LARRY MEJIA,
Plaintiff,
v
.
Mecklenburg County
No. 98-CVD-311
KINNARI M. PATEL and DAVID W.
BURLINGHAM,
Defendants.
Price, Smith, Hargett, Petho & Anderson, by Douglas A. Petho,
for the plaintiff-appellee.
Stiles Byrum & Horne, L.L.P., by Lane Matthews, for defendant-
appellant Kinnari M. Patel.
Templeton & Raynor, P.A., by Erik A. Schwanz, for defendant-
appellant David W. Burlingham.
WYNN, Judge.
Kinnari M. Patel and David W. Burlingham argue on appeal that
the trial court erred in awarding attorney fees to plaintiff under
N.C. Gen. Stat. § 6-21.1. We agree, and remand to the trial court
for reconsideration.
In January 1998, plaintiff brought an automobile-related
personal injury action against defendants under a complaint signed
by his attorneys, William Benjamin Smith and Douglas A. Petho. Defendants Patel and Burlingham each filed an answer as well as
cross-claims against one another seeking contribution. On 12
August 1998, plaintiff filed a notice of substitution of counsel
removing Petho as counsel of record and substituting Scott A.
Beckey of the Law Offices of Stefan R. Latorre, P.A. On 18
September 1998, plaintiff filed a notice of substitution of counsel
removing Beckey as counsel of record and substituting Stefan R.
Latorre.
On 17 November 1998, the parties appeared for court-ordered
non-binding arbitration and plaintiff was awarded $552.00.
Plaintiff appealed, and the case proceeded to jury trial, whereupon
the jury awarded plaintiff $2,200.00 for his personal injuries.
Following trial, plaintiff moved for attorneys' fees under N.C.
Gen. Stat. § 6-21.1 (1999). In support of this motion, Petho
submitted an affidavit indicating his hourly rate of $175.00 and
listing the time expended by him as well as by Latorre's law firm
in prosecuting the action. Petho's affidavit indicated a total
time of thirty-one hours spent on plaintiff's matter by himself and
Latorre's law firm, but did not apportion the thirty-one hours
between the attorneys or their law firms. In its judgment, the
trial court stated:
[t]hat following the trial of this action, the
Plaintiff made a motion pursuant to N.C.
General Statute 6-21.1 for attorneys fees, and
that the Defendant be taxed with the costs of
this action, . . . and the Court having
reviewed the file, the Motion and Affidavit of
Plaintiff's attorneys, and having heard
arguments of counsel, in its discretion makes
the following findings of fact and conclusions
of law:
. . .
2. That the Court having reviewed the
Affidavits of Plaintiff's attorneys find
they have rendered valuable services to
the Plaintiff;
3. That the Defendant shall pay
Plaintiff's attorneys pursuant to N.C.
General Statute 6-21.1, attorneys fees in
the sum of $5,425.00 which the Court
finds to be fair and reasonable based
upon the time expended by Plaintiff's
attorneys and the results obtained at the
trial of this action.
Defendant Burlingham filed a timely motion to reconsider the
award of attorneys' fees and/or make additional findings of fact to
support the award. In support of his motion, Burlingham submitted
affidavits from his insurer's claims adjuster (Vera Lewis) and his
attorney (Erik A. Schwanz). The trial court denied defendant's
motion to reconsider. From this order and the trial court's 1
February 2000 judgment, defendants appeal.
Defendants argue that the award of attorney's fees was not
supported by adequate findings of fact and conclusions of law. We
agree.
In her affidavit filed in support of defendants' motion to
reconsider the award of attorneys' fees, Vera Lewis affied as
follows:
7. On 11/25/97 I spoke with Plaintiff's
attorney, Stefan Latorre inquiring [] about
the claim, settlement, and the medical bills.
I stated to him that I was in the process of
reviewing the file[s] and that I needed to
speak with the co-Defendant's insurer
regarding a possible [50%] contribution from
them on . . . claims made by the Plaintiff.
8. In this conversation, Latorre informed methat he had received an offer of $1,250.00
from Patel's insurer, and that he was
therefore going to file suit against them. He
also advised that I could call him once I was
ready to make an offer.
. . .
10. On 1/5/98 I called Latorre to offer
$2,000.00 to settle our part of the claim, but
he was unavailable in a conference, according
to his secretary; I left a message with the
secretary.
11. I called two more times throughout that
day, and left at least one more message with
Latorre's secretary, but never received a call
back. I then diaried my computer file to
contact Latorre later in the month if I did
not hear from him.
12. On 1/27/98 I called Latorre again in an
effort to make a settlement offer and to get
the case resolved. Again, Latorre was out; I
spoke with another attorney in his firm and
made the offer of $2,000.00. That attorney
advised that he [would] relay the offer to
Latorre and that someone would get back to me
regarding the same.
13. On 2/16/98 I called Latorre's office
again to discuss settlement. I spoke with
Monica of his firm and offered the $2,000.00;
she stated she would relay the message to him.
14. On 3/5/98 I called Latorre's office again
and left a message with his secretary to call
me regarding settlement.
15. On 3/17/98 I received a call from Scott
in Latorre's office, who advised that he would
be representing [plaintiff] in this matter and
he further stated that he had filed suit and
wanted to know if anyone had let me know that
information. I advised that I had no
information regarding the suit, and Scott
agreed to fax me a copy of it.
. . .
17. Prior to the filing of the suit, I was
willing to negotiate further on the settlementof [plaintiff's] bodily injury claim, but no
one with authority to settle the claim would
respond to my offer of $2,000.00.
In his affidavit filed in support of defendants' motion to
reconsider the award of attorneys' fees, Erik Schwanz affied as
follows:
3. The arbitration in this matter was held on
November 17, 1998, which resulted in an award
to the Plaintiff for the sum of $552.00;
Plaintiff appealed the award on or about
December 7, 1998.
4. In reliance on the arbitration award and
the version of events Plaintiff Mejia gave
during that hearing, I agreed to a joint offer
of judgment in the amount of $1,500.00 with
Mr. Lane Matthews (“Matthews” hereinafter),
attorney for Defendant Patel.
5. The Offer of Judgment [made by defendants
pursuant to N.C. Gen. Stat. § 1A-1, Rule 68]
allowed for $1,500.00 and was mailed to the
Plaintiff's counsel on or about June 1, 1999.
6. At the pre-trial conference of this
matter, which occurred just prior to calling
the case, the two Defendants made a joint
offer (through [Schwanz] and Matthews) to
settle for $2,500.00.
7. Prior to that offer, the lowest counter-
offer Defendants had received was $7,500.00.
8. In response to the offer of $2,500.00,
Plaintiff indicated that the minimum he would
accept was $6,000.00, otherwise the case would
go to trial; the case therefore went to trial.
G.S. § 6-21.1 provides that the trial judge may, in his
discretion, allow a reasonable attorney fee to the attorney
representing a litigant obtaining a judgment for damages in a
personal injury action “where the judgment for recovery of damages
is ten thousand dollars ($10,000) or less[.]” While the allowance of attorneys' fees under G.S. § 6-21.1 is
within the trial court's discretion, such discretion is not
unbridled. See Washington v. Horton, 132 N.C. App. 347, 513 S.E.2d
331 (1999). When awarding fees, the trial court must 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.
Id. at 351, 513 S.E.2d at 334-35 (internal citations omitted).
Here, the trial court's 1 February 2000 judgment awarding
plaintiff attorneys' fees pursuant to G.S. § 6-21.1 found merely
that plaintiff's attorneys had “rendered valuable services” to
plaintiff, and thereby awarded plaintiff $5,425.00 in attorneys'
fees. Upon defendants' motion for reconsideration and/or motion to
make additional findings of fact, the trial court made the
following additional findings of fact in its 21 November 2000 order
denying defendants' motion to reconsider:
1. That Plaintiff's counsel, Douglas A.
Petho, was not the original attorney that was
retained in this matter.
2. That Mr. Petho was involved in this case
after suit had been filed.
3. That pre-suit offers were originally sent
to Mr. Latorre's associate, who never acted
upon the same.
4. That counsel for the Defendants made
offers prior to trial while meeting with the
Court in this matter.
5. That on the day of trial, the Plaintiff
was not inclined to accept the [defendants'
settlement] offer as he had traveled to court
to have this matter heard by a jury.
. . .
8. That the Court is of the opinion that if
Mr. Petho had been handling this case from the
outset that the trial of this matter could
have been avoided and a settlement would have
ensued but based upon substitution of counsel,
that did not occur.
Based on these scant findings, the trial court denied defendants'
motion to reconsider.
None of the findings made by the trial court support the award
of attorneys' fees to plaintiff under G.S. § 6-21.1. If anything,
the trial court's findings support a denial of attorneys' fees to
plaintiff. No findings were made concerning the precise timing and
amounts of plaintiff's pretrial settlement demands or defendants'
pretrial settlement offers; nor were findings made concerning the
amounts of the settlement offers as compared to the ultimate jury
verdict. Indeed, defendants' uncontested affidavits indicate that
defendants made multiple settlement offers prior to trial,
ultimately offering $2,500.00 immediately prior to trial, which
exceeded the jury award of $2,200.00. Even before suit was filed,
defendant Patel's insurer offered $1,250.00 to settle Patel's part
of the claim, and defendant Burlingham's insurer offered $2,000.00
to settle his part of the claim; the total of $3,250.00 offered by
defendants prior to the case being filed far exceeded the jury'sultimate award. The jury's award ($2,200.00) was well below
plaintiff's initial demand ($10,000.00) and final pre-trial
settlement demand ($6,000.00), but only slightly exceeded
defendants' Rule 68 offer of judgment ($1,500.00) made months
before trial. Furthermore, there is nothing in the record, and no
finding by the trial court, indicating that defendants unjustly
exercised superior bargaining power. See Washington; see also
Williams v. Manus, 142 N.C. App. 384, 542 S.E.2d 680 (2001).
Additionally, even if the trial court made adequate findings
to support some award of fees to plaintiff, the trial court did not
make adequate findings (including a finding concerning the fee
arrangements between plaintiff and his multiple attorneys, see
Washington, 132 N.C. App. at 351, 513 S.E.2d at 334) such that the
amount of fees awarded was supported. See Porterfield v.
Goldkuhle, 137 N.C. App. 376, 528 S.E.2d 71 (2000); Epps v. Ewers,
90 N.C. App. 597, 369 S.E.2d 104 (1988). Rather, the trial court
awarded fees based solely upon Petho's hourly rate, despite the
recognition that plaintiff employed multiple attorneys and law
firms, and that Petho's affidavit regarding time spent on this
matter included hours expended by Petho and Latorre's law firms.
For instance, plaintiff may have had a fee arrangement to
compensate Petho at a reduced hourly rate of $150.00, or an
arrangement to compensate Latorre's firm at an hourly rate of
$125.00. More likely, plaintiff had a fee arrangement to
compensate his attorneys on a contingency fee basis rather than at
an hourly rate. In any event, we conclude that the amount of thefees award, as well as the award of fees in and of itself, is
unsupported by the trial court's findings of fact.
Furthermore, we note that the trial court's findings of fact
1 and 2 conflict with the evidence in the record. While the trial
court found that Petho was not the original attorney of record in
this matter and became involved only after the suit was filed, we
note that Petho signed plaintiff's complaint, and was later removed
as counsel of record by notice filed by plaintiff on 12 August
1998. There is no indication in the record of when Petho was re-
instated as counsel of record. Additionally, the trial court's
findings indicate that Latorre's law firm never responded to pre-
suit offers. The trial court indicates the opinion that if Petho
had handled the matter from the outset, a settlement would have
ensued and trial could have been avoided. As noted above, however,
Petho signed plaintiff's complaint, and clearly was involved as
early as 9 January 1998; furthermore, there is no justification for
attributing to defendants the failure to settle, when it appears
that settlement would have occurred but for plaintiff's decision to
substitute counsel.
The trial court abused its discretion in awarding plaintiff
attorneys' fees without properly considering the factors outlined
in Washington and making the required findings. Accordingly, we
reverse the award of fees and remand for further review and fact-
finding in accordance with the Washington factors. In the event
the trial court is unable to make adequate findings to support an
award of attorneys' fees under the Washington analysis, the trialcourt should deny plaintiff's motion for fees.
Defendants do not challenge the amount of the underlying jury
award or the expert witness fee awarded to plaintiff. Our decision
therefore leaves those portions of the judgment intact. The trial
court's 21 November 2000 order denying defendants' motion to
reconsider is reversed and remanded, and the 1 February 2000
judgment is,
Affirmed in part, reversed in part, and remanded.
Judges HUDSON and THOMAS concur.
Report per Rule 30(e).
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