Business Court Considers “Extraordinary” 5-Page Introductory Narrative

An “introduction” section in a complaint can set the stage for the case and the claims being asserted. It can forecast and outline the allegations in a way that makes the pleading more “reader-friendly.” And surely, kicking off with a compelling narrative engages the reader in a way that reciting the “parties and jurisdiction” never could. But what are the limits when crafting such an opening? In Buckley LLP v. Series 1 of Oxford Ins. Co. N.C., 2020 NCBC 21 (N.C. Super. Ct. Mar. 23, 2020), the Business Court considered the propriety of a 5-page “introduction” that it described as “extraordinary,” “aggressive,” and “accusatory”—but ultimately declined to strike. See Opinion and Order.

Take-Away:

  • Even a relatively lengthy “introduction” may be acceptable (i.e., not subject to being stricken) if it is tethered to the claims in the pleading, is helpful to understanding the case, and does not prejudice the opposing party.

Background

The law firm plaintiff in Buckley (Buckley) bought an insurance policy from the defendant (Oxford). When Buckley submitted a claim under the policy, a coverage dispute arose. Oxford allegedly first approved coverage, but then shifted course and referred the claim to a third party to “assess” the claim. According to Buckley, the third party’s assessment was over-the-top and not objective: it was “remarkably similar to one-sided civil discovery” including “interrogatories, . . . requests for production, and demand[s] [for] interviews under oath of more than a dozen current and former Buckley lawyers.” (Compl. ¶ 71.) Buckley says that despite its cooperation, its claim was never approved or denied. Instead, Oxford filed a lawsuit disputing coverage.

This prompted Buckley to initiate its own suit in the Business Court, asserting claims for unfair and deceptive trade practices and tortious refusal to settle an insurance claim, among others.

The first five pages of Buckley’s complaint might catch the eye of a seasoned reader of complaints. For one thing, there are no numbered paragraphs. There instead appears to be an “Introduction” section that is not labeled as an Introduction. Even more noteworthy, though, is the tone conveyed throughout these five pages. It is not a happy one, and includes such statements as “Oxford . . . proceeded in a concerted effort to cheat Buckley out of coverage it had paid for” and describes Oxford’s conduct as “reprehensible” and a “concerted effort” to “deprive Buckley of the coverage it paid for.” (Compl. pp. 1-2.)

Oxford did not take these allegations lying down. It counterpunched. That is, Oxford moved to strike the opening allegations as “contain[ing] material that is redundant, irrelevant, immaterial, impertinent, or scandalous matter” in violation of N.C. R. Civ. P. 12(f).   Buckley LLP, 2020 NCBC 21 ¶ 5.

Analysis

The Court was not impressed with Buckley’s “intro”– but it did not strike it. The Court found that while the “Complaint contains allegations framed in aggressive and accusatory language and its case summary and introduction is extraordinary for its length,” the allegations did not cross the line under the Rule 12(f) standard. Buckley LLP, 2020 NCBC 21 ¶ 10. (The Court also declined to find a violation of Rule 8(a)’s “short and plain statement” standard. Id.)

The Court reasoned that the allegations, though “at the outer limits . . . of acceptable pleading,” id. ¶ 14, were acceptable in this case for a few reasons: First, Buckley’s UDTP claim inherently requires showing “egregious” conduct – which may translate to “inflammatory” allegations. Id. ¶ 12. Second, no apparent prejudice was caused to Oxford – indeed, Oxford had “answered the introductory allegations in a single, short sentence.” Id. ¶ 15. The Court also noted that unnumbered introductory paragraphs are “commonplace in business litigation” and can be “very useful,” and that “courts routinely permit them.” Id. ¶ 13.

The Court did caution, however, “that a similarly lengthy introduction might not survive Rule 12(f) scrutiny in a future case where prejudice to the answering party can be shown.” Id. ¶ 15. The Court did not elaborate on what prejudice might look like in this context. (Query, for example, whether prejudice could have been shown had Oxford answered with its own 5-page narrative.)

Conclusion

The upshot of Buckley appears to be this: A complaint’s introduction will not be viewed in isolation. It will be viewed in the context of the claims asserted, how helpful it is to understanding the case, and (probably most importantly) whether it results in prejudice to the opposing party.

 

Matt Krueger-Andes is a litigation associate in Fox Rothschild’s Charlotte office.  He regularly represents clients in the Business Court and advises on Business Court and other business litigation-related matters.  He is also a former law clerk to the Honorable Louis A. Bledsoe, III, Chief Judge of the North Carolina Business Court.