Costs--attorney fees--offer of settlement--Washington factors
The trial court did not abuse its discretion by awarding
attorney fees to plaintiff under N.C.G.S. § 6-21.1 in an
automobile negligence action where defendant offered to settle
the case for $1,650 before plaintiff filed suit, defendant later
made an offer of judgment of $1,718, the jury awarded plaintiffs
$1,600, and the judgment awarded plaintiffs the $1,600 jury
verdict, interest at a rate of 8% per year until the judgment was
paid in full, $4,410 in attorney fees, and $486 in costs. While
defendant argued that the only amount to compare against the
offer of judgment is the verdict amount of $1,600 and that no
attorney fees are therefore allowed, the verdict is not
synonymous with the judgment finally obtained. The trial court's
consideration of the factors in Washington v. Horton, 132 N.C.
App. 347, was adequate.
The Law Offices of William K. Goldfarb, by William K.
Goldfarb, for plaintiff appellees.
Morris, York, Williams, Surles & Barringer, LLP, by John H.
Capitano, for defendant appellant.
McCULLOUGH, Judge.
Plaintiffs Lora Robinson and Christy Robinson are mother and
daughter, respectively. On 4 March 1997, Lora Robinson was driving
her 1986 Pontiac in Monroe, North Carolina; her daughter was in the
car with her. As plaintiffs traveled in a northerly direction,
defendant was backing her 1988 Oldsmobile out of a residential
driveway, moving in a southerly direction. Defendant failed to
yield the right-of-way and collided with plaintiffs' vehicle,causing damages to the vehicle and injuries to plaintiffs.
On 3 December 1997, defendant contacted plaintiffs and
offered to pay $1,000.00 to settle Lora Robinson's claim, and
$650.00 to settle Christy Robinson's claim. Plaintiffs rejected
defendant's offer and filed a complaint, alleging that defendant
was negligent in causing the accident. Plaintiffs also stated that
they suffered injuries and underwent medical treatment as a result
of the accident. Defendant answered, denying that she was
negligent. Some time later, on 22 April 1998, defendant made an
offer of judgment to plaintiffs, stating that she would
allow judgment to be entered against her in
this action, as to the claims of Lora Robinson
for the lump sum of $1,050.00, said amount
specifically to include attorney's fees
taxable as costs, and any remaining costs
accrued at the time this offer is filed in
which the Court might subsequently tax as
costs, and as to the claims of Christy
Robinson, for the lump sum of $668.00 said
amount specifically to include attorney's fees
taxable as costs, and any remaining costs
accrued at the time this offer is filed in
which the Court might subsequently tax as
costs.
Plaintiffs rejected defendant's offer of judgment and the case
proceeded to a trial by jury.
During the trial, defendant stipulated that she was negligent
in causing the car accident. On 4 April 2000, the jury found
defendant's negligence caused plaintiffs' injuries, and awarded
$1,000.00 to Lora Robinson and $600.00 to Christy Robinson. The
issue of attorney fees was set aside for later consideration, with
both plaintiffs' and defendant's attorneys agreeing to submit
written arguments to the trial court regarding appropriate attorney
fees. In his letter, plaintiffs' attorney informed the trial court
that he expended a total of 29.4 hours of work on plaintiffs' case
and that his normal fee was $150.00 per hour. He therefore asked
the trial court to award attorney fees to plaintiffs in the amount
of $4,410.00. Defendant's attorney asked the trial court to fully
deny plaintiffs' motion and award no attorney fees.
The trial court made the following findings of fact:
1. The Plaintiffs' l
awyer incurred time and
expense prior to the making of the offers
of judgment.
2. The judgment fi
nally obtained exceeded
the offers of judgment.
3. The Defendant appealed the arbitration
award and failed to make any additional
offers prior to trial.
4. The attorney's fee agreement between
Plaintiffs and Plaintiffs' counsel is
contingent in part and hourly in part.
The agreement that Plaintiffs' counsel
has with the Plaintiffs is if the case is
resolved without an award of attorney's
fee, the Plaintiffs' counsel would take a
contingent fee. In the event attorney
fees are awarded, Plaintiffs' counsel
charges $150 per hour for the time spent
in the preparation and execution of the
case.
In the exercise of the discretion of the
Court and based on the Findings of the Court,
Plaintiffs' counsel shall recover from the
Defendant attorney fees necessitated by this
litigation in the amount of $4,410 and
Plaintiffs' costs in this action shall be
taxed against the Defendant, said costs being
reflected in the Court's records, the attached
billing statement, and a reasonable fee for
the testimony of Keith Pittman, D.C., to wit:
Certified Mailing (Service on
Defendant) &nb
sp; $ 3.00
Trial Subpoenas (Certified
Mailing -- 11 @ 3.00 each) 33.00
Expert Fee -- Testimony of Keith Pittman, D
.C. 4
50.00
Total Costs $486.00
The trial court then made the following conclusions of law:
1. The parties have
agreed that this
Judgment may be signed out of Term, out
of County and out of Session;
2. That the Plaintif
f, Lora Robinson, have
and recover from the Defendant, Tamela
Shue, the sum of $1,000;
3. That the Plaintif
f, Lora Robinson, have
and recover from the Defendant, Tamela
Shue, interest at a rate of eight percent
(8%) per annum from the date this lawsuit
was instituted on February 11, 1998,
until the Judgment is paid in full
pursuant to N.C.G.S. 24-5;
4. That the Plaintif
f, Christy Robinson,
have and recover from the Defendant,
Tamela Shue, the sum of $600;
5. That the Plaintif
f, Christy Robinson,
have and recover from the Defendant
Tamela Shue, interest at a rate of eight
percent (8%) per annum from the date this
lawsuit was instituted on February 11,
1998, until the Judgment is paid in full
pursuant to N.C.G.S. 24-5;
6. That Plaintiffs'
counsel made a motion
unto the Court for his attorney's fees
pursuant to N.C.G.S. 6-21.1 and expenses
and the Court finds:
(a) &nbs
p; Plaintiffs' counsel expended 29.4
hours on this case;
(b) &nbs
p; That Plaintiffs' counsel's hourly
rate of $150.00 is reasonable and
typically charged by an attorney of
his experience.
The trial court ultimately awarded plaintiffs $4,410.00 in attorney
fees and $486.00 in costs. Defendant appealed.
Defendant brings forth three assignments of error challenging
the trial court's findings of fact and conclusions of law withregard to the award of attorney fees to plaintiffs. Defendant
contends that the trial court's decision constituted an abuse of
discretion. For the reasons set forth, we disagree with defendant
and affirm the judgment of the trial court.
"As a general rule, in the absence of some contractual
obligation or statutory authority, attorney fees may not be
recovered by the successful litigant as damages or a part of the
court costs." Washington v. Horton, 132 N.C. App. 347, 349, 513
S.E.2d 331, 333 (1999). However, N.C. Gen. Stat. § 6-21.1 (1999)
"creates an exception to the general rule that attorney's fees are
not allowable as part of the costs in civil actions." Hill v.
Jones, 26 N.C. App. 168, 169, 215 S.E.2d 168, 169, cert. denied,
288 N.C. 240, 217 S.E.2d 664 (1975). N.C. Gen. Stat. § 6-21.1
(1999) provides as follows:
[i]n 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.
Since plaintiffs' combined jury verdict was only $1,600.00,
plaintiffs properly requested attorney fees under N.C. Gen. Stat.
§ 6-21.1. The purpose of N.C. Gen. Stat. § 6-21.1 is
to provide relief for a person who has
sustained injury or property damage in an
amount so small that, if he must pay his
attorney out of his recovery, he may well
conclude that it is not economically feasible
to bring suit on his claim. In such a
situation the Legislature apparently concluded
that the defendant, though at fault, would
have an unjustly superior bargaining power in
settlement negotiations. . . . This statute,
being remedial, should be construed liberally
to accomplish the purpose of the Legislature
and to bring within it all cases fairly
falling within its intended scope.
Hicks v. Albertson, 284 N.C. 236, 239, 200 S.E.2d 40, 42 (1973).
Though defendant concedes that N.C. Gen. Stat. § 6-21.1 is the
proper method for requesting attorney fees, she maintains that the
trial court's findings of fact are insufficient to support its
award of attorney fees to plaintiffs and that the award itself
constitutes an abuse of discretion. To prevail, defendant must
show that the trial court's ruling is "manifestly unsupported by
reason or is so arbitrary that it could not have been the result of
a reasoned decision." State v. Hennis, 323 N.C. 279, 285, 372
S.E.2d 523, 527 (1988). See also Porterfield v. Goldkuhle, 137
N.C. App. 376, 528 S.E.2d 71 (2000). "Allowance of counsel fees
under the authority of this statute is, by its express language, in
the discretion of the presiding judge, and is reversible only for
abuse of discretion." McDaniel v. N.C. Mutual Life Ins. Co., 70
N.C. App. 480, 483, 319 S.E.2d 676, 678, disc. reviews denied, 312
N.C. 84, 321 S.E.2d 897 (1984). In reviewing this assignment of
error, we are also mindful that "the scope of appellatereview . . . is strictly limited to determining whether the
trial
judge's underlying findings of fact are supported by competent
evidence, in which event they are conclusively binding on appeal,
and whether those factual findings in turn support the judge's
ultimate conclusions of law." State v. Cooke, 306 N.C. 132, 134,
291 S.E.2d 618, 619 (1982).
"The discretion accorded the trial court in awarding attorney
fees pursuant to N.C. Gen. Stat. § 6-21.1 is not unbridled."
Washington, 132 N.C. App. at 351, 513 S.E.2d at 334. When attorney
fees are at issue, the trial court must examine the entire record,
as well as the following factors: (1) settlement offers made prior
to institution of the action; (2) offers of judgment made 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; and (6) the
amounts of settlement offers as compared to the jury verdict. Id.
at 351, 513 S.E.2d at 334-35. "'[T]o 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.'" Brookwood Unit Ownership
Assn. v. Delon, 124 N.C. App. 446, 449-50, 477 S.E.2d 225, 227
(1996) (quoting West v. Tilley, 120 N.C. App. 145, 151, 461 S.E.2d
1, 4 (1995) (quoting United Laboratories, Inc. v. Kuykendall, 102N.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)).
We will review each of the Washington factors in turn.
As to factor one, the trial court considered defendant's
settlement offer made prior to institution of the action. In his
letter to the trial court, defendant's attorney stated that
1. On December 3, 1997, Defendant offered
$650.00 to Christy Robinson and $1,000.00
to Lora Robinson.
Plaintiffs rejected that offer and filed their complaint on 11
February 1998.
As to factor two, the trial court heard evidence from both
attorneys regarding an offer of judgment made after plaintiffs'
suit had been filed. Just before trial, on 22 April 1998,
defendant made an offer of judgment to plaintiffs in the amount of
$1,718.00. Plaintiffs rejected the offer, and the jury ultimately
returned a verdict for plaintiffs for $1,600.00. The trial court
found that plaintiffs incurred costs of $486.00 for certified
mailings and an expert witness fee. The trial court further found,
in finding of fact four, that plaintiffs and their attorney had a
fee agreement that was contingent in part and hourly in part. In
finding of fact two, the trial court found that the judgment
finally obtained exceeded the offer of judgment made on 22 April
1998. This finding of fact also satisfies Washington factor six --
the amounts of settlement offers as compared to the jury verdict.
As to factor three, plaintiffs concede that defendant did not
exercise superior bargaining power. In his letter to the trialcourt, plaintiffs' attorney stated that
I cannot argue that the defendant unjustly
exercised superior bargaining power since
Allstate Insurance Company was the person in
control of the purse strings.
As to factor four, both parties stipulated that "unwarranted
refusal by an insurance company" did not apply in this case.
Moreover, because this suit was not brought by an insured or a
beneficiary against an insurance company defendant, findings of
fact are not necessary regarding this Washington factor. See Crisp
v. Cobb, 75 N.C. App. 652, 331 S.E.2d 255 (1985).
Lastly, as to factor five, the trial court was aware of the
timing of defendant's settlement offer. Defendant's attorney
clearly explained to the trial court that defendant offered to
settle the case for $1,650.00 on 3 December 1997. Defendant's
attorney also informed the trial court that defendant tendered an
offer of judgment on 22 April 1998 in the amount of $1,718.00; this
sum included attorney fees taxable as costs and any remaining costs
accrued at the time the offer was filed which the trial court might
later tax as costs.
Of the six Washington factors, the parties disagree most
fervently as to whether the judgment finally obtained exceeded the
offer of judgment made. Plaintiffs argue that attorney fees and
costs should be added to the $1,600.00 jury verdict to "beat" the
$1,718.00 offer of judgment. Defendant, on the other hand, argues
that only the amount of attorney fees actually awarded as costs
should be added to the jury verdict.
Offers of judgment are addressed by N.C. Gen. Stat. § 1A-1,Rule 68. Rule 68 states:
(a) Offer of judgment.-- At any time
more than 10 days before the trial begins, a
party defending against a claim may serve upon
the adverse party an offer to allow judgment
to be taken against him for the money or
property or to the effect specified in his
offer . . . . If the judgment finally
obtained by the offeree is not more favorable
than the offer, the offeree must pay the costs
incurred after the making of the offer.
"[W]ithin the confines of Rule 68, 'judgment finally obtained'
means the amount ultimately entered as representing the final
judgment, i.e., the jury's verdict as modified by any applicable
adjustments, by the respective court in the particular controversy,
not simply the amount of the jury's verdict." Poole v. Miller, 342
N.C. 349, 353, 464 S.E.2d 409, 411 (1995) (emphasis added), reh'gs
denied, 342 N.C. 666, 467 S.E.2d 722 (1996). In the recent case of
Roberts v. Swain, 353 N.C. 246, 538 S.E.2d 566 (2000), the North
Carolina Supreme Court stated that "costs incurred after the offer
of judgment but prior to the entry of judgment should be included
in calculating the 'judgment finally obtained[.]'" Id. at 250-51,
538 S.E.2d at 569. In the present case, reasonable attorney fees
qualify as part of the costs. See Tew v. West, 143 N.C. App. 534,
546 S.E.2d 183 (2001); and N.C. Gen. Stat. § 6-21 (1999).
Before plaintiffs filed suit, defendant offered to settle the
case for $1,650.00, and later made an offer of judgment in the
amount of $1,718.00. The jury verdict awarded plaintiffs
$1,600.00. The trial court obtained an affidavit from plaintiffs'
attorney, stating that he worked a total of 29.4 hours on the case,and that he normally charged $150.00 per hour, for a total of
$4,410.00. He stated that, before the offer of judgment from
defendant on 22 April 1998, he had expended 8.5 hours of work on
the case, totaling $1,275.00 (a rate of $150.00 per hour). He also
presented evidence of $486.00 in costs.
The judgment obtained totaled $1,600.00, plus costs and
interest, with the issue of attorney fees argued by counsel in
letters to the trial court. It should be noted that the jury
verdict, costs and interest exceeded the offer of judgment without
considering the attorney fees. Plaintiffs' attorney maintains that
the offer of judgment under Rule 68 was therefore less than the
judgment finally obtained, so that he is entitled to the entire
$4,410.00 in attorney fees. Defendant's attorney argues that the
offer of judgment ($1,718.00) "beat" the judgment finally obtained
($1,600.00) because the judgment finally obtained should include
only those attorney fees actually awarded under N.C. Gen. Stat.
§ 6-21.1. See Poole. Since no attorney fees were actually awarded
in the judgment, defendant argues that the only amount to compare
against the offer of judgment is the verdict amount of $1,600.00.
Under his reasoning, the offer of judgment "beats" the judgment
finally obtained and no attorney fees are allowed.
A judgment is "'[t]he final decision of the court resolving
the dispute and determining the rights and obligations of the
parties,'" and "'[t]he law's last word in a judicial controversy.'"
Poole, 342 N.C. at 352, 464 S.E.2d at 411 (quoting Black's Law
Dictionary 841-42 (6th ed. 1990) (emphasis added)). The PooleCourt also explained that the judgment finally obtained is not the
jury verdict, but the actual judgment rendered by the trial court.
Id. Here, the trial court's judgment awarded plaintiffs the
$1,600.00 jury verdict, interest at a rate of eight percent (8%)
per year from 11 February 1998 until the judgment was paid in full,
$4,410.00 in attorney fees, and $486.00 in costs. We cite with
approval our recent decision in Tew, wherein this Court stated that
"[t]he verdict by the jury is not synonymous with the judgment
finally obtained." Tew, 143 N.C. App. at 538, 546 S.E.2d at 186.
After carefully reviewing each of the six Washington factors
and the entire record, we find that the trial court's consideration
of the factors was adequate. The trial court was presented with
letters from both plaintiffs' and defendant's attorneys, and those
letters clearly delineated the relevant case law, as well as the
six Washington factors. Detailed findings of fact are not required
for each factor. See Tew, 143 N.C. App. at 537, 546 S.E.2d at 185.
The trial court also directly addressed the parties' arguments
concerning whether the judgment finally obtained exceeded the offer
of judgment. In its finding of fact two, the trial court
definitively stated that "[t]he judgment finally obtained exceeded
the offers of judgment."
We agree with the parties that the timing and the amount of
settlement offers and the amount of the jury verdict are the most
important issues in this case. See Culler v. Hardy, 137 N.C. App.
155, 526 S.E.2d 698 (2000). However, contrary to defendant's
assertions, we find that the trial court adequately examined thetiming of the pre-suit offer, as well as the offer of judgment.
Defendant's attorney set out the timing of the pre-suit offer and
the offer of judgment in his letter to the trial court. He also
made clear arguments that defendant's pre-suit offer and the offer
of judgment were timely, made in good faith, and were reasonable in
amount as compared to the ultimate jury verdict.
We are not persuaded by defendant's argument that our decision
will encourage plaintiffs to reject fair settlement offers and
proceed to trial, depending on a trial judge to "rescue" them by
later awarding attorney fees. Rather, we agree with plaintiffs
that defendant has presented no evidence that the trial court
ignored the pretrial motions, affidavits, or the written arguments
concerning the Washington factors delivered by both attorneys.
Absent such a showing by defendant, we cannot find an abuse of
discretion by the trial court in this case. Consequently, we hold
that the trial court made adequate findings of fact concerning the
Washington factors. While the better practice would be for the
trial court to include a statement making it clear that it had
fully considered the factors set forth in Washington, we are
satisfied that the trial court did so here.
The judgment of the trial court awarding attorney fees to
plaintiffs is
Affirmed.
Judges WALKER and THOMAS concur.
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