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Business Court Designation Papers Are Now a Mandatory Part of the Record on Appeal

In yet another case highlighting potential pitfalls when appealing a decision of the Business Court, the North Carolina Court of Appeals dismissed a plaintiff’s appeal Tuesday for failing to provide specific information relating to the Court’s jurisdiction over the appeal.  In Grasinger v. Williams, the Court of Appeals held that the plaintiff-appellant “failed to confer jurisdiction” on the Court because the Record on Appeal did not contain anything that established “the precise date upon which [the] action was designated as a mandatory complex business case.”  As a result, plaintiffs lost any recourse they might have had for the Business Court’s dismissal of their claims against the defendants.

The opinion hinges on the legislature’s Business Court Modernization Act, which amended N.C. Gen. Stat. § 7A-27 to confer jurisdiction over appeals from final judgments in mandatory complex business cases in the North Carolina Supreme Court rather than the Court of Appeals.  However, Section 9 of the Act specifically states that this change applies only to actions designated as mandatory complex business cases on or after October 1, 2014.  That is significant here because the Grasinger complaint was filed on October 2, 2013, and, as a quick check of the Business Court’s docket could have confirmed for the Court, it was designated as a mandatory complex business case by the Chief Justice of the Supreme Court on October 25, 2013 – nearly a year before the effective date for the Act.

Nonetheless, the Court faulted the plaintiff-appellant for failing to include in the Record on Appeal “the notice of designation, approval for designation, opposition to designation, or any other pleading from which this Court can determine precisely when this action was designated as a mandatory complex business case.” What is particularly interesting here is that the defendant-appellees seemed to have conceded in their brief that the Court of Appeals had jurisdiction over the appeal, noting in the first footnote to their brief that

Plaintiffs do not focus on the fact this case was designated as a Business Court case or its potential impact on their appellate rights. The recent amendment to N.C. Gen. Stat. § 7A-27 requiring a direct appeal to the Supreme Court from cases such as this, however, is effective to cases designated as Business Court cases on or after [1] October 2014. This case was filed in October 2013 and, under N.C. Gen. Stat. § 1A-45.4, would have been designated as a Mandatory Complex Business Case no later than within 30 days of the filing of the Complaint.

Addressing the defendants’ footnote, the Court stated that it was not persuaded and highlighted a number of hypothetical procedural happenings that could have resulted in the actual designation occurring much later, such as an objection to the designation.

While it seems that the Court could have taken judicial notice of the actual designation as the information is a matter of public record and is readily available through the Business Court’s website, (see, for example, In re Foreclosure of Deed of Trust of Hackley, 212 N.C. App. 596, 601, 713 S.E.2d 119, 601 (2011), where the Court took judicial notice of a trustee’s deed not included in the record on appeal),  the Court instead reiterated its previous statements:  “It is not the duty of this Court to construct arguments for or find support for [an] appellant’s right to appeal[.]”  Comparing the plaintiffs’ failure to include the designation order to a failure to file a notice of appeal and to a failure to allege deprivation of a substantial right absent immediate review in an interlocutory appeal, the Court held that the proper disposition in such cases is to dismiss because the appellant failed to confer jurisdiction on the Court.

The harsh result for the plaintiffs in Grasinger serves as a lesson for all.  At least for cases filed prior to October 1, 2014, there seems to be a new de facto rule when appealing from the Business Court – the appellant must include the designation order in the Record on Appeal to properly confer jurisdiction on the Court.

–Liz Hedrick

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