USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 1 of 24
UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 25-1334
STEPHANIE WALKER,
Plaintiff - Appellant,
v.
CITY OF CHARLOTTE, NORTH CAROLINA,
Defendant - Appellee.
Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Max O. Cogburn, Jr. District Judge (3:23-cv-00083-MOC-DCK)
Argued: December 11, 2025 Decided: April 8, 2026
Before NIEMEYER, WYNN, and BENJAMIN, Circuit Judges.
Affirmed in part, reversed in part, and remanded by unpublished opinion. Judge Wynn wrote the opinion, in which Judge Benjamin joined. Judge Niemeyer wrote an opinion concurring in part and dissenting in part.
ARGUED: M. Shane Perry, WILLIAMS & PERRY PLLC, Mooresville, North Carolina, for Appellant. Steven Andrew Bader, CRANFILL SUMNER LLP, Raleigh, North Carolina, for Appellee. ON BRIEF: Stephanie H. Webster, CRANFILL SUMNER LLP, Charlotte, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit. USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 2 of 24
WYNN, Circuit Judge:
Under North Carolina law, a contract may be set aside if it was obtained through
undue influence.
Stephanie Walker, an elderly widow with limited income, was left suddenly
homeless when her Charlotte home was flooded with raw sewage from a sewer-system
backup. The City of Charlotte offered $45,000 to Walker on the condition that she sign a
release of any claims she might have against the City of Charlotte related to the incident.
Walker initially protested but, lacking the money to make her home habitable and fearing
that she would not survive living in her car, signed the release to pay for emergency repairs.
Because Walker has forecast evidence from which a jury could conclude that the
release was obtained through undue influence, we reverse the district court’s grant of
summary judgment to the City of Charlotte.
I.
A.
Walker is a widow in her late seventies and lives in Charlotte, North Carolina. Her
home connects to the Charlotte sewer system. In the early morning of February 15, 2022,
sewage back flowed through her toilet, covering her home in several inches of raw sewage.
The City of Charlotte has a sewer backup policy, through which it can pay for
property damage stemming from backups that originate in the Charlotte system. In
February 2022, the policy authorized payments of up to $15,000. Payment through the
policy program was contingent on the execution of a release of all claims, with a possible
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exception for backups caused by the City of Charlotte’s negligence. 1 The City of Charlotte
initially offered Walker the full $15,000, along with recommendations for contractors.
Walker chose one of the contractors on the City of Charlotte’s list, Cardinal
Restoration. In the three days following the sewage backup, Cardinal performed basic
mitigation work, such as removing most of the contaminated water and tearing out carpet,
and it gave Walker a quote of $38,200 for repairs. Cardinal noted that “[c]ode updates
required by the county and unforeseen damages could increase this expense.” J.A. 140.2
Additionally, Cardinal and Walker had already “discussed aggressive corner cutting, doing
some work [herself], and careful selection of inexpensive materials,” but there was not
much room to decrease cost. J.A. 141. Walker did not have the money to pay Cardinal, and
Cardinal would not start work until it was guaranteed payment.
At some point between then and June 2022, Walker was referred to counsel. Her
counsel attempted to negotiate with the City of Charlotte, but the City of Charlotte
maintained that it could not pay more than the policy limit. The local news also interviewed
Walker several times and ran stories on her situation in June and July.
1 The City of Charlotte agrees that the payment cap “did not apply if Charlotte’s negligence caused the blockage.” Response Br. at 2. And an initial release signed by Walker states that the document will not release Charlotte from claims “if it is determined that” Charlotte’s negligence caused the blockage. J.A. 149. It is unclear how negligence would be determined without a lawsuit. Yet Charlotte stated at oral argument that Walker could not have accepted the $15,000 and then sued Charlotte for negligence to cover her damages above $15,000. Oral Arg. at 37:29–38:07, https://www.ca4.uscourts.gov/OAarchive/mp3/25-1334-20251211.mp3. It is undisputed that the final release, which was attached to the $45,000 payment, covered all claims arising from the sewer backup. 2 Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this appeal. 3 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 4 of 24
In August 2022, the Charlotte City Council updated the sewer backup policy and
made the revisions retroactively effective as of January 1, 2022. The 2022 policy increased
the payment cap to $45,000 and required claimants to release the City of Charlotte of any
further liability for the sewer backup.
The City of Charlotte offered this increased amount to Walker in early July, before
the policy was officially updated. Her counsel indicated that this amount would perhaps be
sufficient to make Walker’s home habitable, but it would not cover a significant portion of
her other damages, including to her furniture and other personal property. But the City of
Charlotte held firm, stating that any compensation for personal property would need to
come out of the $45,000. A month later, the City of Charlotte rejected Walker’s counsel’s
suggestion to settle for $65,000.
By August, six months after the backup, Walker had grown desperate. She was
losing her alternate housing and would need to sleep in her car. Her counsel informed
Charlotte that Walker was “in her late 70s and she won’t last long living in her car.” J.A.
154. Walker avers that she was “in fear for [her] life,” that she “had nowhere else to go,”
and that she did not have the money to fix her home on the hope of recovering her repair
costs through a lawsuit. J.A. 216.
On August 10, 2022, Walker signed a release and wrote under her signature, “I’m
homeless and I don’t have another choice!” J.A. 146. Charlotte responded that it could not
accept the release because “it appears to intend to put the City on notice that the Release
was not signed freely and under no duress.” J.A. 147. Walker’s counsel responded that the
City of Charlotte was “already on notice that she has no options” because he had told the
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City of Charlotte that “she is homeless and has no money to fix what the city has done.”
J.A. 155.
Walker needed the money: She attests that she “did not want to sign” but that she
“thought about dying” and then executed a clean copy of the release “so that [she] would
not be homeless any longer.” J.A. 217; accord id. (“If I had had a choice, I would not have
signed it.”). The City of Charlotte then paid Walker $45,000. Cardinal repaired portions of
Walker’s home, though water and sewer issues persist.
B.
In February 2023, Walker sued the City of Charlotte, claiming that she had signed
the release under undue influence and bringing negligence, nuisance, inverse
condemnation, and takings claims. The City of Charlotte moved to dismiss, citing the
release. The district court denied the motion, concluding that the issue of undue influence
would be resolved at summary judgment.
In the order denying the motion to dismiss, the district court stated that it would
“allow this matter to go to discovery on the issue of undue influence. That is, the parties
may conduct discovery on the circumstances surrounding the settlement agreement in this
matter.” Walker v. City of Charlotte, No. 3:23-cv-83, 2023 WL 8421110, at *1 (W.D.N.C.
Dec. 4, 2023). The parties disagreed about whether the order meant that discovery was
limited only to the issue of undue influence and requested a discovery conference. In a
pretrial order, the magistrate judge declined to hold a conference, stating that he had
confirmed with the district court that discovery should be limited to undue influence.
5 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 6 of 24
After this limited discovery, the City of Charlotte moved for summary judgment. At
the hearing, the district court explained that it would decide the motion on the issue of
undue influence: “If the undue influence is not there, the case is over. If the undue influence
is there, all the other [claims] are in play.” J.A. 195.
The district court granted summary judgment for the City of Charlotte. It noted that
Walker was represented by counsel, and the court considered her decision to remove her
protest statement from the release as indicative of “her desire to strike a bargain so she
could begin repairs on her home.” Walker v. City of Charlotte, No. 3:23-cv-83, 2025 WL
2271428, at *2 (W.D.N.C. Apr. 1, 2025). The district court reviewed the history of
negotiations and determined that the City of Charlotte’s increased offers from $15,000 to
$45,000 showed that Walker had some bargaining power. Though Walker may have been
undercompensated, the district court noted that “settlement is inherently a compromise.”
Id. Finally, the district court determined that Walker’s age and economic condition did not,
on their own, show that the City of Charlotte had an “overpowering influence” over her.
Id. at *3. Thus, the district court concluded that the evidence pointed “to a difficult but
voluntary decision” by Walker to settle, knowing that the payment would not cover her full
damages. Id.
Walker timely appealed.
II.
Walker challenges the district court’s decision to limit the scope of initial discovery
and its subsequent grant of summary judgment.
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We review the district court’s discovery decision under an abuse-of-discretion
standard, acknowledging that district courts have “considerable discretion in overseeing
discovery.” Va. Dep’t of Corr. v. Jordan, 921 F.3d 180, 188 (4th Cir. 2019) (quoting Kolon
Indus. Inc. v. E.I. DuPont de Nemours & Co., 748 F.3d 160, 178 (4th Cir. 2014)). That
discretion “extends as well to the manner in which it orders the course and scope of
discovery.” Ardrey v. United Parcel Serv., 798 F.2d 679, 682 (4th Cir. 1986).
We review a “ruling on summary judgment de novo, applying the same legal
standards as the district court and viewing the evidence in the light most favorable to the
nonmoving party.” Edwards v. CSX Transp., Inc., 150 F.4th 232, 235 (4th Cir. 2025). And
we review de novo questions of state contract law. Rowland v. Sandy Morris Fin. & Est.
Plan. Servs., LLC, 993 F.3d 253, 257 (4th Cir. 2021); see Lansdowne on the Potomac
Homeowners Ass’n, Inc. v. OpenBand at Lansdowne, LLC, 713 F.3d 187, 205 (4th Cir.
2013).
III.
First, Walker argues that the district court erred when it limited initial discovery to
the issue of undue influence without hearing from the parties or performing an analysis
under Rule 42(b) of the Federal Rules of Civil Procedure, which governs a district court’s
ability to bifurcate a trial on separate issues. 3 See Fed. R. Civ. P. 42(b) (“[T]he court may
order a separate trial of one or more separate issues [or] claims[.]”). We disagree.
Charlotte argues that Walker did not preserve this argument for appeal. But Rule 3
46 requires an objection only so far as the party had an “opportunity to do so when the ruling or order was made.” Fed. R. Civ. P. 46. The district court sua sponte restricted
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As an initial matter, Walker’s reliance on Rule 42(b) is incorrect. To be sure, we
have used the term “bifurcation” to refer to the decision to conduct either a trial or
discovery in phases. See, e.g., Wai Man Tom v. Hosp. Ventures LLC, 980 F.3d 1027, 1043
(4th Cir. 2020) (referencing “bifurcated discovery”); Burgess v. Goldstein, 997 F.3d 541,
548 (4th Cir. 2021) (reviewing the bifurcation of trial, with discovery stayed until the
conclusion of the first trial). Yet bifurcated trial and bifurcated discovery are different
animals. Courts separate or bifurcate trials under Rule 42(b). See Plyler v. Cox, 145 F.4th
501, 513 (4th Cir. 2025). But it is Rule 26 that “vests the trial judge with broad discretion
to . . . dictate the sequence of discovery.” Crawford-El v. Britton, 523 U.S. 574, 598–99
(1998) (explaining that the court sets “the timing and sequence of discovery” under Rule
26(d)). This sequencing may happen, for example, after the parties submit a discovery plan
under Rule 26(f), when the court devises an appropriate pretrial order under Rule 16(b).
See 8A Wright & Miller’s Federal Practice & Procedure § 2047 (3d ed. 2010 & Supp.
2025).
That is what happened here. After the City of Charlotte moved to dismiss based on
the release, and Walker opposed dismissal by raising the issue of undue influence, the
district court denied the motion and stated that the parties could “conduct discovery on the
circumstances surrounding the settlement agreement in this matter.” J.A. 107. The parties
disagreed about the interpretation of that sentence in their report of the Rule 26(f) meeting
and requested a discovery conference. The court declined to hold a conference and
discovery in its order denying Charlotte’s motion to dismiss, and the magistrate judge declined the parties’ request for a discovery conference on the matter. 8 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 9 of 24
confirmed in the Rule 16(b) pretrial order that discovery would be limited to the issue of
The district court did not abuse its discretion by restricting initial discovery to the
issue of undue influence. Though a district court “may not, through discovery restrictions,
prevent a plaintiff from pursuing a theory or entire cause of action,” courts often order that
discovery should first proceed on threshold issues. Ardrey, 798 F.2d at 682. For example,
a court may restrict initial discovery to jurisdictional issues before merits issues, to
individual claims before class claims, or to officer liability before municipal liability. See,
e.g., Cunningham v. Gen. Dynamics Info. Tech., Inc., 888 F.3d 640, 650–51 (4th Cir. 2018)
(jurisdiction); Ardrey, 798 F.2d at 684–85 (individual claims); Carter v. Baltimore County,
95 F. App’x 471, 475 (4th Cir. 2004) (officer liability).
Here, the district court identified the validity of the release as a potentially
dispositive, threshold issue. If Walker’s undue-influence argument failed, the court would
not reach the merits of the remainder of her suit. Thus, we conclude that the district court
did not abuse its discretion by limiting initial discovery to the issue of undue influence. 4
IV.
Second, Walker argues that the district court erred when it granted summary
judgment to the City of Charlotte because there is a jury question on undue influence. We
agree.
Of course, because we next conclude that Walker’s undue-influence theory 4
survives summary judgment, she must be allowed discovery on the remainder of her claims before any trial. See Ardrey, 798 F.2d at 682. 9 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 10 of 24
Under North Carolina law, a contract is voidable if it is obtained through undue
influence. Link v. Link, 179 S.E.2d 697, 705–07 (N.C. 1971). Undue influence is “the
exercise of an improper influence over the mind and will of another to such an extent that
[the action] is not that of a free agent, but in reality is the act of the third person who
procured the result.” Stephenson v. Warren, 525 S.E.2d 809, 812 (N.C. Ct. App. 2000)
(quoting Lee v. Ledbetter, 49 S.E.2d 634, 636 (N.C. 1948)).
Undue influence is related to, but distinguishable from, duress and fraud. Link, 179
S.E.2d at 703. Duress requires a wrongful, coercive act. Id. at 704–05. But situations falling
short of duress may satisfy the standard for undue influence: “Where there is no coercion
amounting to duress,” another type of “force exerted upon a party” may justify relief under
the doctrine of undue influence. Id. at 706. Likewise, fraud requires deception, but there
may be undue influence even “where there is no misrepresentation or concealment of a
fact.” Id. at 703.
In North Carolina, there are “four general elements of undue influence: (1) a person
who is subject to influence; (2) an opportunity to exert undue influence; (3) a disposition
to exert undue influence; and (4) a result indicating undue influence.” Griffin v. Baucom,
328 S.E.2d 38, 41 (N.C. Ct. App. 1985) (citing Curl ex rel. Curl v. Key, 306 S.E.2d 818,
820 (N.C. Ct. App. 1983), rev’d on other grounds, 316 S.E.2d 272 (N.C. 1984)). Of these,
the first and fourth elements—a person subject to influence and a result indicating
influence—are “key.” Curl, 306 S.E.2d at 820.
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“Undue influence is an inherently subjective term, and finding its existence thus
requires engaging in a heavily fact-specific inquiry.” In re Will of Jones, 669 S.E.2d 572,
577 (N.C. 2008). And “[n]o test has emerged by which we can measure with mathematical
certainty the sufficiency of the evidence to take the issue of undue influence to the jury.”
Hardee v. Hardee, 309 S.E.2d 243, 245 (N.C. 1983); see In re Andrews’ Will, 261 S.E.2d
198, 200 (N.C. 1980). Nevertheless, the North Carolina courts have articulated lists of
relevant “factors” or “badges” of undue influence. In re Andrews’ Will, 261 S.E.2d at 200. 5
This non-exclusive list includes
[t]he age, physical and mental condition of the victim, whether the victim had independent advice, whether the transaction was fair, whether there was independent consideration for the transaction, the relationship of the victim and alleged perpetrator, the value of the item transferred compared with the total wealth of the victim, whether the perpetrator actively sought the transfer and whether the victim was in distress or an emergency situation.
Yurek v. Shaffer, 678 S.E.2d 738, 746 (N.C. Ct. App. 2009) (quoting Curl, 306 S.E.2d at
820). No one factor is determinative, because “undue influence is generally proved by a
number of facts, each one of which standing alone may be of little weight, but taken
collectively may satisfy a rational mind of its existence.” Jones, 669 S.E.2d at 578 (cleaned
up).
5 The issue of undue influence arises most commonly in will contests, and a set of specific (though non-exclusive) factors has developed in that context. See, e.g., Jones v. Corn, 902 S.E.2d 17, 25–26 (N.C. Ct. App. 2024) (reciting the factors articulated in In re Andrews’ Will, 261 S.E.2d at 200, including that “the will is different from and revokes a prior will”). This case, of course, does not concern a will contest. 11 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 12 of 24
Walker has forecast evidence, when viewed in the light most favorable to her, that
is sufficient to raise a question of fact on the issue of undue influence.
First, Walker has offered evidence that her age, economic condition, and emergency
situation made her more susceptible to undue influence. Walker is a widow in her late 70s
with a limited income. Her house had been flooded with raw sewage, and she had “no
spouse support or money saved up” to fix it. J.A. 216. In her affidavit, Walker testified that
at the time she signed the release, she was losing her temporary housing and was “in fear
for [her] life” because she “had nowhere else to go” and “it would be very cold in the
winter.” Id. Though initially she signed the release with a “protest statement” included, she
removed the statement at the City of Charlotte’s request after she “thought about dying.”
J.A. 217.
The district court concluded that Walker’s removal of the protest statement in the
second release “indicate[d] her desire to strike a bargain.” Walker, 2025 WL 2271428, at
*2. Though a factfinder may make that determination at trial, here we must view the
evidence in the light most favorable to Walker. Applying that more favorable light, a jury
could conclude that Walker’s compliance with the City of Charlotte’s demand for her to
remove her protest statement was simply further evidence of its control over Walker’s
execution of the contract.
Next, the evidence suggests that the City of Charlotte knew about Walker’s
circumstances. An earlier email informed the City of Charlotte that Walker was “in her late
70s and she won’t last long living in her car.” J.A. 154. Moreover, the City of Charlotte
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rejected the first executed release from Walker because “it appear[ed] to intend to put the
City of Charlotte on notice that the Release was not signed freely and under no duress.”
J.A. 147. We do not suggest that the City of Charlotte acted with bad faith or ill motive,
but undue influence may void a transaction even “without an affirmative intention of
wrong-doing or an evil purpose.” New Amsterdam Cas. Co. v. Waller, 301 F.2d 839, 843
(4th Cir. 1962) (applying North Carolina law). Rather, a party that “tak[es] advantage of
another’s weakness” to the extent that it supplants the other party’s will has exerted undue
influence. Little v. Bank of Wadesboro, 121 S.E. 185, 187 (N.C. 1924).
Finally, Walker has forecast evidence that the result of the transaction indicates
undue influence, pointing to the disparity between her damages and the settlement amount.
The Supreme Court of North Carolina’s decision in Causey v. Seaboard Air Line Railway
Co., 81 S.E. 917 (N.C. 1914) is instructive here.
There, an employee sustained a head injury while working. Id. at 918. The employer
provisionally agreed to settle the injury claim for $75, plus his lost two-and-a-half months
of wages. Id. Eventually, the employee signed a settlement agreement for only the $75. Id.
In concluding that there was sufficient evidence to support a finding that the employee was
unduly influenced, the court noted that the settlement amount did not include “the most
important element of damages, [which was] mental and physical suffering, and reduced
capacity.” Id.
Here, a jury could similarly find that the settlement amount did not include
important damages amounts. Walker selected Cardinal Restoration from a list of
contractors suggested by the City of Charlotte. Cardinal initially quoted Walker $38,200
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as the cost to repair the structure of her home. Cardinal also noted that the price could
increase with needed housing code upgrades and that the parties had already discussed
“aggressive corner cutting, doing some of the work [herself], and careful selection of
inexpensive materials.” J.A. 141. Beyond repairing her home’s structure, Walker also faced
significant other costs, including those associated with her temporary lodging, with
replacing her home’s contents, and with her emotional damages. Walker averred that
replacing her kitchen cabinets alone would cost over $30,000, and she informed the City
of Charlotte that one of her ruined furniture sets initially cost $12,000. But “no matter how
much the actual cost was,” the City of Charlotte would not pay more than $45,000. J.A.
216. Thus, the jury could find that the financial result of the bargain indicates undue
influence.
To be sure, the City of Charlotte also has strong evidence that points away from
undue influence. Walker was represented by counsel when she signed the release. See
Yurek, 678 S.E.2d at 746 (listing “whether the victim had independent advice” as a relevant
factor). A jury may well find that this fact is compelling enough to find that Walker suffered
from no undue influence in signing away her claims against the City of Charlotte.
But on summary judgment, viewing all evidence in the light most favorable to
Walker, we cannot conclude that this single factor is dispositive. See id. (listing other
factors); Jones, 669 S.E.2d at 578 (“[U]ndue influence is generally proved by a number of
facts[.]”); In re Beale’s Will, 163 S.E. 684, 687 (N.C. 1932) (noting that there was a jury
question on the issue of undue influence, even though an attorney had drafted the contested
will). Indeed, here Walker’s counsel has conceded that he was entirely unable to aid Walker
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in negotiations. See J.A. 198 (stating that the increase to $45,000 “wasn’t me. . . . I had
nothing to do with it”). Because a jury could reasonably find that the presence of counsel
did not outweigh the other factual circumstances that created undue influence, we reverse
the grant of summary judgment.
C.
We understand the district court’s concern that “invalidating contracts like this one
would make it difficult for parties to strike bargains that offer sorely needed relief.” Walker,
2025 WL 2271428, at *3. And we agree that financial difficulty cannot “by itself justify
setting aside a settlement on grounds of duress.” 6 Selmer Co. v. Blakeslee-Midwest Co.,
704 F.2d 924, 928 (7th Cir. 1983). If it were so, those in dire financial straits would be
unable to enter into binding settlements. Cf. Melanson v. Browning-Ferris Indus., Inc., 281
F.3d 272, 277 (1st Cir. 2002) (inferring duress “from merely the emotional and financial
stress associated with loss of a job” would “make it virtually impossible for employers and
employees to enter into binding settlements of employment disputes”).
But it is also true that “[m]atters stand differently when the complaining party’s
financial distress is due to the other party’s conduct.” Selmer, 704 F.2d at 928. In such
circumstances, a release may present a party with “little more than a ‘Hobson’s choice.’”
Coventry v. U.S. Steel Corp., 856 F.2d 514, 524 (3d Cir. 1988).
Of course, a release may implicate more than a simple monetary interest. For
example, the Ninth Circuit has held that whether a father had voluntarily signed a release
6 Of course, as discussed in Part IV.A, the standard to set aside a contract due to duress is even higher than that to set aside a contract for undue influence. 15 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 16 of 24
was a triable issue of fact when he had to choose between releasing his Federal Tort Claims
Act claims against the government or prolonging his separation from his children
indefinitely. Salmeron v. United States, 724 F.2d 1357, 1361–62 (9th Cir. 1983). The fact
that he had been represented by counsel was “not dispositive.” Id. at 1362. And a
potentially life-or-death situation further complicates the question of voluntariness. See,
e.g., Reliford v. United Parcel Serv., No. 08-cv-1266, 2008 WL 4865987, at *5 (N.D. Ill.
July 8, 2008) (holding that an employer’s withholding of medical benefits could constitute
duress if the benefits were necessary to preserve the employee’s wife’s life).
All of that considered, this is a matter that is controlled by the laws of North
Carolina. And under North Carolina law, when a negligent actor 7 creates physical peril for
a victim and then conditions rescue funds on the release of the victim’s claims, there is at
least a question of fact on whether the release was obtained through undue influence. See
Link, 179 S.E.2d at 705–07; Little, 121 S.E. at 187; Causey, 81 S.E. at 918. That is the
factual question that the record before us presents that should be resolved by a jury, not by
summary judgment.
7 Walker has not yet had discovery on her claim that it was the City of Charlotte’s negligence that placed her in this precarious situation, so we assume it for the purpose of this appeal. Without addressing the discovery limitation, the dissent argues that the record “shows a total lack of evidence that the City was indeed negligent,” in part because “there is no suggestion that the sheetrock tape was the property of the City or that the City had played any role in causing the tape to end up in the sewer main.” Dis. Op. at 23. But a municipality can be negligent for failing to properly maintain, inspect, and repair the sewer system, even if a blockage originated with a third party. See, e.g., Bostic Packaging, Inc. v. City of Monroe, 562 S.E.2d 75, 76–79 (N.C. Ct. App. 2002); Pulliam v. City of Greensboro, 407 S.E.2d 567, 570–71 (N.C. Ct. App. 1991). Here, one of Walker’s negligence allegations is that the City of Charlotte failed “to use reasonable, ordinary care in the maintenance and inspection of the sewer main.” J.A. 70. 16 USCA4 Appeal: 25-1334 Doc: 42 Filed: 04/08/2026 Pg: 17 of 24
For the foregoing reasons, while we affirm the challenged decision about how to
manage discovery in this case, we must reverse the district court’s decision granting
summary judgment and remand for further proceedings.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
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NIEMEYER, Circuit Judge, concurring in part and dissenting in part:
After a sewer main in the City of Charlotte, North Carolina, became clogged by a
roll of sheetrock tape, sewage backflowed into the home of Stephanie Walker, causing
damage to her real and personal property. After the City refused to pay her more than
$15,000 — the maximum automatically awardable without fault under its sewer backup
policy — she retained an attorney. Her attorney demanded $65,000, but, following
negotiations, he obtained an agreement to settle with the City for $45,000. As Walker
needed the money to repair her home because of her poor financial condition, she signed
the settlement agreement with the approval of her attorney.
After her home was repaired, Walker sued the City to void and set aside the
settlement agreement on the ground that she had signed it while under duress. She claimed
that the City unduly influenced her into signing the agreement as she lacked financial
resources, she needed to repair her home, and the City had greater financial bargaining
power. In addition to seeking to set aside the settlement agreement, she asserted claims for
negligence, nuisance, inverse condemnation, and the unlawful taking of her property. The
City filed a motion for summary judgment, which the district court granted, concluding
that Walker had failed to present any evidence that she was, in any way, forced by the City
to sign the settlement agreement. The court stated that the settlement was “inherently a
compromise” in which she may have “sacrificed full compensation to avoid the uncertainty
of litigation.” In light of the settlement agreement, the court dismissed Walker’s remaining
claims and entered judgment for the City.
From that judgment, Walker has appealed.
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The majority, now, chooses to find sufficient evidence to vacate the district court’s
judgment, but without any factual support for doing so. One party’s personal financial
condition is not sufficient to show that the other party in any way overbore the first party’s
will. To the contrary, the evidence in this case is that Walker exercised her will, with the
advice of counsel, and signed the settlement agreement because that was the best financial
outcome for her at the time, even though it was a compromise of all that she had wished to
obtain. This case presents a routine negotiation for a settlement in which the parties signing
were represented by counsel. The fact that the City was able, because of its superior
financial condition, to adhere to its final offer is not a ground to void the agreement that
Walker voluntarily signed, albeit in protest, with the approval of her attorney. The fact
remains that there was no conduct on the part of the City to overbear Walker’s will. Indeed,
after the City adjuster had initially visited her to offer the then maximum $15,000 under
the City’s sewer backup policy, no representative of the City ever again had any contact
with Walker by which to overbear her will. To the contrary, she executed her settlement
of her own will, weighing her own financial plight and the amount and timing of the City’s
offer. And only her own financial condition brought pressure on her. The district court
was clearly correct, and I would affirm. Thus, I concur in Parts II and III of the court’s
opinion and dissent from Part IV.
I
In February 2022, a roll of sheetrock tape clogged a sewer main in the City of
Charlotte, causing sewage to backflow into Walker’s home. Shortly thereafter, a City
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claims adjuster offered Walker $15,000 in settlement, which was the maximum amount
that the City could automatically offer under its sewer backup policy without any showing
of fault. But when Walker contacted a contractor from among those that the City had
recommended, she received a quote to repair her home for $38,200. Thereupon, she
retained an attorney to negotiate with the City.
While Walker’s attorney was negotiating with the City, emphasizing that $15,000
would not cover the repairs to Walker’s home, let alone to her personal property, the City
updated its sewer backup policy to increase the maximum payment to $45,000 without
regard to fault. Accordingly, the City offered Walker the new policy cap of $45,000 for
“mitigation and restoration costs” to her home. While Walker’s attorney pressed for more,
asserting that Walker “would settle the claim for $65,000,” the City held fast to its $45,000
offer. Through counsel, Walker then accepted the offer, concluding that it was her best
option at the time. Walker signed the settlement agreement and at the bottom wrote, “I’m
homeless and I don’t have another choice!” When the City refused to accept the settlement
agreement as so endorsed, Walker signed a clean copy, releasing all claims against the City
for $45,000.
After Walker had made the repairs to her home and had moved back in, she
commenced this action against the City. In the first count, she alleged undue influence
against the City in order to set aside the settlement agreement, and in the remaining counts,
she alleged negligence, nuisance, inverse condemnation, and an unlawful taking of her
property.
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In response to the City’s motion for summary judgment, Walker submitted an
affidavit to explain why she had signed the settlement agreement while under duress. She
stated that she had been “shock[ed]” when the sewage flooded her home and that she could
not afford to finance the repairs. She stated that, during the time when the City would not
pay her the demanded $65,000, she was “losing the [interim] place where [she] had been
living” since the incident; that she “knew that it would be very cold in the winter”; and that
she had “nowhere else to go.” Plus, she was “concern[ed] about “lawyer fees,” “[t]he
length of time that it would take to get the case settled,” and “the court system.” She also
stated that she “was in fear for [her] life” and her dog’s life, “was under a great deal of
stress,” and “just wanted to be in [her] home,” so she signed the offer “under protest”
because she “did not have any other choice.” She claimed that she “did not want to sign”
the offer but did so that “she would not be homeless any longer.”
The district court granted the City’s motion, concluding that Walker had not met
her burden of showing “circumstances and inferences from which a jury could find that”
her acceptance of the offer “was not the product of [her] own free and unconstrained will,
but instead was the result of an overpowering influence over [her] by [the City].” (Quoting
Barbee v. Johnson, 665 S.E.2d 92, 98 (N.C. Ct. App. 2008)). The court noted that Walker
had obtained an increased settlement amount, and although she was elderly and poor, she
had produced “no evidence to suggest [she] was in any way forced to sign the agreement”
by the City. The court further explained that “a settlement is inherently a compromise”
and concluded that Walker had “sacrificed full compensation to avoid the uncertainty of
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litigation and to repair her home as soon as possible.” It thus concluded that the settlement
was binding and therefore granted summary judgment to the City.
From the district court’s judgment dated April 1, 2025, Walker filed this appeal.
II
While the majority neatly parses the elements of an undue-influence claim under
North Carolina law, the overarching fact remains that Walker has presented no evidence of
any conduct by the City that can be considered overbearing conduct so as to constitute
undue influence. Under North Carolina law, Walker must show that the City “exercise[d]
. . . an improper influence over the mind and will of [her] to such an extent that [the
settlement] [was] not that of a free agent, but in reality [was] the act of the [City] who
procured the result.” Stephenson v. Warren, 525 S.E.2d 809, 812 (N.C. Ct. App. 2000)
(cleaned up). Making an offer of settlement and holding to it plainly does not qualify as
undue influence. Otherwise, all settlement agreements reflecting compromise would be
the product of undue influence.
In this case, Walker obtained a settlement that fully covered the quoted cost of her
repairs and was the maximum amount the City could automatically offer under its sewer
backup policy without a showing of fault. While she was indeed dissatisfied with the offer,
she consulted with her attorney, balanced her personal financial circumstances with the
prospects for litigation, and then knowingly accepted the City’s offer. These facts do not
indicate undue influence. Undue influence requires that Walker show that her lack of
choice was the result of a third party, the City, having “substitut[ed] . . . its mind for [hers]
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. . . causing [her] to [sign a document] which [s]he otherwise would not have [signed].” In
re Kemp’s Will, 67 S.E.2d 672, 674 (N.C. 1951); id. at 675 (noting that plaintiff had not
shown “an overpowering influence or as tending in any way to coerce her actions or destroy
her free will”).
Moreover, it appears from the record that the City had no obligation to pay Walker
more than the maximum under its program. If Walker thought she could prove otherwise,
she could have turned down the offer and filed suit. But on this record, there was little to
give Walker hope that she could prove that the City was negligent. Yet, the majority’s
holding is propped up by assuming negligence. As it holds, “[W]hen a negligent actor
creates physical peril for a victim and then conditions rescue funds on the release of the
victim’s claims, there is at least a question of fact on whether the release was obtained
through undue influence.” Supra at 17 (footnote omitted) (emphasis added). The record,
however, shows a total lack of evidence that the City was indeed negligent. The sewage
backup, as alleged by Walker, was caused by a roll of sheetrock tape that had somehow
found its way into the sewer, blocking the main and causing the backflow into Walker’s
home. But there is no suggestion that the sheetrock tape was the property of the City or
that the City had played any role in causing the tape to end up in the sewer main.
The facts of Walker’s personal situation were indeed unfortunate, but the fact that
she was, in her view, not compensated by the City with more money does not give rise to
a triable issue of undue influence by the City. The City presented Walker with its final
offer of settlement, and she made the rational decision to accept it as a guaranteed, timely
payment in lieu of taking her chances with litigation. See, e.g., Yurek v. Shaffer, 678 S.E.2d
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738, 747 (N.C. Ct. App. 2009) (concluding that there was “little evidence to support a claim
of undue influence” where, in signing a consent judgment giving custody of her child to a
relative, the record showed that the plaintiff had “made a rational determination” of what
was in her and the child’s best interests). Settlements involve compromise and negotiation,
and parties often feel that they have either overpaid or been undercompensated. But those
are the risks that parties accept when they choose to settle matters outside the judicial
system. The controlling point is, however, that dissatisfaction with one’s own bargaining
power is not undue influence by another who has a greater bargaining power. Yet the
majority seems to assume so.
I respectfully dissent from Part IV.