A new Labor Department rule attempted to make more employees eligible for overtime pay, but was halted by a federal judge. Under the rule, salaried workers who earn less than $59,000 a year must be compensated fairly for overtime work. Overtime pay of 150% of regular pay is not required to be paid to workers in certain capacities who make over a certain minimum. Those exceptions include executive, administrative, or professional capacities. To avoid paying the overtime, the employer must show that the worker qualifies in one of those exceptions and is paid over the designated minimum. During the Trump administration, the salary threshold was $35,568, above which employees do not have full protection. On July 1, 2024, the threshold increased to $43,888, and on January 1, 2025, it will rise to $58,656. The change could affect 4 million workers. As with the FTC non-compete rule, this rule was promptly challenged in court.

Well, never mind!

UPDATE: Within a few weeks of my initial blog posting, the rules changed yet again. This is typical for the modern regulatory environment, where every rule is challenged in court.

The DOL’s new overtime regulations were scheduled to go into effect on January 1, 2025. However, on November 15, 2024, a judge from the US District Court for the E.D. Tex invalidated it entirely.

With the court’s ruling, the number remains at the previous $35,568. There has been, and remains, an exemption for highly compensated employees making over $107,432, meaning those making that much need not be paid overtime. In between, whether employees are entitled to overtime depends on an assessment of factors relating to their job duties,

Given the recent election, it is likely that the DOL will not pursue an appeal. In any event, the injunction is likely to be in place for a significant period of time.

If you aren’t sure whether employees are entitled to overtime, seek legal counsel. The penalties for not paying an employee overtime he or she is entitled to are severe, and can reach back for years.

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Peter Juran brings over 30 years of litigation experience, having tried cases to verdict before juries, judges, and arbitrators. He advises clients on employment law, construction disputes, intellectual property, real estate, corporate governance, and trust and estate matters. Certified as a mediator, Peter also conducts Superior Court Mediated Settlement Conferences. Known for his strategic approach, he helps clients navigate complex disputes, whether through negotiation or litigation, to achieve the best possible outcomes.

 

In my Outside General Counsel Services practice I tend to review a fair number of contracts sent to my clients. Most of the agreements are preprinted forms from trade vendors, suppliers, or service providers and many tend to be pretty lengthy for the average person to wade through. I always appreciate my clients sharing these contracts with me and asking for my advice on the legal terms which are buried within the 17 or more pages of 8 point type which comprise the standard form contract. It means they are concerned about the legal terms that might be included in the contract and want a professional opinion on whether those terms are overreaching.

Many business owners tend to focus on the business terms disclosed in the contract, and if that matches their understanding of the “deal” they often gloss over all the “legalease” which makes up the remainder of the agreement. Unfortunately, that can be a costly mistake later in the life of the relationship between the parties when something goes wrong, and the client wants to know if it can “get out of the contract,” sue the other party for breach of the agreement or recover some damages it believes the other party to the contract has caused.

Whether you fall into the category of the business owner who seeks legal advice before you sign most contracts, or the business owner who tends to focus solely on the business terms, this article will help you hone in on those legal provisions in contracts which are vitally important, and most often result in disappointment if a contractual relationship later turns sour.

Every contract contains legal provisions regarding standard boilerplate terms and conditions. Those terms and conditions may include provisions which tend to protect the drafting party, to the detriment of the countersigning party. Here are a few contractual provisions all business owners should pay particularly close attention to when signing any contract for goods or services:

Limited Warranty Provisions – Many companies who sell goods or services, or both, will try to limit the warranties made respecting the goods they sell or the services they provide. There is nothing inherently wrong with limiting the kind of warranty that a business will provide to its customers. That said, you should always review the warranty provisions in a contact and make sure that provision does not completely eliminate all warranties. I am always surprised when a business presents a contract which says it provides no warranties whatsoever respecting the good or services provided under the contract. At a minimum, a business should warrant that it has good title to the goods it is selling and that the goods are fit for the purpose intended, or that the services provided will be performed in a workmanlike manner according to industry standards. If a business is not willing to give these minimum warranties, you may want to consider moving on to another vendor or provider.

Limitation of Liability Provisions – It has become quite common for business contracts to limit the liability of a contracting party. This can take the form of a waiver of certain types of damages, such as consequential damages, lost profits, special, incidental, indirect, exemplary, or punitive damages resulting not only from performance or non-performance under the contract, but also under tort theories for negligence, strict liability, warranty, indemnity or in equity. These provisions are often one-sided, meaning both parties do not have the same limitations and restrictions. At a minimum, you should insist that such provisions are mutual and limit the liability for both sides to the contract. Alternatively, liability may be limited by limiting the total monetary amount of the damages arising under the contact to some formula based upon the amount of product purchased or the dollar amount of services provided during the contact. For instance, the contract may limit the total recovery to the amount paid for the purchase price of a good involved in the dispute or the amount paid for the services involved in a dispute. These sometimes result in dramatic limitations of recoverable damages.

Statute of Limitations Reduction Provisions – Some contracts will attempt to reduce the amount of time you have to sue for breach of contract as compared to the amount of time permitted under state law. While this is not improper in business contracts, it is something to take note of, and resist if the temporal period proposed is unreasonable.

Indemnification and Hold Harmless Provisions – Indemnification provisions are some of the most complicated and often misunderstood provisions in contracts. Again, they are often drafted as one-sided agreements which only protect and indemnify the drafter of the agreement. Indemnification provisions may require a party to defend a lawsuit brought by a third party against the indemnified party arising out of the contract, indemnify the risk of loss and damages for claims and suits brought by a third party against the indemnified party, and hold harmless the indemnified party from the claims asserted against them by a third party resulting from the contract. You should insist on mutual indemnification under the contract. Often these provisions seek an indemnification regardless of the negligence of the indemnified party and only exclude from the indemnification gross negligence or willful and malicious acts of the indemnified party. Because of the varied and complex nature of these provisions, unless you clearly understand the obligations you are committing to, and the rights you are potentially waiving, you should seek advice of counsel on this critical legal provision in a contact.

Shipping Terms and Risk of Loss – When a contract involves the purchase of goods which will be transported through interstate or international commerce, you should always be certain of where the risk of loss is, should something happen to those goods during shipment. If title to the goods passes once the goods are delivered by the supplier to a carrier, then the risk of loss is on you the purchaser and you should make certain you have adequately insured the goods from the risk of loss during transit. Most contracts are drafted in this manner. Some contracts are drafted where title remains with the seller until the goods reach their destination and title does not pass until the goods are delivered. In those situations, the seller is responsible for the risk of loss to the goods. Pay close attention to shipping terms and when the risk of loss passes to you as the buyer.

Termination Rights – Is the contract for a set term of months or years? Does it renew automatically if notice of termination is not provided? Does notice of termination need to be provided by a certain number of days or months in advance of the termination date? Do you even have a right of termination? Are there rights to cure defaults, and if so, is notice required for exercising a right of termination? All of these are important considerations. Knowing and understanding how you get out of a contract is an important consideration. You should always seek a right to terminate a contract upon a limited notice to the other party.

Dispute Resolution – Does the contract contain restrictions on how disputes about the contract or performance under the contract are resolved? Many business contracts contain mandatory arbitration provisions or mediation provisions to replace, or precede traditional litigation in state or federal court. You should know your rights and responsibilities under an alternative dispute resolution provision, which may include paying or sharing the cost of the mediation or the arbitration proceeding, a shifting of attorneys’ fees incurred by the parties, or binding decisions by tribunals other than a court of law. In addition, many such contracts include waivers of a right to a jury trial, a required governing law of a state other than the state in which you conduct your business, and a required venue for resolution of the dispute in another state. Read these provisions and make sure you understand the implications of agreeing to the form of dispute resolution provided in the contract.

While all of the provisions of a contract have importance and serve a specific function, these provisions are critical to understand and the most frequently bemoaned or litigated when a contractual relationship falls apart. Understanding them on the front end, and protecting your interests to level the playing field will save you time, money and headache down the road. Take some time to read these provisions, and if necessary, seek the advice of counsel on what the provisions mean, and how they will impact your business.

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Ashley Rusher brings more than 35 years of experience in business bankruptcies, distressed debt workouts, problem loan recovery, real estate title litigation, and commercial litigation. She delivers practical, results-oriented solutions to clients, representing financial institutions, trade creditors, bankruptcy trustees, and businesses in complex matters such as debt restructuring and title curative litigation. As Outside General Counsel, Ashley provides trusted, business-centered legal advice to help clients achieve their goals.

 

 

 

Employers are often baffled when an employee requests “reasonable accommodations” under the Americans with Disabilities Act, popularly called the ADA. As described by Illinois Senator Tammy Duckworth, the ADA “allows persons with disabilities the opportunity to participate in the world around them.” One major section of this Act requires employers to provide “reasonable accommodations” to workers with disabilities. But what does that mean to an employer?

If an individual with a disability requests accommodation, the employer is required to enter into good faith discussions to determine if an accommodation is needed and, if so, what will accomplish the goal. A reasonable accommodation is broadly defined as a change in a working environment or the hiring process that allows qualified individuals with a disability to complete the essential functions of a job while not having the employer suffer an undue hardship. For example, a reasonable accommodation can be a wide range of things, such as adjusting work schedules or equipment, or changing the workplace environment. However, with such an expansive definition, it can be challenging to determine which accommodation provides the best relief for a situation. Sometimes, “outside the box thinking” is needed to find a creative solution to the employee’s needs.

To help address these issues, the U.S. Department of Labor has recently released an online tool called the “Situations and Solutions Finder.” This resource provides more than 700 real-life examples of reasonable accommodations shared by the Job Accommodation Network, a service offered by the Department’s Office of Disability Employment Policy. Such reasonable accommodations can be filtered by disabilities, limitations, and/or occupations.

While accommodations are unique to each individual, the Situations and Solutions Finder shows common patterns taken by workplaces and presents accommodations that have been considered reasonable for employers to satisfy. Both employers and workers can use this tool as a valuable starting point when exploring potential solutions to best support an employee with a disability. Ultimately, while the Situations and Solutions Finder may not provide a one-size-fits-all answer, it can help guide employers and workers toward the right path in identifying reasonable accommodations for the workplace.

The Situations and Solutions Finder can be accessed here.

If your employee has requested accommodations, be sure to treat the request seriously and respectfully and, if needed, seek legal counsel to ensure that the request is handled in compliance with the law.

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Taylor Gibbs joined Blanco Tackabery in 2024 as part of the Civil Litigation Practice Group. She earned her B.A. in political science, summa cum laude, with a minor in religious studies from Appalachian State University and her J.D. from Wake Forest University School of Law. During law school, Taylor served as an executive member of Wake Forest’s Black Law Students’ Association and represented the school in regional and national moot court competitions as a member of the Jimmy Quander Moot Court Team.

 

 

 

Many employers try to protect their business territory and customer base by imposing restrictions on employees. Most popular among these are non-disclosure agreements (“Don’t use or share my trade secrets!”), non-solicitation of customer agreements (“Don’t steal my customers!”) and non-competition agreements (“Don’t even go into the same business as me!”). One of these, non-competition agreements, has been under fire from a Federal Trade Commission rule which would bar the enforceability of most of those agreements. The few that would remain valid are limited to high level executives making more than $150,000 per year, or those that are part of the sale of a business.

Many people, including the Biden administration, have long felt that employers overreach in restricting their employees’ ability to earn a living in their field of expertise after leaving the employer’s business. Indeed, North Carolina courts have long imposed limitations and restrictions on the enforceability of such agreements. They require the employer to prove the agreement’s reasonableness as to time and territory, among other restrictions. This has made enforcing these agreements both hard and unpredictable for many years. Still, the agreements remain a popular approach for many businessmen. The new FTC rule, if allowed to go into effect, would at least simplify things, but not in a way that employers will like.

Here are the basics: The Federal Trade Commission published the new rule which declares it to be an unfair trade practice to even include such restrictions in their employee contracts. The rule was set to take effect in early September unless “stayed” by a court. Several business organizations, including the U.S. Chamber of Commerce, sued over the rule, and at least one court has put it on hold until it resolves a lawsuit on its validity. On August 20, 2024, in Ryan, LLC v. FTC, a U.S. District Court held that the FTC’s non-compete rule is unlawful and ordering that the FTC’s non-compete rule could not take effect on September 4, 2024, or thereafter. This ruling prevents the FTC from enforcement of the rule against any company nationwide.

At least two other cases challenging the rule have also gone poorly for the FTC. For now, it appears that it will be a long time, if at all, before the rule can take effect. 1 Then again, it appears that the National Labor Relations Board may join the fray. On October 7, 2024, its General Counsel issued a memo opining that broad non-competes act chill the employees’ right to “concerted activity” and may violate the National Labor Relations Act. Stay tuned!

Regardless of the FTC rule status or the NLRB position, individual employees can always challenge the reasonableness of the restrictions imposed on them by virtue of their agreements, which can pose an expensive and risky threat to employers. The contracts in question are assessed on an individual basis, and where the employer can convince the court that the agreement is narrowly tailored to protect the employer’s legitimate interests, they should survive. This is not always easy, however.

Fortunately, other alternatives are available. Non-solicitation clauses, which only prohibit the “raiding” of the employer’s customers, are, as a practical matter, already more narrowly drawn that non-competition clauses. Further, it is easier for the employer to identify and prove to a court that the ex-employee is taking advantage of information obtained while employed— valuable as both a legal and psychological distinction when advocating for enforcement of a restriction. These clauses are, therefore, easier to enforce in North Carolina anyway, and if they can accomplish the employer’s goals, they are preferable to a blanket ban on competition. Likewise, North Carolina courts are much more open to enforcing non-disclosure agreements, if the information protected is truly proprietary “trade secret” type information.

Employers who feel the need to restrict employees’ ability to attack their business upon departure should definitely consult counsel to ensure that the strongest restrictions which are enforceable are put into place.

1 However, the FTC retains the ability to go after individual cases where the employer’s actions are deemed to be anti-competitive activity, and it may pursue enforcement actions on a case-by-case basis. The FTC considers non-compete agreements to be violations of Section 5 of the Federal Trade Commission Act (FTCA), which bans “unfair methods of competition” and “unfair or deceptive acts or practices.” The FTC has the power to review and enforce that law.

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Peter Juran brings over 30 years of litigation experience, having tried cases to verdict before juries, judges, and arbitrators. He advises clients on employment law, construction disputes, intellectual property, real estate, corporate governance, and trust and estate matters. Certified as a mediator, Peter also conducts Superior Court Mediated Settlement Conferences. Known for his strategic approach, he helps clients navigate complex disputes, whether through negotiation or litigation, to achieve the best possible outcomes.

 

It is a common practice for landlords to check the criminal background of potential tenants before approving or denying an application. Most landlords, relying on the traditional viewpoint holding that criminal history may reveal the character of a person and indicate an inclination toward future criminal acts, check a potential tenant’s criminal background to minimize the risk of a future tenant creating health and safety risks or damaging the leased property. Despite the commonness of the practice, landlords may not realize that they are potentially exposing themselves to liability under the Fair Housing Act and related laws by basing decisions on applicants’ criminal background.

The data the Department of Housing and Urban Development (“HUD”) has reviewed shows that Black and Brown persons are arrested, charged, convicted, and incarcerated at a disproportionate rate compared to other racial groups in the United States.1 There are a multitude of reasons for this disparity, including “The New Jim Crow”2 and discriminatory policing. Regardless of the cause, those statistics indicate Black and Brown persons are more likely to have a criminal background than white persons. As a result, since Black and Brown persons have more criminal records than white persons, using criminal background to exclude people from housing, jobs, or anything will result in more Black and Brown persons being excluded than those from other racial groups.

That is a potential problem under the Fair Housing Act, which prohibits discrimination in the rental context on the basis of seven protected classes, including race. Discrimination under the Fair Housing Act can take several different forms. One form of discrimination is based on the disparate impact theory, which covers situations where persons belonging to a protected class are disproportionately impacted by a housing policy or practice. When there is no legitimate reason supporting the policy or practice that creates the disproportionate impact, the Fair Housing Act will deem the policy or practice discriminatory.

Since excluding potential tenants on the basis of criminal activity will affect more Black and Brown persons than other racial groups, it has a disproportionate impact on Black and Brown persons. Accordingly, landlords must have a legitimate reason to support the exclusion. Otherwise, the landlord may face liability under the Fair Housing Act.

HUD has been heavily focused on how housing providers use criminal background in housing decisions for many years. HUD recently issued new guidance on this issue, titled GUIDANCE ON APPLICATION OF THE FAIR HOUSING ACT TO THE SCREENING OF APPLICANTS FOR RENTAL HOUSING on April 29, 2024. In that guidance, HUD reiterates that overly broad criminal background screenings that have unjustified disparate impact violates the Fair Housing Act. In light of this guidance, it is important for housing providers to give some consideration to how they are screening potential tenants.

To comply with the Fair Housing Act, landlords who use criminal background screening should consider developing a written policy and procedure governing the use of criminal history in rental decisions. Recent HUD guidance and proposed rules indicate HUD believes an individual assessment of applicants’ criminal background is required in all cases. Accordingly, a landlord’s screening policy should define and explain how the landlord will decide each case. At a minimum, the policy should clearly define and state the categories of convictions that will affect a rental decision. For instance, does the landlord only want to exclude people for violent crimes? What about drug crimes? The policy must also clearly state how the decision to rent to someone will be affected. For instance, will there be an automatic denial for some crimes and discretionary denial for other? Furthermore, the policy should establish timeframes for how long a conviction will affect decisions to rent to a person. For instance, a landlord might decide to have a longer period of exclusion for murder than for a simple possession of marijuana charge. Most importantly, each exclusion, whether actual or potential, must be justified by a credible threat to health and safety. Arbitrary and overly broad exclusions are particularly problematic under the Fair Housing Act.

Now more so than ever it is important for landlords to put some thought into how and why they are making rental decisions based on criminal background. The experienced attorneys at Blanco Tackabery stand ready to provide counsel for making those difficult decisions or designing a policy to assist in making them.

1 See HUD, GUIDANCE ON APPLICATION OF THE FAIR HOUSING ACT TO THE SCREENING OF APPLICANTS FOR RENTAL HOUSING, pg. 21 (April 29, 2024), Guidance on Application of the Fair Housing Act to the Screening of Applicants for Rental Housing (hud.gov); see also HUD, GUIDANCE ON APPLICATION OF FAIR HOUSING ACT STANDARDS TO USE OF CRIMINAL RECORDS BY PROVIDERS OF HOUSING AND REAL ESTATE-RELATED TRANSACTIONS (April 4, 2016), Office of the General Counsel (hud.gov).

2 Michelle Alexander popularized the term “The New Jim Crow” with her 2010 non-fiction book with that title. As a concept, The New Jim Crow refers to the theory that the United States’ criminal justice system is a technology used to exert racial social control and which has an effect very much like the original Jim Crow laws of racial segregation.

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Henry Hilston employs his experience in state and federal litigation as an asset in his representation of affordable and conventional multifamily property owners and managers. In that practice, he advises property management companies on a wide range of issues, including evictions and other landlord-tenant disputes, VAWA, the Fair Housing Act, and compliance issues under federal and state affordable housing programs, such as the Low-Income Housing Tax Credit (LIHTC) program and HUD and USDA-Rural Development rental subsidy programs. He also assists those clients with the preparation, review, and revision of management documents, including tenant selection plans, management agreements, and leases.

 

 

An easement is the right to make use of land owned by another person. For example, an easement could give a person the right to maintain an unimpeded scenic view from his property by restricting a neighboring landowner’s right to make use of her property in such a way that would impair her neighbor’s view. In this example, the first property owner’s right in the land of his neighbor is, essentially, a “negative right” that operates as a restraint on the second property owner’s right to make free use of her own property, rather than an “affirmative right” for the first property owner to make some specific use of the second property owner’s property himself.

However, when most people think of easements, they probably think first of access easements, which typically exist to provide a landowner with a means of access to his property from a public road over his neighbor’s land. There are a number of ways that such easements might exist. They could be expressly granted or reserved pursuant to a recorded instrument, such as a deed, or they might arise by implication or operation of law, where, for example, title to a single tract of land is subdivided into two tracts with the severance leaving one of the subdivisions without access, in which event a so-called “easement by necessity” might arise in favor of the owner of the landlocked tract.

One way that an easement might arise, which has existed under North Carolina law for many years but is not frequently used, is through a statutory cartway proceeding. These proceedings are governed by Article 4 of Chapter 136 of the North Carolina General Statutes, which provides in pertinent part that, if a person is engaged or preparing to engage in certain activity, including cultivation for agricultural purposes, timbering, quarrying for minerals, or the operation of an industrial or manufacturing plant, but the property on which such activity is to be conducted lacks access from a public road or other adequate legal access, other than from a navigable waterway, then he can institute a special proceeding before the Clerk of Superior Court to establish his entitlement to a statutory cartway over the land of a neighboring property owner.

Upon filing such a proceeding, all the landlocked person needs to do is demonstrate to the Clerk that it is necessary, reasonable, and just that he be granted the requested cartway. Once the landlocked property owner establishes his entitlement to the cartway, the Clerk then “appoint[s] a jury of view of three disinterested freeholders to view the premises and lay off” the course of the cartway “and assess the damages the owner or owners of the land crossed may sustain thereby.” N.C. Gen. Stat. § 136-69(a). The three-person “jury of view” appointed by the Clerk must then make a written report of its findings and recommendations to the Clerk. Any party to the special proceeding may then file exceptions to the jury’s report. Any such exceptions are heard and determined in the first instance by the Clerk, who “may affirm or modify said report, or set the same aside and order a new jury of view.” Id. Any party who is aggrieved by the Clerk’s final order or judgment “may appeal to the superior court for a jury trial de novo on all issues including the right to relief, the location of [the] cartway, . . . and the assessment of damages.” N.C. Gen. Stat. § 136-68. Once the report is approved and finalized, and any appellate rights are exhausted, the party who has been granted a cartway must pay into the Clerk’s office the amount of damages assessed in order to acquire the legal right to install and utilize the cartway that he has been awarded.

The statutory process for acquiring a cartway has existed since at least the 19th century, as a modern reader might surmise from the use of the archaic terminology, including for example, the requirement for the three jurors on the “jury of view” to be “disinterested freeholders.” While the applicable statutory regime has undergone relatively little legislative updating since its original enactment, there have been occasional calls for modernization, including calls for changes that would make cartways more readily obtainable. As development continues to increase across North Carolina, along with concomitant opportunities for development to be stymied by lack of legal access to otherwise developable properties, perhaps calls for the modernization of this little utilized means for acquiring access may renew or grow more sustained.

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Chad Archer brings extensive expertise in state and federal litigation and was recently named to Business North Carolina’s Legal Elite Honorees 2024 as well as the 2024 edition of The Best Lawyers: Ones to Watch® in America. In his civil litigation practice, he advises clients on a wide range of issues, including trusts and estates, appeals, contract disputes, commercial and corporate disputes, complex business litigation and real property disputes.

 

 

Sometimes a property owner or developer will need special permission from a local board to undertake a project in compliance with “land use” laws. In North Carolina, when that permission requires the board to apply subjective legal standards to the facts presented, a “quasi-judicial proceeding” is required. Many applicants in land-use requests – and even many boards, especially in small towns – are not familiar with the term “quasi-judicial,” much less its ramifications. But these types of proceedings create hazards for the unwary that can make or break a desired outcome.

Land-use decisions in North Carolina fall into one of a few categories. For example, whether a tract of land will be rezoned from one type of zoning to another is usually a “legislative” decision. In other words, it’s basically a political decision that a town council will make, based whether the council thinks it’s a good idea. Council members will decide the matter, for the most part, based on their own judgment and opinions that they receive from citizens. Another category of land-use decision is an “administrative” decision. For example, a town may have a rule that involves objective criteria – such as a maximum height for a building, or a minimum setback from the road. Typically, a town employee can decide whether the rule is satisfied, since there should be little debate about criteria that are readily measurable or confirmable. In between legislative decisions and administrative decisions are quasi-judicial proceedings, in which a board will hear evidence regarding the request and decide whether the evidence meets the subjective standards for approval. For example, a board may be authorized to grant a request only upon a finding that it does not “materially endanger public or health or safety” or “substantially injure the value of adjoining property.”

The type of board that will hear a quasi-judicial proceeding is often a Zoning Board of Adjustment, but may be the Town Council or Planning Board, depending on the town’s local “ordinances.” Often, the board may consist of volunteers with no legal expertise or significant training in planning and land development. In a quasi-judicial proceeding, the board will be required to take evidence in accordance with the law and then weigh the evidence to determine whether a request meets the standards in the ordinance. In short, the board plays a role very similar to a judge in court; thus, the term “quasi-judicial.”

Quasi-judicial proceedings are used for decisions such as: variances (where the applicant seeks an exception to a land-use rule); special use permits (where a certain type of “use” is allowed in a zoning district only with special permission); certificates of appropriateness (where a property can only be modified in a way that is consistent with the era of a historic neighborhood); and appeals of decisions by town staff. Quasi-judicial proceedings will involve a hearing that occurs after notice is provided to the applicant and other directly affected property owners. Both proponents and opponents of the request should come to the hearing well-prepared. Important considerations include:

· Standing: Whether you are a party with “standing” will determine the extent of what you can do at the hearing. If you’re not a property owner or resident in the vicinity of the property in controversy, you might not have standing.

· Standards: What are the applicable standards that must be met for the request to be approved? Don’t develop a strategy until you know the rules of the game (which will may involve researching the town ordinances).

· Experts: To prove (or disprove) the applicable standards, will you need an expert witness, or can a layperson provide an opinion? In particular, an expert may be needed on issues such as whether a project will decrease neighborhood property values or create an unsafe amount of additional traffic.

· Procedure: What are the details of how the hearing will be conducted? What opportunities are there to present evidence, conduct cross-examination, make objections, or argue in support of your position?

· Appeal: How and when must any appeal be undertaken?

Attending a quasi-judicial proceeding without being prepared for a “court-like” experience is a mistake. While the board may be generous with an unprepared applicant in a small unopposed matter, adequate preparation and knowledge of the quasi-judicial process are crucial in a matter that is hotly contested or has high financial stakes. Regardless of whether you support or oppose the request, obtaining counsel with experience in representing local governments and/or developers in land-use matters is a sound investment.

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Elliot Fus has served as town attorney for several North Carolina municipalities and has represented private parties in land use matters. He is a member of the N.C. Association of Municipal Attorneys and leads the firm’s Litigation Practice Group.

Lenders that provide motor vehicle financing typically place a lien against the title to a motor vehicle in order to secure payment of the financing. If a borrower fails to make payments, or otherwise defaults under a financing agreement, the lender generally has the right to repossess the motor vehicle to protect its interests. However, under well-established North Carolina law, a lender may not “breach the peace” when exercising the right to repossess a motor vehicle. A breach of the peace can arise if a lender cuts a lock to open a gate to gain access to the motor vehicle or if a repossession occurs over the objection of a borrower who is present when the motor vehicle is repossessed. How can a lender faced with these circumstances repossess a motor vehicle without breaching the peace?

Fortunately, North Carolina statutes provide a procedure that assists a lender in this situation. The procedure is called “claim and delivery” in North Carolina. In other states, the procedure is called a replevin action. In brief, claim and delivery is a pre-judgment procedure that permits a lender to obtain an Order of Seizure from the Clerk of Court in the county where the motor vehicle is located directing the Sheriff of the relevant county to seize the motor vehicle from the borrower. The lender is required to file a complaint alleging a breach of the financing agreement and requesting an order of possession for the motor vehicle and a money judgment for the amount due under the financing agreement. A hearing before the Clerk of Court is scheduled and the borrower must be provided at least 10 days’ notice of the hearing. At the hearing, if the Clerk finds that there is a default under the financing agreement and that the lender is entitled to possession of the motor vehicle, the Clerk will issue an Order of Seizure. After the Sheriff seizes the motor vehicle, the Sheriff has to hold the motor vehicle for three days before releasing it to the lender. This three-day holding period permits the borrower to post a bond to protect the lender’s interest and regain possession of the motor vehicle. If no bond is posted, the motor vehicle is released to the lender, who is free to liquidate it consistent with its financing agreement and state law.

With motor vehicles becoming more and more expensive, lenders must look carefully at options for preserving their rights in collateral for their financing contracts. Motor vehicles depreciate rapidly and are subject to damage when being used. One advantage of a claim and delivery is that it is a prejudgment remedy, meaning that it can be pursued as soon as a lawsuit is filed. It should be noted that the claim and delivery process is not limited to motor vehicles. It can be used whenever possession of personal property is in issue.

Consulting an attorney with extensive experience in collateral protection procedures is prudent. The attorneys in Blanco Tackabery’s Litigation Practice Group have handled hundreds of claim and delivery actions throughout the State of North Carolina and can capably assist a client in protecting its interest in personal property collateral.

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James Vaughan has more than 30 years of experience and primarily devotes his practice to representing financial institutions, companies and individuals as creditors in bankruptcy cases, in state and federal court litigation and in commercial loan workouts. Jim has represented secured lenders, unsecured lenders, landlords, equity interest holders and other parties in interest in many Chapter 11 cases as well as thousands in Chapter 7 and Chapter 13 cases.

Recent changes to North Carolina guardianship law strengthens the rights of respondents and wards, while potentially increasing the burden on petitioners, guardians, guardian ad litem, and others. 

In 2021, The New York Times released the headline-seizing documentary film Framing Britney Spears. The film explored the so-called “#FreeBritney Movement”—a term used to describe a loosely organized effort by Spears’ dedicated and vocal fanbase to end a California conservatorship that empowered Spears’s father, as conservator, to exercise significant control over her personal and financial affairs. A similar grassroots movement arose among the fans of former Nickelodeon star Amanda Bynes and culminated in termination of a nearly decade-long California conservatorship that likewise constrained keys aspects of her individual decision-making.

California is, however, hardly alone among jurisdictions that prescribe procedures and mechanisms for wresting control from individuals deemed incapable of managing aspects of their lives. In North Carolina, such arrangements are called guardianships, rather than conservatorships. Effective January 1, 2024, several key legislative changes altered aspects of the statutory regime governing North Carolina guardianships. Many of these changes appear to be motivated by a desire to ensure that respondents in guardianship proceedings (i.e., those who may ultimately be adjudicated as incompetent) are better apprised of their rights and subject to fewer limitations on their individual liberty.

For example, the guardianship statutes now make clear that a person will not be adjudicated as an incompetent and subjected to a guardianship “if, by means of a less restrictive alternative, he or she is able to sufficiently (i) manage his or her affairs and (ii) communicate important decisions concerning his or her person, family, and property.” This idea was implicit in the law of guardianship prior to the recently enacted legislative changes but is now made explicit. The statute also includes an express definition of the term “less restrictive alternative”:

An arrangement enabling a respondent to manage his or her affairs or to make or communicate important decisions concerning his or her person, property, and family that restricts fewer rights of the respondent than would the adjudication of incompetency and appointment of a guardian. The term includes supported decision making, appropriate and available technological assistance, appointment of a representative payee, and appointment of an agent by the respondent, including appointment under a power of attorney for health care or power of attorney for finances.

In other words, and as but one example of a potential “less restrictive alternative,” if a person executed a durable power of attorney prior to experiencing any issues impacting his or her competency, the existence of that durable power of attorney might be viewed as obviating the need for an adjudication of incompetency and the appointment of a guardian of the estate or general guardian for the principal under the power of attorney, even if the person might otherwise meet the criteria to qualify as an incompetent adult.

The new law also requires the petition in any guardianship proceeding to affirmatively include a “statement identifying what less restrictive alternatives have been considered prior to seeking adjudication and why those less restrictive alternatives are insufficient to meet the needs of the respondent.”

Another significant update concerns the respondent’s right to receive a mandatory, conspicuous notice that advises the respondent, without limitation, of the following:

– The right to counsel of choice;

– The right to be represented by a court-appointed guardian ad litem;

– The right to receive notice of any hearings and copies of documents filed in the proceeding;

– The right to gather and present evidence;

– The right to a hearing before being adjudicated as incompetent;

– The right to have a jury determine the issue of competency;

– The right to ask for a non-public hearing;

– The right to communicate his or her wishes regarding the exercise of any of his or her rights and the selection of any potential guardians; and

– The right to appeal.

A respondent is also now entitled to be notified about the rights he or she will have in the event that a court ultimately adjudicates the respondent as an incompetent ward, including, without limitation, the following:

– The right to a qualified and responsible guardian;

– The right to request that the administration of the guardianship be transferred to a different county of venue;

– The right to request that he or she be restored to competency;

– The right to request a review or modification of the guardianship; and

– The right to vote.

A guardian ad litem appointed to represent the respondent’s best interests must explain these rights to the respondent if the respondent requests such explanation during the guardian ad litem’s personal visit with the respondent. In any proceedings following an adjudication of incompetency in which a guardian ad litem is appointed for the incompetent ward, the guardian ad litem is likewise under a continuing, mandatory, affirmative duty to explain these rights. Finally, the written notice advising the respondent of these rights mut be served on the ward alongside the petition and notice of hearing.

In keeping with the general tenor of many of these updates, the law also now expressly states that, in the case of adults, “guardianship should always be a last resort and should only be imposed after less restrictive alternatives have been considered and found to be insufficient to meet the adult’s needs.”

If you need legal assistance in instituting a North Carolina guardianship proceeding as a petitioner or defending against a proceeding or seeking modification of an existing guardianship as a respondent, ward, or other interested person, attorneys at Blanco Tackabery may be able to help you navigate the complexities of this unique legal area. Similarly, if you have been appointed as the guardian for an incompetent ward and need advice concerning administration of a guardianship and compliance with your fiduciary obligations, please reach out to us today.

 

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Chad Archer brings extensive expertise in state and federal litigation and was recently named to Business North Carolina’s Legal Elite Honorees 2024 as well as the 2024 edition of The Best Lawyers: Ones to Watch® in America. In his civil litigation practice, he advises clients on a wide range of issues, including trusts and estates, appeals, contract disputes, commercial and corporate disputes, complex business litigation and employment disputes.

 

 

When the NCAA adopted interim rules allowing college athletes to profit from name, image and likeness (“NIL”) in July 2021, it called upon Congress to implement NIL laws at a national level. Nearly three years into the NIL era, that hasn’t happened. Meanwhile, the NCAA had a busy start to 2024, imposing NIL-related sanctions against Florida State University, introducing new transparency requirements for NIL deals, and being sued by several states over its NIL policies.

To understand the current NIL landscape, let’s back up. NIL regulation currently flows from three sources: state government, the NCAA, and schools themselves. Athletes, donors, and businesses should be familiar with each level of regulation to ensure their NIL deals don’t put them–or schools they support– at risk of serious penalties.

North Carolina’s NIL Law

North Carolina’s current NIL law was established via Executive Order No. 223, signed by Governor Cooper on July 2, 2021. The important points to know are: (1) schools cannot make NIL deals directly with student-athletes; (2) NIL deals cannot be used as a direct inducement for a student-athlete to enroll or remain enrolled at a school, and (3) NIL deals cannot be conditioned on performance in competition.

These restrictions are intended to preserve the amateurism of college athletics by ensuring NIL does not create a “free agency” of the kind we see in professional sports, where teams attract players using high salaries and performance-based bonuses. You’ll find that much of the current NIL regulatory scheme was made with that same intent. That notwithstanding, the Order does allow student-athletes to hire agents, so long as they comply with the same state and federal laws that apply to agents for professional athletes.

Finally, North Carolina also gives discretion to its own colleges and universities to establish additional regulations, should they choose to. More on that later.

NCAA Rules

The next layer of regulation comes from the NCAA’s interim rules. The NCAA’s interim policy and supplemental guidance hit many of the same notes as North Carolina’s law – including that NIL opportunities may not be used to induce recruits to attend a particular school.

The NCAA also emphasizes that compensation without quid pro quo is prohibited. Accordingly, NIL agreements must contain expected deliverables, such as endorsement and marketing activities, that the student-athlete has promised in exchange for compensation. In other words, businesses cannot simply write a check with “NIL” in the memo line. It should be clear how the student-athlete’s name, image, and likeness will be used.

Like North Carolina’s law, the NCAA prohibits compensation based on athletic participation and achievement. So, NIL agreements cannot have any of the performance-based incentives that have become so common in professional sports, such as bonuses for reaching thresholds for innings pitched, rushing yards, or games played.

In January, the NCAA concluded its first major case for NIL violations, sanctioning Florida State University after an FSU assistant coach arranged a meeting between a recruit and an FSU booster, during which the booster extended a 1-year, $180,000.00 NIL offer–contingent on transferring to FSU. Following an investigation, the NCAA suspended the coach for three games. Perhaps more damaging, FSU was required to “disassociate” from the booster for three years. Disassociation means the booster cannot provide assistance (financial or otherwise) to FSU, nor can the booster receive any athletics benefit from FSU which would be unavailable to the general public.

The NCAA’s Division I Council also unanimously adopted new disclosure requirements in January. Beginning August 1, 2024, student-athletes must disclose information to their schools regarding all NIL agreements exceeding $600.00 in value. They must disclose the involved parties, terms of the agreement, and any compensation for the student athlete’s service provider (agent, financial advisor, etc.) within 30 days of signing the deal. The NCAA will also be developing standardized contracts and recommended, but not mandatory, contract terms.

While the NCAA’s NIL rules are harmonious with North Carolina’s, that’s not the case everywhere. The attorneys general of Tennessee and Virginia filed suit against the NCAA this week to abolish the NCAA’s NIL regulations on antitrust grounds. The lawsuit follows the NCAA’s investigation into the University of Tennessee’s recruitment of a five-star quarterback from California.

School-Specific Rules

The final layer of regulation comes at the school level. North Carolina’s NIL law gives colleges and universities discretion to prohibit certain deals for reasons specific to that school. For example, schools may prohibit NIL deals which conflict with an existing contract of the institution. So, because NC State has a deal with Adidas for its athletic uniforms, it could prohibit an athlete from signing an NIL deal with Nike, or another competitor.

Schools may also limit the categories of brands a student athlete may enter NIL agreements with. For example, the University of North Carolina at Chapel Hill’s policy prohibits athletes from engaging in NIL deals involving alcohol, gambling, or adult entertainment.

Schools may limit compensation during official team activities and events—probably to prevent a student-athlete from attempting, and brands expecting, promotion of their sponsor’s brand during a game or press conference.

Schools may also require that NIL deals are commensurate with fair market value. So, if an athlete is offered a million dollars for a de minimis obligation, schools have the authority to tamp down. However, that’s something schools are clearly disincentivized to do as it could put them at a competitive disadvantage compared to schools who don’t have the same requirement.

Institutions may also limit NIL pertaining to the school’s intellectual property. For example, Wake Forest could prevent one of its players from using Wake Forest’s logos in the course of an NIL deal. Knowing each school’s policies on intellectual property use in NIL deals is vital to avoid exposure to trademark and copyright infringement.

That’s an overview of the current landscape. But that landscape could change–fast. Support for amateurism in college sports appears to be waning, with polls indicating that a majority of Americans support the notion of directly paying college athletes. Whether Congress will act to standardize NIL law remains to be seen. In the meantime, stakeholders should vet their NIL contracts, both in form and presentation, to ensure they aren’t exposing themselves – or their beloved alma maters – to serious penalties.

Recently, the Court of Appeals issued an unpublished decision in Rosewood Estates I, LP v. Wendy Drummond that could have important consequences for those who own and operate rental properties subject to the protections of Violence Against Women’s Act (“VAWA”). No. COAA23-118, 2023 WL 5688807 (N.C. Ct. App. Sept. 5, 2023). In that decision, the court opined that the termination notice issued by the landlord was “fatally deficient under VAWA” because the landlord did not enclose the VAWA Notice of Occupancy Rights and HUD Certification Form with the termination notice. Id. at *4. Accordingly, the landlord in Rosewood could not evict the tenant because the termination notice was insufficient. Id.

Notably, the Rosewood holding appears to be at odds with the purpose of the VAWA housing statute and the regulation implementing it. The VAWA housing statute’s primary purpose is to prevent a covered housing provider from denying admission and assistance to, terminating the tenancy of, and/or evicting a tenant or applicant on the basis that the tenant or applicant has been or is a victim of domestic violence, sexual assault, or stalking. 34 U.S.C. § 12491(b)(1). Put simply, VAWA and the housing statute are designed to protect the victims of domestic violence.

To be sure, the VAWA statute directs each public housing agency or owner and manager of a covered housing program to provide a copy of the VAWA Notice of Occupancy Rights (HUD 5380) and VAWA Certification Form (HUD 5382; together with the HUD 5380, the “VAWA Forms”) to an applicant or tenant of the covered housing program at various times, including, without limitation, at the outset of a tenant’s tenancy and with any notification of eviction or notification of termination of assistance. 34 U.S.C. § 12491(d)(2). The regulation implementing and interpreting the VAWA statute repeats that requirement and adds the following: “Nothing in this section limits any available authority of a covered housing provider to evict or terminate assistance to a tenant for any violation not premised on an act of domestic violence, dating violence, sexual assault, or stalking that is in question against the tenant or an affiliated individual of the tenant.” 24 C.F.R. § 5.2005(d).

The Court in Rosewood did not account for the purpose of the VAWA housing statute or the implementing regulation’s language when rendering its decision. Again, the purpose of VAWA is to provide victims of domestic violence with protections, and the VAWA housing statute imposes those protections in the housing sphere. If an eviction is not based on the status of the tenant as present or past victim of domestic violence, dating violence, sexual assault, or stalking, then the VAWA statute provides no protection, which is a point the implementing statute makes abundantly clear. By contrast, the VAWA housing statute and implementing regulation do not say a tenant will have a defense to any eviction for any reason—for example, a simple failure to pay rent—if the covered housing provider fails to provide the VAWA Forms at the specified times.

Nevertheless, the Court in Rosewood purports to extend the umbrella of VAWA’s protections to any tenant whom a covered housing provider is evicting for any reason when that tenant does not receive a termination notice with the VAWA Forms enclosed, irrespective of whether the tenant is a victim of domestic violence or already had notice of his or her rights under VAWA. For those reasons, the Court in Rosewood appears to conflict with VAWA’s animating purpose. Regardless, in Rosewood’s wake, the question is this: what does Rosewood mean for covered housing providers in North Carolina?

First, it must be emphasized that the Rosewood opinion is an unpublished opinion and that, to date, there is no published opinion in North Carolina on this point. In North Carolina, the Court of Appeals issues published and unpublished opinions. Published opinions are binding decisions of the Court that constitute precedent for the lower courts. That means a trial court would be obliged to follow a published Court of Appeals opinion. On the other hand, unpublished opinions are not binding and do not constitute controlling legal authority. Rule 30 of the North Carolina Rules of Appellate Procedure thus states that the use of unpublished opinions in legal argument is disfavored.

Second, the holding regarding the VAWA housing statute in Rosewood is not essential to the ruling issued by the Court. The Court first ruled that the notice in the Rosewood case was defective because it omitted the grounds for termination as required by the parties’ lease agreement. The Court then added that the notice was also defective because it did not include the VAWA forms. The latter statement was not necessary for the court to find that the notice was defective, and thus the Court’s statement regarding VAWA is arguably dicta, i.e., non-binding authority.

That said, it is strongly recommended that covered housing providers who are not enclosing the VAWA Forms with their termination notices start doing so immediately and continue for the time being, unless and until a contrary precedential decision is issued on the topic. While the Court in Rosewood seemingly gave only cursory consideration to this issue, the Rosewood opinion could be invoked to exert persuasive authority over trial court judges in North Carolina. Until greater clarity is achieved through issuance of a published decision, it is simply safest for covered housing providers to include the VAWA Forms with all termination notices. Covered housing providers may also wish to include an enclosure line in their termination letters about the VAWA Forms (e.g., “Enclosure: HUD 5380 and HUD 5382”). Further, covered housing providers should retain complete copies or scans of the termination notices with the VAWA Forms to be able to prove compliance later.

As a final note, you may be wondering if you are a covered housing provider under VAWA. VAWA applies to most, if not all, affordable rental properties and programs, including public housing, properties operated pursuant to the IRS’s Low Income Housing Tax Credit program, properties operated by a public housing authority, properties operated in connection with a voucher program, Section 202 properties, Section 811 housing, Housing Trust Fund properties, and HOME fund properties.

Covered landlords (and landlords who are unsure whether they qualify as such!) should consult with experienced counsel to ensure that they don’t run afoul of the law.  The experienced attorneys at Blanco Tackabery stand ready to provide such counsel.

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Henry Hilston employs his experience in state and federal litigation as an asset in his representation of affordable and conventional multifamily property owners and managers. In that practice, he advises property management companies on a wide range of issues, including evictions and other landlord-tenant disputes, VAWA, the Fair Housing Act, and compliance issues under federal and state affordable housing programs, such as the Low-Income Housing Tax Credit (LIHTC) program and HUD and USDA-Rural Development rental subsidy programs. He also assists those clients with the preparation, review, and revision of management documents, including tenant selection plans, management agreements, and leases.