Volume 107 — North Carolina Court of Appeals Reports

1. Guaranty 17 (NCI4th); Uniform Commercial Code 35 (NCI3d) — impairment of collateral — discharge defense — accommodation party The defense of discharge because of impairment of collateral provided in N.C.G.S. 25-3-606(b)(1) is available to all parties who occupy the position of an accommodation party but is not available to non-accommodating makers or co-makers. Am Jur 2d, Guaranty 79-96. <block_quote> What constitutes unjustifiable impairment of collateral, discharging parties to negotiable instrument, under UCC 3-606(i)(6). 95 ALR3d 962.</block_quote><page_number>Page 54</page_number> 2. Uniform Commercial Code 33 (NCI3d) — signatures on note — co-makers rather than accommodation parties Defendants executed a promissory note as co-makers and not as accommodation parties and were not entitled to assert the defense of discharge where their signatures appear on the lines reserved for co-makers; their signatures were not given or necessary for the purpose of aiding the two other signees of the note to obtain the loan but were part of a business venture for which the other signees had already secured the loan; and defendants entered the venture with the expectation of receiving profits. Am Jur 2d, Bills and Notes 109 et seq. 3. Fiduciaries 1 (NCI4th) — bank's release of lots from deed of trust — no breach of fiduciary duty Plaintiff bank did not breach a fiduciary duty to defendants by releasing certain lots from a deed of trust securing a promissory note executed by defendants where a mere debtor-creditor relationship existed between plaintiff and defendants, and the record does not reveal any facts suggesting that defendants reposed any sort of special confidence in plaintiff which would give rise to a fiduciary relationship. Am Jur 2d, Banks 303 et seq. 4. Unfair Competition 1 (NCI3d) — bank's release of lots from deed of trust — breach of contract — no unfair trade practice Plaintiff bank's alleged release of several subdivision lots from a deed of trust in violation of the terms of a promissory note and loan agreement executed by defendants did not constitute an unfair trade practice under N.C.G.S. <cross_reference>75-1.1</cross_reference> where defendants failed to allege any aggravating circumstances beyond breach of contract which would support a claim for an unfair trade practice. <block_quote> Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices 696 et seq.</block_quote>

1. Appeal and Error 130 (NCI4th) — sanctioning of attorney — immediate appeal by attorney An attorney may properly appeal the trial court's imposition of Rule 11 sanctions where the sanctions run only against the attorney. Furthermore, an order imposing sanctions on counsel is immediately appealable. Am Jur 2d, Trial 118, 192 et seq.<page_number>Page 88</page_number> 2. Attorneys at Law 63 (NCI4th) — charging lien — withdrawal prior to settlement or judgment No right to an attorney's charging lien exists when an attorney working pursuant to a contingent fee agreement withdraws prior to settlement or judgment being entered in the case. Am Jur 2d, Attorneys at Law 324 et seq. 3. Rules of Civil Procedure 11 (NCI3d) — improper notice of charging lien — sanctions against attorney — legal sufficiency prong of Rule 11 The trial court properly imposed sanctions upon an attorney for a violation of the legal sufficiency prong of Rule 11 by filing notice of a charging lien after she had withdrawn from her former client's case and before a settlement or judgment was entered since no reasonable person in the attorney's position, after reading and studying the North Carolina law on the issue, would have believed that she had the right to file such a lien, and the attorney made no argument that her notice of lien was warranted by a good faith extension of existing North Carolina law. Am Jur 2d, Attorneys at Law 324 et seq.; Trial 118. 4. Rules of Civil Procedure 11 (NCI3d) — notice of charging lien — improper purpose — sanctions against attorney A strong inference of improper purpose, i.e., harassment of a former client and her present attorneys, was created by a former attorney's filing of a notice of a charging lien seeking recovery on the basis of quantum meruit plus a percentage of the judgment after she had withdrawn from the case out of anger because the client refused to accept a settlement offer. Therefore, the trial court properly imposed sanctions against the attorney for a violation of the improper purpose prong of Rule 11. Am Jur 2d, Attorneys at Law 324 et seq.; Trial 118.