Recent decisions by the North Carolina Court of Appeals and North Carolina Business Court (NCBC) shed light on a previously unsettled question of law: when can a North Carolina trial court award attorney’s fees as part of a class-action settlement in the absence of additional statutory authority? Long-standing precedent is that a court can award attorneys’ fees to a prevailing party when statutorily authorized to do so.[1] This practice is known as the “American Rule.” The intended purpose of the American Rule is to encourage the conservation of judicial resources by promoting settlement and discouraging unnecessarily prolonged litigation.[2] Regarding…
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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…
