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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the
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NO. COA01-866
NORTH CAROLINA COURT OF APPEALS
Filed: 18 June 2002
VILONA BLEDSOLE,
Plaintiff
v
.
RICKY LEE JOHNSON,
Defendant
Appeal by defendant from orders entered 23 January 2001 and 24
January 2001 by Judge Kimbrell Kelly Tucker in Cumberland County
District Court. Heard in the Court of Appeals 23 April 2002.
Hatley & Stone, P.A., by Angela M. Hatley, for plaintiff-
appellee.
Walker, Clark, Allen, Herrin & Morano, L.L.P., by Jerry A.
Allen, Jr. and Gay Parker Stanley, for defendant-appellant.
HUNTER, Judge.
Rickie Lee Johnson (defendant) appeals from an order
striking defendant's Request for Trial De Novo and awarding Vilona
Bledsole (plaintiff) attorney's fees and costs. We hold the
trial court did not err in striking defendant's Request for Trial
De Novo. We also hold the trial court erred in awarding plaintiff
costs incurred prior to the arbitration award, and we remand to the
trial court for an order clarifying the basis for the award of
attorney's fees and costs incurred after the arbitration award.
Plaintiff and defendant were involved in a motor vehicle
accident in November of 1998 in Cumberland County, North Carolina.
Plaintiff filed a complaint on 4 April 2000 seeking damages.
Defendant filed a response raising various defenses. Defendantalso demanded a jury trial. On 30 June 2000, the trial court
ordered the parties to participate in non-binding arbitration
pursuant to N.C. Gen. Stat. § 7A-37.1 (2001). The arbitration
hearing was scheduled but then continued by consent of the parties,
and the hearing was rescheduled for 31 August 2000. The trial
court sent copies of a Notice of Arbitration Hearing to Angela M.
Hatley, the attorney representing plaintiff, and to Gay Parker
Stanley, an attorney hired by defendant's insurance company,
Allstate Insurance Company (Allstate), to represent defendant.
At the arbitration hearing, plaintiff and her attorney
appeared, as well as Scott T. Stroud, an attorney from the same
firm as Ms. Stanley. Defendant did not appear in person. In
addition, no adjuster or representative on behalf of Allstate
appeared at the hearing. The hearing lasted for thirty minutes,
during which time plaintiff presented her medical bills and
records, and Mr. Stroud presented photographs of plaintiff's
vehicle and presented arguments. The arbitrator entered an award
of $7,000.00 in plaintiff's favor, and also taxed costs of the
action to defendant, although no amount of costs were included.
The arbitrator did not award any attorney's fees to plaintiff.
On 11 September 2000, defendant filed a Request for Trial De
Novo pursuant to Rule 5(a) of the Rules for Court-Ordered
Arbitration (Arb. Rule 5(a)). The parties then proceeded to
engage in discovery, conducting a deposition of plaintiff on 5
October 2000, and a de bene esse video deposition of plaintiff's
chiropractor on 17 October 2000. On 24 October 2000, plaintifffiled a Motion for Sanctions seeking to strike defendant's
Request for Trial De Novo and enforce the arbitration award, or, in
the alternative, to be awarded attorney's fees and costs as a
result of defendant's failure to participate in the arbitration
hearing. In this motion, plaintiff argued that defendant had
violated Rule 3(l) of the Rules for Court-Ordered Arbitration
(Arb. Rule 3(l)) by failing to participate in the arbitration
hearing in a good faith and meaningful manner. A hearing on this
motion was scheduled for 6 November 2000, the same day as the
trial. On 6 November 2000, prior to the hearing and trial,
plaintiff filed an additional motion seeking attorney's fees of
$3,300.00 and costs of $1,270.70. Following a hearing on 6
November 2000, and a second hearing on 5 December 2000, the trial
court entered an order on 23 January 2001 granting plaintiff's
initial motion for sanctions by striking defendant's Request for
Trial De Novo and enforcing the arbitration award, and also
granting plaintiff attorney's fees of $1,912.50 and costs of
$175.30. Defendant filed a Motion for Reconsideration and
Rehearing on 14 December 2000, and the trial court denied this
motion by order dated 24 January 2001. Defendant appeals from both
orders.
I.
On appeal, defendant first argues that the trial court erred
in striking defendant's Request for Trial De Novo and in enforcing
the arbitration award. Rule 3(p) of the Rules for Court-Ordered
Arbitration (Arb. Rule 3(p)) requires that [a]ll parties shallbe present at hearings in person or through representatives
authorized to make binding decisions on their behalf in all matters
in controversy before the arbitrator. R. Ct.-Ordered Arbitration
in N.C. 3(p), 2002 N.C. R. Ct. 233. Arb. Rule 3(l) further
provides that [a]ny party failing or refusing to participate in an
arbitration proceeding in a good faith and meaningful manner shall
be subject to sanctions by the court on motion of a party, or
report of the arbitrator, as provided in N.C.R. Civ. P. 11,
37(b)(2)(A)-37(b)(2)(C) and N.C. Gen. Stat. § 6-21.5. R. Ct.-
Ordered Arbitration in N.C. 3(l), 2002 N.C. R. Ct. 233.
Here, the trial court found as fact that defendant did not
appear at the arbitration hearing, and that [t]here is no evidence
in the record that Mr. Stroud was appearing at the arbitration
hearing with the authority to make binding decisions on defendant's
behalf in all matters in controversy before the arbitrator. Based
upon these findings, the trial court concluded that defendant
failed to participate in the arbitration proceeding in a good
faith and meaningful manner, as required by Arb. Rule 3(l), and
therefore determined that sanctions were warranted.
There is no dispute that defendant himself did not attend the
arbitration hearing. Defendant contends that Mr. Stroud's
appearance satisfied Arb. Rule 3(p) because Mr. Stroud was
authorized to make binding decisions on defendant's behalf in all
matters in controversy before the arbitrator. However, the record
does not contain any evidence to support this contention. This
Court has previously held that where a defendant fails to appear atarbitration, and where there is no evidence in the record that the
attorney purporting to represent the defendant at the hearing had
the authority to make binding decisions in all matters on
defendant's behalf, a trial court's ruling that the defendant has
violated Arb. Rule 3(p) is not an abuse of discretion. Mohamad v.
Simmons, 139 N.C. App. 610, 613-15, 534 S.E.2d 616, 618-20 (2000)
(noting that such evidence could include the defendant's contract
with the attorney, or an affidavit setting forth the nature of the
representational relationship and the authority of the attorney).
Furthermore, this Court has held that, under such circumstances, a
trial court's award of sanctions against the defendant in the form
of striking the defendant's demand for trial de novo and enforcing
the arbitration award in favor of the plaintiff is not an abuse of
discretion. Id. at 614-15, 534 S.E.2d at 619-20.
Defendant argues that Mohamad is distinguishable from the
instant case for two reasons. We address each in turn.
A.
First, defendant argues, unlike in Mohamad, there is evidence
in this case that defendant never received notice of the
rescheduled hearing and, thus, the reasons for his failure to
appear at the hearing were beyond his control. We find this
argument to be unpersuasive for a number of reasons.
First and foremost, there is no evidence in the record tending
to show that the reasons for defendant's failure to appear were
beyond his control. Defendant sought to attach to his Motion for
Reconsideration and Rehearing two affidavits purportedly averringthat defendant had not received any notice regarding the
rescheduled arbitration hearing. In its 24 January 2001 order
denying the Motion for Reconsideration and Rehearing, the trial
court found that defendant had failed without justification to
produce any such affidavits at the hearings on 6 November 2000 and
5 December 2000. As noted above, the trial court denied the Motion
for Reconsideration and Rehearing, and further, in settling the
record on appeal, ruled that all exhibits attached to the motion
should be deleted from the record on appeal. It is well
established that [a] trial court's order settling the record on
appeal is final and will not be reviewed on appeal. Penland v.
Harris, 135 N.C. App. 359, 363, 520 S.E.2d 105, 108 (1999).
Furthermore, [r]eview of an order settling the record on appeal is
available, if at all, only by way of certiorari. Id. Defendant
has not applied for certiorari. Since there is no evidence in the
record on appeal to show that defendant failed to attend the
hearing for good cause, defendant cannot establish that Mohamad
may be distinguished on this basis.
Second, defendant's argument is founded upon the premise that
defendant's failure to appear at the hearing was the fault of his
attorneys in not notifying him of the rescheduled date, and not his
own fault. Even if this were true, it is not clear that it would
make a difference from a legal standpoint. Parties are generally
held responsible for the negligence of their lawyers in handling
their case in order to ensure that both clients and lawyers take
care to act responsibly. See Briley v. Farabow, 348 N.C. 537,546-47, 501 S.E.2d 649, 655 (1998) (an attorney's negligent conduct
is not excusable neglect under N.C. Gen. Stat. § 1A-1, Rule
60(b)(1) (2001)).
Allowing an attorney's negligence to be a
basis for providing relief from orders would
encourage such negligence and present a
temptation for litigants to use the negligence
as an excuse to avoid court-imposed rules and
deadlines. Plaintiffs have argued that this
Court should provide relief from an order if
only the attorney, rather than the client, was
negligent. Looking only to the attorney to
assume responsibility for the client's case,
however, leads to undesirable results.
Id. at 546, 501 S.E.2d at 655. Thus, even if defendant could show
that his attorney received notice of the rescheduled hearing and
failed to notify defendant, such fact would not necessarily compel
the conclusion that defendant's failure to appear was for good
cause or was due to reasons beyond his control.
Finally, even if there were evidence that the reasons for
defendant's failure to appear were beyond his control, defendant
nonetheless failed to employ the most appropriate remedy for his
failure to appear: namely, moving for a rehearing pursuant to Rule
3(j) of Rules for Court-Ordered Arbitration (Arb. Rule 3(j)).
This rule provides:
If a party who has been notified of the date,
time and place of the hearing fails to appear
without good cause therefor, the hearing may
proceed and an award may be made by the
arbitrator against the absent party upon the
evidence offered by the parties present, but
not by default for failure to appear. . . .
The court may order a rehearing of any case in
which an award was made against a party who
failed to obtain a continuance of a hearing
and failed to appear for reasons beyond the
party's control. Such motion for rehearingshall be filed with the court within the time
allowed for demanding trial de novo stated in
Arb. Rule 5(a).
R. Ct.-Ordered Arbitration in N.C. 3(j), 2002 N.C. R. Ct. 232-33.
If defendant had desired to contest the arbitration award against
him on the basis that the reasons for his failure to appear were
beyond his control, the appropriate remedy would have been filing
a motion for rehearing pursuant to Arb. Rule 3(j), which defendant
failed to do.
B.
The second reason defendant argues that Mohamad is
distinguishable is that here, unlike in Mohamad, plaintiff failed
to object to defendant's absence during the arbitration hearing,
and that plaintiff here did not raise an objection to defendant's
absence until forty-three days after defendant filed the Request
for Trial De Novo. Again, we find this argument unpersuasive for
a number of reasons.
First, there is nothing in Mohamad indicating that the Court
in that case placed any significance upon the fact that the
plaintiff objected to the defendants' failure to appear; the court
merely noted this fact in passing during a recitation of the
procedural background. See Mohamad, 139 N.C. App. at 611, 534
S.E.2d at 618). Second, nothing in the Rules for Court-Ordered
Arbitration requires a party to object to an opposing party's
failure to appear at an arbitration hearing, or to object to any
violation of the Rules at the arbitration hearing, in order topreserve the right to later seek sanctions based upon such
violation.
Moreover, we see no reason for imposing such a requirement in
this context. Generally, parties must enter objections before the
lower court in order to preserve an issue for appeal because: (1)
appellate courts are limited to a review of alleged errors in the
rulings of the trial court, and, absent an objection and an
opportunity for the trial court to rule on the objection, there is
nothing for an appellate court to review, see Cotton Mill Co. v.
Textile Workers Union, 234 N.C. 748, 749, 68 S.E.2d 809, 810
(1952); and (2) requiring parties to object at trial increases the
likelihood that the error will be called to the trial court's
immediate attention and corrected, thereby eliminating the need for
a new trial, see Penland v. Green, 289 N.C. 281, 285, 221 S.E.2d
365, 369 (1976).
However, in the context of a trial de novo following an
arbitration hearing, the trial court is not limited to a review of
alleged errors in the rulings of the arbitrator at the arbitration
hearing. There is no official transcript of the arbitration
hearings, see Arb. Rule 3(k), and, as a result, a trial de novo is
not technically considered to be an appeal from an arbitration
award, see Comment to Arb. Rule 6. Furthermore, only the trial
court, and not the arbitrator, has authority to punish arbitration
parties for contempt, see Arb. Rule 3(g), 3(l), 3(p), and only the
trial court has authority to schedule or reschedule arbitration
hearings, see Arb. Rule 8(b), or to order a rehearing, see Arb.Rule 3(j). Thus, an objection at the arbitration hearing to a
party's failure to appear would not have the effect of providing
the arbitrator an opportunity to enter any contempt ruling based
upon the party's failure to appear or to order that the hearing be
rescheduled.
C.
Defendant has asserted various other grounds in support of his
contention that the trial court erred in striking the demand for
trial de novo. Defendant draws our attention to the fact that
plaintiff's motion for sanctions was not made until forty-three
days after defendant filed its demand for trial de novo, and one
week before trial was scheduled. While we agree that such delay
can result in significant inconvenience and cost for the opposing
party, who is left having unnecessarily prepared for trial if the
demand for trial de novo is ultimately stricken, only our Supreme
Court has the authority to adopt rules governing the procedure
for court-ordered, nonbinding arbitration. See N.C. Gen. Stat. §
7A-37.1(b). At present, the Rules for Court-Ordered Arbitration do
not include a deadline for filing a Motion for Sanctions based upon
an opposing party's failure to appear at the arbitration hearing in
violation of Arb. Rule 3(l).
Defendant also contends that the trial court erred in finding
that Mr. Stroud did not conduct any cross-examination and
presented no evidence during the course of the arbitration
hearing. Defendant contends that Mr. Stroud did, in fact, present
evidence at the hearing. Even assuming arguendo that defendant iscorrect, and that the trial court's finding to the contrary is not
supported by the evidence in the record, such finding was not
necessary to the court's conclusion that defendant failed to
participate in the arbitration proceeding in a good faith and
meaningful manner. This conclusion was adequately supported, as
noted above, by the trial court's findings that defendant did not
appear at the arbitration hearing, and that [t]here is no evidence
in the record that Mr. Stroud was appearing at the arbitration
hearing with the authority to make binding decisions on defendant's
behalf in all matters in controversy before the arbitrator.
Defendant also contends the trial court erred in finding that
no person from Allstate Insurance Company appeared at the
arbitration hearing. We agree with defendant that this finding
would not be a proper basis for concluding that defendant failed to
participate in the arbitration proceeding in a good faith and
meaningful manner. This is because nothing in the Rules for
Court-Ordered Arbitration requires the attendance of a
representative of a party's insurance company when such insurance
company is not a named party in the action. See Johnson v.
Brewington, ___ N.C. App. ___, ___ S.E.2d. ___ (No. COA01-865 filed
21 May 2002). However, there is no indication in the order that
the trial court's conclusion was dependent upon this finding, and
thus, any error in entering this finding was inconsequential.
II.
Defendant next assigns error to the trial court's award of
attorney's fees in favor of plaintiff. The arbitration award didnot include an award of attorney's fees in favor of plaintiff. The
trial court in its order awarded plaintiff attorney's fees only for
fees incurred during the time period from the date of the
arbitrator's award to October 9, 2000 and for the preparation and
filing of the motion for sanctions. However, the order does not
clearly indicate the basis upon which such fees were awarded.
It is possible that the trial court intended to award such
attorney's fees pursuant to N.C. Gen. Stat. § 6-21.5 (2001) as
sanctions for defendant's failure to appear at arbitration.
(See footnote 1)
However, such basis for the award of attorney's fees would have
been improper. Section 6-21.5 of our General Statutes allows a
court to award a reasonable attorney's fee to the prevailing party
if the court finds that there was a complete absence of a
justiciable issue of either law or fact raised by the losing party
in any pleading. N.C. Gen. Stat. § 6-21.5. Here, the trial court
did not find facts that would support such a conclusion, the trial
court did not enter such a conclusion in its order, and the record
does not, in fact, support such a conclusion.
It is also possible that the trial court intended to award
attorney's fees, not as a sanction pursuant to N.C. Gen. Stat. § 6-
21.5, but, rather, based upon some other statutory authority (for
example, plaintiff's motion for attorney's fees and costs expresslyrefers to Rule 11, Rule 37, and N.C. Gen. Stat. § 6-21.1). Because
the trial court may have intended to award attorney's fees based
upon some statutory authority other than N.C. Gen. Stat. § 6-21.5,
we remand the case to the trial court. If the only basis for the
trial court's award of attorney's fees was N.C. Gen. Stat. § 6-
21.5, the trial court is instructed to enter an order denying
plaintiff's motion for attorney's fees. If the award of attorney's
fees was intended to be made upon some other basis, the trial court
is instructed to enter an order clarifying the basis for the
attorney's fee award.
III.
Finally, defendant argues that the trial court erred in
awarding costs of $175.30 to plaintiff ($91.30 for costs incurred
through the date of the arbitration hearing, and $84.00 for costs
incurred since the arbitration hearing). The Arbitration Award and
Judgment states that costs are to be taxed against defendant, but
it does not actually specify any particular amount to be awarded to
plaintiff as costs. Defendant contends that no specific costs were
included in the award because plaintiff did not present any
evidence of her costs at the arbitration hearing. Defendant
further contends that any costs awarded to plaintiff by the trial
court would essentially constitute a modification of the
Arbitration Award and Judgment, and that such modification would be
improper since defendant's Motion for Trial De Novo was stricken,
and plaintiff did not appeal from the arbitration award. To theextent that the trial court awarded plaintiff costs incurred up to
the date of the arbitration hearing, we agree.
It is important to understand the status of this action at the
time the trial court struck defendant's Request for Trial De Novo.
Rule 6(b) of the Rules for Court-Ordered Arbitration (Arb. Rule
6(b)) provides in pertinent part:
If the case is not terminated by agreement of
the parties, and no party files a demand for
trial de novo within 30 days after the award
is filed, the clerk or the court shall enter
judgment on the award, which shall have the
same effect as a consent judgment in the
action.
R. Ct.-Ordered Arbitration in N.C. 6(b), 2002 N.C. R. Ct. 234.
Initially, we hold that the same result (entry of judgment on the
award with the effect of a consent judgment) obtains where, as
here, (1) an Arbitration Award and Judgment is entered, (2) one of
the parties demands a trial
de novo, and (3) the trial court
strikes the demand for trial
de novo as a form of sanctions based
upon a violation of Rule 3(l). Thus, as a result of the trial
court's 23 January 2001 order striking defendant's demand for trial
de novo, and because plaintiff did not file a demand for trial
de
novo within thirty days, the trial court's order entering judgment
on the arbitration award has the same effect as a consent judgment.
The trial court awarded costs incurred by plaintiff prior to
the arbitration award, even though such costs were not specifically
included in the arbitration award. This award of costs incurred
before the arbitration award was improper and must be reversed.
There is nothing in the Rules for Court-Ordered Arbitrationindicating that, following entry of judgment by the clerk or the
trial court on an arbitration award which then has the same effect
as a consent judgment, the trial court has authority to alter the
terms of the arbitration award by awarding costs incurred prior to
the arbitration award which were not included in the award.
See
Taylor v. Cadle, 130 N.C. App. 449, 454, 502 S.E.2d 692, 695 (1998)
(holding that failure of a party to request a trial
de novo within
thirty days of the arbitrator's award acts as a waiver of that
party's right to appeal the arbitrator's determination on the issue
of attorney's fees or costs).
As to the trial court's award of costs incurred by plaintiff
after the arbitration award, the trial court's order fails to
indicate the statutory basis for this award. As to these costs, we
remand to the trial court for entry of an order clarifying the
basis for this award.
In summary, we affirm the trial court's 23 January 2001 order
to the extent that it strikes defendant's demand for trial
de novo
based upon defendant's violation of Rule 3(l). We reverse the
trial court's order to the extent it purports to award plaintiff
costs incurred prior to the arbitration award. As to the trial
court's award of attorney's fees and costs incurred after the
arbitration award, we remand to the trial court for entry of an
order clarifying the basis for such awards.
Affirmed in part, reversed in part, and remanded.
Judge TIMMONS-GOODSON concurs.
Judge GREENE dissents in a separate opinion.
==============================
GREENE, Judge, dissenting.
All parties to a case that is to be arbitrated pursuant to the
Rules for Court-Ordered Arbitration (the Rules) are required to be
present at the arbitration hearing or to have a representative
present who is authorized to make binding decisions on their
behalf. N.C. Arb. R. 3(p). If a party or its authorized
representative does not appear at the hearing and the arbitrator
enters an award against that party, that party may within 30 days
of the filing of the award move the trial court to order a
rehearing on the grounds that he failed to appear for reasons
beyond [his] control. N.C. Arb. R. 3(j), 5(a).
In this case, the arbitration hearing was conducted on 31
August 2000. Defendant was not present for the hearing, although
his attorney was present. At the hearing, the issue of whether
defendant's attorney had the authority to make binding decisions on
behalf of his client was never raised. After the hearing, on 1
September 2000, an Award and Judgment, which noted that [a]ll
parties were present in person or through an attorney, was filed.
Subsequently, on 11 September 2000, defendant moved for a trial
de
novo pursuant to Rule 5(a). On 24 October 2000, plaintiff filed
her motion for sanctions requesting defendant's trial
de novo
request be denied because he did not appear at the arbitration
hearing or have anyone present authorized to make binding
decisions on his behalf. The trial court allowed plaintiff'smotion on the grounds that defendant was neither present for the
arbitration hearing nor had a representative there with the
authority to make binding decisions on his behalf.
Because plaintiff did not raise the issue of whether
defendant's attorney had the requisite Rule 3(p) authority until
after expiration of the time for defendant to move the trial court
for an arbitration rehearing, she is barred from raising the issue.
To hold otherwise would allow her to simply wait until it is too
late for defendant to attempt to correct the problem that is the
basis of her motion, and this would be inconsistent with any
reasonable construction of the Rules. In other words, unless a
party makes a timely Rule 3(p) objection, it cannot seek to deny
another party the right to request a Rule 5(a) trial
de novo on the
grounds that party has failed to comply with Rule 3(p).
See
Mohamad v. Simmons, 139 N.C. App. 610, 611, 534 S.E.2d 616, 618
(2000) (the plaintiff objected to the failure of the individual
defendants to appear [at the arbitration hearing], but proceeded
with the hearing without waiving or withdrawing the objection).
A timely objection is one entered either at the hearing or at the
time the award is filed. As plaintiff never entered a Rule 3(p)
objection, the failure of the record to show defendant's attorney
had Rule 3(p) authority cannot be the basis for denying defendant
a trial
de novo, awarding plaintiff attorney's fees, or awarding
costs.
Accordingly, I would reverse and remand for an entry of an
order granting defendant's request for a trial
de novo.
Footnote: 1 Arb. Rule 3(l) authorizes a trial court to award sanctions
pursuant only to Rule 11, Rule 37(b)(2)(a)-(c), and N.C. Gen. Stat.
§ 61-21.5. The trial court's order references only Rule 37 and
N.C. Gen. Stat. § 61-21.5. Because the order does not reference
Rule 11, and because Rule 37(b)(2)(a)-(c) does not authorize
attorney's fees as sanctions, the trial court may have intended to
award attorney's fees pursuant to N.C. Gen. Stat. § 61-21.5.
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