North Carolina Supreme Court Clarifies Requirements for Preservation of JNOV Motion
According to a recent court ruling, North Carolina litigants must expressly state the grounds for relief in a motion for a directed verdict if they wish to later pursue a motion for judgment notwithstanding the verdict (JNOV) on the same grounds. In Vanguard Pai Lung, LLC v. Moody, the North Carolina Supreme Court ruled that if “a specific argument or theory that forms a ground for relief is not expressly stated in a directed verdict motion, that issue is waived both at the directed verdict stage and later at the JNOV stage."
In 2022, a trial on an LLC’s claims for fraud, conversion, embezzlement, unfair and deceptive trade practices, and unjust enrichment against its former president and CEO, and partial owner, commenced. The defendants moved for a directed verdict at the close of the plaintiffs’ case. The North Carolina Business Court reserved a ruling on the motion and defendants renewed it at the close of the evidence – at which point the Business Court denied the motion in part and granted it in part. One of the plaintiffs’ theories for their unfair and deceptive trade practices claim was eliminated, but the remaining claims went to the jury.
The jury returned its verdict, finding the defendants liable on claims of fraud, conversion, embezzlement, constructive fraud, unfair and deceptive trade practices, and unjust enrichment. Upon the defendants’ motion, the Business Court granted the JNOV motion with respect to the unfair and deceptive trade practices claim and denied the motions with respect to the fraud, conversion, embezzlement, and unjust enrichment claims.
On appeal, the North Carolina Supreme Court upheld the decision of the Business Court, agreeing with the Business Court’s reliance on the North Carolina Court of Appeals’ decision in Plasma Centers of America v. Talecris Plasma. 222 N.C. App. 83 (2012). In Plasma, the Court of Appeals held, that in order to “have standing after the verdict to move for JNOV, a party must have made a directed verdict motion at trial on the specific issue which is the basis of the JNOV.” The Supreme Court held that this requirement is consistent with the plain language of Rule 50(b)(1) of the North Carolina Rules of Civil Procedure, which provides that a motion for a JNOV may be pursued only “in accordance with” an earlier motion for directed verdict asserted at the trial.
The Supreme Court upheld the Business Court’s decisions to deny the defendants’ JNOV motions with respect to the fraud, conversion, embezzlement, and unjust enrichment claims because on each claim, the defendants’ argued grounds for relief which were not expressly stated in the corresponding directed verdict motion.
The Supreme Court’s opinion states that, “In cases involving multiple defenses and theories of liability, it is critical that the movant direct the trial court with specificity to the grounds for its motion for a direct verdict.” As such, Justice Richard Dietz recommends that, “[t]he best practice in these multi-claim, multi-defense cases is to prepare and file a written motion for directed verdict.” That way, the “key issues can then be highlighted for the court’s consideration in open court without raising concerns about preservation and waiver.” The Court warns that “any confusion about the scope of a directed verdict motion may result in waiver.”
Please contact Maeve Healy, Patrick Meacham or any member of the Phelps Litigation team if you have questions or need advice or guidance.
