Costs--attorney fees--award not supported by findings and reason
An award of attorney fees to plaintiff pursuant to N.C.G.S. § 6-21.1 was remanded where
defendants in a personal injury action arising from an automobile accident offered $501; plaintiff
received a non-binding arbitration award of $3,500; defendant appealed the award and the jury
returned a verdict of $62; plaintiff's counsel made a motion for attorney fees and costs and
submitted an affidavit chronicling 73.5 hours devoted to the case; and the trial court held a
hearing and entered an order awarding $5,000 in attorney fees and $848.72 in costs. The
discretion to award attorney fees is not unbridled; the award here appears to be unsupported by
reason in light of the court's failure to make any findings of fact and the jury verdict, the amount
plaintiff sought to recover, plaintiff's contract for legal services, and the hourly rate counsel
received.
Dean & Gibson, L.L.P., by Michael G. Gibson and Thomas G.
Nance, for defendant appellant.
Culler & Culler, P.A., by Richard A. Culler, for plaintiff
appellee.
SMITH, Judge.
On 19 August 1997, Teresa B. Williams (plaintiff) was pulling
away from a stop sign when a vehicle driven by Lisa A. Manus and
owned by Tony Manus (defendants) struck the rear of her vehicle.
Plaintiff made a claim for her alleged injuries to defendants'
liability insurance carrier, but the claim was denied because the
carrier determined that the impact was at too low a speed, and
there was “no evidence to suggest that there would have been a
sufficient amount of force from this contact to have caused
injuries to anyone.” On 25 June 1998, plaintiff filed this action for personal
injuries seeking damages “in excess of five thousand dollars
($5,000.00).” Defendants answered and served an offer of judgment
in the amount of $501.00. On 30 October 1998, the parties appeared
for non-binding arbitration and plaintiff was awarded $3,500.00.
Defendant Lisa A. Manus appealed the award, and the case proceeded
to trial. On 21 September 1999, the jury returned a verdict for
plaintiff in the amount of $62.00.
Following the trial, counsel for plaintiff made a motion for
attorney's fees and costs pursuant to N.C. Gen. Stat. § 6-21.1
(1999). Counsel also submitted an affidavit chronicling 73.5 hours
of time dedicated to plaintiff's case. A hearing was held on the
motion, and the trial court entered an order awarding plaintiff's
counsel $5,000.00 in attorney's fees and $848.72 in costs.
Defendant appeals from the award of attorney's fees.
Defendant's sole argument on appeal is that the trial court
erred in awarding $5,000.00 in fees to plaintiff's counsel.
Defendant asserts that to allow an award of attorney's fees in this
case where the jury verdict is so small and so far below the
defendant's settlement offer, would be the equivalent of holding
that the award of attorney's fees is guaranteed. Under these
circumstances, defendant contends that plaintiffs and their counsel
would be motivated to reject all reasonable settlement offers.
Defendant additionally argues that the trial court failed to make
findings of fact showing that it considered the several factors
relating to the appropriateness of the award. Culler v. Hardy, 137
N.C. App. 155, 526 S.E.2d 698 (2000); Washington v. Horton, 132N.C. App. 347, 513 S.E.2d 331 (1999).
After careful review of the record, briefs and contentions of
the parties, we vacate and remand. Pursuant to N.C. Gen. Stat.
§ 6-21.1, attorney's fees may be allowed as part of court costs in
certain cases. N.C. Gen. Stat. § 6-21.1 states:
In any personal injury or property damage
suit, or suit against an insurance company
under a policy issued by the defendant
insurance company and in which the insured or
beneficiary is the plaintiff, upon a finding
by the court that there was an unwarranted
refusal by the defendant insurance company to
pay the claim which constitutes the basis of
such suit, instituted in a court of record,
where the judgment for recovery of damages is
ten thousand dollars ($10,000) or less, the
presiding judge may, in his discretion, allow
a reasonable attorney fee to the duly licensed
attorney representing the litigant obtaining a
judgment for damages in said suit, said
attorney's fee to be taxed as a part of the
court costs.
Although the statute expressly states that attorney's fees are
allowed in the discretion of the trial court, this discretion is
not unbridled. When awarding attorney's fees, the trial court is
required to consider and make findings of fact regarding the
following factors:
(1) settlement offers made prior to the
institution of the action . . . ; (2) offers
of judgment pursuant to Rule 68, and whether
the “judgment finally obtained" was more
favorable than such offers; (3) whether
defendant unjustly exercised "superior
bargaining power"; (4) in the case of an
unwarranted refusal by an insurance company,
the "context in which the dispute arose.";
(5) the timing of settlement offers; (6) the
amounts of the settlement offers as compared
to the jury verdict; and the whole record.
Horton, 132 N.C. App. at 351, 513 S.E.2d at 334-35 (citationsomitted). Here, however, the trial court made a
bsolutely no
findings in support of its award of attorney's fees.
We also note that the attorney's fees award might be
considered unreasonable in light of the jury verdict, the amount
plaintiff sought to recover from defendants, and plaintiff's
contract for legal services with counsel. If one considers the
hourly rate counsel received, however, the award might be
unreasonably low.
This Court has stated:
"While the statute is aimed at encouraging
injured parties to press their meritorious but
pecuniarily small claims, we do not believe
that it was intended to encourage parties to
refuse reasonable settlement offers and give
rise to needless litigation by guaranteeing
that counsel will, in all cases, be
compensated."
Id. at 352, 513 S.E.2d at 335 (quoting Harrison v. Herbin, 35 N.C.
App. 259, 261, 241 S.E.2d 108, 109, cert. denied, 295 N.C. 90, 244
S.E.2d 258 (1978)). In light of the foregoing, and the trial
court's failure to make any findings of fact to support its award
of attorney's fees, the award appears to be unsupported by reason.
Accordingly, we hold the trial court erred in awarding
attorney's fees to counsel for plaintiff without considering the
guidelines established by Horton. Thus, the award of attorney's
fees in the present case is reversed, and the case remanded to the
trial court for further proceedings consistent herewith.
Reversed and remanded.
Chief Judge EAGLES and Judge HUDSON concur.
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