There is a lack of consensus among lawyers about the correct time to schedule the mediation.  According to recent studies, delaying the mediation even for a short time decreases the likelihood of settlement.  There are many factors at work, but generally the investment in the litigation and the level of contentiousness between the parties grows as the case goes forward.

In a previous article, I reviewed the use of the pre-litigation mediation tool.  Whether required by contractual clauses or proposed by lawyers who know their clients can benefit from trying to resolve disputes before they incur the time, expense, emotion and distraction of litigation, early mediations are becoming much more of a “norm” than ever before.  Mediation is a reality in most civil superior court cases, so is it worth taking a shot to resolve a dispute before the parties dig deeper into their pockets and positions?

The obvious advantages to early mediation include the relatively small amount of time, fees and costs invested, with the potential of a prompt resolution.  Pre-litigation mediation has the advantage of the confidential nature of the proceedings as opposed to the public record of court proceedings.  The parties may not want to air their dirty laundry, or may not want their competitors, customers or employees to find out about the issues.

Even early in litigation, studies suggest that cases referred to mediation at an earlier stage are more likely to be settled than the cases that advanced to the pre-trial stage.  Preparation for an early mediation is key, as the parties have typically not conducted much discovery.  Lawyers may need to flesh out the key facts and provide evidence or documents and legal precedent for the mediation and should be prepared to share their positions.  A bonus is that, if the pre-litigation or early mediation is unsuccessful, the lawyers are better prepared to draft a complaint or answer without extensive additional investigation, or in some circumstances, the mediator can adjourn the conference until the necessary questions are answered in the case.

Paul T. Flick is a NCDRC Certified Superior Court Mediator at Flick Dispute Resolution in Raleigh, North Carolina

About Miller Monroe Holton & Plyler

At Miller Monroe Holton & Plyler, our attorneys have helped many clients resolve their disputes throughout alternative dispute resolution before a lawsuit is ever filed.  We recommend engaging experienced counsel if you are involved a dispute that may lead to litigation, so that you can effectively navigate the process.  Contact us today for a consultation, or click here to learn more about our practice areas.

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Some of the advantages to pre-litigation mediation are obvious and some are not.  The obvious advantages include the relatively small amount of time invested, with the potential of a prompt resolution, the limited attorney fees and costs incurred, and the possibility of avoiding the uncertainty of a judge, jury or arbitrator.  One less obvious advantage is the confidential nature of the proceedings as opposed to the public record of court proceedings.  The parties may not want to air their dirty laundry, or may not want their competitors, customers or employees to find out about the issues.   Another less obvious advantage is the possibility of protecting a business or personal relationship between the parties that a contested lawsuit could destroy.  A skillful mediator can facilitate communication designed to resolve the dispute, without creating on-going ill will that typically accompanies our adversary system in litigation.  It allows a problem to be solved without assigning a “win” or “loss” label.  And perhaps what should be obvious but is not always, the advantage of the parties fashioning their own remedy and being allowed to be creative in doing so.  There may be more ways to solve the issues than the exchange of money, if the parties’ interests and “hot buttons” in the dispute can be addressed.  Many business disputes can be better resolved without relying on an expert witness to determine the “value” of a claim.

Of course, the form and rules used in mediation matter.  Mediation is generally an informal process that encourages parties to reach a settlement agreement of a dispute through the use of a third party neutral.  The parties generally control the decision making as the mediator attempts to provide open lines of communication and understanding to resolve the dispute.  The Mediated Settlement Conference Rules under N.C. Gen. Stat. §7A-38.1 and the local rules establish the selection of the mediator, the timing, attendance, fees, the mediator’s duties and confidentiality, among other things.  It would be wise for the parties to adopt those Rules or to agree on the applicable rules prior to undertaking the mediation, particularly as to confidentiality and the memorialization and enforcement of any settlement that is achieved.

Preparation for a pre-litigation mediation is required.  In the usual Mediated Settlement Conference, the lawyers have often conducted discovery and usually know their cases well.  With pre-litigation mediations, the lawyers may need to flesh out the key facts and legal precedent in preparation for the mediation and share their positions.  Mediation is the best chance to help each side understand that there are two sides to every story.   The preparation for a pre-litigation mediation is also the time to manage the client’s expectations so that valuable communication and understanding can take place.  A bonus is that if the pre-litigation fails, the lawyer is prepared to draft a complaint or answer without extensive additional investigation.

Of course, for any mediation to be successful, the parties must want to resolve the issues between them and believe that mediation is a possible vehicle to do so.  Lawyers should be more open to the alternative dispute resolution available in pre-litigation mediation, without any preconception that it is a showing of weakness or strength, but rather embrace it as an opportunity.

Experienced Litigation Attorneys

At Miller Monroe Holton & Plyler, our attorneys have helped many clients resolve their disputes throughout alternative dispute resolution before a lawsuit is ever filed.  We recommend engaging experienced counsel if you are involved a dispute that may lead to litigation, so that you can effectively navigate the process. Contact us today for a consultation, or click here to learn more about our practice areas.

This article does not establish an attorney-client relationship and must not be construed as legal advice.

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Many clients are surprised to learn that obtaining a judgment is not the end of the story in litigation. Even lawyers fall into the trap of celebrating a large verdict or favorable judgment before a judgment is actually collected.  The often disappointing reality, particularly in commercial litigation, is that a judgment is sometimes only the tip of the iceberg.  The post-judgment collection process is often complex, extensive, and fraught with frustrations ranging from minor challenges, such as a judgment debtor’s relocation, to significant obstacles, including a judgment debtor’s insolvency, bankruptcy, or artful service-dodging.  At times, simply serving the judgment papers will rattle a party into writing a check.  However, the more common scenario is a prolonged hunt for assets that may ultimately leave the judgment creditor empty-handed.

Understanding the basics of judgment execution is critical in creating realistic expectations about the prospects of collection.  The first step is to ensure compliance with the judgment debtor’s rights.  Hearkening back to the foundational principles of property law, an individual’s right to use, enjoy, and retain his own property is sacred and spans all practice areas.  As such, the law allows a judgment debtor to designate certain property as exempt from a civil judgment.  All states have their own exemption laws that apply to a judgment debtor’s property located in that state.  In North Carolina, there are several items an individual can protect from the judgment’s reach. A few examples include:

• Up to $35,000 in a residence and burial plots. If the individual is unmarried and 65 or older, he or she may designate the same in an amount up to $60,000.
• Up to $5,000 in personal property – including household goods and appliances – and an additional $1,000, but not to exceed $4,000, for dependents.
• Up to $3,500 in a motor vehicle after deduction of valid liens or security interests.
• Healthcare aids such as wheelchairs and hearing aids.
• Up to $2,000 in professional books or tools.
• Life insurance policies where the sole beneficiaries are the spouse and/or children.
• Retirement accounts.

In the case of an individual judgment debtor (as opposed to a corporate judgment debtor), the judgment creditor is required by law to serve the judgment debtor with a formal notice of the right to designate exemptions.  From the date of service of the notice, the judgment debtor is allowed twenty days to designate exemptions.    The judgment creditor is entitled to challenge the exemptions by filing a Notice of Objection with the Court in the county where the case was heard. However, there are narrow circumstances in which the Court will uphold a judgment creditor’s objections, for instance, if the judgment debtor designated more property than the law allows.

Once the exemption period expires, the judgment creditor may file for the issuance of a writ of execution in each county in which the judgment debtor is believed to own assets.  In counties other than the county in which the judgment was entered, the judgment creditor must pay a small fee to transcribe the judgment in that county.  The Clerk of Court in each county in which the judgment has been transcribed will then issue the writ of execution.  The writ gives the Sheriff’s Office in each county the authority to execute the judgment, which entails formally serving the writ of execution on the judgment debtor and locating and seizing non-exempt property.  The Sheriff may clear bank accounts, seize motor vehicles, place a lien on a home, and collect personal items and effects.   Unlike other states, however, North Carolina does not allow a creditor to garnish wages except in certain rare situations (for example, child support).  If the judgment attaches to a motor vehicle or other personal property, the Sheriff’s Office may sell the property and use the proceeds from the sale to pay off all liens against it, including the judgment.  A judgment can also attach as a lien on a house, which will render it unsaleable until the judgment is satisfied.  This can give the judgment creditor leverage in forcing the judgment debtor to satisfy a judgment.  However, it is not always easy to find property that is unencumbered or valuable enough to satisfy a judgment.  Therefore, often the most efficient way to satisfy a judgment, aside from the judgment debtor writing a check, is to locate a non-exempt bank account with sufficient funds to satisfy the judgment.

A judgment is valid for up to ten years.  If a judgment debtor acquires new property in the counties in which the judgment has been entered or transcribed, the judgment will automatically attach to that property.  However, it is important to understand that a judgment may never be satisfied.  If the judgment debtor has several other judgments against him/her, any seizable assets will be subject to a priority battle among the various creditors.  Additionally, many corporate judgment debtors may dissolve, file bankruptcy, or transfer or hide assets, while debtors who are individuals may dodge the judgment by relocating to another state.  A skilled attorney will conduct the research necessary to assess the likelihood of collecting on a judgment and will advise you of these risks prior to initiating litigation.

Given the inherent challenges in judgment execution, it is critical to engage attorneys who will diligently and tenaciously pursue collection.  A skilled attorney will take an active role in judgment collection by routinely investigating the status of the judgment debtor’s assets and liabilities and communicating with the Sheriff’s Office in the relevant counties regarding what property might be available and subject to seizure.  At Miller Monroe, we understand that post-judgment collection requires as much diligence as litigating a case.  We have successfully collected on numerous judgments in and out of bankruptcy, and we will take an aggressive role in enforcing a judgment in your case.  We will also guide you through an honest and transparent cost/benefit analysis where we believe collection is unlikely. When hiring a litigator to handle your commercial litigation matters, we would strongly encourage you to inquire about the firm’s experience in enforcing judgments as part of your due diligence process.  It is critically important that your attorney be well-versed in litigating the underlying case, but also in pursuing assets necessary to fulfill a judgment in the event that you prevail.

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North Carolina has adopted the Uniform Enforcement of Foreign Judgments Act, which applies in all but a few states and sets forth the guidelines attorneys or judgment creditors must follow in executing on a foreign judgment. While the detailed legal requirements of the Uniform Enforcement of Foreign Judgments Act can be found at N.C.G.S. § 1C-1701, we have broken the process down into four simple steps:

1. File an authenticated copy of your judgment. Judgment creditors must obtain an original, signed, physical copy of the judgment to file in any North Carolina county in which the judgment debtor resides or has real or personal property.
2. Prepare and file an affidavit. Along with the judgment, the attorney or judgment creditor must file a sworn statement that the judgment has not been satisfied in full.
3. Serve the judgment debtor. The attorney or judgment creditor must serve the individual or corporate judgment debtor with a copy of the judgment, affidavit, and a formal notice that the judgment was filed in the applicable counties. The purpose of this step is to ensure that the judgment debtor has notice that the judgment may be executed on its North Carolina property, and to provide the judgment debtor with an opportunity to respond or object to the judgment.
4. Wait 30 days. The judgment debtor is afforded 30 days from the date of service to file a motion for relief from the judgment in the applicable North Carolina counties. If this happens, the judgment creditor will be required to petition the court for an order allowing execution of the judgment.  If not, the judgment creditor is permitted to proceed with executing the judgment in the normal manner.

While this process appears straightforward, it does not always proceed smoothly and can be fraught with various complications such as a judgment debtor’s bankruptcy or relocation to another state.  Particularly in the case of individual judgment debtors, the law imposes various restrictions on creditors in an attempt to protect the judgment debtors’ rights.  It can be difficult to weather unexpected challenges while trying not to run afoul of various sets of laws that protect debtors. As such, it is helpful to engage an experienced attorney to help you navigate the process.

At Miller & Monroe, we have the experience and skill to help you navigate these complicated waters.  Our Raleigh lawyers have enforced civil judgments throughout North Carolina for our business and individual clients.  If you need help collecting a business debt or consumer debt, or enforcing a judgment against a business or individual, please contact us today and setup a consultation to discuss your options.

 This article is not intended to constitute legal advice and does not create an attorney-client relationship.

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North Carolina adheres to a modified version of the American Rule.  The general rule in North Carolina is that each party pays its own fees, with a few narrow exceptions.  Those exceptions arise when the General Assembly enacts a statute specifically authorizing the recovery of attorney’s fees in particular cases.  Even so, these narrow exceptions apply only to claims arising under North Carolina law.  As such, state statutes will not allow recovery of attorneys’ fees in federal lawsuits unless there is a specific federal directive on point.

Here are a few examples of claims for which a statute provides for recovery of attorney’s fees:

• Misappropriation of trade secrets;
• Unfair and deceptive trade practices;
• Claims arising from a breach of a business contract that contains a reciprocal attorneys’ fees provision, meaning each party has the opportunity to recover attorneys’ fees under the contract;
• Retaliatory employment discrimination practices and wage and hour disputes;
• Claims arising out of a promissory note, conditional sale contract, or other “evidence of indebtedness” (including leases);
• Claims involving liens against real property;
• Injury and property damage claims involving an insurance company in which the total recovery is less than $20,000;
• Claims brought by an opposing party that prove altogether unsupported by law or fact;
• Claims involving domestic or family issues such as post-separation support, alimony, or child support; and
• Claims involving estate disputes, including will caveats.

Note: This is not an exhaustive list and each category above has additional limitations. 

Even if your claim falls into one of these categories, however, there is a risk that you will not recoup your attorneys’ fees.  Judges have discretion to deny or reduce the recovery of fees even if a statute allows it.  It is critical to keep this in mind before entering into expensive and protracted litigation, particularly if the amount in controversy is relatively small.

An experienced attorney can advise you of the risks and rewards of entering into litigation given the likelihood that you will not recover your fees.  At Miller Monroe, our goal is to offer you efficient, aggressive, and cost-effective representation, and we will help you make the best strategic and financial decision in resolving your legal dispute.

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Business North Carolina magazine honors Tar Heel lawyers by publishing Business North Carolina’s Legal Elite, a listing of the State’s top lawyers in business-related categories.  Winners are chosen not by the magazine’s editors, but by the state’s lawyers.  In developing the list, Business North Carolina made ballots available to more than 20,000 Tar Heel Lawyers and only 3% were selected for Legal Elite.

Jason A. Miller has litigation experience in state and federal courts throughout North Carolina and beyond.  He has represented Fortune 500 companies in complex business litigation matters, builders and developers in real property disputes, information technology companies in trade secrets disputes, partners in closely-held company disputes, investors in business deals gone awry, and dozens of cases in between.  Jason has litigated matters in more than a dozen counties in North Carolina and is licensed to practice in every state and federal court in North Carolina.  Most recently, Jason became licensed to practice law in his home state of New York.

Jeffrey R. Monroe commenced his legal career in the Raleigh office of a mid-sized insurance defense firm, where he handled a variety of litigation matters throughout the state, including defending individuals and companies in personal injury claims, construction defect claims, and business disputes.   Since joining Miller & Monroe in 2013, Jeff has litigated business disputes, estate and fiduciary disputes, personal injury claims, and a variety of other civil litigation matters.

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Business North Carolina magazine honors Tar Heel lawyers by publishing Business North Carolina’s Legal Elite, a listing of the State’s top lawyers in business-related categories.  Winners are choosen not by the magazine’s editors, but by the state’s lawyers.  In developing the list, Business North Carolina made ballots available to more than 20,000 Tar Heel Lawyers and only 3% were selected for Legal Elite (including Mr. Miller’s wife Kimberly Miller of Owens & Miller PLLC).

Jason A. Miller has litigation experience in state and federal courts throughout North Carolina and beyond.  He has represented Fortune 500 companies in complex business litigation matters, builders and developers in real property disputes, information technology companies in trade secrets disputes, partners in closely-held company disputes, investors in business deals gone awry, and dozens of cases in between.  Jason has litigated matters in more than a dozen counties in North Carolina and is licensed to practice in every state and federal court in North Carolina.

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 An individual suit is generally the more straightforward remedy.  In this type of action, you would bring suit, in your own name, against your partner for the damage and financial losses he has inflicted on you personally.  The typical legal claims in this sort of action might include breach of contract (assuming you have an operating or shareholder agreement); conversion, for your partner taking property that rightfully belongs to you; and breach of fiduciary duty, because as a officer/director/manger of the company,  you partner likely has a duty to act in good faith and in the best interests of the company.  Depending on the specific circumstances, you may also have claims for fraud and unfair and deceptive trade practices.  This later of these claim is  particularly useful because it allows you to triple your damages and also recover your attorney’s fees.

A shareholder derivative suit is more complex.  In a normal business operations, the board of directors has a duty to make sure that the corporate officers and other directors do not take any action to harm the corporation.  In small businesses (or “close corporations” in legal jargon), this sometimes does not happen because the officer or director harming the corporation is one of just a few officers or directors.  A shareholder derivative suit is the solution for situations where the bad actor is also in control of the company.  The derivative suit allows a shareholder who meets certain requirements to force the corporation to take action against officers or directors who are harming the corporation.

In order to file a derivative suit, you must have been a shareholder at the time the actions harming the corporation occurred, or you must have obtained your stock by operation of law from someone who was.  In addition, you must be able to fairly and adequately represent the corporation in enforcing its rights and send timely written notice to the corporation notifying it of the bad acts you seek to remedy.  The courts will dismiss your suit if any of these criteria are not met, or if a panel of independent directors (those not named in the suit) determines the action is not in the best interests of the corporation.  As long as all the requirements are complied with, the court should allow the corporation to take action against the officer or director who is harming the corporation, including filing any of the actions that could have been filed by an individual shareholder.

Whether pursuing the individual remedy, or going the derivative route, you will want to have an experienced attorney representing you in a suit against a business partner.  When faced with an intra-company dispute, it is critical to consult with an attorney that has experience litigating shareholder or partner disputes.  At Miller & Monroe, we have the experience and skill to help you navigate these complicated waters.  Our lawyers have prosecuted and defended these kinds of claims for our clients.  If you are having a problem with your business partner, please call today and setup a consultation to discuss your options.

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Few things are more frustrating than being frozen out of a company you helped build. Although it might seem like you have no recourse in this situation since the other two owners will always outvote you, North Carolina has long been at the forefront of protecting shareholders in a close corporation.

North Carolina Statute §55-14-30 allows for a shareholder to petition the courts to dissolve a corporation in certain circumstances. In your case, dissolution could be ordered as being reasonably necessary for the protection of your rights or interests. In looking to determine whether the corporation may be dissolved, the courts will use the “reasonable expectations” test.

Under the reasonable expectations test, a court will order a judicial dissolution if four criteria are met. First, you must show that you had some reasonable expectation of your ownership that was known or assumed by the other shareholders. This is usually an easy threshold to meet. Your expectations of having a say in running the corporation and being an employee of the corporation are expectations that courts have held qualify as a reasonable expectations. The second thing you must prove is that your expectations have been frustrated. Since you don’t currently have a say in the running of the corporation and are no longer employed there, you have also met this criteria.

Third, you must demonstrate that your exclusion has not been through any fault of your own and was largely due to circumstances beyond your control. Generally, if you have not done anything that would specifically harm the corporation, you can claim that your exclusion has not been through any fault of your own. North Carolina courts have held that shareholders who do not bother to learn the corporation’s business or attend company meetings can be excluded, as can shareholders who used their position to embezzle funds. However, the North Carolina Court of Appeals specifically held that a shareholder in a close corporation could not be prevented from receiving a share of the corporate profits because he had sexually harassed an employee. As long as you are not harming the corporation, and are at least making an effort to conduct its business, you probably satisfy the third part of the reasonable expectation test.

Finally, you must be able to show that the specific circumstances of your case entitle you to some relief. If you have been permanently frozen out, the courts will generally find that you are entitled to relief.

Once you have demonstrated that you are entitled to relief under the reasonable expectations test, the court will generally grant your petition for judicial dissolution of the corporation. However, this is not always in your best interest. The usual process calls for the corporate assets to be liquidated to pay off the creditors of the corporation. As with any judicially-ordered sale, you will be lucky to get half of what the assets are really worth. Fortunately, the corporation can avoid dissolution by buying your shares for their fair market value, an outcome that is most likely better for everyone. At Miller & Monroe, we have experience in dealing with corporate disputes and break-ups. We have helped individual investors and corporate entities across many industries. Give us a call today to speak with an attorney.

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