Real property owned by multiple individuals is held either as tenants in common, joint tenants with rights of survivorship, or (in the case of married couples) tenants by the entirety. Disputes may arise among joint owners of real property regarding its best and highest use or because personal relationships deteriorate. When parties can’t agree whether to sell the property or how to divide and/or use it, they can turn to the court’s for assistance. In North Carolina, joint owners of property are entitled to an actual partition of the disputed land as a matter of right, and may institute a special proceeding before…
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NCBC: Fifty-Mile Customer Based Geographic Restriction Makes Non-Compete Agreement Unreasonable
In August, the North Carolina Business Court (“NCBC”) determined a non-compete agreement was unreasonable because of its overly broad geographic restriction, and denied Plaintiff’s motion for preliminary injunction to prohibit a former employee from competing with it.[1] In North Carolina, non-compete agreements are generally disfavored and strictly construed against the drafting party. A non-compete agreement must be (1) in writing; (2) made a part of the employment contract; (3) supported by consideration; (4) reasonable both as to time and territory; and (5) no broader than necessary to protect the employer’s interest.[2] In determining the reasonableness of such agreements, the…
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Rule 11 Sanctions Imposed for Improper Breach of Fiduciary Duties Claims Against Rank-and-File Employees
In September 2011, Southeast Air Charter, Inc. (“Southeast Air”) brought suit against three (3) employees (“Defendants”) alleging, among other things, breach of fiduciary duty and constructive fraud. The North Carolina Business Court (“NCBC”) determined all defendants were rank-and-file employees of Southeast Air and therefore could not be subject to the breach of fiduciary duty and constructive fraud claims. As such, Plaintiff and Plaintiff’s attorneys were subject to Rule 11 sanctions for bringing these claims without any factual basis. In determining the appropriate amount of sanctions and the allocation of attorneys’ fees incurred by Defendants, Judge James Gale, Chief Special Superior Court Judge of the NCBC,…
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N.C. Court of Appeals: Caveators Were Not Prejudiced By Dead Man’s Statute Since the Jury “heard the gist of caveators’ evidence.”
In 1960 Charles Pickelsimer (“Charles”) inherited significant stock holdings in a family telecommunications company.[1] Over the next 45 years, Charles gave his children and grandchildren stock certificates as gifts. When he sold the company in 2008 for $65 million, Charles and his children received significant cash distributions. In 2009, Charles and his wife executed an estate plan to protect their assets, and their children were the primary beneficiaries. Charles was diagnosed with mild dementia and memory loss in January 2010, and his wife died in March of that year. His condition continued to subsequently decline. Charles executed a new estate plan in August 2010 (“2010…
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Guardianship Proceedings in North Carolina
It is prudent to execute a healthcare and/or financial power of attorney well in advance of necessity to ensure your individual wishes are honored in the event you are unable to attend to your own needs. However, competency is required to execute a power of attorney. If you become incompetent and do not have a durable power of attorney, it will be necessary for someone to petition the court to appoint a guardian to manage your affairs. Before appointing a guardian, the court first determines whether an individual is legally incompetent. The adjudication of incompetence is heard by the clerk of court…
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Non-Conforming Payable on Death Accounts Can Survive as Common Law Tentative or “Totten” Trusts
On August 4, 2015, the North Carolina Court of Appeals issued a ruling clarifying that when a grantor seeks to create a statutory payable on death (“POD”) account, but fails to satisfy the statutory provisions, he/she can still rely on the existence of a common law tentative trust or “Totten” trust as an alternative.[1] The Totten trust, sometimes called a “poor man’s will,” was established after the 1904 New York Court of Appeals decision, In the Matter of Totten. The requirements to create a Totten trust are: (1) sufficient words to show intention to create…
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NC Court of Appeals: While decedent’s actions effectively bypassed will, “it was his prerogative to do so.”
On July 21, 2015, the North Carolina Court of Appeals issued a ruling emphasizing the importance of executing cohesive estate documents and appointing a trusted fiduciary to execute the testator’s wishes.[1] Dwight Jordan died testate with four children, and his will instructed the estate to be divided between them in equal shares. Mr. Jordan named one of his sons, Raymond Baxter Jordan (“Defendant”), as the executor, and designated him as his attorney-in-fact. The same day he executed the will, Mr. Jordan and the Defendant converted Mr. Jordan’s bank account to a joint account with rights of survivorship. The bank account comprised…
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Powers of Attorney: General Considerations
While many people recognize the term “power of attorney,” most do not know how to create a valid power of attorney or choose between the various considerations. It is important to prepare safeguards to protect current and future assets long before one faces severe illness or incapacity. A power of attorney is a straightforward and relatively inexpensive document to prepare, compared to the time and expenses that may be incurred if a court is required to settle family disputes or appoint a guardian in the absence of an instructive document. Put simply, a power of attorney is a legal…
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North Carolina Business Court Recognizes New Duty to Negotiate in Good Faith
While North Carolina has never recognized a fiduciary relationship between lenders and borrowers, in June the North Carolina Business Court did recognized a new cause of action: breach of a duty to negotiate in good faith.[1] The Court confined its decision to the particular facts present in the case, leaving many questions unanswered regarding this type of claim. BB&T gave two loans totaling $5.275 million to an experienced real-estate developer. BB&T and the client had a long (30 year) borrower-lender relationship, which the Court characterized as “multifaceted and unique.”[2] The loans needed restructuring, so BB&T and the borrower spent over eight (8) months extensively negotiating their terms. The negotiations…
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The Line Between Cyber-bullying and Freedom of Speech
The intersection of free speech and safety on social media has been a hotly debated topic for many years. Because cyber-bullying takes many different forms, it is difficult to define. While several states criminalize cyber-bullying, the language of these statutes vary greatly and are just recently being challenged under First Amendment grounds. In June, the North Carolina Court of Appeals upheld the state’s cyber-bullying statute over a First Amendment challenge.[1] This decision is noteworthy because it contrasts a 2014 New York Court of Appeals decision striking down an Albany County cyber-bullying statute.[2] While the statutory language of these cyber-bullying statutes differ to some degree, the respective state…
