Opinion
No. 8117SC825
Filed 15 June 1982
1. Attorneys at Law 2 — out-of-state attorney — conditions to practice pro hac vice Until an out-of-state attorney meets the conditions of G.S. 84-4.1, a court has no discretion to admit out-of-state counsel to practice before it.
2. Attorneys at Law 2; Judgments 25.2 — default judgment — attributable to defendant's neglect in hiring out-of-state attorney By hiring a Virginia attorney to defend it in a North Carolina action defendant did not exercise the degree of care expected of a man of ordinary prudence in dealing with his important business, and defendant's default in the action must therefore be attributed to its own inexcusable negligence.
APPEAL by plaintiff from Long, Judge. Order entered 21 April 1981 in Superior Court, ROCKINGHAM County. Heard in the Court of Appeals on 31 March 1982.
Harrington, Stultz Maddrey, by Thomas S. Harrington, for plaintiff appellant.
Broaddus, Epperly, Broaddus Warren, by John D. Epperly; and Bryant, Drew, Crill Patterson, by Victor S. Bryant, Jr., for defendant appellee.
Chief Judge MORRIS dissenting.
The order appealed from allowed defendant's motion to set aside a default judgment entered against it by the clerk of superior court on 3 February 1981. The action was commenced on 3 July 1979 when plaintiff filed a complaint seeking to recover over $32,000 allegedly due it on a promissory note executed by defendant, a Virginia corporation. Attorney John Epperly filed answer on defendant's behalf on 25 July 1979 alleging that a much smaller amount was due on the note. Plaintiff filed a reply denying this allegation on 27 July 1979.
Approximately three months later, on 19 October 1979, plaintiff filed a motion for entry of default against defendant on the ground that no proper answer had been filed, defendant's purported answer having been filed by an out-of-state attorney who had failed to comply with the provisions of G.S. 84-4.1 for limited practice by an out-of-state attorney. The attached certificate of service indicates that a copy of the motion was served on counsel for defendant.
On 8 November 1979 North Carolina attorney Victor Bryant filed a notice of appearance stating that he would be representing defendant in the matter along with attorney Epperly of the Virginia bar.
On 2 February 1981 entry of default was filed by the clerk, and on 3 February 1981 a default judgment was entered by the clerk in the amount of $32,650.81.
On 16 and 17 February 1981 attorneys Bryant and Epperly each filed a motion to set aside the default judgment, alleging that they had received no notice of the hearing on plaintiff's motion for entry of default and that their first knowledge of the default judgment came when a copy of it was delivered to them by defendant on 11 February 1981. In a supplement to his motion attorney Bryant reasserted that defendant has a meritorious defense and attached a statement of account showing defendant's indebtedness to plaintiff to be only $3,340.76.
On 16 March 1981 attorney Epperly filed a motion, with supporting affidavits, pursuant to G.S. 84-4.1 to be admitted to practice in North Carolina for the limited purpose of representing defendant in this action.
On 21 April 1981 Judge Long entered two orders. One, dated 20 March 1981, allowed Epperly's limited practice motion. It was stated to be prospective only, without prejudice to any rights of plaintiff which might have arisen prior thereto. The other order, dated 6 April 1981, set aside the default judgment previously entered in plaintiff's favor and ordered that the answer theretofore filed on defendant's behalf by attorney Epperly be declared a proper portion of the record. In the order setting aside the default judgment, Judge Long took judicial notice of a longstanding practice and custom among attorneys of Virginia practicing close to the North Carolina state line to appear in the courts of North Carolina without fully complying with the provisions of G.S. 84-4.1. He then found and concluded that although counsel for defendant may have been negligent in not meeting the requirements of G.S. 84-4.1 prior to entry of the default judgment, such neglect should not be imputed to defendant who exercised proper care throughout by delivering the suit papers to its attorney for defense of the action. He also found that defendant had asserted a meritorious defense. Plaintiff appeals from this order.
Judge Long's order setting aside the default judgment must be reversed. We are advertent to the fact that orders setting aside default judgments are interlocutory and ordinarily not appealable. Bailey v. Gooding, 301 N.C. 205, 270 S.E.2d 431 (1980). Nevertheless, because the present order contains serious error regarding a matter of great importance we, in our discretion, choose to review it.
We first note our disapproval of the taking of judicial notice by Judge Long of a custom and practice which violates the law of this State. The legislature has fixed the conditions under which an out-of-state attorney may be admitted to practice pro hac vice in this State in G.S. 84-4.1. The purpose of this statute is to afford the courts a means to control out-of-state counsel and to assure compliance with the duties and responsibilities of attorneys practicing in this State. E.g., State v. Nickerson, 13 N.C. App. 125, 185 S.E.2d 326 (1971), cert. denied, 280 N.C. 304, 186 S.E.2d 179, cert. denied, 408 U.S. 925, 33 L.Ed.2d 336, 92 S.Ct. 2503 (1972). The conditions in the statute are mandatory. Until they have been met, a court has no discretion to admit out-of-state counsel to practice before it. In re Smith, 301 N.C. 621, 272 S.E.2d 834 (1981). We have consistently refused to allow noncomplying out-of-state attorneys to appear in this Court. E.g., Resort Development Co. v. Phillips, 9 N.C. App. 158, 175 S.E.2d 782 (1970), aff'd in part, rev'd in part on other grounds, 278 N.C. 69, 178 S.E.2d 813 (1971); State v. Daughtry, 8 N.C. App. 318, 174 S.E.2d 76 (1970). Likewise, a party cannot nullify the statute merely by responding to actions of a noncomplying out-of-state attorney in the courts of this State. such as, in this case, replying to a purported answer filed by that attorney. The fact that a custom may have grown up among Virginia attorneys practicing near the North Carolina state line to ignore the requirements of G.S. 84-4.1 is irrelevant to this case. Such custom in no way abrogates or excuses out-of-state counsel from complying with the statute. Compare Brown v. Hale, 93 N.C. 188 (1885).
Although Judge Long committed error in judicially noting said irrelevant and unlawful practice, he correctly concluded that counsel for defendant had been negligent in failing to comply with G.S. 84-4.1. Not only did attorney Epperly fail to comply with G.S. 84-4.1 initially, he took no action to rectify the matter for seventeen months after plaintiff filed its motion for entry of default. Such neglect was inexcusable. Judge Long further concluded, however, that this neglect should not be imputed to defendant because defendant had exercised proper care. With this conclusion we do not agree.
"[O]rdinarily a client is not charged with the inexcusable neglect of his attorney, provided the client himself has exercised proper care. . . . The standard of care required of the litigant is that which a man of ordinary prudence usually bestows on his important business." Moore v. Deal, 239 N.C. 224, 227, 79 S.E.2d 507, 510 (1954). To exercise proper care a party must not only pay proper attention to the case himself, he must employ counsel who is licensed or entitled to practice in the court where the case is pending. Moore v. Deal, supra, Kerr v. North Carolina Joint Stock Land Bank, 205 N.C. 410, 171 S.E. 367 (1933); Manning v. Roanoke Tar River Railroad Co., 122 N.C. 824, 28 S.E. 963 (1898); Norton v. Sawyer, 30 N.C. App. 420, 227 S.E.2d 148, cert. denied, 291 N.C. 176, 229 S.E.2d 689 (1976). The attorney hired by defendant to defend it in this North Carolina action was not licensed to practice in the courts of North Carolina and, as we have previously discussed, was not entitled to practice there by reason of a custom and practice which violates the laws of this State. By hiring a Virginia attorney to defend it in a North Carolina action, defendant did not exercise the degree of care expected of a man of ordinary prudence in dealing with his important business. Defendant's default in this action must therefore be attributed to its own inexcusable negligence. See Harrell v. Welstead, 206 N.C. 817, 175 S.E. 283 (1934).
"It is only when there is excusable negligence (and not when there is inexcusable negligence) that the judge can in his discretion set the judgment aside . . . ." Manning v. Roanoke Tar River Railroad Co., supra at 831, 28 S.E. at 965. The order setting aside the default judgment is
Reversed and remanded for reinstatement of the judgment.
Judge ARNOLD concurs.
Chief Judge MORRIS dissents.