Appeal by defendant from judgment entered 24 August 2000 byJudge Regan A. Miller in Mecklen
burg County District Court. Heard
in the Court of Appeals 18 September 2001.
Downer, Walters & Mitchener, P.A., by Stephen W. Kearney and
Joseph H. Downer, for plaintiff-appellee.
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Allen C.
Smith and Dana M. Mango, for defendant-appellant.
MARTIN, Judge.
Plaintiff was allegedly injured when he was involved in an
automobile collision with defendant on 29 June 1996. Defendant
offered to settle plaintiff's claim for $500. Plaintiff rejected
this offer and made a counteroffer of $1,400. No settlement was
reached and plaintiff filed this action on 7 May 1999 seeking
damages for his alleged injuries. Defendant filed an answer,
denying that she was negligent and asserting contributory
negligence as an affirmative defense. On 22 June 1999, defendant
filed an offer of judgment in the amount of $500 pursuant to G.S.
§ 1A-1, Rule 68. Plaintiff rejected the offer.
The case was submitted to court-ordered arbitration, and
plaintiff was awarded $2,350.80 by the arbitrator. Defendant
requested a trial de novo. The case was tried in Mecklenburg
County District Court before a jury on 8 May 2000, resulting in a
verdict for plaintiff in the amount of $204.10. Plaintiff then
moved for attorney's fees and costs pursuant to G.S. § 6-21.1 and
filed two supporting affidavits regarding the total number of hours
plaintiff's attorney had spent in preparation for trial and the
reasonable hourly rate of compensation for the legal servicesrendered. The first affidavit claimed a total of $1,125 for the
11.25 hours expended before defendant's offer of judgment on 22
June 1999 and the second affidavit claimed a total of $2,775 for
the 27.75 hours expended before and after defendant's offer of
judgment, both based upon a suggested rate of $100 per hour. After
a hearing, the trial court awarded attorney's fees to plaintiff's
counsel in the amount of $2,775, which included the hours expended
before and after the offer of judgment. Defendant appeals.
[1]As a threshold matter, we must first consider plaintiff's
motion to dismiss the appeal. Plaintiff contends this Court should
dismiss defendant's appeal pursuant to N.C.R. App. P. 25 for
defendant's failure to properly and timely file notice of appeal.
N.C.R. App. P. 3(c) provides that an appeal from judgment in a
civil action “. . . must be taken within 30 days after its entry.”
However, under Rule 3(c), “[t]he running of the time for filing and
serving a notice of appeal in a civil action . . . is tolled as to
all parties for the duration of any period of noncompliance with
the service requirement of Rule 58 of the [North Carolina] Rules of
Civil Procedure . . . .” G.S. § 1A-1, Rule 58 requires “[t]he
party designated by the judge or, if the judge does not otherwise
designate, the party who prepares the judgment, shall serve a copy
of the judgment upon all other parties within three days after the
judgment is entered. Service and proof of service shall be in
accordance with Rule 5.” G.S. § 1A-1, Rule 5(d) provides:
[w]ith respect to all pleadings and other
papers as to which service and return has not
been made in the manner provided in Rule 4,
proof of service shall be made by filing with
the court a certificate either by the attorney
or the party that the paper was served in themanner prescribed by this rule, or a
certificate of acceptance of service by the
attorney or the party to be served. Such
certificate shall show the date and method of
service or the date of acceptance of service.
In the present case, judgment was entered 24 August 2000 and
was served on defendant 1 September 2000 as evidenced by a copy of
a letter from plaintiff to defendant. Plaintiff did not, however,
file a certificate of service as required by Rule 5(d) until 26
October 2000. On 20 September 2000, defendant served a notice of
appeal upon plaintiff. The notice of appeal was filed, however,
with this Court, rather than in the office of the Clerk of Superior
Court of Mecklenburg County as required by N.C.R. App. P. 3(a).
Defendant subsequently filed a proper notice of appeal with the
Clerk of Superior Court of Mecklenburg County on 10 October 2000.
Plaintiff argues that defendant filed the notice of appeal more
than 30 days after the judgment was entered and that her appeal
should therefore be dismissed. We note that plaintiff did not
fully comply with the service requirements of Rule 58 of the Rules
of Civil Procedure until 26 October 2000 since that is the date he
filed a certificate of service with the court. The running of the
time for filing and serving a notice of appeal was tolled pursuant
to N.C.R. App. P. 3 until plaintiff's compliance, and defendant's
notice of appeal is, therefore, timely. Plaintiff's motion to
dismiss the appeal is denied.
The sole issue raised by this appeal is whether the trial
court abused its discretion in awarding attorney's fees to
plaintiff. The general rule in North Carolina is that in the
absence of contractual obligation or statutory authority, asuccessful litigant may not recover attorney's fees as damages or
a part of the court costs.
Hicks v. Albertson, 284 N.C. 236, 200
S.E.2d 40 (1973). However, G.S. § 6-21.1 provides an exception to
the general rule and allows an award of attorney's fees as part of
the court costs in certain cases. The statute provides:
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.
N.C. Gen. Stat. § 6-21.1 (2001). The purpose of the statute was
stated by the North Carolina Supreme Court in
Hicks:
The obvious purpose of this statute 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, 284 N.C. at 239, 200 S.E.2d at 42. The decision to allow
attorney's fees is in the discretion of the presiding judge, and isreversible by an appellate court only for abuse of discretion.
McDaniel v. N.C. Mutual Life Ins. Co., 70 N.C. App. 480, 319 S.E.2d
676,
disc. review denied, 312 N.C. 84, 321 S.E.2d 897 (1984).
“Abuse of discretion results where the court's ruling is manifestly
unsupported by reason or is so arbitrary that it could not have
been the result of a reasoned decision.”
Blackmon v. Bumgardner,
135 N.C. App. 125, 130, 519 S.E.2d 335, 338 (1999) (citations
omitted).
[2]Defendant first contends that there was no evidence of an
unwarranted refusal to pay plaintiff's claim by defendant and
therefore the trial judge abused his discretion in awarding
attorney's fees. However, our appellate courts have consistently
held that a finding of unwarranted refusal to pay a claim is
required only in suits brought by an insured or a beneficiary
against an insurance company defendant.
Washington v. Horton, 132
N.C. App. 347, 513 S.E.2d 331 (1999)
; Yates Motor Co. v. Simmons,
51 N.C. App. 339, 276 S.E.2d 496,
disc. review denied, 303 N.C.
320, 281 S.E.2d 660 (1981);
Rogers v. Rogers, 2 N.C. App. 668, 163
S.E.2d 645 (1968). Since the present case involves a personal
injury suit by plaintiff against an individual defendant, rather
than one by an insured or beneficiary directly against an insurance
company, no finding of unwarranted refusal is required. Therefore,
the trial court did not err in failing to make a finding of
unwarranted refusal to pay plaintiff's claim.
[3]Defendant next argues that the trial court erred in
failing to consider the entire record and the factors set forth in
Washington, before awarding plaintiff attorney's fees. A trial
court's discretion in awarding attorney's fees pursuant to G.S. §
6-21.1 is not unbridled.
Washington, 132 N.C. App. at 351, 513
S.E.2d at 334.
In
Washington, this Court stated
[T]he trial court is to consider the entire
record in properly exercising its discretion,
including but not limited to 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.
Id. at 351, 513 S.E.2d at 334-35 (citations omitted).
For the following reasons, we hold the trial court gave proper
consideration to the factors established by
Washington. As to the
first
Washington factor, it is evident that the trial court
considered the settlement offer made prior to the institution of
the action. The court noted in its first finding of fact that
prior to the filing of the action, defendant made a settlement
offer to plaintiff in the amount of $500 but that plaintiff
rejected this offer and made a counteroffer of $1,400.
The second
Washington factor was considered as well. The
trial court found “[o]n June 22, 1999, defendant filed an offer of
judgment pursuant to Rule 68 of the North Carolina Rules of Civil
Procedure in the amount of $500.00 Plaintiff did not accept this
offer and sought to resolve the case for $1,400.00 . . . .” Thetrial court went on to conclude that when the reasonable fees
incurred or sought by plaintiff's counsel at the time of the offer
of judgment were added to the jury verdict of $204.10, the judgment
finally obtained would exceed the offer of judgment. Defendant
argues that her offer of judgment was more than twice the amount of
the jury verdict and therefore, the trial court's award of
attorney's fees was an abuse of discretion. However, our Supreme
Court has concluded that “within 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),
reh'g denied, 342 N.C. 666, 467 S.E.2d 722 (1996).
Additionally, the Supreme Court has recently held that post Rule 68
offer costs should be included in calculating the final judgment
obtained.
Roberts v. Swain, 353 N.C. 246, 538 S.E.2d 566 (2000).
Thus, the attorney's fees for work done both before and after
defendant's offer of judgment should be added to the jury verdict
in order to determine the final judgment ($2,775.00 + $204.10 =
$2,979.10). Since the final judgment ($2,979.10) is greater than
defendant's offer of judgment ($500), the trial court did not abuse
its discretion based on the second
Washington factor.
As to the third factor, the court made no findings with
respect to whether defendant unjustly exercised “superior
bargaining power.” However, “. . . the absence of such a findingdoes not require reversal when the trial court made adequate
findings on the whole record to support an award of attorney's
fees.”
Olson v. McMillian, 144 N.C. App. 615, 619, 548 S.E.2d 571,
573-74 (2001). As to factor four, findings of fact are not
necessary since this suit was not brought by an insured or a
beneficiary against an insurance company defendant.
Washington,
132 N.C. App. at 350, 513 S.E.2d at 334. As to factor five, the
trial court made findings of fact indicating that the timing of
settlement offers was considered in awarding plaintiff attorney's
fees. The trial court noted that prior to the filing of the
action, defendant made a settlement offer to plaintiff in the
amount of $500 and that on 22 June 1999 defendant filed an offer of
judgment in the amount of $500. As to factor six, it is clear from
the court's findings of fact that it considered the amount of the
settlement offer as compared to the jury verdict since the court
cited the settlement offer and jury verdict within the findings.
Finally, it is apparent that the trial court evaluated the whole
record, in view of the hearing on the motion and its consideration
of the affidavits submitted and the arguments of counsel.
An award of attorney's fees must be reasonable. “If the court
elects to award attorney's fees, it must also enter findings to
support the amount awarded.”
Porterfield v. Goldkuhle, 137 N.C.
App. 376, 378, 528 S.E.2d 71, 73 (2000). In order for the
appellate court to determine that the 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 feefor like work, and the experience or ability of the attorney.”
United Laboratories, Inc. v. Kuykendall, 102 N.C. App. 484, 494,
403 S.E.2d 104, 111 (1991),
affirmed, 335 N.C. 183, 437 S.E.2d 374
(1993). In the present case, the trial court made the following
findings of fact with respect to reasonableness:
Prior to the date of the offer of judgment,
Plaintiff's attorneys had expended at least
11.25 hours prosecuting this action and were
seeking to recover a fee of at least $350.00.
By the end of the trial of this case, a total
of 27.75 hours of attorney time had been
expended by Plaintiff's counsel pursuing his
claim. Given the experience and
qualifications of Plaintiff's counsel and the
fees charged by attorneys in Mecklenburg
County of comparable skill and experience, a
rate of $100.00 per hour is a reasonable fee
applicable to the services of Plaintiff's
counsel.
We hold these findings sufficient to support the award.
Plaintiff has also moved, in this Court, for attorney's fees
pending appeal, for work performed during the appellate process.
This Court has held that the trial court has the authority under
G.S. § 6-21.1 to award additional attorney's fees for an appeal.
Hill v. Jones, 26 N.C. App. 168, 215 S.E.2d 168,
cert. denied, 288
N.C. 240, 217 S.E.2d 664 (1975). Therefore, we remand this case
for the limited purpose of allowing the District Court, in its
discretion, and upon plaintiff's motion, to make findings of fact
relevant to a determination of reasonable attorney's fees for
services rendered on appeal and to enter an award consistent with
those findings.
Affirmed and remanded.
Judges WALKER and TYSON concur.
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