The often misunderstood impact of writing “Payment in Full” on a check was before the North Carolina Court of Appeals in In the Matter of the Foreclosure of a Lien by Five Oaks Recreational Association, Inc., decided on March 6, 2012.  In this case, a member of a planned community failed to pay his assessments on time.  The association sued and moved for summary judgment in its favor.  The member argued that by writing “Payment in Full” in the memo section of a check, he had reached a settlement with the association for less than the full amount.  The Court of Appeals affirmed the entry of summary judgment by the trial court against the member, holding that there was no evidence that the amount was in dispute so that an accord and satisfaction may have existed.

A plaintiff bank suing on a promissory note originally executed in favor of another bank must introduce evidence that it is the proper holder of the note in order to obtain summary judgment when the defendant questions the plaintiff bank’s right to sue on the note.  This was the holding in TD Bank, N.A. v. Mirabella, decided by the North Carolina Court of Appeals on March 20, 2012.   In this case, the bank claimed that it had merged with the original lender, but failed to introduce affidavits or other evidence supporting that claim prior to seeking summary judgment on the note.  The Court of Appeals reversed the trial court’s entry of summary judgment for the bank and allowed the defendant to continue contesting the suit.

Related business entities must always be vigilant in maintaining legal separation between them, not only in documentation, but in the manner in which they conduct business.  In Best Cartage, Inc. v. Stonewall Packaging, LLC and Jackson Paper Mfg. Co., a North Carolina Court of Appeals case decided March 20, 2012, a trucking company sued two related businesses on a contract with one of the businesses.  The suit claimed that, although the defendants were two businesses, they should be treated as a partnership and/or joint venture.  The Court of Appeals reversed dismissal by the trial court of the claims for partnership by estoppel, joint venture and de facto partnership and allowed the case to continue with these claims intact.

Among the factors relied upon by the Court of Appeals was the plaintiff’s claim that it thought it was dealing with a partnership, the execution of the contract on behalf of one defendant by an officer of the other defendant, a press release from the Governor referring to the two businesses as a joint venture, and the expenditure of funds by one defendant for the other defendant with no expectation of reimbursement

In an employment dispute arising in HaywoodCounty, the Court of Appeals affirmed the order of the trial judge compelling discovery of medical records and income tax returns of the Plaintiff.  In Young v. Kimberly-Clark Corporation, COA 11-1020, decided February 21, 2012, the Court of Appeals reviewed a discovery dispute arising out of an employee suit against the employer claiming wrongful discharge, negligence and infliction of emotional distress.  Plaintiff’s damages included lost wages, employment benefits and compensation for emotional distress and/or pain and suffering.

The Plaintiff refused to provide medical records and tax returns claiming that they were not reasonably related to her claims and damages.  The Court of Appeals agreed with the trial judge that the information sought was appropriate and that the Plaintiff’s claims of privilege had been waived by the filing of the law suit seeking damages related to that information.

In Pierce v. The Atlantic Group, Inc., COA 11-494, decided February 21, 2012, a fired employee filed suit claiming that he had been fired from his position as a lifting rigger supervising coordinator because of his attempts to have claimed operators and riggers certified.  The Trial Court found that the claim for retaliatory dismissal firing was properly dismissed because the employees’ actions were nothing more than complaints to his supervisors and did not constitute an “initiation of an inquiry” pursuant to NCGS § 95-241(a).  The Court of Appeals agreed and affirmed the dismissal.

In Phelps Staffing, LLC v. Sheila Phelps, et al., decided December 20, 2011 the North Carolina Court of Appeals found that the sellers of a contract labor staffing business did not breach a non compete clause contained in the asset sale agreement.  After the business was purchased, one of the business owners opened up a competing contract staffing company and “flipped” many of the contract laborers and some of the customers who were working with the purchaser.

In finding that the sellers had not breached the contract, the Court of Appeals noted that one seller held no stock or other financial stake in the competing business even though she did receive payment of some of her personal expenses from that business.  The Court also appears to have placed great weight on the fact that that the seller was not actively involved in the management and had no entitlement to the payments.

IMPORTANT:  When you are selling or purchasing a business, be sure to work closely with a business lawyer.  Covenants not to compete are not favored by North Carolina courts and require careful preparation if they are to be enforced.

In Archie v. Kirk, (COA 11-436) decided on December 20, 201, the North Carolina Court of Appeals reviewed a decision by the North Carolina Industrial Commission awarding worker’s compensation benefits to a person electrocuted while working on a billboard.  In that case, the record showed that the Plaintiff was sometimes paid a lump sum amount but often paid by the hour.  The evidence also showed that Kirk exercised little supervision over on the Plaintiff.  In affirming the decision of the Industrial Commission and holding that an employer – employee relationship existed between Kirk and the Plaintiff, the Court focused on the fact that Kirk had the right to supervise job performance by the Plaintiff even if that supervision did not occur very often.  The Court also relied upon evidence that Kirk transported the Plaintiff to jobsites and provided tools to be used on the job.

IMPORTANT:  North Carolina courts generally look at the following factors to determine whether a person is an independent contractor:  Whether the person (1) is engaged in an independent business, calling or occupation; (2) is to have the independent use of his special skill, knowledge, or training in the execution of the work; (3) is doing a specified piece of work at a fixed price or for a lump sum or upon a quantitative basis; (4) is not subject to being fired because he adopts one method of doing the work rather than another; (5) is not regularly in the employ of the other contracting party; (6) is free to use such assistants as he may think proper; (7) has full control over such assistant’s; and (8) selects his own time.