The Supreme Court has recently held that a default judgment in favor of an owner against a general contractor cannot form the basis for extinguishing a subcontractor’s lien on property under N.C.G.S. §44A-23.

In the case of Carolina Building Services v. Boardwalk, LLC, the Supreme Court was faced with this issue after a general contractor abandoned a job project before completion of the project.  An unpaid subcontractor filed a lien on the project after the abandonment by the general contractor.  The subcontractor filed suit against the general contractor and owner to perfect the lien and the owner asserted a claim against the general contractor.  The owner moved for default judgment against the general contractor and presented affidavits that the cost to complete the project exceeded the balance of contract owed to the general contractor, effectively nullifying the subcontractor’s lien on funds.  The subcontractor presented competing affidavits showing the owner completed the project for less than the balance of contract, thus preserving the subcontractor’s lien rights.  The trial court indicated the subcontractor did not have standing to challenge the default judgment against the general contractor on the owner’s claim and entered judgment in favor of the owner, effectively cutting off the subcontractor’s subrogation lien rights.  On appeal, the Court of Appeals affirmed the trial court’s ruling.  However, on discretionary review, the Supreme Court held that the general contractor’s default on the owner’s crossclaim was an “action” prejudicing the subcontractor’s lien rights under the mechanics lien statute and the subcontractor should have had an opportunity to prove its entitlement to a lien on funds owed to the general contractor.  Writing for the Supreme Court, Justice Newby indicated, “[subcontractor] presented an affidavit that raised a genuine issue of material fact concerning [the owner’s] liability to [the general contractor] based on a lien against [the owner’s] real property. Rather than consider this affidavit, the trial court focused on the default judgment for [the owner] against [the general contractor]. By its plain meaning, an action is ‘[a] thing done.’  Thus, [the general contractor’s] choice not to defend [the owner’s] claims constituted an “action” which prejudiced the rights of [subcontractor] contrary to the statutory mandate of N.C.G.S. § 44A-23.  [Subcontractor] should have an opportunity to present its evidence concerning the merits of recovery under its lien on real property.”

The Supreme Court recently ruled in the case of Winding Ridge v. Joffe that a single family use restriction in a set of restrictive covenants was a structural limitation as opposed to a restriction on the type of occupancy permitted within a dwelling.  The Supreme Court ruling overturns a July 2007 Court of Appeals case which had held that a group of baseball players were in violation of the usage restriction and prohibited the students from occupying the residence unless they were related by blood or marriage or otherwise structured in the same way as a traditional view of an American family.  Judge Geer dissented in the Court of Appeals case and maintained that the restriction was instead, a structural limitation, as opposed to a usage limitation.  In her dissent, Judge Geer wrote, “I would hold in this case that the restrictive covenant, as drafted, is only a limitation on the type of structure that may be placed on the property and not a restriction on the type of occupancy permitted within the dwelling.”  The case was appealed to the Supreme Court where the Supreme Court reversed the Court of Appeals majority decision and adopted Judge Geer’s dissent.

An article written by Joe Wall was recently featured in the Winter 2007 quarterly publication of the North Carolina Association of Defense Attorneys and in the December 17, 2007 edition of North Carolina Lawyers Weekly. The article examines recently enacted legislation that changed the common law rule regarding the admissibility of expert testimony concerning vehicular speed. For many years, the common law rule in North Carolina was that no one, including experts, could testify concerning the speed of a motor vehicle unless he or she had actually observed the vehicle in motion. The article explains the history of the common law rule, discusses the new legislation, and cites a 2007 Court of Appeals decision that deals with the issue of whether or not the rule change applies to accidents that occur prior to December 1, 2006. Joe Wall practices in the area of civil litigation with an emphasis on insurance defense and trucking law. You may read the article here.

Paul T. Flick, Jordan Price’s managing member, announced that the firm is pleased to welcome two new associates, J. Carr McLamb, Jr. and Lori Peoples Jones. Mr. McLamb practices in the area of civil and business litigation. Mr. McLamb has experience with pleadings, discovery, motions and legal research for cases at both the state and federal trial and appellate level. Mr. McLamb was valedictorian of the May 2004 graduating class of North Carolina State University and a member of Phi Kappa Phi Honor Society. He is licensed to practice in the State of North Carolina. Ms. Jones is an Associate of the Firm and focuses her practice on general civil litigation matters. She has experience with construction litigation and general liability defense matters. She is licensed to practice in North Carolina and the U.S. District Courts for the Eastern and Middle Districts of North Carolina.

Joseph Propst was elected to the Board of Directors for the Wake County Bar Association on December 4, 2007 at the Wake County Bar Association’s Annual Meeting. Mr. Propst will serve for a term of two years. Mr. Propst recently completed a stint as Chair of the North Carolina Bar Association’s Young Lawyers Division.

The firm welcomes E. Scott Bowers, IV to the practice. Mr. Bowers graduated from the University of North Carolina-Chapel Hill with a Bachelor of Arts in political science and philosophy in 2004. He received his Juris Doctor from the University of Alabama School of Law in 2007. Mr. Bowers primarily practices in the areas of business and corporate law.

The firm welcomes John Love to the practice. Mr. Love graduated from Clemson University with a Bachelor of Science in accounting in 2001. He received his law degree from the Campbell University School of Law in 2004, where he was among the inaugural group of students to complete the school’s Business Track curriculum and receive a degree with a concentration in business law. (more…)