Summary
pertaining to a lawsuit requesting enforcement of its lien
Summary of this case from Grp. III Mgmt., Inc. v. Suncrete of Carolina, Inc.Opinion
No. COA09-781
Filed 15 June 2010 This case not for publication
Appeal by plaintiff from judgment entered 11 March 2009 by Judge Robert P. Johnston in Mecklenburg County Superior Court. Heard in the Court of Appeals 18 November 2009.
Thomas B. Kobrin, for plaintiff-appellant. James, McElroy Diehl, P.A., by John R. Buric and Preston O. Odom, III, for defendants-appellees.
Mecklenburg County No. 08 CVS 6654.
Brooks Millwork Company ("plaintiff") appeals the 11 March 2009 order that granted defendants' motion for attorneys' fees. For the reasons stated herein, we affirm on the merits and sanction plaintiff for its numerous rules violations.
Daniel and Leigh Levine ("defendants") contracted with plaintiff for plaintiff to provide labor and materials for construction at defendants' property. The parties disagree as to whether plaintiff performed its obligations pursuant to the contract and whether defendants failed to make payments that were owed pursuant to the contract. On 4 February 2008, plaintiff filed a claim of lien upon defendants' property in the amount of $98,342.48. On or about 21 March 2008, plaintiff filed a complaint against defendants, alleging breach of contract and unjust enrichment and requesting enforcement of its lien. Defendants responded with a motion to dismiss, answered plaintiff's complaint, and counterclaimed for breach of contract and quantum meruit.
On 1 December 2008, plaintiff acknowledged a partial satisfaction of the claimed lien, reducing the principal amount owed by defendants from $98,342.48 to $63,358.48. A jury trial took place during the 20 January 2009 term of Mecklenburg County Superior Court, prior to which defendants made plaintiff three separate offers — ranging from $30,000.00 to $37,500.00 — to settle the case, all of which plaintiff refused. The jury found that defendants had breached their contract with plaintiff and that plaintiff was entitled to recover $25,575.61. Both parties moved for attorneys' fees. On 11 March 2009, the trial court granted defendants' motion for attorneys' fees and awarded defendants $20,242.50 in fees and $778.00 in costs, pursuant to North Carolina General Statutes, section 44A-35. Plaintiff appeals.
Plaintiff first argues that it is entitled to an award of attorneys' fees, which it labels "contractual" attorneys' fees, pursuant to North Carolina General Statutes, section 6-21.2, and that the trial court erred in refusing to award such attorneys' fees. We disagree.
Initially, we note that
[t]he case law in North Carolina is clear that to overturn the trial judge's determination [on the issue of attorneys' fees], the [party] must show an abuse of discretion. However, where an appeal presents [a] question[] of statutory interpretation, full review is appropriate, and we review a trial court's conclusions of law de novo.
Bruning Federle Mfg. Co. v. Mills, 185 N.C. App. 153, 155-56, 647 S.E.2d 672, 674, cert. denied, 362 N.C. 86, 655 S.E.2d 837 (2007) (internal citations and quotation marks omitted). Thus, whether an award of attorneys' fees is authorized by statute is a question that we review de novo, whereas the amount of the attorneys' fee award is reviewable pursuant to an abuse of discretion standard.
With respect to contractual attorneys' fees, our Supreme Court has explained that "the general rule has long obtained that a successful litigant may not recover attorneys' fees, whether as costs or as an item of damages, unless such a recovery is expressly authorized by statute." Enterprises, Inc. v. Equipment Co., 300 N.C. 286, 289, 266 S.E.2d 812, 814 (1980) (citing Hicks v. Albertson, 284 N.C. 236, 200 S.E.2d 40 (1973)). North Carolina General Statutes, section 6-21.2 sets forth the framework for the award of contractual attorneys' fees:
Obligations to pay attorneys' fees upon any note, conditional sale contract or other evidence of indebtedness, in addition to the legal rate of interest or finance charges specified therein, shall be valid and enforceable, and collectible as part of such debt, if such note, contract or other evidence of indebtedness be collected by or through an attorney at law after maturity, subject to the following provisions:
. . . .
(2) If such note, conditional sale contract or other evidence of indebtedness provides for the payment of reasonable attorneys' fees by the debtor, without specifying any specific percentage, such provision shall be construed to mean fifteen percent (15%) of the "outstanding balance" owing on said note, contract or other evidence of indebtedness.
. . . .
(5) The holder . . . shall, after maturity of the obligation by default or otherwise, notify the maker, debtor, account debtor, endorser or party sought to be held on said obligation that the provisions relative to payment of attorneys' fees in addition to the "outstanding balance" shall be enforced and that such maker . . . has five days from the mailing of such notice to pay the "outstanding balance" without the attorneys' fees. If such party shall pay the "outstanding balance" in full before the expiration of such time, then the obligation to pay the attorneys' fees shall be void, and no court shall enforce such provisions.
N.C. Gen. Stat. § 6-21.2 (2007).
This Court previously has noted that this statute "does not require that a party seeking attorneys' fees under the statute qualify as a `prevailing party' in litigation." Trull v. Central Carolina Bank Trust, 124 N.C. App. 486, 491, 478 S.E.2d 39, 42 (1996). Therefore, our inquiry with respect to plaintiff's claim for contractual attorneys' fees is separate from that of its status as the prevailing party. We further have held that "the purpose of [North Carolina General Statutes, section] 6-21.2 is to allow the debtor a last chance to pay his outstanding balance and avoid litigation, not to reward the prevailing party with the reimbursement of his costs in prosecuting or defending the action." Id. (citing RC Associates v. Regency Ventures, Inc., 111 N.C. App. 367, 373-74, 432 S.E.2d 394, 398 (1993)).
Here, defendants argue that plaintiff did not comply with the fifth section of North Carolina General Statutes, section 6-21.2 and therefore, cannot obtain attorneys' fees pursuant to that statute. We previously have addressed this section, noting that "[t]he statutory use of `shall' renders the provision requiring notice mandatory." Blanton v. Sisk, 70 N.C. App. 70, 74, 318 S.E.2d 560, 564 (1984), impliedly overruled on other grounds as stated in Paynter v. Maggiolo, 105 N.C. App. 312, 314-15, 412 S.E.2d 691, 693 (1992). Furthermore, "the serving of the complaint upon the defendants seeking to recover attorneys' fees does not satisfy the requirements of [North Carolina General Statutes, section] 6-21.2(5)." Id. at 75, 318 S.E.2d at 564.
Plaintiff does not contend that it satisfied the notice provision of North Carolina General Statutes, section 6-21.2(5). Because we find nothing in the record that would constitute notice and because plaintiff has not directed us to such notice, we hold that plaintiff has not met the requirements of the statute. Having held that plaintiff is not entitled to attorneys' fees pursuant to North Carolina General Statutes, section 6-21.2, we need not address whether the trial court abused its discretion in awarding plaintiff no attorneys' fees.
Plaintiff's second argument is that the trial court erred by awarding attorneys' fees to defendants pursuant to North Carolina General Statutes, section 44A-35. We disagree.
We review the "trial court's award of attorney's fees pursuant to [North Carolina General Statutes,] section 44A-35 for abuse of discretion. `To demonstrate an abuse of discretion, the appellant must show that the trial court's ruling was manifestly unsupported by reason, or could not be the product of a reasoned decision.'" Terry's Floor Fashions, Inc. v. Crown Gen. Contr'rs, Inc., 184 N.C. App. 1, 17, 645 S.E.2d 810, 820 (2007) (internal citations omitted). Furthermore, "the trial court `has the duty to pass upon the credibility of the witnesses who testify. [It] decides what weight shall be given to the testimony and the reasonable inferences to be drawn therefrom. The appellate court cannot substitute itself for the trial court in this task.'" Nationsbank of North Carolina v. Baines, 116 N.C. App. 263, 269, 447 S.E.2d 812, 815 (1994) (quoting General Specialties Co. v. Teer Co., 41 N.C. App. 273, 275, 254 S.E.2d 658, 660 (1979)).
North Carolina General Statutes, section 44A-35 provides, in relevant part, that "the presiding judge may allow a reasonable attorneys' fee to the attorney representing the prevailing party[] . . . upon a finding that there was an unreasonable refusal by the losing party to fully resolve the matter which constituted the basis of the suit or the basis of the defense." N.C. Gen. Stat. § 44A-35 (2007).
In the instant case, the trial court found as fact that
4. On December 1, 2008, [p]laintiff served [d]efendants with a document entitled "Partial Satisfaction of Lien" attempting to reduce their lien claim from $98,342.48 to $63,358.48.
5. Prior to counsel['s] beginning the final preparations for trial, [d]efendants (through counsel) offered to settle all of the disputes between the parties in exchange for [d]efendants['] paying the [p]laintiff the sum of $30,000.00. That offer was rejected.
6. On the day of trial, during and subsequent to the pretrial conference with the undersigned, [d]efendants['] offer was increased to $35,000.00 and then again to $36,250.00. Plaintiff rejected both offers. . . .
. . . .
8. The jury's award was less than one half of [p]laintiff's lien claim of $98,342.48, and $10,674.39 less than [d]efendants' last offer.
It then concluded as a matter of law that
3. Plaintiff recovered $10,674.39 less than the last offer made prior to commencement of trial. Defendants, therefore, are the prevailing party under both analysis [sic] outlined in North Carolina General Statute § 44A-35. (unreasonable refusal to resolve the dispute and because [p]laintiff recovered less than 50% of its $98,342.48 lien claim).
Plaintiff argues that the trial court erred in labeling defendants as the prevailing party, because plaintiff recovered more than fifty percent of the amount it sought. However, excluding contractual attorneys' fees — to which plaintiff is not entitled, as discussed supra — from plaintiff's calculation, the final judgment totals less than half of plaintiff's claimed amount. Therefore, we need not address plaintiff's other arguments as to the correct interpretation of the statutory term "amount sought in the claim[.]"
The trial court's findings demonstrate that it considered specific instances of plaintiff's refusal to settle — in addition to the disparity between the settlement offers and the ultimate jury award — in determining that plaintiff's efforts had been unreasonable. Considering this evidence, we cannot label the trial court's determination as "`manifestly unsupported by reason[.]'" Terry's Floor Fashions, 184 N.C. App. at 17, 645 S.E.2d at 820 (citation omitted). We hold that the trial court's conclusion that plaintiff unreasonably refused to resolve the matter fully did not constitute an abuse of discretion.
As part of its second argument, plaintiff also contends that competent evidence does not support the trial court's award of attorneys' fees to defendants. We hold that it does.
"For the appellate court to determine if an award of counsel fees is reasonable, `the record must contain findings of fact as to the time and labor expended, the skill required, the customary fee for like work, and the experience or ability of the attorney' based on competent evidence." West v. Tilley, 120 N.C. App. 145, 151, 461 S.E.2d 1, 4 (1995) (quoting United Laboratories, Inc. v. Kuykendall, 102 N.C. App. 484, 494, 403 S.E.2d 104, 111 (1991), aff'd, 335 N.C. 183, 437 S.E.2d 374 (1993) (citations omitted)). "`The findings of the trial judge are conclusive on appeal if there is competent evidence in the record to support them. . . . This is true even though there may be evidence in the record which could sustain findings to the contrary.'" Dyer v. State, 331 N.C. 374, 376, 416 S.E.2d 1, 2 (1992) (quoting In re Ridge, 302 N.C. 375, 380, 275 S.E.2d 424, 427 (1981)).
With respect to an award of attorneys' fees, our Supreme Court previously has held "that the [trial] court properly relied on the statement of the . . . attorney as to the amount of time he devoted to the case. The attorney was an officer of the court." Id. at 378, 416 S.E.2d at 3. It further noted that "[t]he [trial] court observed the attorney during the trial and could determine his skill in trying the case as well as the difficulty of the problems faced by the attorney." Id.
In the case sub judice, defendants' attorney presented an affidavit to the trial court, which detailed his hourly rate, how much he had charged defendants up to that point, his years of experience, and his opinion that such an hourly rate "is commensurate with attorneys of similar age and experience handling civil matters in this community." The trial court found as fact that
9. To defend this action [d]efendants have incurred attorneys' fees in the amount of $20,242.50 and costs in the amount of $778.00. The attorneys' fees were billed at an hourly rate of $375.00 per hour by [d]efendants' attorney, John Buric. Attorney Buric has been engaged in civil trial work in Mecklenburg County for more than 12 years. This Court finds that these fees and expenses are reasonable and commensurate with what would normally be charged by attorneys with similar training and experience within Mecklenburg County. By simple math, the attorneys' fees represent 54 hours of work, which the undersigned finds is reasonable to engage in discovery, prepare a case for trial and to expend approximately three days trying the case.
We think that an affidavit from an officer of the court is competent evidence upon which the trial court could base its findings. Although the trial court may have found additional detail from defendants' attorney as to the services he performed or an explicit statement of the number of hours he worked useful, the trial court had sufficient information — both from the affidavit and its own observation of the attorney at work — to support its findings.
Unlike the case law to which plaintiff points us, Brookwood Unit Ownership Assn. v. Delon, 124 N.C. App. 446, 449-50, 477 S.E.2d 225, 227 (1996) ("The record here contains no findings whatsoever with regard to the reasonableness of the attorney's fees awarded. Accordingly, we remand[.]"), the trial court here recited the appropriate findings as to the reasonableness of an attorneys' fee award. Accordingly, we hold that the trial court did not abuse its discretion in finding that an attorneys' fee award to defendants of $20,242.50, plus $778.00 in costs, was reasonable, because such finding was supported by competent evidence. Therefore, plaintiff's second argument is overruled.
Plaintiff's final argument is that, pursuant to North Carolina General Statutes, section 44A-35, plaintiff is the prevailing party, defendants were unreasonable in their actions, and therefore, plaintiff is entitled to attorneys' fees. We disagree.
Notwithstanding our previous determination that the trial court did not err in awarding defendants attorneys' fees pursuant to this section, plaintiff's argument nonetheless is unsuccessful. North Carolina General Statutes, section 44A-35 provides that "the presiding judge may allow a reasonable attorneys' fee" in certain circumstances. N.C. Gen. Stat. § 44A-35 (2007) (emphasis added). This statute "does not mandate that the trial court award attorneys' fees, but instead places the award within the trial court's discretion." Barrett Kays Assoc. v. Colonial Building Co., 129 N.C. App. 525, 530, 500 S.E.2d 108, 112 (1998). Accordingly, the trial court did not abuse its discretion by declining to award attorneys' fees to plaintiff pursuant to North Carolina General Statutes, section 44A-35.
Separate from the arguments contained in the parties' briefs, defendants filed a motion to dismiss this appeal based upon plaintiff's numerous violations of our Rules of Appellate Procedure. We note the significance of plaintiff's violations, but we deny defendants' motion to dismiss.
Our Supreme Court recently has outlined the method by which appellate courts should address procedural rules violations. In Dogwood Dev. Mgmt. Co., LLC v. White Oak Transp. Co., the Court emphasized the importance of parties' compliance with procedural requirements but reiterated that "noncompliance with the appellate rules does not, ipso facto, mandate dismissal of an appeal." 362 N.C. 191, 194, 657 S.E.2d 361, 363 (2008) (citing State v. Hart, 361 N.C. 309, 311, 644 S.E.2d 201, 202 (2007)) (emphasis added). Rather, "[w]hether and how a court may excuse noncompliance with the rules depends on the nature of the default." Id.
"Our cases indicate that the occurrence of default under the appellate rules arises primarily from the existence of one or more of the following circumstances: (1) waiver occurring in the trial court; (2) defects in appellate jurisdiction; and (3) violation of nonjurisdictional requirements." Id. Our Rules of Appellate Procedure set forth the nonjurisdictional requirements, which are "designed primarily to keep the appellate process `flowing in an orderly manner.'" Id. at 198, 657 S.E.2d at 365 (quoting Craver v. Craver, 298 N.C. 231, 236, 258 S.E.2d 357, 361 (1979)). Our Supreme Court has "stress[ed] that a party's failure to comply with nonjurisdictional rule requirements normally should not lead to dismissal of the appeal." Id. (citations omitted).
According to the Dogwood Court,
Rules 25 and 34, when viewed together, provide a framework for addressing violations of the nonjurisdictional requirements of the rules. Rule 25(b) states that "the appellate [court] may . . . impose a sanction . . . when the court determines that [a] party or attorney or both substantially failed to comply with these appellate rules. The court may impose sanctions of the type and in the manner prescribed by Rule 34. . . ." N.C. R. App. P. 25(b) (emphasis added). Rule 34(a)(3) provides, among other things, that "the appellate [court] may . . . impose a sanction . . . when the court determines that . . . a petition, motion, brief, record, or other paper filed in the appeal . . . grossly violated appellate court rules." N.C. R. App. P. 34(a)(3) (emphasis added). Rule 34(b) enumerates as possible sanctions various types of monetary damages, dismissal, and "any other sanction deemed just and proper." N.C. R. App. P. 34(b).
Id. at 199, 657 S.E.2d at 366. "In most situations when a party substantially or grossly violates nonjurisdictional requirements of the rules, the appellate court should impose a sanction other than dismissal and review the merits of the appeal." Id. at 200, 657 S.E.2d at 366.
The Dogwood Court also set forth the factors that inform whether a party's violations of the appellate rules would constitute gross or substantial violations, namely (1) "whether and to what extent the noncompliance impairs the court's task of review[,]" (2) "whether and to what extent review on the merits would frustrate the adversarial process[,]" and (3) "the number of rules violated[.]" Id. at 200, 657 S.E.2d at 366-67.
Here, defendants enumerated plaintiff's rules violations clearly in their motion to dismiss:
(1) [Plaintiff] violated Rules 7(a)(1) and 9(a)(1)(e) by failing to file any transcript to support the competency-of-the-evidence challenge asserted in its eight Assignments of Error,
(2) [Plaintiff] violated Rule 10(c)(1) in relation to its eight Assignments of Error by failing to (a) state a sufficiently focused legal basis for any error assigned; (b) assign error to any specific factual finding or legal conclusion; and (c) make any record or transcript reference regarding any of its assignment[s] of error,
(3) [Plaintiff] violated Rule 26(g)(1), 28(b)(1), and 28(b)(2) by failing to conform the "Table of Cases and Authorities" and first textual page of its Plaintiff-Appellant's Brief, respectively, to the formatting requirements of N.C.R. App. P., Appendices B and E (2009),
(4) [Plaintiff] violated Rule 9(a) and subsections (b)(5) and (b)(6) of Rule 28 by making several statements in its Plaintiff-Appellant's Brief that lack any record support,
(5) [Plaintiff] violated Rule 28(b)(5) by interposing argumentation in the "Statement of the Facts" section of its Plaintiff-Appellant's Brief,
(6) [Plaintiff] violated Rule 28(b)(6) by failing to identify a standard of review in relation to the first argument enunciated in its Plaintiff-Appellant's Brief, [and]
(7) [Plaintiff] violated Rules 10(a) and 28(b)(6) by making several arguments that do not correspond with any Assignment of Error[.]
Plaintiff's violations of the appellate rules were numerous, as outlined by defendants. Many of plaintiff's violations significantly affected this Court's ability to review the evidence and arguments before it. However, as demonstrated by defendants' brief and motion to dismiss, plaintiff's rules violations were not so egregious as to leave defendants "`without notice of the basis upon which [the] appellate court might rule[.]'" Id. at 200, 657 S.E.2d at 367 (quoting Viar v. N.C. Dep't of Transp., 359 N.C. 400, 402, 610 S.E.2d 360, 361 (2005)). Plaintiff's violations, therefore, are substantial but do not warrant dismissal of the case.
Although plaintiff's rules violations do not result in a dismissal of its appeal, we nonetheless award defendants sanctions due to the number and significance of plaintiff's infractions. In accordance with prior case law and pursuant to North Carolina Rules of Appellate Procedure, Rule 34(b), we order plaintiff's attorney to pay double the printing costs of this appeal. See, e.g., Dogwood Dev. Mgmt. Co., LLC v. White Oak Transp. Co., 192 N.C. App. 114, 122, 665 S.E.2d 493, 500 (2008) ("[W]e hold plaintiff's noncompliance to be substantial, but not so egregious as to warrant dismissal of defendant's appeal in its entirety. . . . In the exercise of our discretion, defendant's attorney is ordered to pay double the printing costs of this appeal.") and Luther v. Seawell, 191 N.C. App. 139, 143, 662 S.E.2d 1, 4 (2008) ("[W]e hold that plaintiffs' noncompliance was substantial in this case but not so gross as to warrant dismissal. . . . As such, we . . . order plaintiffs' attorneys to pay double the printing costs of this appeal pursuant to Rule 34(b)[.]").
For these reasons, we affirm the trial court's award of attorneys' fees to defendants as the prevailing party. We also order plaintiff's attorney to pay double the printing cost of this appeal due to plaintiff's myriad violations of our Rules of Appellate Procedure.
Affirmed.
Judges HUNTER, Robert C. and BRYANT concur.
Report per Rule 30(e).