Opinion
No. COA12–925.
2013-03-5
D.P. SOLUTIONS, INC., Plaintiff, v. XPLORE–TECH SERVICES PRIVATE LIMITED, Pankaj Dhanuka and Kishore Saraogi, Defendants.
Blanco, Tackabery, & Matamoros, P. A., by Elliot A. Fus and Toni J. Grace, for defendants-appellants. Sharpless & Stavola, P. A., by Eugene E. Lester III, for plaintiff-appellee.
Appeal by defendants from judgment entered 29 February 2012 by Judge Edwin G. Wilson, Jr. in Guilford County Superior Court. Heard in the Court of Appeals 11 December 2012. Blanco, Tackabery, & Matamoros, P. A., by Elliot A. Fus and Toni J. Grace, for defendants-appellants. Sharpless & Stavola, P. A., by Eugene E. Lester III, for plaintiff-appellee.
HUNTER, ROBERT C., Judge.
Pankaj Dhanuka and Kishore Saraogi appeal from the trial court's judgment holding them jointly and severally liable to D.P. Solutions, Inc., for $456,067.56 under the terms of a personal guarantee. After careful review, we affirm the judgment.
Background
On 12 April 2007, D.P. Solutions, Inc. (“plaintiff”) entered into a share purchase agreement whereby Xplore–Tech Services Private Limited (“Xplore–Tech”) agreed to purchase plaintiff's subsidiary company, Help Desk Now, Inc. (“HDN, Inc.”). Under the terms of the share purchase agreement, Xplore–Tech was to pay plaintiff $300,000.00 upon the closing of the agreement and additional payments of $500,000.00 to be paid within 90 days of the closing and $110,000.00 to be paid within 180 days of the closing. On 23 April 2007, two principals of Xplore–Tech, Pankaj Dhanuka and Kishore Saraogi (collectively “defendants”), signed a personal guarantee (“the personal guarantee”) as security for the remaining $610,000.00 Xplore–Tech owed plaintiff under the share purchase agreement.
Xplore–Tech paid the initial $300,000.00 upon the singing of the agreement but failed to make the remaining payments of $610,000.00. Xplore–Tech's failure to make these payments caused HDN, Inc. to default on a line of credit it held with the bank BB & T. Plaintiff was a guarantor of the line of credit and was forced to pay $144,484 .39 to BB & T. Plaintiff and some of its shareholders filed a separate lawsuit in Guilford County Superior Court (08 CVS 174) against HDN, Inc. for repayment of the $144,484.39 and certain loans the shareholders made to HDN, Inc. HDN, Inc. paid $450,000.00 to settle those claims.
On 22 March 2010, plaintiff filed the underlying action against Xplore–Tech and defendants claiming that Xplore–Tech was in breach of the share purchase agreement and that defendants owe $610,000.00 under the personal guarantee. Xplore–Tech and defendants filed a motion to dismiss and to compel arbitration. D.P. Solutions v. Xplore–Tech Servs. Private, –––N.C.App. ––––, ––––, 710 S.E.2d 297, 299 (2011). The trial court entered an order staying the breach of contract claim against Xplore–Tech and compelling arbitration. Id. Xplore–Tech and defendants appealed that order to this Court, and we affirmed the trial court's order. Id. at ––––, 710 S.E.2d at 301.
Plaintiff's remaining claim against defendants seeking enforcement of the personal guarantee was not stayed. Id. at ––––, 710 S.E.2d at 299. The claim proceeded to trial, and plaintiff filed a motion for summary judgment. On 4 August 2011, the trial court, Judge Paul G. Gessner presiding, denied plaintiff's motion concluding that the pleadings and affidavits presented one or more genuine issues of material fact. On 13 February 2012, the matter came on for a bench trial in Guilford County Superior Court, Judge Edwin G. Wilson presiding.
In a judgment entered 29 February 2012, the trial court concluded that defendants were in breach of the personal guarantee. The trial court concluded that of the $450,000.00 HDN, Inc. paid to plaintiff to settle the claims in 08 CVS 174, plaintiff was entitled to apply $144,484.39 to the amount it paid BB & T on HDN, Inc.'s line of credit. The trial court concluded that the remainder of the HDN, Inc. settlement money ($305,515.61) was applied by plaintiff toward the $610,000.00 Xplore–Tech and defendants owed to plaintiff under the share purchase agreement and personal guarantee. This left a balance due to plaintiff of $304,484.39, plus interest. In addition, the trial court ordered defendants to pay 15% of the remaining balance as a reasonable attorneys' fee pursuant to N.C. Gen.Stat. § 6–21.2. The trial court further concluded that defendants failed to present a justiciable issue of law or fact in any pleading and that this provided an additional justification for awarding a reasonable attorneys' fee pursuant to N.C. Gen.Stat. § 6–21.5. Defendants appeal.
Discussion
A. Notice of Intent to Collect Attorneys' Fees
First, defendants argue that the trial court erred by failing to make a finding of fact as to whether plaintiff provided defendants with notice of plaintiff's intent to collect attorneys' fees, as required by N.C. Gen.Stat. § 6–21.2. We disagree.
“The standard of review on appeal from a judgment entered after a non-jury trial is ‘whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment.’ “ Cartin v. Harrison, 151 N.C.App. 697, 699, 567 S.E.2d 174, 176 (quoting Sessler v. Marsh, 144 N.C.App. 623, 628, 551 S.E.2d 160, 163 (2001)), disc. review denied,356 N.C. 434, 572 S.E.2d 428 (2002).
N.C. Gen.Stat. § 6–21.2(5) requires the holder of an unsecured debt to notify the debtor of the debtor's right to pay the debt within five days of such notice and thereby avoid liability for the attorneys' fees the holder would incur in collecting the amount due. Specifically, the statute provides that
[t]he holder of an unsecured note or other writing(s) evidencing an unsecured debt ... shall, after maturity of the obligation by default ... notify the maker, debtor ... that the provisions relative to payment of attorneys' fees in addition to the “outstanding balance” shall be enforced and that such ... party sought to be held on said obligation has five days from the mailing of such notice to pay the “outstanding balance” without the attorneys' fees.
N.C. Gen.Stat. § 6–21.2(5) (2011). If the debtor pays the outstanding balance within five days of the notice, the debtor's obligation to pay the attorneys' fees “shall be void.” Id.
Defendants do not argue that plaintiff failed to provide them with the notice required under section 6–21.2(5). Indeed, the record contains a copy of a certified letter mailed from plaintiff to defendants providing them with the notice required under the statute. Defendants contend, however, that the trial court's failure to make a finding of fact as to whether plaintiff gave defendants the statutory notice requires reversal of the award of attorneys' fees.
The caselaw defendants cite in support of their argument is distinguishable. In McGinnis Point Owners Ass'n v. Joyner, 135 N.C.App. 752, 757, 522 S.E.2d 317, 320 (1999), we concluded that the record was insufficient to determine whether the plaintiff had complied with the notice requirement of section 6–21.2(5). We held that where there was no evidence in the record to indicate whether the plaintiffs had provided the required notice and the trial court made no finding regarding whether the notice was given, the trial court was not authorized to award attorneys' fees under 6–21.2(5). Id. Accordingly, we vacated the award and remanded for a finding on the issue of notice. Id.; see Davis Lake Community Ass'n v. Feldmann, 138 N.C.App. 292, 297, 530 S.E.2d 865, 869 (2000) (“Absent evidence showing [the plaintiff] did comply with this notice requirement, any award of attorney's fees is unauthorized.” (citing McGinnis Point Owners Ass'n, 135 N.C.App. at 757, 522 S.E.2d at 320) (emphasis added)).
While the trial court's judgment does not contain a finding as to whether plaintiff provided defendants with the notice required under section 6–21.2(5), the record contains uncontested evidence that plaintiff did comply with the statute. Therefore, we conclude the trial court's failure to make a finding of fact that notice was given does not warrant reversal of the award, and defendants' argument is overruled.
B. N.C. Gen.Stat. § 6–21.5
Next, defendants argue that the trial court's award of attorneys' fees pursuant to N.C. Gen.Stat. § 6–21.5 must be reversed because the court: (1) failed to make findings of fact as to how it determined the amount of fees was reasonable; and (2) erred in concluding that defendants failed to raise a justiciable issue in any of their pleadings. Because we conclude the trial court's award of attorneys' fees pursuant to N.C. Gen.Stat. § 6–21.2 may be affirmed, we do not reach defendants' arguments regarding N.C. Gen.Stat. § 6–21.5.
The total attorneys' fees the trial court awarded to plaintiff was $45,672.66. This sum is equal to 15% of the balance due under the personal guarantee ($304,484.39) and is the amount awarded by the trial court under N.C. Gen.Stat. § 6–21.2. Thus, plaintiffs were not ordered to pay any attorneys' fees pursuant to section 6–21 .5. Rather, as the trial court concluded, section 6–21.5 provided a “further reason” for awarding attorneys' fees to plaintiff. Furthermore, the amount of attorneys' fees that defendants were ordered to pay—15% of the outstanding balance—is the percentage authorized by our statutes. N.C. Gen.Stat. § 6–21.2(2) states that where a contract 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” under the contract. In RC Associates v. Regency Ventures, Inc., 111 N.C.App. 367, 373, 432 S.E.2d 394, 397 (1993), we concluded that when a contract provides for an award of attorneys' fees but does not provide a specific percentage of the outstanding balance owed in order to calculate the amount of the attorneys' fees, N.C. Gen.Stat. § 6–21.2(2) “has predetermined that 15% is a reasonable amount....” Because the personal guarantee did not specify a percentage for calculating an award of attorneys' fees, the trial court properly awarded 15% of the balance due under the guarantee, and we affirm the trial court's award.
C. Amount Owed Under the Personal Guarantee
Next, defendants argue that the trial court erred in concluding that the amount they owed under the personal guarantee was $610,000.00 because the trial court failed to deduct an amount paid in the settlement of a separate lawsuit to an individual who is not party to the underlying action. We disagree.
In 2008, Michael J. Riek, a shareholder of plaintiff D.P. Solutions, Inc. and the president of HDN, Inc., filed a lawsuit in Guilford County Superior Court (08 CVS 3442) against Xplore–Tech and defendants. Michael Riek filed that action in his individual capacity alleging that Xplore–Tech and defendants had breached his employment contract and defaulted on a $13,000.00 loan. That lawsuit was settled, and all claims therein were released by all parties. Defendants claim that $13,000.00 of the money paid to Michael Riek in settlement of that lawsuit should have been deducted from the total amount defendants owe to plaintiff in this lawsuit, thereby reducing the amount owed under the personal guarantee from $610,000.00 to $597,000.00.
In support of their argument, defendants cite the complaint filed by Michael Riek in 08 CVS 3442 and the agreement settling those claims. Neither of these documents provides any indication that the settlement of that lawsuit was intended to reduce the amount due to plaintiff under the personal guarantee. Rather, Fredrick Riek, father of Michael Riek, and founder and CEO of D.P. Solutions, Inc., testified that his son personally loaned approximately $12,000.00 to HDN, Inc. and that he did not believe this loan was included in the $610,000.00 guaranteed by defendants. The trial court included a finding of fact in its judgment that the court heard the testimony of Fredrick Riek and that it found him to be a credible witness.
In actions tried without a jury, it is the duty of the trial court to determine “the credibility of the witnesses and the weight to be given their testimony and the reasonable inferences to be drawn therefrom.” Knutton v. Cofield, 273 N.C. 355, 359, 160 S.E.2d 29, 33 (1968). The trial court's conclusion that defendants were not entitled to any set-offs or credits to reduce the outstanding balance of $304,484.39 is supported by competent evidence, and defendants' argument is overruled.
D. Marshaling of the Assets
Lastly, defendants contend that the trial court erred in failing to apply the doctrine of marshaling of assets to deduct plaintiff's recovery from its separate lawsuit against HND, Inc. (08 CVS 174) from the amount defendants owed plaintiff under the personal guarantee.
The doctrine of marshaling assets is inapplicable to the facts of this case as “the rule does not apply as between debtor and creditor[.]” Page Trust Co. v. Godwin, 190 N.C. 512, 518, 130 S.E. 323, 326 (1925). Moreover, as defendants failed to raise this issue before the trial court, the issue was not preserved for our review. N.C. R.App. P. 10(a)(1) (2012) (“In order to preserve an issue for appellate review, a party must have presented to the trial court a timely request, objection, or motion, stating the specific grounds for the ruling the party desired the court to make if the specific grounds were not apparent from the context.”). Defendants' argument is dismissed.
Conclusion
For the reasons state above, we affirm the trial court's judgment.
AFFIRMED.