The 2003 session of the North Carolina General Assembly considered 2,343 bills in its 102-day session. Many of the 433 bills ratified in this session affect areas of the law which are of particular interest to our clients, including business law, construction law, estate planning law, family law and real property. Some of the most noteworthy changes are detailed below.

Business Law

Dissenters’ Rights Clarifications: S136 Ch. 2003-157.  N. C. Gen. Stat. § 55-13-02 (a) was rewritten to include that a “shareholder is entitled to dissent from, and obtain payment of the fair value of his shares in the event of . . . an amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter’s shares because it . . . excludes or limits the right of the shares to vote on any matter or to accumulate votes, other than an amendment of the articles of incorporation permitting action without meeting to be taken by less than all shareholders entitled to vote, without advance notice, or both . . ..”

No Credit Card Number on Receipts: H357 Ch. 2003-206.  This bill prohibits a person who accepts credit or debit cards in transacting business from printing on a sales receipt more than five digits and the expiration date of the credit card or debit card used in a particular transaction. It also prohibits any individual from selling a credit or debit card machine or cash register or the like which cannot be programmed or otherwise operated to produce a receipt showing five or fewer digits of the credit or debit card account number and no expiration date of the credit or debit card.

Promote E-Commerce and E-Government: S622 Ch. 2003-233. This act amends the existing law to allow all public agencies to accept electronic signatures pursuant to several articles of the North Carolina General Statutes. This act also amends the law governing the submission of annual reports by domestic corporations and foreign corporations authorized to do business in North Carolina to the Secretary of State by adding that in addition to submission to the Secretary of State in paper form, annual reports my be transmitted in electronic form as prescribed by the Secretary of State. Further, under this act, the Department of the Secretary of State will study the Notary Public Act “to further facilitate electronic notarization” and make other changes.

Strengthen Security Fraud Enforcement Laws: S925 Ch. 2003-413. This legislation is in furtherance of the prevention of securities fraud and sets out concrete factors to be considered by the Administrator to determine whether to permit the filing of unaudited financial statements. The act also amends the applicable statutes delineating damages available for violations of the securities laws and further addressing the liability of employees who know of violations by their employers. In addition, this legislation increases the criminal penalties associated with violations of the securities laws and for an employee’s knowledge of an employer’s violations of the securities laws.

Construction Law

General Contractors/Protect Information/Clarify Injunctive Relief: S323 Ch. 2003-97. This legislation keeps confidential the identity of a party who files a complaint regarding a licensee or an unlicensed general contractor with the Licensing Board of General Contractors. This legislation further sets out that the Board may seek injunctive relief upon its determination that a person, firm or corporation is in violation of any provisions of the applicable law.

Estate Planning & Fiduciary Law

Uniform Principal and Income Act: S549 Ch. 2003-232. This legislation adopts the Revised Uniform Principal and Income Act (“UPIA”). The UPIA sets out the duties of a fiduciary and gives a trustee the power to adjust “between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or shall be distributed to a beneficiary by referring to the trust’s income, and the trustee determines, after applying the rules [set out in this article], that the trustee is unable to comply with [this article].” It also provides that a court cannot order a fiduciary to change a specific decision regarding the exercise or a discretionary power of the fiduciary “unless it determines that the decision was an abuse of the fiduciary’s discretion.”

Family Law

Equitable Distribution Claim Survives Death of Spouse/Limit: S394 Ch. 2003-168. This legislation allows a claim for equitable distribution to be filed or, if already properly filed, to continue after the death of a spouse. If the claim for equitable distribution has not been filed at the time of the death of a spouse, the other spouse may file the claim if the parties are living separate and apart at the time of the death and the claim is filed within one year of the date of the death of the deceased spouse; otherwise, the claim will be forever barred.

Amend Child Support Enforcement Laws-AB: S423 Ch. 2003-288. This act allows the release of income and expense information of either parent to the other parent for purposes of establishing or modifying a child support order. This act also allows the Department of Health and Human Services to place a lien on the bank account of the parent who is delinquent in paying his or her child support obligations.

General Interest

Unwanted Telephone Solicitations: S872 Ch. 2003-411. This legislation provides protection to individuals who wish to stop being solicited by telephone. By this act, the General Assembly recognizes the need for a mechanism for telephone subscribers and consumers to register and facilitate their desire not to receive consumer solicitations by telephone. In doing so, the General Assembly sets out restrictions on telephone solicitations for those people listed on the “Do Not Call” Registry. These restrictions have certain limited exceptions, including exceptions for those telephone solicitors who already have a business relationship with an individual on the “Do Not Call” Registry.


Litigation & The Courts

Pre-litigation Mediation of Insurance Claims: S775 Ch. 2003-307. This act allows, under certain conditions, persons who have claims against an individual who is the named insured on a private passenger automobile insurance policy to request in writing, and receive from the insurer information regarding the policy limits of the insured’s policy at issue prior to litigation. This legislation also facilitates pre-litigation mediation on such claims.

Uninsured/Underinsured Motorist Coverage: H1023 Ch. 2003-311. This legislation allows interpolicy stacking of uninsured motorist coverage. It further amends the definition of “underinsured highway vehicle” to mean when “the total amount actually paid to a person under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy.” In addition, the legislation clarifies the amount of underinsured coverage available when more than one party is injured in a motor vehicle accident and states that “[f]or purposes of an underinsured motorist claim asserted by a person injured in an accident where more than one person is injured, a highway vehicle will also be an “underinsured highway vehicle” if the total amount actually paid to that person under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy.

Real Property

Clarify Subordination Agreement Requirements: S629 Ch. 2003-219. This act adds the following new language clarifying the requirements of a valid subordination agreement: a “written commitment or agreement to subordinate or that subordinates an interest in real property signed by a person entitled to priority shall be given effect in accordance with its terms and is not required to state any interest rate, principal amount secured, or other financial terms.” The act further clarifies the priority of recorded instruments giving instruments recorded earlier in time priority over instruments recorded later in time.

Property Tax Correction: S450 Ch. 2003-250. This legislation provides that, for the 2002-2003 tax year, “a taxing unit shall release or refund the portion of property taxes paid on real property that is attributable to the erroneous inclusion of a septic or well system in the valuation of the property.”

Manufactured Housing: H1006 Ch. 2003-400. This legislation gives greater protections to the consumers and residents of manufactured homes in this State. Specifically, this legislation provides that pricing information must be prominently displayed on manufactured homes for sale, that criminal history checks may be done on applicants for licensure as manufactured home dealers, set-up contractors, sales people and manufacturers, and for minimum standards of design and construction for modular homes, among other things. 

If you have any further questions about the laws passed by the North Carolina General Assembly, please contact attorney Lynn Wilson Lupton. Ms. Lupton practices in the firm’s Domestic Law section. She may be reached at (919) 250-2176 or by email at llupton@smithdebnamlaw.com. 

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FOCUS ON: Smith Debnam’s Insurance Subrogation Practice

What is Insurance Subrogation?

Insurance subrogation is the process by which an insurance company seeks to recover money it has paid its customer following an accident or loss. While claims from hurricanes and natural disasters are often unrecoverable losses for the insurance company, many claims are attributable to negligence or intentional acts of someone other than the insured person. Upon paying a claim to its customer, the insurance company usually “stands in the shoes” of its customer and thus has the right to pursue the claim itself. The customer may be satisfied, but the paying insurance company has a right to pursue the entity or person that is legally at fault for the incident which caused the loss. 

A Common Scenario:

For example, let’s say that Niceguy Insurance Co. finds that its customer, Mr. Gooddriver, has been rear-ended at a stop light by Mr. Leadfoot. Mr. Leadfoot’s insurance company, Denial Insurance Inc., denies that Leadfoot caused the accident or claims that his policy lapsed two days before the accident. In either case, Niceguy Insurance Co. will be forced initially to foot the bill in order to get Mr. Gooddriver back on the road..

Niceguy Insurance, pursuant to the terms of its policy with Mr. Gooddriver, acquires the rights to the claim and can sue Mr. Leadfoot for the damages caused by his negligent driving. It hires a lawyer and seeks to collect directly from Mr. Leadfoot. While Denial Insurance Company may not be very friendly, it did not cause the damages and itself has no liability. While Mr. Gooddriver is happy to have his car repaired, his policy also requires that he assist Niceguy Insurance as a witness to the accident, if necessary. A subrogation lawyer represents the insurance company in its pursuit of the Mr. Leadfoots of the world.

Complex Scenarios:

The above example illustrates the basic concept of subrogation but does not present the more complex problems. A negligently manufactured microwave may be the culprit of a fire which destroys a two-million dollar home. In such a case, the insurance company that pays to rebuild the house may have quite a complicated road ahead. The manufacturer of the microwave may blame the home’s electrician, or the manufacturer of another appliance. The litigation against a Fortune 500 manufacturing company might require numerous experts and exhaustive analysis. The subrogation lawyer must be prepared to pursue various avenues of recovery.

The Role of the Subrogation Lawyer:

The subrogation lawyer serves his client in several ways. He analyzes the potential for subrogation by seeking to determine and identify parties that may be liable and ascertains both legal and collection potential. He deals directly with the insurance company and its customer in order to understand the loss and the facts of the case. He attempts resolution and proceeds with litigation, if warranted. Once the case is won, the subrogation attorney then must often assist the client with enforcement of its judgment and extract payment from the responsible party or parties. 

Aaron N. Bailey, an attorney with the firm’s creditor’s rights section, has developed a successful, state-wide subrogation practice and provides insurance companies with litigation and recovery representation throughout the state of North Carolina. Mr. Bailey has extensive civil litigation, collection and judgment enforcement experience in both state and federal court. Mr. Bailey is available to offer guidance, representation, and assistance to entities in the insurance industry and may be reached at (919) 250-2134 or at abailey@smithdebnamlaw.com.

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