[CORRECTION, JANUARY 26, 2024:  Attorney Benjamin Kull, who practices in Durham, pointed out to me that the penultimate paragraph of the original post, discussing searches based on the odor of marijuana, was not accurate.  It has been modified.  Thanks and a tip of the hat to Benjamin!]

            The North Carolina Court of Appeals issued several interesting opinions in its most recent release.  I’ll dig into one that should be of particular concern to all practitioners, then mention a couple of others that caught my eye.

            In Smith Debnam Narron Drake Saintsing & Myers, LLP v. Muntjan, No. COA23-324, there are three relevant participants to a contract dispute: (1) the plaintiff law firm, (2) a business owned by an individual named Nick, and (3) Nick’s father, the defendant.  The three met, and while all agree that they did not discuss the specifics of the law firm’s fee compensation for representing Nick’s business, the plaintiff’s partner who attended testified that the defendant promised to pay for the plaintiff’s representation of his son’s business.  The defendant, on the other hand, denied having made such a promise.

            Not long after this initial meeting, the plaintiff used both snail mail and email to send to Nick an engagement letter, the terms of which provided that the plaintiff would begin work upon receiving a signature page and a retainer.  The engagement letter included the plaintiff’s hourly rate and other billing information.  Nick denied ever having received this letter. 

            Nick was later sued by some of his former clients.  Even though the plaintiff had not received a signed engagement letter, it began work on the case, sending its bills to Nick.  The plaintiff received some payments that were made through the defendant’s credit card.  Nick and his defendant father later testified that the defendant had not really paid those bills but instead had allowed Nick to use the defendant’s credit card as a loan.    

            The plaintiff’s bills mounted and eventually the plaintiff sued the defendant for past-due debts.  At the conclusion of a bench trial, the court granted the plaintiff judgement against the defendant, finding that the defendant breached his “original promise” to the plaintiff to pay the bills for his son’s business.

            The Court of Appeals reversed in a published split opinion (Carpenter with Flood; Arrowood dissenting).  On appeal, the defendant argued that he had not formed a valid contract with the plaintiff and that, even if he had, the contract was unenforceable under the Statute of Frauds.  In its analysis, the Court assumed that a valid contract existed and addressed only the applicability of the Statute of Frauds (which, pursuant to N.C.G.S. Chapter 22, requires that a contract be in writing and signed by the party to be charged).

            The majority began by observing that a contract to pay the debts of a third party, such as we have here, is a guaranty.  The majority then reviewed the applicable cases and found that if the promisor alone is liable for the promise, it is considered to be an “original promise”; but if another party is also liable for the promise, the promise is a “collateral promise.”  This distinction matters because an “original promise” does not fall within the Statute of Frauds but a “collateral promise” does.  Here, the evidence indicated that the defendant told the plaintiff that he was making his promise in order to help Nick, who would also be liable, thus making a “collateral promise.”  Accordingly, the majority held that the trial court erred when it concluded that the Statute of Frauds did not apply and that the defendant’s promise to the plaintiff could be enforced, even though it was not in writing. 

            The majority also considered whether the equitable doctrine of quantum meruit would allow the plaintiff to recover from the defendant.  It concluded that the doctrine did not apply because the defendant received no benefit.  Instead, the plaintiff’s legal services benefitted Nick, not the defendant.

            In dissent, Judge Arrowood argued that emails presented as evidence in the case were sufficient to satisfy the Statute of Frauds. 

            The Court’s opinion did not remand the case to the trial division.  So the plaintiff law firm may simply be out of luck.

            Since a dissent no longer guarantees the opportunity for review in the Supreme Court, we will have to wait and watch to see if the plaintiff makes any filings there.  But even if the Supremes reverse the Court of Appeals, the reversal will probably be based on the particular facts in the case, such as the language in emails sent between the participants.  Whatever happens, the primary lesson from this case will stand:  Get Those Engagement Letters Signed and the retainer in hand before going to work!  Client representations almost always start in a rosy glow but things can go south quickly and unexpectedly.  Protect yourself and your practice.

            Another interesting opinion, especially for criminal practitioners, is State v. Springs, No. COA23-9.  In that case, the court noted that legalized hemp is indistinguishable by smell or appearance from illegal marijuana.  As a result, “odor alone” may no longer provide sufficient probable cause to justify a search.  However, the Springs court declined to answer the question directly, relying instead on a “totality of the circumstances” analysis to find no error.  See also State v. Parker, 277 N.C. App. 531 (2021), an earlier Court of Appeals opinion that reached a similar result after acknowledging the changing legal landscape.  We probably have not seen the last of this issue.

            Finally, some of you faithful followers of this blog may remember that I occasionally have posted ruminations noting instances where a reviewing court affirmed a trial court’s ruling, even though the lower court’s analysis was faulty.  The most recent post is dated August 16, 2019.  We find another such opinion in Hill and Hill v. The Division of Social Services, et al., No.COA23-197.  The opinion addresses the mind-numbing intersection of state and federal law and regulation surrounding Medicaid, which I will spare you.  However, the opinion’s bottom line reads: “Accordingly, the superior court’s order is properly affirmed despite the authorities upon which it relies.”  In other words, right for the wrong reasons.

–Bob Edmunds