IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA16-460

Filed: 20 December 2016

Cumberland County, No. 14 CVS 5311 

HARRY A. WILEY and GERALD D. GILMAN, Plaintiffs,

v.

L3 COMMUNICATIONS VERTEX AEROSPACE, LLC, Defendant.

Appeal by defendant from judgment entered 17 September 2014 by Judge Lucy 

N. Inman, order entered 23 January 2015 by Judge Kendra D. Hill, and judgment 

entered 9 October 2015 and order entered 13 November 2015 by Judge Claire V. Hill 

in Cumberland County Superior Court. Cross-appeal by plaintiffs from order entered 

9 October 2015 by Judge Kendra D. Hill in Cumberland County Superior Court. 

Heard in the Court of Appeals 3 October 2016.

Yarborough, Winters & Neville, P.A., by Garris Neil Yarborough and H. 

Addison Winters, and Phelps Dunbar LLP, by M. Nan Alessandra and Robert 

M. Kennedy, Jr., for defendant-appellant/cross-appellee.

Ryan McKaig, Lee Tart Malone, and Robert A. Buzzard for plaintiffsappellees/cross-appellants.

DIETZ, Judge.

Plaintiffs Harry Wiley and Gerald Gilman secured a default judgment against 

Defendant L3 Communications Vertex Aerospace, LLC after the company mistakenly 

missed its deadline to respond to the complaint. The trial court later set aside the 
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damages portion of its award and held a trial on damages. The jury awarded

compensatory and punitive damages to both Wiley and Gilman, totaling more than 

$750,000 each. 

As explained below, we affirm in part and vacate in part. We hold that Gilman 

lacked standing to pursue his claims because he failed to disclose the claims in his

pending bankruptcy proceeding. Consistent with other courts that have addressed 

this issue, we conclude that North Carolina’s standing principles do not permit a 

Chapter 13 debtor to pursue a claim that the debtor concealed from the bankruptcy 

estate.

We affirm the award of compensatory damages to Wiley, but vacate the award 

of punitive damages. The complaint did not allege any aggravating factors 

supporting an award of punitive damages under Rule 9(k) of the Rules of Civil 

Procedure. Indeed, the complaint did not even contain the words “punitive damages” 

in the allegations or prayer for relief, much less an articulation of the grounds 

required by the rule. Accordingly, as explained more fully below, we vacate in part, 

affirm in part, and remand for entry of a new judgment consistent with this opinion.

Facts and Procedural History

On 14 July 2014, Plaintiffs Harry Wiley and Gerald Gilman filed a joint 

complaint against their former employer, Defendant L3 Communications Vertex 

Aerospace, LLC, with each asserting claims for discrimination based on age, physical 
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ability, and race. Gilman also asserted a claim for violation of the North Carolina 

Wage and Hour Act. Plaintiffs served L3 with a summons and the complaint on 17 

July 2014. 

L3 failed to timely file an answer or other responsive pleading. On 21 August 

2014, Wiley and Gilman moved for entry of default. That same day, the clerk entered 

a default against L3. 

On 8 September 2014, Wiley and Gilman moved for default judgment. On 15 

September 2014, their motion for default judgment came on for hearing. L3 did not 

appear at the hearing.

On 17 September 2014, the trial court granted the motion for default judgment. 

The trial court awarded Wiley $391,274.44 in compensatory damages and 

$1,173,823.32 in punitive damages. The court awarded Gilman $727,525.62 in 

compensatory damages and $2,182,576.86 in punitive damages. 

On 16 October 2014, L3 moved to set aside the entry of default and default 

judgment. On 23 January 2015, the trial court denied L3’s request to set aside the 

entire judgment, but granted the motion with respect to damages and scheduled a 

trial on damages.

On 21 September 2015, the jury awarded Wiley $273,353.48 in compensatory 

damages and $500,000.00 in punitive damages. It awarded Gilman $279,180.00 in 
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compensatory damages and $500,000.00 in punitive damages. On 9 October 2015, 

the trial court entered written judgment on the jury’s verdict.

L3 timely moved for judgment notwithstanding the verdict or, alternatively, a 

new trial. The trial court denied L3’s post-trial motions. 

L3 timely appealed. Wiley and Gilman timely cross-appealed. 

Analysis

Both parties appeal from various trial court orders and judgments throughout 

this case. We first address several jurisdictional arguments asserted by L3, and then 

turn to the parties’ challenges to the trial court’s rulings throughout the default 

proceedings. 

I. Gilman’s Failure to Disclose His Claim to the Bankruptcy Court

L3 argues that Gilman lacked standing to bring the claims asserted in the

complaint because he had a pending bankruptcy and failed to inform the bankruptcy 

court of the existence of his legal claims. As explained below, we agree.

Standing is a jurisdictional issue. Union Grove Mill. & Mfg. Co. v. Faw, 109 

N.C. App. 248, 251, 426 S.E.2d 476, 478, aff’d, 335 N.C. 165, 436 S.E.2d 131 (1993). 

“If a party does not have standing to bring a claim, a court has no subject matter 

jurisdiction to hear the claim.” Estate of Apple ex rel. Apple v. Commercial Courier 

Exp., Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14, 16 (2005). A defect in subject matter 

jurisdiction cannot be waived by a party’s failure to appear. Hart v. Thomasville 
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Motors, Inc., 244 N.C. 84, 90, 92 S.E.2d 673, 678 (1956); Matter of Triscari Children, 

109 N.C. App. 285, 288, 426 S.E.2d 435, 437 (1993). Thus, if Gilman lacked standing, 

the trial court had no power to enter judgment in his favor, notwithstanding L3’s 

default.

We thus turn to L3’s argument that Gilman lacked standing because of his 

failure to notify the bankruptcy court of his claims. Gilman’s causes of action arose 

when L3 terminated him on 11 April 2013. Gilman petitioned for Chapter 13 

bankruptcy in the United States Bankruptcy Court for the Eastern District of North 

Carolina on 10 January 2014. Because Gilman’s claims existed when he petitioned

for bankruptcy, they are the property of the bankruptcy estate and Gilman was 

required by law to disclose the claims to the estate. See 11 U.S.C. §§ 541, 1007(h), 

1306(a). Gilman did not properly disclose these claims to the bankruptcy court until 

after the jury entered its verdict.

In a Chapter 13 bankruptcy, both the debtor and the trustee of the bankruptcy 

estate have concurrent standing to bring non-bankruptcy causes of action belonging 

to the estate. Wilson v. Dollar Gen. Corp., 717 F.3d 337, 343 (4th Cir. 2013). This 

concurrent standing results from the special character of a Chapter 13 bankruptcy, 

in which the debtor retains possession of the property comprising the bankruptcy 

estate and is permitted to use that property in various ways. 11 U.S.C. §§ 363, 1303, 

1306(b), 1322. 
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But the fact that debtors have concurrent standing to bring claims in the 

Chapter 13 context does not mean that we can ignore Gilman’s failure to disclose the 

claims in his bankruptcy proceeding. As the Fourth Circuit acknowledged in Wilson, 

although a Chapter 13 debtor has standing to bring such claims, the debtor does so 

“on behalf of the estate” and “for the benefit of the estate.” Wilson, 717 F.3d at 343–

44. 

This special, vicarious nature of the debtor’s standing leads us to conclude, as 

other courts have, that the debtor’s standing is conditional on having properly 

disclosed his claims in the bankruptcy proceeding. Cowling v. Rolls Royce Corp., No. 

1:11-CV-01719-JMS, 2012 WL 4762143, at *4 (S.D. Ind. Oct. 5, 2012) (unpublished); 

Calvin v. Potter, No. 07 C 3056, 2009 WL 2588884, at *3 (N.D. Ill. Aug. 20, 2009) 

(unpublished); Robson v. Tex. E. Corp., 833 N.E.2d 461, 473 (Ind. Ct. App. 2005). As 

these courts reasoned, disclosing the claim in the bankruptcy proceeding is a 

necessary prerequisite to pursuing a claim on behalf of the estate. Without disclosing 

the claim, the bankruptcy court cannot factor that potential claim (and possible 

recovery) into any repayment plan, and the bankruptcy trustee cannot exercise its 

authority to evaluate the debtor’s actions and determine if it must intervene to ensure 

the litigation is resolved in the best interests of the estate. We agree with this 

reasoning and hold that, when a debtor has concealed the existence of a potential 

legal claim in a Chapter 13 bankruptcy proceeding, the debtor cannot be pursuing 
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that claim “on behalf of or for the benefit of her bankruptcy estate” and thus lacks 

standing under North Carolina law. See Calvin, 2009 WL 2588884, at *3. 

This outcome also is consistent with our State’s strict rules concerning 

prerequisites to proper legal standing when suing on behalf of others. For example, 

a homeowner’s association lacks standing, even in an actual controversy at the heart 

of the association’s representative role, if it failed to first obtain authority to sue

under its bylaws. Willowmere Cmty. Ass’n, Inc. v. City of Charlotte, __ N.C. App. __, 

__, __ S.E.2d __, __ (2016). Similar rules apply to those suing on behalf of a 

corporation. See Anderson v. SeaScape at Holden Plantation, LLC, __ N.C. App. __, 

__, 773 S.E.2d 78, 88 (2015). We see no reason why we should depart from this 

standing precedent for debtors suing on behalf of the bankruptcy estate. 

Accordingly, we hold that Gilman lacked standing to litigate these claims

because he pursued it without properly disclosing it in his bankruptcy proceeding. As 

a result, the trial court lacked subject matter jurisdiction to adjudicate the claim. See 

Estate of Apple, 168 N.C. App. at 177, 607 S.E.2d at 16.

“Where there is no jurisdiction of the subject matter the whole proceeding is 

void ab initio and may be treated as a nullity anywhere, at any time, and for any 

purpose.” High v. Pearce, 220 N.C. 266, 271, 17 S.E.2d 108, 112 (1941). Accordingly, 

we vacate the judgment and award in Gilman’s favor. 
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II. Application of Mandatory Arbitration Agreement

L3 next argues that the trial court lacked jurisdiction to enter the default 

judgment because Wiley signed an arbitration agreement that governed any claims 

concerning his employment. L3 contends that, under the arbitration agreement, the 

court lacked authority to litigate these disputes.

This argument is foreclosed by precedent from this Court holding that 

application of an arbitration clause is not a jurisdictional issue and can be waived by 

failure to timely invoke it. Blankenship v. Town and Country Ford, Inc., 155 N.C. 

App. 161, 163, 574 S.E.2d 132, 133–34 (2002). 

In Blankenship, the defendant argued “that the trial court erred in denying its 

motion to set aside the default judgment because the trial court lacked jurisdiction 

since the parties were subject to mandatory arbitration with respect to issues raised 

in plaintiffs’ complaint.” Id. at 166, 574 S.E.2d at 135. This Court rejected that 

argument, holding that the arbitration agreement was binding on the court only if 

the defendant appeared in court and invoked it: 

Arbitration pursuant to a valid agreement may be 

compelled by a court only upon application by a party to 

the agreement. 

Plaintiffs chose to file suit against defendant rather than 

seek arbitration pursuant to the agreement. It was 

incumbent upon defendant to assert its right to arbitrate. 

Because defendant failed to assert its right to arbitrate, 

this Court is not compelled to enforce the arbitration 

agreement. Moreover, we hold that the trial court did not 
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err in denying the motion to set aside the default judgment 

based on the existence of an arbitration agreement.

Id. at 166–67, 574 S.E.2d at 135 (citations omitted).

This case is indistinguishable from Blankenship. Because L3 did not timely 

appear in court and invoke the arbitration agreement to compel arbitration, the trial 

court did not err in entering judgment notwithstanding the parties’ agreement to 

arbitrate this dispute.

III. Decision to Set Aside Default Judgment on Damages 

Having addressed these jurisdictional arguments, we turn to the parties’ 

challenges to the trial court’s rulings throughout the default proceedings. 

First, Wiley argues that the trial court erred by setting aside the damages 

portion of the court’s initial default judgment under Rule 60(b). Wiley focuses his

argument on Rule 60(b)(6), and we thus begin our analysis there, although the trial 

court’s order did not specify the particular provision of Rule 60(b) on which it relied.

Wiley argues that Rule 60(b)(6) cannot support the trial court’s ruling because 

L3 failed to satisfy either of the first two prongs of the three-part test applicable to 

motions under Rule 60(b)(6). As explained below, the trial court was well within its 

sound discretion in allowing relief under Rule 60(b)(6). 

“A trial court’s decision to grant or deny a motion to set aside an entry of 

default and default judgment is discretionary. Absent an abuse of that discretion, 

this Court will not reverse the trial court’s ruling.” Basnight Const. Co. v. Peters & 
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White Const. Co., 169 N.C. App. 619, 621, 610 S.E.2d 469, 470 (2005). “[W]e only find 

abuse of discretion where the trial court’s judgment is manifestly unsupported by 

reason.” Bodie Island Beach Club Ass’n, Inc. v. Wray, 215 N.C. App. 283, 290, 716 

S.E.2d 67, 74 (2011).

To qualify for relief under Rule 60(b)(6), a movant must satisfy a three-part 

test: “(1) extraordinary circumstances exist, (2) justice demands the setting aside of 

the judgment, and (3) the defendant has a meritorious defense.” Gibby v. Lindsey, 

149 N.C. App. 470, 474, 560 S.E.2d 589, 592 (2002). Wiley does not argue that L3 

lacks a meritorious defense. Thus, we limit our analysis to the first two prongs of the 

test. 

This Court previously has recognized that the size of a default judgment award 

is a relevant factor to consider when determining whether extraordinary 

circumstances exist and whether justice would be best served by affording relief from 

judgment. See Anderson Trucking Serv., Inc. v. Key Way Transp., Inc., 94 N.C. App. 

36, 43, 379 S.E.2d 665, 669 (1989). 

Here, the size of the judgment was quite large, totaling well over $4 million. 

Moreover, as explained in Part VI below, that judgment included a large award of 

punitive damages, which were not even requested in the complaint.

Finally, L3 provided an explanation for why it failed to timely respond to the 

complaint and, although the trial court ultimately chose to uphold the default 
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judgment on liability, L3’s conduct in the case and its innocent explanation for why 

it missed the deadline readily provide a reasonable basis for the court to set aside the 

default judgment on damages. Accordingly, we reject Wiley’s argument and hold 

that, under the deferential standard of review, the trial court’s decision was not an 

abuse of discretion. See Wray, 215 N.C. App. at 290, 716 S.E.2d at 74.

IV. L3’s Motion to Set Aside Entry of Default and Default Judgment

Next, L3 asserts several challenges to the trial court’s initial entry of default 

and default judgment and the court’s denial of its motion to set aside the default. As 

explained below, we must reject these arguments under the applicable, narrow 

standard of review. 

A trial court’s decision to enter a default judgment, as well as a clerk or lower 

court’s entry of default, are both reviewable for abuse of discretion. Lowery v. 

Campbell, 185 N.C. App. 659, 665, 649 S.E.2d 453, 456 (2007), aff’d per curiam, 362 

N.C. 231, 657 S.E.2d 354 (2008). The decision to grant or deny a motion to set aside 

a default judgment likewise is reviewed for abuse of discretion. Basnight Const. Co., 

169 N.C. App. at 621, 610 S.E.2d at 470. As noted above, “we only find abuse of 

discretion where the trial court’s judgment is manifestly unsupported by reason.” 

Wray, 215 N.C. App. at 290, 716 S.E.2d at 74. As a result, “[t]his Court seldom has 

found an abuse of discretion by the trial court in failing to set aside a default 

judgment.” Bailey v. Gooding, 60 N.C. App. 459, 466, 299 S.E.2d 267, 271 (1983).
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A. Attachment of Verifications at Default Judgment Hearing 

L3 first argues that the trial court erred by entering the default judgment 

because Wiley amended the complaint at the default judgment hearing, thus 

reopening L3’s time to file a responsive pleading. Specifically, at the default 

judgment hearing (where L3 was not present), the following exchange occurred 

between Wiley’s counsel and the trial court:

MR. BUZZARD: We have got copies of the affidavits that 

are in the binder that we handed up, which Ms. Malone has 

copies to file.

MS. MALONE: And also the verifications for the 

complaint. 

THE COURT: Well that’s what I was going to say—

MS. MALONE: They were signed the date, or prior to the 

filing to [sic] the complaint. 

THE COURT: Okay.

MS. MALONE: I had just held those in my file, but I think 

I should probably put them in the file.

THE COURT: Yes. You can hand those up, and in light of 

the default all allegations in the complaint are deemed 

admitted and insofar as they are verified.

MS. MALONE: That was a filed copy and also a copy of the 

files.

THE COURT: And have been verified and can be treated 

as affidavits. 
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L3 argues that, by adding the verification pages to the complaint, Wiley 

amended the complaint under Rule 15 of the Rules of Civil Procedure, thereby 

reopening the time to file a responsive pleading. As explained below, we disagree.

Our determination turns on the context in which the verification pages were 

offered to the court. As other jurisdictions have observed, “adding a verification to a 

complaint is not, strictly speaking, an amendment to the pleading itself.” Chisholm 

v. Vocational Sch. for Girls, 103 Mont. 503, 508, 64 P.2d 838, 842 (1936). Moreover, 

the purpose of providing additional time to file a responsive pleading following an 

amendment is to offer the party an opportunity to respond to the amended

allegations. Turner Halsey Co. v. Lawrence Knitting Mills, Inc., 38 N.C. App. 569, 

573, 248 S.E.2d 342, 345 (1978). Of course, if the allegations were not amended, this 

underlying purpose is not implicated. 

Here, although the court accepted the verification pages into the trial record, 

the court’s comments indicate that it treated those verifications as affidavits attesting 

to the truth of the allegations in the complaint, not as amendments to the contents of 

the complaint. And, as Wiley points out, those verifications had no impact on the 

allegations in the complaint. Accordingly, we hold that, in the context of this default 

judgment hearing, the submission of verifications, attesting to the truth of the 

allegations in the complaint, did not amend the complaint and reopen the time to file 

a responsive pleading. We therefore reject L3’s argument. 
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B. Failure to Serve Affidavit of Service

L3 next argues that Wiley did not properly serve the motion for entry of default

and a notice of hearing at least five days before the hearing on the motion, as required 

by Rule 6(d) of the North Carolina Rules of Civil Procedure. This argument is 

meritless. Rule 6(d) states that it applies to a written motion “other than one which 

may be heard ex parte.” This Court has held that the requirements of Rule 6(d) are 

not applicable to motions for entry of default because, by their nature, these motions

are heard ex parte. G & M Sales of E. N.C., Inc. v. Brown, 64 N.C. App. 592, 594, 307 

S.E.2d 593, 594–95 (1983). This decision also is consistent with the text of Rule 55 

which, as explained in more detail below, provides a different, three-day period in 

which to serve notice on a party who has appeared in the case in advance of the 

default judgment hearing. Accordingly, we reject L3’s argument. 

C. Appearance Before Entry of Default Judgment

L3 next argues that it had made an appearance in this action before entry of 

default judgment and thus was entitled to notice of the default judgment hearing

under Rule 55 of the Rules of Civil Procedure. We are not persuaded.

Rule 55(b)(2) provides that, where “the party against whom judgment by 

default is sought has appeared in the action, that party (or, if appearing by 

representative, the representative) shall be served with written notice of the 

application for judgment at least three days prior to the hearing on such application.” 
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When a party entitled to notice under this provision does not receive it, the court 

must vacate the default judgment. Stanaland v. Stanaland, 89 N.C. App. 111, 115, 

365 S.E.2d 170, 172 (1988).

“Generally, an appearance requires some presentation or submission to the 

court.” Cabe v. Worley, 140 N.C. App. 250, 253, 536 S.E.2d 328, 330 (2000). 

Nevertheless, “a defendant does not have to respond directly to a complaint in order 

for his actions to constitute an appearance.” Roland v. W & L Motor Lines, Inc., 32 

N.C. App. 288, 289, 231 S.E.2d 685, 687 (1977). Instead, “an appearance may arise 

by implication when a defendant takes, seeks, or agrees to some step in the 

proceedings that is beneficial to himself or detrimental to the plaintiff.” Id. For 

example, in Coastal Federal Credit Union v. Falls, this Court held that the

defendants’ negotiations with plaintiff’s law firm over a payment plan could be 

sufficient to qualify as an “appearance” entitling the defendants to notice of a default 

judgment hearing. 217 N.C. App. 100, 103–07, 718 S.E.2d 192, 194–96 (2011). 

Here, L3 has not identified any communications that could satisfy the 

appearance requirement. To be sure, L3 presented evidence of a series of 

unsuccessful attempts by its counsel to reach Wiley’s counsel in the hour before the 

default judgment hearing occurred. But this Court has never held that unsuccessful, 

unilateral efforts to communicate with opposing counsel can constitute an 

“appearance” for purposes of Rule 55, and we are unwilling to do so here. We adhere 
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to the rule established in Roland, which permits an appearance by implication only 

“when a defendant takes, seeks, or agrees to some step in the proceedings that is 

beneficial to himself or detrimental to the plaintiff.” Roland, 32 N.C. App. at 289, 

231 S.E.2d at 687. Accordingly, we reject L3’s argument. 

D. Sufficiency of Facts Alleged to Support Claims Asserted

Finally, L3 argues that the allegations in the complaint are insufficient to state 

a valid claim on which relief can be granted and, as a result, the court lacked 

authority to enter judgment on those claims. But L3 does not present any argument 

on this point, instead stating that “[t]he law and facts are detailed at R. pp. 194–205 

and are incorporated by reference herein.” In a footnote, L3 then states that the 

arguments in this case require “detailed exposition” and that “[d]ue to page 

limitations, the Court is respectfully referred herein to prior briefs in the Record on 

Appeal, which are incorporated by reference.” 

This Court and our Supreme Court repeatedly have rejected attempts by 

litigants to “incorporate by reference” arguments found elsewhere in the trial record. 

See, e.g., Fortner v. J.K. Holding Co., 319 N.C. 640, 641–42, 357 S.E.2d 167, 167–68 

(1987); Stark v. N.C. Dep’t of Env’t & Nat. Res., Div. of Land Res., 224 N.C. App. 491, 

513, 736 S.E.2d 553, 567 (2012); S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 

189 N.C. App. 601, 615–16, 659 S.E.2d 442, 453 (2008). This precedent is particularly 

important in this Court, which adheres to strict page or word limits for briefs—limits 
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that L3 concedes it sought to avoid by referencing outside arguments rather than 

presenting them in the brief. Under Rule 28(b)(6), an issue “not presented in a party’s 

brief, or in support of which no reason or argument is stated, will be taken as 

abandoned.” We therefore treat this argument as abandoned.

V. Exclusion of Certain Evidence at the Trial on Damages 

We next turn to L3’s arguments concerning the trial on damages. L3 first 

argues that the trial court erred by excluding certain evidence it sought to introduce 

at trial, including evidence related to the circumstances surrounding Wiley’s 

discharge and the existence of the arbitration agreement. As explained below, we 

reject this argument. 

As an initial matter, many of L3’s evidentiary arguments are not preserved for 

appellate review. “A party must preserve the exclusion of evidence for appellate 

review by making a specific offer of proof unless the significance of the evidence is 

ascertainable from the record.” Griffis v. Lazarovich, 161 N.C. App. 434, 438, 588 

S.E.2d 918, 921 (2003).

Here, L3 challenges the trial court’s refusal to permit L3 to ask various 

questions concerning the company’s planned reduction in force, its employment 

practices, and the Plaintiffs’ job performance. But the content and significance of the 

answers to these questions is not apparent from the record and there was no offer of 

proof. Accordingly, these issues are not preserved for appellate review. See id.
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L3 also argues that the trial court erroneously prevented it from presenting 

any evidence concerning the parties’ arbitration agreement. The parties’ arbitration 

agreement is in the record and thus this issue properly is preserved for appellate 

review. Nevertheless, we reject this argument because the exclusion of the 

arbitration agreement, even if error, was harmless.

Appellate courts do not set aside verdicts and judgments 

for technical or harmless error. It must appear that the 

error complained of was material and prejudicial, 

amounting to a denial of some substantial right. The 

appellant thus bears the burden of showing not only that 

an error was committed below, but also that such error was 

prejudicial—meaning that there was a reasonable 

possibility that, but for the error, the outcome would have 

been different. 

Faucette v. 6303 Carmel Rd., LLC, __ N.C. App. __, __, 775 S.E.2d 316, 323 (2015).

Here, even if we assume the contents of the arbitration agreement had some 

minimal relevance, L3 has not shown that the exclusion of that evidence would have 

affected the calculation of compensatory damages owed to Wiley.1 “The sole purpose 

of the damages trial was to determine the harm to [Wiley] caused by” L3’s 

discriminatory termination of his employment. See Hien Nguyen v. Taylor, 219 N.C. 

App. 1, 16, 723 S.E.2d 551, 562 (2012). The availability of the arbitration procedures 

would not have impacted the jury’s calculation of these compensatory damages, and 

thus, exclusion of this evidence was harmless.

 

1 As explained in Part VI below, we vacate the award of punitive damages because Wiley failed 

to properly plead a request for punitive damages under Rule 9(k) of the Rules of Civil Procedure.
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VI. Denial of Request for Punitive Damages

Finally, L3 argues that the trial court erred by denying its motion for a directed 

verdict with respect to punitive damages. L3 contends that Wiley did not include a 

request for punitive damages or allege with particularity any of the aggravating 

factors that support punitive damages. L3 thus contends that the trial court should 

not have submitted that issue to the jury. We agree.

In 1994, our Supreme Court held in Holloway v. Wachovia Bank & Trust 

Company that “a plaintiff need not specially plead punitive damages as a prerequisite 

to recovering them at trial.” 339 N.C. 338, 347, 452 S.E.2d 233, 238 (1994). Instead, 

the Court held that, “where a pleading fairly apprises opposing parties of facts which 

will support an award of punitive damages, they may be recovered at trial without 

having been specially pleaded.” Id. 

In 1995, apparently in response to Holloway, the General Assembly adopted 

Rule 9(k) of the North Carolina Rules of Civil Procedure. 1995 N.C. Sess. Laws ch. 

514, § 3. That rule provides as follows: “A demand for punitive damages shall be 

specifically stated, except for the amount, and the aggravating factor that supports 

the award of punitive damages shall be averred with particularity.” N.C. R. Civ. P. 

9(k). 

Thus, to recover punitive damages, “[P]laintiff’s complaint must allege facts or 

elements showing the aggravating circumstances which would justify the award of 
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punitive damages.” Hart v. Brienza, __ N.C. App. __, __, 784 S.E.2d 211, 218 (2016). 

Those aggravating factors are “(1) fraud; (2) malice; or (3) willful or wanton conduct.” 

Id.

Here, the complaint does not contain a request for punitive damages. Indeed, 

the words “punitive damages” are not contained anywhere in the complaint’s 

allegations or in the prayer for relief. Moreover, there are no allegations of any of the 

aggravating factors that can support an award of punitive damages. See N.C. R. Civ. 

P. 9(k). Thus, we hold that Wiley failed to properly plead a request for punitive 

damages under Rule 9(k). As a result, the trial court erred by rejecting L3’s argument 

and submitting the punitive damages issue to the jury.2

Conclusion

For the reasons set out above, we affirm the trial court’s judgment with respect 

to the compensatory damages awarded to Plaintiff Harry A. Wiley, we vacate the 

award of punitive damages to Wiley, and we vacate the judgment entered in favor of 

Plaintiff Gerald D. Gilman for lack of standing. This case is remanded for entry of a 

new judgment consistent with this opinion. 

AFFIRMED IN PART; VACATED IN PART AND REMANDED.

 

2 L3 also challenges the trial court’s denial of its motion for a directed verdict with respect to 

the award of compensatory damages to Wiley but, as with other issues in its brief, presents no 

argument, instead incorporating by reference arguments made in the trial court and contained in the 

record on appeal. As explained in Part IV.D above, the Rules of Appellate Procedure do not permit 

parties to incorporate by reference arguments set out in other pleadings. Accordingly, these 

arguments are abandoned on appeal. See Stark, 224 N.C. App. at 513, 736 S.E.2d at 567.
WILEY V. L3 COMMC’NS VERTEX AEROSPACE, LLC

Opinion of the Court

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Chief Judge McGEE and Judge TYSON concur.