NORTH CAROLINA Small Claims LAWJoan G. Brannon
The School of Government at the University of North Carolina at Chapel Hill works to improve the lives of North Carolinians by engaging in practical scholarship that helps public officials and citizens understand and improve state and local government. Established in 1931 as the Institute of Government, the School provides educational, advisory, and research services for state and local governments. The School of Government is also home to a nationally ranked graduate program in public administration and specialized centers focused on information technology, environmental finance, and civic education for youth. As the largest university-based local government training, advisory, and research organization in the United States, the School of Government offers up to 200 courses, seminars, and specialized conferences for more than 12,000 public officials each year. In addition, faculty members annually publish approximately fifty books, book chapters, bulletins, and other reference works related to state and local government. Each day that the General Assembly is in session, the School produces the Daily Bulletin, which reports on the day s activities for members of the legislature and others who need to follow the course of legislation. The Master of Public Administration Program is a full-time, two-year program that serves up to sixty students annually. It consistently ranks among the best public administration graduate programs in the country, particularly in city management. With courses ranging from public policy analysis to ethics and management, the program educates leaders for local, state, and federal governments and nonprofit organizations. Operating support for the School of Government s programs and activities comes from many sources, including state appropriations, local government membership dues, private contributions, publication sales, course fees, and service contracts. Visit www.sog.unc.edu or call 919.966.5381 for more information on the School s courses, publications, programs, and services. Michael R. Smith, Dean Thomas H. Thornburg, Senior Associate Dean Frayda S. Bluestein, Associate Dean for Programs Todd A. Nicolet, Associate Dean for Operations Ann Cary Simpson, Associate Dean for Development and Communications Bradley G. Volk, Associate Dean for Administration Faculty Gregory S. Allison David N. Ammons Ann M. Anderson A. Fleming Bell, II Maureen M. Berner Mark F. Botts Joan G. Brannon Michael Crowell Shea Riggsbee Denning James C. Drennan Richard D. Ducker Robert L. Farb Joseph S. Ferrell Alyson A. Grine Milton S. Heath Jr. Norma Houston (on leave) Cheryl Daniels Howell Jeffrey A. Hughes Joseph E. Hunt Willow S. Jacobson Robert P. Joyce Kenneth L. Joyner Diane M. Juffras David M. Lawrence Dona G. Lewandowski James M. Markham Janet Mason Laurie L. Mesibov Christopher B. McLaughlin Kara A. Millonzi Jill D. Moore Jonathan Q. Morgan Ricardo S. Morse C. Tyler Mulligan David W. Owens William C. Rivenbark Dale J. Roenigk John Rubin John L. Saxon Jessica Smith Karl W. Smith Carl W. Stenberg III John B. Stephens Charles A. Szypszak Shannon H. Tufts Vaughn Upshaw A. John Vogt Aimee N. Wall Jeffrey B. Welty Richard B. Whisnant Gordon P. Whitaker Eileen R. Youens 2009 School of Government The University of North Carolina at Chapel Hill Use of this publication for commercial purposes or without acknowledgment of its source is prohibited. Reproducing, distributing, or otherwise making available to a non-purchaser the entire publication, or a substantial portion of it, without express permission, is prohibited. Printed in the United States of America Cover design by Daniel Soileau 13 12 11 10 09 1 2 3 4 5 ISBN 978-1-56011-607-3 Th is publication is printed on permanent, acid-free paper in compliance with the North Carolina General Statutes. Printed on recycled paper
Summary of Contents I History of the Office of Magistrate 1 II Small Claims Procedure 7 III Contracts 51 IV Torts 99 V Actions to Recover Possession of Personal Property 121 VI Landlord Tenant Law 147 VII Motor Vehicle Mechanic and Storage Liens 213 VIII Evidence 237 IX The Marriage Ceremony 253 X Miscellaneous Duties and Powers of a Magistrate 263 iii
Contents Preface xiii I History of the Office of Magistrate 1 II Small Claims Procedure 7 Definition of a Small Claim 7 Amount in Controversy 7 When Plaintiff Seeks Monetary Damages 8 When Plaintiff Seeks Return of Personal Property 9 Actions to Enforce Motor Vehicle Lien 10 Principal Relief Sought 10 Plaintiff Requests Assignment 11 Filing a Small Claims Action 11 Where Action Is Filed 12 District Judge Assigns Case 13 Small Claim for More Than $5,000 14 Splitting Claims to Reduce Amount in Controversy 15 Time for Trial 15 Service of Process 15 Proof of Service 17 Service by Sheriff 17 Service by a Private Process Server 17 Service by Certified Mail 17 Written Acceptance of Service 17 Voluntary Appearance 18 Service by Publication 18 Determining Proper Service 18 Multiple Defendants and Service 19 Defendant s Answer and Counterclaim 20 Answer 20 Counterclaim 20 Filing a Counterclaim 21 Counterclaim Amount in Controversy 22 Counterclaim for More Than $5,000 23 Cross Claims and Third Party Claims 23 v
vi Contents Pretrial Motions 24 Motion to Name Real Party in Interest 24 Motion to Perfect Statement 24 Motion Objecting to Venue or Jurisdiction 25 Motion to Transfer to Superior Court Division 26 12(b)(6) Motion 26 Motion for Continuance 26 Dismissal without Trial 27 Voluntary Dismissal by Plaintiff 27 Without Prejudice 28 Voluntary Dismissal by Court Order 28 Involuntary Dismissal 29 With Prejudice 29 Dismissal When Defendant Files a Counterclaim 29 Judgment on the Pleadings 30 Trial of the Case 30 No Default Judgment 31 Burden of Proof 31 Representing the Parties in Court 32 Hearing Evidence 33 Order of Presentation 33 Oath 34 Applicability of Evidence Laws 34 Amending the Complaint 35 Asking Questions 36 Rendering Judgment 36 Announcing the Judgment at Trial 37 Signing the Judgment at Trial 37 Reserving Judgment 37 Effect of Magistrate s Judgment 38 Appeal 38 Appealing as an Indigent 39 Stay of Execution Bond 40 Setting Aside Judgments or Orders 41 Clerical Errors 41 Excusable Neglect, Mistake, or Surprise 42 Definitions 42 Hearing a Rule 60(b)(1) Motion 43 Meritorious Defense 44 Effect of Bankruptcy 44 Special Provisions for Residential Leases 46 Judgment for Possession before Bankruptcy 46 Evictions for Criminal Activity 47 Stays to Other Bankruptcy Actions 47 Effect of Bankruptcy on Judgment 47 Procedural Issues in Appeals to District Court 48 Apendix 1 49 Model General Order regarding Small Claims Assignments and Magistrates Authority 49
Contents vii III Contracts 51 Is There a Contract? 52 Offer 52 Terminating an Offer 53 Acceptance and Counteroffers 54 Who Can Accept the Offer 55 Acceptance Conforms to Offer 55 Implied Contracts 56 Consideration 57 Adequacy of Consideration 59 No Consideration Required 59 What Are the Contract Terms? 59 Terms That Must Be Specifically Agreed On 59 Determining the Contract s Terms 59 Warranties 61 Express Warranties 61 Implied Warranties 63 Exclusion or Disclaimer of Warranties 64 Express Warranties 64 Implied Warranties 65 Is the Contract Enforceable? 67 Defenses to Formation 67 Illegality 67 Mistake 67 Lack of Consent Defenses 68 Lack of Consent 68 Minors and Mental Incompetents 69 Defenses to Enforcement 72 Statute of Frauds 73 Parol Evidence Rule 73 Statute of Limitations 74 Unconscionability 76 Defenses for Nonperformance 77 Agency 78 Actual and Apparent Authority 78 Ratification 80 Retail Installment Sales Act 81 What Damages Should Be Awarded for Breach of Contract? 84 Monetary Damages 85 Verified Itemized Statement of an Account A Rule of Evidence 86 Breach of Warranty Damages 87 Check Returned for Insufficient Funds 87 Duty to Mitigate Damages 89 Joint and Several Liability 89 Rescission 90 Allowable Interest 90 Damages for Usury 91 Attorneys Fees 91 Evidences of Indebtedness 91 Action on a Check 92 Miscellaneous Attorneys Fee Statutes 93
viii Contents Apendix 1 95 Agency 95 Apendix 2 96 Table 1. Maximum Allowable Interest Rates on Loans in North Carolina 96 Table 2. Maximum Allowable Finance Charges on Sale of Consumer Goods or Services in North Carolina 97 IV Torts 99 Intentional Torts 99 Assault and Battery 100 Trespass to Land 102 Negligence 103 Four Elements of Negligence Action 104 Defendant Owed Plaintiff a Duty of Reasonable Care 104 Defendant Must Have Failed to Meet the Standard of Reasonable Care 106 Defendant s Negligence Must Be a Cause of the Plaintiff s Injury 109 Plaintiff Must Have Suffered Actual Loss or Damage 110 Summary 110 Negligence per se Violation of Safety Statutes 110 Contributory Negligence 112 Damages 112 Compensatory Damages 112 Compensatory Damages in Personal Injury Cases 113 Compensatory Damages for Property Damage 114 Punitive Damages 114 Nominal Damages 115 Statute of Limitations 116 Strict Liability 116 Parents Liability for Children s Acts 116 Attorneys Fee Awards in Tort Cases 117 Summary 119 V Actions to Recover Possession of Personal Property 121 Conversion and Actions to Recover Possession By a Nonsecured Party 121 Action for Conversion 121 Action to Recover Possession 122 Claim and Delivery 123 Who Decides Which Action to Bring 124 Examples of Conversion versus Action to Recover Possession 124 Action Brought to Enforce a Security Agreement 125 Why Take a Security Interest? 126 When Creditor Has Rights against Property 127 Secured Party s Rights after Debtor Defaults 130 Issues at Trial 131 What Happens after the Trial? 133 Secured Party s Obligations after Reacquiring Possession 134 Secured Party s Duty to Give Debtor Notice of Sale 135
Contents ix Debtor s Right to Redeem the Property 135 Sale of the Property 136 Application of Proceeds 139 Examples of Follow-up after Repossession 140 Secured Party s Action for Deficiency 140 Debtor s Remedies for Creditor s Failure to Comply with Law 142 Secured Party s Rights against Third Parties 143 Claim and Delivery 145 VI Landlord Tenant Law 147 Summary Ejectment Actions 147 Who Brings the Lawsuit? 148 Service of Process 149 Action Limited to Landlord Tenant Relationship 150 Seller Buyer Relationship 151 Employer Employee Relationship 151 Innkeeper Guest Relationship 152 When a Cohabitant Is a Guest 153 Types of Leases 155 Tenancy for Years 155 Periodic Tenancy 155 Tenancy at Will 157 Grounds for Action 157 Violating a Condition in the Lease 158 Failure to Pay Rent 160 Holding Over after the End of the Term 162 Tender 164 Monetary Damages 165 Unpaid Rent 166 Damages for Occupancy after the End of the Lease 166 Physical Damage to Property 166 Damages for Remainder of the Term 168 Late Fees 169 Other Contractual Fees 170 Tenant s Defenses against Summary Ejectment 171 Waiver of the Breach 171 Other Defenses 172 Denying Landlord s Title 173 Magistrate s Judgment 174 Splitting Monetary Claims 174 Appeal and Stay-of-Execution Bond 175 Notice of Appeal and Costs 175 Stay-of-Execution Bond 175 Eviction for Criminal Activity 178 Statutory Provision 178 Breach of Lease Condition 182 Ejectment of Tenants in Publicly Assisted Housing 184 Good Cause Requirement 184 Notice Requirements 186 General Provisions about Leases 187 When Rent Is Due 187 Terms of a Written Lease 187 What Leases Must Be Written 187 Registration of Leases and Selling Property Subject to Lease 187
x Contents Subleases and Assignments 188 Entry to Leased Premises 189 Security Deposits 189 Residential Leases 189 Commercial Leases 190 Responsibility for Tenant s Property Left on Premises 190 Residential Premises 190 Commercial Leases 192 Tenant s Rights and Remedies 193 Residential Rental Agreements Act 193 Landlord s Duties 193 Notice Requirements 194 Tenant s Remedies 195 Tenant s Obligations 200 Unfair and Deceptive Practice Claim 201 Retaliatory Evictions 202 Tenant s Rights in Self-Help Eviction 205 Victims of Domestic Violence, Sexual Assault, or Stalking 206 Changing Locks 207 Early Termination of the Lease 208 Retaliation or Discrimination against Domestic Violence Victims 208 Termination of Lease by Military Tenant 209 Tenant in Foreclosed Property 210 Fair Housing Act 210 Apendix 1 211 Publicly Assisted Housing Notice Requirements 211 VII Motor Vehicle Mechanic and Storage Liens 213 Who Is Entitled to a Lien 213 Establishing the Lien 214 When the Lien Arises 214 When the Lien Terminates 214 Procedure to Enforce Lien before Court Proceeding 216 Small Claims Case or Special Proceeding? 217 Trial before Magistrate 217 Amount in Controversy and Venue 218 Nature of Action and Parties 218 Service of Process 219 Procedure for Service by Publication 220 Proving Service by Publication 220 Action Brought by Business That Repairs, Stores, Tows Vehicles 220 Ordinary Course of Business 221 Owner or Legal Possessor 221 Express or Implied Contract 222 The Lien Attached 222 Amount of the Lien and Storage Costs 222 Requirement to Notify DMV of Lien and Intent to Sell 224
Contents xi Action Brought by Business That Stores or Garages Vehicles 224 Action Brought by Landowner 225 Judgment 226 Lienor s Duties after Judgment 226 DMV Permission to Sell Vehicle 226 Redeeming the Vehicle 226 Sale Procedure 227 Public or Private Sale 227 Notice to DMV and Parties 227 Posting and Publication for Public Sale 228 Allocation of the Proceeds of Sale 228 Owner s Remedies for Lienor s Failure to Comply 228 Action by Owner to Recover Vehicle 229 Amount in Controversy 229 Magistrate s Judgment 230 No Cash Deposit by Owner 230 Plaintiff Deposits Cash Bond 230 Lienor s Action to Recover Vehicle and Establish Lien 232 The Motor Vehicle Repair Act 234 Apendix 1 235 Division of Motor Vehicle Letters to Lienor 235 Apendix 2 236 Time Line for Awarding Storage Fees 236 VIII Evidence 237 General Principles of Evidence 239 Kinds of Evidence 239 Documentary and Testimonial Evidence 239 Judicial Notice 239 Direct and Circumstantial Evidence 240 Presentation of Evidence 241 Weight of the Evidence 241 Admissibility of Evidence and Rules of Exclusion 243 The Original Writing or Best Evidence Rule 244 Authentication 245 Hearsay 246 Declarations against Interest 247 Admissions 247 Spontaneous (or Excited) Utterances 248 Regular Business Entries 248 Verified Statement of Account 248 Competency of Witnesses 249 Conclusion 251
xii Contents IX The Marriage Ceremony 253 General Requirements 253 Marriage License 254 Pre-Ceremony Checks 255 Location of the Ceremony 255 Marriage Ceremony 255 Reasons for Refusing to Conduct Ceremony 256 Certificate 256 Fees 257 Apendix 1 258 Sample Marriage Ceremonies 258 No. 1 (Civil) 258 No. 2 (Religious) 259 No. 3 (Religious) 260 No. 4 (Civil Spanish) 261 X Miscellaneous Duties and Powers of a Magistrate 263 Assignment of a Year s Allowance 263 Persons Entitled to an Allowance 264 Who Must File Claim 265 Filing for the Allowance 266 Where to File for Allowance 267 Procedure for Assigning Year s Allowance 267 Special Proceeding to Award Year s Allowance 270 Administration of Oaths 272 Issuance of Subpoenas 273 Affidavits for the Verifications of Pleadings 273 Habeas Corpus ad Testificandum 274 Acknowledgments 275