The Conference Room--Answers to Questions on N.C. Law

The Kardashian Effect—Legal Separation, Divorce “Papers” and Whether to Seek Annulment or Absolute Divorce?

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By now even the non-entertainment savvy amongst us has heard about reality television “star” Kim Kardashian’s made-for-television, multi-million dollar marriage to NBA player Kris Humphries, and their equally publicized break-up a mere 72 days later. Reports have circulated that Kim K. initially asked Humphries for an annulment, however his refusal to “agree” to one left her forced to go the more traditional route of filing for a divorce, citing “irreconcilable differences.”

One of the more frequent questions I receive in my domestic practice surrounds the question of exactly what “papers” a potential client must obtain in order to “legally separate” from his or her spouse. In fact, in North Carolina there are no such “papers” that are needed in order to effectuate a valid, legal separation. North Carolina is what is called a “no-fault” divorce state, meaning that the only requirement for legal separation is a decision by one of the spouses to end marital co-habitation, followed by the action of actually physically separating and no longer living together as husband and wife. It is not even required that the decision to separate be a mutual decision. So long as one spouse has communicated his or her desire to separate from the other spouse, and acted on it—meaning physically ceased cohabitation—a legal separation has occurred. Terms like “irreconcilable differences” are irrelevant in this state, as North Carolina does not require a petitioner to cite a reason for the separation in order to later file for an absolute divorce.

Back to the Kardashians, reports that KK’s beloved Mr. Humphries thwarted her attempts at an annulment might make for good checkout magazine fodder, but legally speaking this is not possible. This is because in California, as in this state, parties cannot merely “agree” to an annulment but rather they must qualify for one under some very strict criteria. Interestingly, the length of Kim Kardashian’s marriage would be irrelevant to a determination of whether or not she could have the union annulled. To “annul” a marriage is to ask that it be declared invalid, that it never legally existed. An action for divorce ends an otherwise valid marriage, whereas an action for an annulment seeks a declaration that the marriage never existed. Annulments are rare, largely because a person must prove grounds to qualify for an annulment before one may be granted by the Court.

Faced with not wanting to wait the mandatory twelve months it takes to obtain an absolute divorce, many newly separated clients ask whether they are able to seek an annulment of the marriage as a faster alternative. Unfortunately, the length of the marriage is not a consideration in whether or not annulment is available and seeking an annulment is not always a faster option for ending the legal bond of husband and wife. In some circumstances, a marriage may be declared “void” and in others, it may be “voidable” based upon a particular set of circumstances. Chapter 51 of the North Carolina General Statutes provides that a marriage may be declared void only if:

1) the marriage was between any two persons nearer of kin than first cousins, or between double first cousins;

2) either of the parties is under the age of 16 (with a limited exception) at the time of marriage;

3) one of both of the parties to the marriage was already married to another living person at the time of marriage;

4) one or both of the parties to the marriage was physically impotent at the time of the marriage; or

5) at the time of the marriage, one or both of the parties was “incapable of contracting from want of will or understanding;” OR

6) the marriage was contracted under the representation that the female is pregnant, the parties separate within 45 days of marriage, and no child is born to the female within ten months of the date of separation.

It is important to note that none of the above-stated grounds for annulment have to do with fraud other than fraud regarding impotency or regarding a pregnancy. Fraud regarding other issues, for example the desire to have children, is not a ground for annulment.  Furthermore, only a bigamous marriage cannot be ratified by the parties. Meaning that even if one of the other “voidable” criteria is met, if the parties were aware of the defect at the time of marriage and married anyway, this is not a basis for annulment later.

As a practical matter, annulment is a rare and specialized cause of action. In most instances, parties will not qualify and will instead need to wait the requisite 12 months before they may petition the Court for a divorce. If you are contemplating separation or would like to speak with an experienced attorney, Hodges & Coxe can help. I offer free consultations and am always happy to sit down with you to discuss your specific case and to determine what path is best for you.

--Jennifer Bennett joined Hodges & Coxe PC as an associate attorney in 2010 and currently practices in the areas of general civil litigation and matrimonial law, focusing on divorce, child custody disputes, establishment and defense of child and spousal support obligations, equitable distribution and marital tort claims. You can reach her at (910) 772-1678 or at jbennett@hc-lawfirm.com

Power of Attorney

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Protecting our financial interests is especially important in this day and age of social security and economic uncertainty. I say “our” to point out that this type of knowledge is certainly helpful to us all, myself included! And it’s never too soon or too late to get started.  That said, I’d like to take this opportunity to share a few of the estate planning lessons that I took away from a recent seminar.

IT IS ALWAYS A GOOD IDEA TO HAVE A POWER OF ATTORNEY. If you become incapacitated, such as through an accident, sudden illness, unplanned or scheduled absence, a general power of attorney allows you to name someone to act on your behalf with regard to any and all financial, business and contractual matters. This includes the opening and closing of bank accounts, paying of bills, transferring property and contracting attorneys and accountants. This allows YOU, not the court, to decide who is best able to handle your financial matters. If you become unable to handle your financial, business and contractual affairs and haven't appointed an attorney-in-fact, then court intervention will most likely be required before anyone may pay bills, sign a deed to transfer property, sign contracts, or decide other important matters. Moreover, a power of attorney may be required to get access to joint accounts and conduct other business. As a result, failure to appoint a financial power of attorney could ultimately cause excess stress to your family, unnecessary and additional legal fees and delays. Bottom line, it is always a good idea to appoint a power of attorney in the event that you may become unable to handle your financial affairs. Although it is certainly preferable to hire an attorney to draft your power of attorney, Chapter 32A of the North Carolina General Statutes explains the laws in NC with regard to powers of attorney. More specifically, NC Gen. Stat. §32A-1 provides a statutory short form power of attorney.

A HEALTH CARE POWER OF ATTORNEY IS A SEPARATE AND DISTINCT TYPE OF POWER OF ATTORNEY DIFFERENT FROM A GENERAL POWER OF ATTORNEY. The North Carolina General Assembly has acknowledged the fundamental right of an individual to control the decisions relating to his or her medical care, and that this right may be exercised on behalf of the individual by an agent chosen by the individual. As a result, North Carolina has established an additional, nonexclusive method for an individual to exercise his or her right to give, withhold, or withdraw consent to medical treatment, including mental health treatment, when the individual lacks sufficient understanding or capacity to make or communicate health care decisions by and through the designation of a health care power of attorney. Basically, a health care power of attorney allows you to name someone else to make medical decisions for you if you should become unable or unwilling to make these decisions for yourself. You can have both a living will and a health care power of attorney and both can be in the same document. Please note that someone providing health care to you for compensation cannot be named as your health care agent. If you do not name someone as your “health care agent” in a health care power of attorney, then your spouse or next of kin will make all medical decisions for you if you become incapacitated. Chapter 32A of the North Carolina General Statutes explains the laws in NC with regard to health care powers of attorney and NC Gen. Stat. §32-25.1 provides a statutory form health care power of attorney.

--Sarah Reamer currently practices with Hodges & Coxe PC and specializes in general civil litigation, focusing on real estate litigation and foreclosure protection. Please contact her at sreamer@hc-lawfirm.com or (910) 772-1678.

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Corporation Games

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Businesses can be organized in several different ways. One of the newer forms of business is a Limited Liability Company or LLC. The best way to understand an LLC is to compare it to a traditional corporation.

Limited Liability Company

A LLC is a legal entity that exists separate and apart from its owners. The owners of the LLC are called "members" (as compared to a corporation, where the owners are referred to as "shareholders"). An LLC is formed by filing articles of organization Secretary of State (filing fees are paid with the articles of organization).

There are three primary areas of an LLC that are attractive business owners:

The LLC, like a partnership, is given a pass through tax treatment, which means that profits and losses are reported on each member's individual tax return;

The LLC, like a corporation, provides liability protection for the members (assuming that potential debts and obligations are incurred in the name of the LLC and not the members individually), which means that creditors can assert their claims only against LLC and not directly against the members (again, assuming that the LLC is properly operated and the members do not personally guarantee any obligation of the LLC); and

The LLC provides flexibility in management and other issues while preserving the 2 advantages listed above.

Corporations

A for-profit corporation is a business structure formed by filing articles or incorporation with the secretary of state. A corporation is recognized as being separate and apart from its owners. (The owners are called "shareholders".) As a separate entity, it has its own rights, privileges, and liabilities apart from the individuals who form it.

The shareholders of a corporation are generally not personally liable or responsible for the debts or obligations of the corporation. A stockholder's personal liability is usually limited to the amount of his, her or its investment in the corporation and no more. A corporation continues to exist after the death of or transfer of shares by one or more of the shareholders. A corporation pays taxes on its profits, and its shareholders pay taxes on dividends, unless "S" tax status is elected - then the profits and losses of the corporation "pass through" to the shareholders.

The shareholders of a corporation have only the money that they have invested into the company at risk - shareholders are generally not required to pay their own money to satisfy any debt of or judgment against the company.

A corporation's existence may continue on regardless of what may happen to its individual officers, directors or shareholders. Also, ownership of the business may be transferred, without disrupting operations, through the sale of stock.

Capital can be more easily raised with a corporation. This may be accomplished through the sale of stock or other equity interests.

Corporations can offer anonymity to its owners. The corporate name is used in the operation of the business, generally not that of the shareholders.

--Matthew Adams joined Hodges & Coxe in 2010 as an associate attorney and currently practices in the areas of estate planning, estate administration, business formation and organization, business transactions, corporate law and taxation. Please contact him for advice on these issues at (910) 772-1678.

A not-so-social deposition

The movie “The Social Network,” is about the formation of Facebook. A lot of the narrative of the movie is told in flashbacks framed by the various depositions in the lawsuits between the parties who allegedly had role in the creation of the social media site. In this scene, Mark Zuckerberg, the creator of Facebook,(played by actor Jesse Eisenberg) answers some questions in a deposition by the attorney for the Winklevoss twins who filed a lawsuit alleging that Mr. Zuckerberg stole their idea and created Facebook. Despite this being an entertaining clip and it seems that Mr. Zuckerberg won this exchange, if this is how the transcript played out in reality, he did nothing but hurt his case.

One of the mistakes that people make in depositions is trying to argue with the other attorney. This happens especially with experts and professionals because they think they are smarter than the attorney asking the questions. In a lot of cases they are even correct (and it would not be a stretch to say Mr. Zuckerberg was smarter than the opposing lawyers). But by verbally sparring with the other attorney, you are doing more than just answering the question. You are providing the other attorney free information about your case. You are giving your opponent cross-examination material to use on the stand against you. Mr. Zuckerberg’s comments in this deposition can be read to a jury and introduced into evidence. In fact, this appeared to be a video depositionA good attorney could build an entire closing argument around these comments. “Thank you ladies and gentlemen of the jury for your attention to the facts in this case. That is all my clients, the Winklevoss twins asked of you and you have delivered. If only the Defendant had given them his attention, as he agreed to do. But he did not, and even in a lawsuit did not. The only person that the Defendant thought deserved attention was himself.  Does he even think you deserve his attention…”

Save the clever arguments for your lawyer and cocktail parties. Just listen to the question; answer the question; and let your lawyer object if it is irrelevant.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

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Servicemembers Civil Relief Act

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The “Servicemembers Civil Relief Act” (SCRA) was enacted in 2003. This law is the latest in a series of statutory protections dating back to the Civil War for active service members, including the predecessor statute the Soldiers’ and Sailors’ Civil Relief Act. The SCRA provides protection to servicemembers regarding residential leases, automobile leases, installment contracts, interest rates, court proceedings, and some tax protections.

Residential Leases

If a servicemember is a named party on a residential lease, the SCRA allows him to terminate it for entering active duty, or he receives orders for a permanent change of station or to deploy for a period of not less than 90 days. In order to take advantage of these protections, the servicemember has to make a written request with a copy of their orders. The lease will then be terminated 30 days after the date on which the next regularly scheduled payment is due. Like most contracts the statutory mandate is the minimum required. Particularly in areas with a large military presence, there may be additional protections that are provided in your lease.  

In addition, the servicemember can be protected from evictions from a residence occupied by the servicemember or dependants for which the monthly rent does not exceed a certain amount. If the court determines that the servicemember or dependents are unable to pay their rent on time as a direct result of the servicemember’s military duties, they may order that the eviction be postponed for up to three months.

Automobile Leases

A new provision similar to the protection for residential leases allows the termination of automobile leases for use by servicemembers and their dependents. Automobile leases may be cancelled if the servicemember receives orders to active duty for a period of 180 days or more or permanent change of station orders outside the continental US. The servicemember is responsible for title, tags, excess wear and mileage, but cannot be charges with an early termination fee.

Interest Rates

If a servicemember has debts that were incurred prior to entering military service, and if the her  military service has directly affected her  ability to pay those debts, the servicemember can have the interest rate capped at six percent (6%) for the duration of her military service. The service member must request this reduction in writing and include a copy of her orders. Note that the language of the statute specifies that the excess interest is forgiven and not just deferred to be collected at a later time.

Court Proceedings

Where I generally have run into this act, is the provision regarding court proceedings. If a servicemember is a defendant in a civil proceeding, the servicemember may ask for a postponement if he submits a statement along with a statement from his commanding officer explaining how their current duty requirements prevent them from appearing. The SCRA also would allow a court to reopen a default judgment entered against the servicemember if it is clear that the servicemember was unable to defend themselves due to their military service and they have a legal defense to the action. The new statute also extends this protection to administrative hearings.

Taxes

The SCRA also has a provision that would prevent states from increasing the tax bracket of a nonmilitary spouse who earned income in the state by adding in the service member’s military income for the limited purpose of determining the nonmilitary spouse’s tax bracket. This practice has had the effect of increasing the military family’s tax burden.

Happy Veteran's Day.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Spys Like Us

COVERT COMMUNICATIONS—When is it “OK” to record a conversation with my spouse or my chidren in the context of a contested divorce case?

    The two most frequent areas where electronic surveillance is used in litigation arise in the context of commercial espionage, and in domestic litigation. As formerly “high tech” surveillance technology is now available at a relatively low cost to anyone with an internet connection and a credit card, the issue of whether, and how, my clients may record and document conversations with their spouses or children has become a regular part of my practice. It is an important area to address at the outset of litigation, because the laws regarding privacy and surveillance are complex , vary from state to state,  and can result in civil and criminal penalties for violations. This means that if your spouse moves with your minor children across state lines, you may be invoking the laws of a foreign jurisdiction or the federal government if you initiate surveillance or attempt to record a conversation with him or her.  Not only could you subject yourself to civil and criminal penalties, but you could make otherwise valuable evidence inadmissible at a future hearing in your divorce proceedings.

The Law…

    The Electronic Communications Privacy Act and the Stored Wire and Electronic Communications Act, commonly grouped together as the Electronic Communications Privacy Act, or ECPA, comprise the set of federal laws which prohibit both private citizens and law enforcement from engaging in certain types of electronic eavesdropping. Congress passed the ECPA in 1986 to update the Federal Wiretap Act of 1968, which attempted to protect citizens’ privacy by proscribing the use of recording devices in the use of telephone lines. As with most things, technology evolved beyond the scope the original lawmakers could have foreseen. In 1968, no one envisioned the widespread use of cellular phones, text messaging, or the internet. Since the ECPA was enacted in 1986, it has also been updated to reflect new developments in the realm of communication technology. North Carolina has adopted laws which closely mirror the Federal Act, codified at Article 16 of Chapter 15A of the General Statutes under “Electronic Surveillance.”

    Both the ECPA and the North Carolina Electronic Surveillance Act (ESA) create civil and criminal penalties for anyone who intentionally intercepts, uses or discloses any wire or oral communication by using any electronic, mechanical, or other device. The statute defines “interception” as the “aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.” The Act likewise bans unauthorized access to wire or electronic communication in storage, which is defined as “any temporary, immediate storage of a wire or electronic communication.”  

    So, when may I record a conversation with my spouse?

    In North Carolina, telephone and oral communications may only be recorded if one of the parties to the communication is aware of and has consented to its being recorded. This means that you may record your own phone calls or conversations, but you may not record conversations between your spouse and a third party if neither knows the conversation is being taped. You may also not set up recording equipment your home or car to capture all conversations and activities taking place in those locations. At present, you may install video monitoring equipment, however the same may not have an audio component.  Also, you should be aware that if you are recording a conversation with a party in another state, the state with the more stringent laws will apply. This means that if you are in North Carolina, which is a one-party consent state, and the person you intend to record is in California, which requires the consent of all parties to the conversation, the California law would govern.

    May I record conversations with my children?

    You may record conversations that you have with your children, because you are a participant in those communications. Ordinarily, federal and state privacy laws would prohibit any recordings between your children and a third party, without the consent of that party (your children are minors and therefore cannot consent to the recording). However, in certain limited circumstances, where you can demonstrate a good faith, reasonable belief that your spouse or another individual is having communications with your children which are contrary to their best interests, you may record such conversations. This is called the vicarious consent doctrine. As a parent, you are vicariously consenting to the recording on your child’s behalf. As this standard is not easily identified, however, is it always best to speak with an attorney prior to recording such conversations so as to avoid potentially violating the law.

    I know my spouse’s passwords, may I access his or her e-mail or Facebook account to retrieve a document or to see what he or she has been doing since we separated?

    Both the Federal and North Carolina Acts prohibit the intentional, unauthorized access of another person’s electronic storage. This would include e-mail and social media accounts, and any other accounts which require a password for entry. If your spouse gave you his or her password and authorized you to retrieve a document, you may do so. However, you may not exceed this authority to scope through all of the messages, hoping to find something juicy to use in your case. You may also not go into your spouse’s accounts merely because you knew or could ascertain the password. To do so would violate the law and potentially make any document you retrieve inadmissible in your divorce trial.

--Jennifer Bennett joined Hodges & Coxe PC as an associate attorney in 2010 and currently practices in the areas of general civil litigation and matrimonial law, focusing on divorce, child custody disputes, establishment and defense of child and spousal support obligations, equitable distribution and marital tort claims. You can reach her at (910) 772-1678

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Hoarders & Homeowner's Associations

One popular reality show today is A&E's "Hoarders. "The show details the problems of pathological hoarding or disposophobia. The individuals acquire possessions and fail to discard them even when the items are worthless, hazardous, or unsanitary and impair mobility and interfere with basic functions of life. The show scratches a morbid curiosity and probably makes "normal" people feel good about that stack of old TV Guides they haven't thrown out yet. It also illustrates a serious physiological condition.

A Homeowner's Association client of mine was faced with this issue. After receiving numerous complaints from neighbors regarding pests and odors from one townhouse unit, the manager investigated and found an out of control hoarding situation. Garbage and trash were piled up past window height. Poisonous spiders, insects, rats and feral cats roamed the unit. The owner refused to clean his unit and refused to allow the manager to clean it. Witnessing severe unsanitary conditions, the manager asked for help from the county's social services, the fire department, the police department and even animal control. They were unable to help him as the owner continued to refuse to allow anyone to enter and refused any psychological help. The manager then called me.

The hoarder was the owner (not a tenant) and had paid his assessments on time so initially there was no basis to force him to leave. I had to look deeper. Most sets of HOA restrictive covenants (also known as "declarations") contain language that requires a unit owner to keep their unit in good condition and repair, and prevents a unit owner from causing a nuisance to any other owner. If the unit owner fails in this duty, the HOA has the power to enter the property, fix the condition, and then assess the homeowner for the expenses. This was the procedure we had to follow.

First, we had to give written notice to the homeowner to correct the situation. By this time, the post office had refused to deliver mail to the unit, because the owner never cleaned out the mailbox, so I had to hand-deliver a notice. We gave the owner a number of days to correct the condition or the HOA would. The notice period was set forth in the restrictive covenants. When the time passed and the homeowner had taken no steps to correct the condition, we moved to the next step.

Although the covenants provided that the HOA had the right to enter the property without further notice or court action, because the homeowner refused entry, the police would not assist without a court order. Rather than have the HOA force their way in and defend a trespass suit, the better way was to go through the court. We therefore filed a court action and asked the judge for a preliminary injunction to allow the HOA entry to the unit for cleaning and for the police to provide assistance. The police wanted very specific instructions from the judge on the use of force and the time period of the cleaning. After notice to the homeowner, a hearing was held before the judge. I laid out the authority in the covenants and provided affidavits and photographs of the condition in the unit. The judge granted our motion (although I think the photographs ruined his lunch), and then I worked with the attorney for the police department in getting the specific detail they needed in the order to assist me.  

After the judge signed our order, the HOA retained a cleaning company who went to the unit along with three police officers in HAZMAT suits, an animal control officer, and a social worker. Thankfully, after discussions with the police, the homeowner allowed the cleaning crew into the unit without the use of force. Unfortunately, he still refused any psychological or other assistance and the social worker said she could not help.  The cleaning crew spent two days and filled up two dumpsters with trash and garbage. A pest control company treated for rats, spiders, ticks and other pests. By the end, the unit was clean and the HOA had racked up a substantial cleaning bill. The cleaning crew remarked that it would have been more sanitary for the homeowner to live in the dumpster as that would at least be emptied every month.

Next, again following the procedure in the restrictive covenants, the HOA (again with the mandated written notice) levied a special assessment on the homeowner for the costs of cleaning, court and attorney fees. The homeowner refused to pay. Therefore, at this time, the HOA had grounds for a lien against the property for the assessment. The lien was filed and foreclosure proceedings began. At this point, the procedure was the same if the hoarder had simply failed to pay his annual dues, a much more common problem with Homeowner's Associations. 

Foreclosures for HOA liens follow the same format as a more typical bank foreclosure. The clerk of court sits for the initial foreclosure hearing. Essentially, she makes sure that the documents are correct and verifies the amount owed. If the foreclosure is contested, a judge may hold a hearing and delay or deny the foreclosure. In this case, the documents were in order and the clerk entered the foreclosure order.

It was now up to my office to conduct a sale of the property to recover the lien amount (again growing with interest and attorney fees). After notice in the newspaper of the sale date, in an archaic procedure, an attorney in our office read aloud from the top of the courthouse steps that the property was up for sale and was open for bids. No bids for the property were received, so how would the HOA receive compensation for the lien?

The solution was to have the HOA bid on the property precisely the amount they were owed plus the attorney fees for the sale. After a bid, anyone (including the homeowner) can submit an upset bid of at least 10% greater than the prior bid. That process continues until the time for upset bids have passed. In this case, no upset bids were submitted. The HOA, because it had bid the exact amount they were due, took ownership without having to pay any additional money. After the clerk entered the final report of the foreclosure sale, the last step was the preparation of a foreclosure deed that was filed with the register of deeds

One wrinkle with the HOA's ownership was that they were actually the 2nd lienholder on the property. Like most homeowners, the hoarder had a mortgage. Had he failed to pay that mortgage and the bank foreclosed, the HOA's lien would have been extinguished and the HOA could only have recovered if the foreclosure sale was more than what was owed the bank. Because the HOA, who was 2nd in line, or subordinate, was the entity foreclosing on the property, they took the property (as would any third party who had bid) subject to the first loan. The hoarder, even though he no longer owned the property, still owed the debt on the mortgage, but if he stopped paying on his loan, the bank could enforce their lien against the property through their own foreclosure action even though the property was now owned by the HOA.

Regardless, because the HOA now owns the property, they can now clean the unit, sell the unit, and recover in cash their expenses after the bank loan is satisfied. They could also begin proceedings for a summary ejectment of the hoarder. Thankfully, by the time of the sale, the estranged family of the homeowner and social services got involved and found the homeowner a assisted living home where he could live in safe and sanitary conditions.

While this was an unusual experience, the same procedures would be followed where a unit owner fails to pay more ordinary annual assessments or special assessments. However, in the vast majority of the cases, the owners eventually pay the amounts due. Nevertheless, an HOA Board must be aware of the full procedure before making a decision to start down that path. In this case, it took almost a year and half from the time of the first notice that the homeowner must clean, to the HOA taking final possession, with at least a dozen various notices and copies of filings hand-delivered to the homeowner.  While the HOA was frequently frustrated at the length of time of the process, all the steps had to be taken to protect the homeowner's rights in his property. Keep in mind that while the homeowner refused to cooperate or pay, he also did not contest any of the authority or facts that I argued before the court and the foreclosure clerks. Any argument may have caused the process to resolve even slower.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

HIPAA

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With our increasingly interconnected world and the rise of identity theft and other similar invasions of privacy, more and more laws and regulations are being enacted to bolster traditional common law and wall off private information from the public. One such body of law is contained in The Health Insurance Portability and Accountability Act. More commonly known as “HIPAA,” this law was passed by Congress in 1996 to set a national standard for electronic transfers of health data. At the same time, Congress saw the need to address growing public concern about privacy and security of personal health data. The task of writing rules on privacy eventually fell to the U.S. Department of Health and Human Services (HHS). After several modifications, DHHS issued the HIPAA Privacy Rule.

HIPAA set a national standard for the privacy of medical records. A state can enact greater privacy rights, but HIPAA sets the minimum that must be followed. Under HIPAA, the patient has a right to their medical records, although the provider can bill for the cost of copying them.

When you first go to a doctor or other medical provider, they should provide you with a notice of privacy practices that give you more information about how your medical information is shared. Including in that is your right to an accounting of disclosure of your health information, how to file a complaint, and how to ask for special confidential communications (for example telephone calls to your home rather than work for communications regarding your health care and treatment).

Exceptions to the protection of HIPAA are information used for your treatment, drug companies who are issuing recalls or warnings of medications, business associates (for example, if your doctor provides your information to an account for medical billing purposes) The health care provider is supposed to have a contract that ensures that the business associate properly handle the information, but is not required to check and supervise.

The patient can also authorize the health care provider release the information to a third-party. I usually run into this exception when dealing with personal injury and medical malpractice lawsuits. Most people understand that if they are trying to recover for medical bills and injury, they have to show their medical records and bills to the jury. However, the plaintiff is required to turn over medical information before a trial to a defendant if he asks for it in discovery, even for past medical records, if it could possibly lead to discoverable evidence. One common defense is that the injury the plaintiff complains of did not occur due to the defendant’s negligence, but rather, due to a pre-existing condition. Therefore, evidence of a plaintiff’s pre-existing medical condition, including her past medical records, is discoverable. This is thought of as a voluntary disclosure since a plaintiff is not required to file a lawsuit.

If a medical provider releases your information in violation of HIPAA, you can not file a lawsuit. There is no “private right of action” with HIPAA. What you can do, is first complain to the medical provider’s privacy officer. If you are not satisfied, you can file a complaint with the U.S. Department of Health and Human Services. You have 180 days to file such a complaint although the HHS can extend it at need. The HHS can levy fines against the health care provider, but you won’t get the money like you would in a private right of action lawsuit.

While some states may have additional privacy rights that would be actionable in a civil lawsuit (and therefore an aggrieved plaintiff could recover damages), North Carolina is not one of them. However, in North Carolina, a HIPAA violation can be used as the basis for the tort of Negligent Infliction of Emotional Distress. This means that the plaintiff can file a suit and recover damages. However, an NIED suit would have to show more than just a violation of HIPAA. The plaintiff would have to show “severe emotional distress” which North Carolina courts have held to be a diagnosable condition. If the disclosure of your private health records didn’t cause you to have psychiatric or other counseling, then you probably won’t have a case. In addition, the suit would fall under the more strict medical malpractice rules so there will be additional hoops to jump through, including finding an expert in the same specialty to testify as to why the HIPAA violation was a breach of the standard of care.  

--Bradley A. Coxe is a practicing attorney in Wilmington, NC who specializes in Personal Injury, Medical Malpractice, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Wrongful Cutting of Timber

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North Carolina is the Tar Heel State and the nickname of the University of North Carolina is the Tar Heels. While there are several interesting origins of the name, one underlying common element is the importance of pine tar in the state. Tar and timber in the state were important industries, especially in the 18th and 19th century.

Legally then, the state legislature took special steps to protect landowners from theft of their timber. Modifying the traditional common law rule of trespass, North Carolina has a special statute N.C.G.S. Sec. 1-539.1 that governs timber cutting. When a person cuts somebody else’s timber, he is entitled to double damages. It’s not a defense that the party doing the cutting doesn’t know it is somebody else’s property or has a reasonable belief that he has permission. I’ve had cases where a timber cutting company contracted with a person who showed them a map and a deed of the property, only later to find out that somebody else actually owned the property. While they did have an action against the person who misrepresented the ownership of the property, they were still on the hook against the actual landowner.

The damages are doubled, but the damages are calculated by the value of the timber at the stump, or the stumpage value. Essentially that means the value of the timber after reasonable costs are deducted for the logger, truck driver, and the mill. Essentially this is the net profit of the timber “crop” rather than the gross.

Even so, if you have several acres of timber that were clear cut by a timber company, you could have significant damages. In recent years however, as North Carolina has become more and more urban, and suburban, the more typical timber cutting case is the neighbor who cuts down your favorite shade trees on your property. Even doubled, the timber value of some shade trees on your property may not reach $100. In those cases, there is an alternative measure of damages that could be used.

The alternative damage would be the traditional damages for any trespass or damage to real property. That is the difference between the market value of the property with the trees and without the trees. This type of damage may be more difficult to quantify than a count of stumps and a check on mill prices, but if it can be done, it may yield greater damage than the stump value. This type of damage however is not doubled by the statute.

One measure of damages that can not be used is the replacement cost. The replacement cost would be how much you would have to pay an arborist to replant a tree of the same type and age. For mature trees this would be far more than the value of the tree as timber and very well could be far more than the difference in market value. The replacement cost can be used as some evidence of the difference in market value, but in and of itself, it is not a measure of damages.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC who specializes in Personal Injury, Medical Malpractice, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Curb Your Enthusiasm

The other night, I was watching an old “Curb Your Enthusiasm” episode on DVD. The episode was a typical half hour of misunderstandings and wild coincidences. Larry’s friend and business agent, Jeff is in the hospital for some surgery to correct his snoring. For several funny reasons I won’t go into here, Larry inadvertently infuriates Jeff’s doctor who then goes to the operating room and shaves Jeff’s head. Jeff then wakes up bald and fails to close a million dollar deal with Ben Stiller. Jeff is convinced that the reason he lost the deal was because he was bald. He shouts to Larry “I’ll sue!”

So that got me thinking. Is this a real case? Is it medical malpractice? What would I do if Jeff walked into my office? Could this be one of those urban legend “frivolous lawsuits?”

First, is this even a medical malpractice case? Shaving somebody’s head doesn’t sound like a medical case and isn’t even negligence if the doctor did it intentionally. However, because shaving is a normal part of some surgeries (but not a snoring surgery) it would be a “medical treatment” and therefore would fall under medical malpractice law.

Now that we know its medical malpractice, we have to see if there is a breach of the standard of care. It would seem obvious that shaving somebody’s head that had nothing to do with the actual surgery and maybe it is. Nevertheless, under North Carolina law, an expert doctor has to give that opinion, even before any lawsuit is filed. That expert has to be in the same or similar specialty and be familiar with the community or a similar sized community.

Contrast that requirement with a normal lawsuit. If Jeff had fallen asleep in a barber chair who had then shaved his head, he could file a lawsuit the next day and argue to a jury that this was not with his permission or not what a reasonable person would do. No need to get an expert barber to testify.

Assuming we have retained an expert doctor to review the medical records and solemnly pronounce a breach of the standard of care that caused the damage (baldness) the real question is one of damages. Unless Ben Stiller will admit that he didn’t hire Jeff because he was bald, the damages will be limited to a few weeks of embarrassment and baldness, and probably the extra medical bills that Jeff had to pay for the failed operation. This is one more factor against medical malpractice. Again if this was ordinary negligence of a barber, just these damages may be worth a lawsuit. But, with the cost of medical experts, I don’t see a jury giving Jeff enough money to make a medical malpractice case worthwhile. I never want to take a case where it costs my client more than what he could win.

As silly as this is, it does show one of the biggest limitations of medical malpractice cases and why cries for tort reform from medical malpractice insurance companies are overblown. Medical mistakes happen all the time, but unless there is serious and permanent injury, lawsuits are simply too expensive to be used to rectify medical negligence.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC who specializes in Personal Injury, Medical Malpractice, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678.