Appeal by petitioner from order entered 18 September 2002 by
Judge John R. Jolly, Jr. in Superior Court, Wake County. Heard in
the Court of Appeals 24 February 2004.
Law Offices of Glen C. Shults, by Glen C. Shults, for
petitioner-appellant.
Attorney General Roy Cooper, by Assistant Attorney General
Thomas M. Woodward, for the State.
McGEE, Judge.
Petitioner Marshe Morgan (petitioner) appeals an 18 September
2002 order granting petitioner $22,500 in attorney's fees and
affirming the State Personnel Commission's award of costs in her
underlying employment case.
Petitioner filed a pro se petition with the Office of
Administrative Hearings (OAH) in September 1998 alleging that she
was not selected for a position as a Symbol Board Technician
because of her age and race. Glen C. Shults (Shults) filed a
notice of appearance as counsel on behalf petitioner in December
1998. After a hearing, an administrative law judge issued a
Recommended Decision in favor of petitioner on 11 July 2000. This
decision was subsequently adopted by the State Personnel Commission
(SPC) in January 2001. Neither petitioner nor the North Carolina
Department of Health and Human Services (respondent) appealed the
SPC's Decision and Order.
Petitioner thereafter filed a motion for attorney's fees and
costs with the SPC in April 2001 seeking an order directing
respondent to pay her attorney's fees in the amount of $113,426 and
her costs in the amount of $12,229.53. Based upon the SPC's
interpretation of petitioner's fee agreement with Shults dated 14
December 1998, the SPC awarded petitioner $5,000 in attorney's fees
and $6,970.46 in costs. Petitioner filed a petition in Wake County
Superior Court (superior court) challenging the SPC's award of
attorney's fees and costs as inadequate and unreasonable, and
requesting judicial review of the decision and order. The superior
court ordered that the SPC's decision and order be modified. In a
final order entered 16 September 2002, the superior court granted
petitioner $22,500 in attorney's fees and affirmed the SPC's award
of costs. Petitioner appeals from the final order.
We first note that petitioner has failed to comply with the
North Carolina Rules of Appellate Procedure. "The Rules of
Appellate Procedure are mandatory and failure to follow the rules
subjects an appeal to dismissal." Wiseman v. Wiseman, 68 N.C. App.
252, 255, 314 S.E.2d 566, 567-68 (1984). In her brief, petitioner
refers this Court to petitioner's memoranda of law submitted to theSPC and to the superior court, which are included in the record on
appeal to this Court. Petitioner directs this Court's attention to
cases cited in her memoranda of law instead of citing those cases
in her appellate brief for the stated purpose of complying with the
space limitations imposed by the Rules of Appellate Procedure. See
N.C.R. App. P. 28(j)(2)(A). N.C.R. App. P. 28(b)(6) provides that
the body of the argument in a brief is to contain "citations of the
authorities upon which the appellant relies." Despite her failure
to comply with the rules of appellate procedure, this Court elects
in its discretion, pursuant to N.C.R. App. P. 2, to review the
merits of petitioner's argument.
Respondent cross-assigned as error the superior court's
affirmation of the SPC's award of attorney's fees and the superior
court's modification of the SPC's award as to costs. N.C.R. App.
P. 10(d) (2004) provides that an appellee may, without taking an
appeal, "cross-assign as error any action or omission of the trial
court which was properly preserved for appellate review and which
deprived the appellee of an alternative basis in law for supporting
the judgment, order, or other determination from which appeal has
been taken." Respondent does not present in its cross-assignments
of error an alternative basis in law for supporting the superior
court's order, but instead, contends that the superior court's
award of attorney's fees and costs was excessive. These issues are
therefore not properly before this Court and will not be
considered; the proper method for preserving such issues forappellate review would have been by cross-appeal. City of
Charlotte v. Whippoorwill Lake, Inc., 150 N.C. App. 579, 583-84,
563 S.E.2d 297, 300 (2002); Wilson Realty & Constr., Inc. v.
Asheboro-Randolph Bd. of Realtors, 134 N.C. App. 468, 473, 518
S.E.2d 28, 32 (1999); Cox v. Robert C. Rhein Interest, Inc., 100
N.C. App. 584, 588, 397 S.E.2d 358, 361 (1990).
Regarding errors of law, this Court's standard of review of a
superior court's order entered upon review of an administrative
agency decision mandates that we determine whether (1) the trial
court used the appropriate scope of review and, if so, (2) whether
the superior court did so correctly. Sutton v. N.C. Dep't of
Labor, 132 N.C. App. 387, 389, 511 S.E.2d 340, 341-42 (1999).
"[I]f the appellant contends the agency's decision was affected by
a legal error, G.S. § 150B-51(1)(2)(3) & (4), de novo review is
required; if the appellant contends the agency decision was not
supported by the evidence, G.S. § 150B-51(5), or was arbitrary or
capricious, G.S. § 150B-51(6), the whole record test is utilized."
Dillingham v. N.C. Dep't of Human Res., 132 N.C. App. 704, 708, 513
S.E.2d 823, 826 (1999).
The superior court conducted a whole record review of the
SPC's interpretation of governing law and its findings relating to
the SPC's award of attorney's fees. Then, based on de novo review,
the superior court modified the SPC order and found petitioner was
entitled to recover $22,500 in attorney's fees. Regarding the
matter of costs, the superior court employed de novo review ofwhether the SPC exceeded its statutory authority in its award and
then applied the whole record test in concluding the award was
reasonable. Petitioner does not contend that the superior court
exercised the incorrect standards of review regarding the issues.
However, petitioner alleges that the superior court incorrectly
applied those standards of review which resulted in errors of law.
We must thus determine whether the superior court applied the
applicable standards of review properly to the matters before the
superior court, requiring de novo review by this Court. Id.
We first review the relevant and material portions of the fee
arrangement between petitioner and Shults regarding petitioner's
employment discrimination action. In a letter dated 14 December
1998, Shults detailed the terms of his representation of
petitioner and his billing practices. Under the heading "Fees,"
Shults wrote:
[a]s we have discussed, I will be charging you
a maximum attorneys' fee of $5,000.00 for my
representation in this case. In the event
that we fully litigate the case before the
[OAH], and before any appellate tribunals, and
prevail in the case, I will be seeking
attorney's fees and costs from the State of
North Carolina under the applicable fee-
shifting statute. In any event, no matter
whether you receive a favorable or unfavorable
outcome in this case, the maximum amount of
attorney's fees you will owe to me is
$5,000.00.
In a letter dated 23 September 1999, Shults stipulated that in the
event petitioner is "awarded attorney's fees in excess of $5,000
but less than $22,500, [Shults would] have a contractual right toreceive all attorney's fees," but if the recovery of attorney's
fees exceeded $22,500, petitioner would "receive 50 per cent of
such fees, and [Shults] would retain the other 50 per cent."
N.C. Gen. Stat. . 126-4(11) (2003) establishes the power and
duties of the State Personnel Commission to assess "[i]n cases
where the Commission finds discrimination, harassment, or orders
reinstatement or back pay . . . reasonable attorneys' fees and
witnesses' fees against the State agency involved." Pursuant to
the authority of N.C.G.S. . 126-4(11), the SPC promulgated 25
N.C.A.C. 1B.0438 (2003) which provides that the SPC may award
attorney fees at "a reasonable hourly rate based on the prevailing
market rate but at a rate no higher that the fee agreement between
the parties."
(See footnote 1)
The SPC, in keeping with its interpretation of 25 N.C.A.C.
1B.0438, found that the fee agreement of 14 December 1998 between
petitioner and Shults limited petitioner's financial obligation for
attorney's fees to $5,000.00; thus, the SPC found that an award of
attorney's fees was restricted to $5,000.00. Upon appeal to the
superior court, the superior court could "reverse or modify the
decision of the Commission if the decision [was] unreasonable orthe award [was] inadequate." N.C. Gen. Stat. . 126-41 (2003). The
superior court found that the SPC's attorney's fee award was
unreasonable in light of the parties' fee agreement. However, the
superior court concluded that to award attorney's fees in excess of
$22,500 would "effectively allow [p]etitioner to realize a monetary
recovery in excess of that awarded by the SPC and envisioned by
applicable statutory schemes, and would violate public policy."
We agree with the superior court's implicit conclusion that
the SPC misinterpreted the fee agreement between petitioner and
Shults as expressed in the letter dated 14 December 1998. Although
petitioner's personal liability to Shults for attorney's fees was
restricted to $5,000.00, the letter indicated an unambiguous
intention on the part of Shults to seek reimbursement from
respondent for attorney's fees as afforded by the applicable
statute. Although 25 N.C.A.C. 1B.0438 explicitly provides that
the SPC is to consider the fee agreement between a petitioner and
a petitioner's attorney and a petitioner is required to submit a
copy of the representation agreement along with the petition for
attorney's fees, we find no basis for the SPC's holding that an
award of attorney's fees is limited to a petitioner's personal
liability to a petitioner's attorney.
However, the General Assembly has limited the scope of the
SPC's power to grant recovery and restitution to a petitioner. In
a case brought on the basis of alleged discrimination, the SPC is
authorized to reinstate any employee to the
position from which the employee has been
removed, to order the employment, promotion,
transfer, or salary adjustment of anyindividual to whom it has been wrongfully
denied or to direct other suitable action to
correct the abuse which may include the
requirement of payment for any loss of salary
which has resulted from the improperly
discriminatory action of the appointing
authority.
N.C. Gen. Stat. . 126-37(a) (2003). It is a well-established
principle of statutory interpretation that a statute is to be given
its plain meaning when the statutory language is clear and
unambiguous.
Cochran v. N.C. Farm Bureau Mutual Ins. Co., 113 N.C.
App. 260, 262, 437 S.E.2d 910, 911,
disc. review denied, 335 N.C.
768, 442 S.E.2d 513 (1994). The General Assembly has specified the
remedies the SPC is authorized to grant. Simply stated, the SPC
does not have the authority to award compensatory damages beyond
those set forth in N.C.G.S. . 126-37.
The fee agreement between petitioner and Shults is unusual and
we are concerned about the implication of such arrangements between
attorneys and clients involving matters before the SPC. To allow
petitioner to recover what are labeled "attorney's fees" is the
equivalent of an award of damages that is beyond the scope of the
SPC's authority.
See N.C.G.S. §§ 126-4, 126-41, 126-37. For the
foregoing reasons, we agree with the trial court's conclusion that
an award of attorney's fees over $22,500 would be in violation of
the applicable statutory scheme. We find petitioner's assignment
of error number one to be without merit.
Petitioner directs this Court to a substantial number of cases
from the federal courts regarding attorney's fees. However,
petitioner's right to file with the SPC for attorney's fees andcosts was made pursuant to Chapter 126, specifically N.C.G.S. § 126-
4(11). Petitioner's appeal of that award was also pursuant to
Chapter 126, specifically N.C.G.S. § 126-41. We conclude therefore
that North Carolina law dictates the powers of the State Personnel
Commission in awarding attorney's fees in this case.
We further note that petitioner also contends that the superior
court erred in failing to award her attorney's fees for pursuing her
petition for judicial review. The superior court declined to make
such an award, stating that it found "nothing in the record to show
any fee arrangement between the petitioner and Shults specific to
this issue. Accordingly, the Fee Agreement is controlling and no
further fee is awarded[.]" The superior court made no award to
petitioner of attorney's fees beyond $22,500.
As we previously noted, petitioner's petition for judicial
review as to attorney's fee was made pursuant to N.C.G.S. § 126-41.
This statute specifically provides that "[t]he reviewing court
shall
award court costs and a reasonable attorney's fee for representation
in connection with the appeal to an employee who obtains a reversal
or modification of the Commission's decision in an appeal under this
section." N.C.G.S. § 126-41 (emphasis added). In the case before
us, the reviewing superior court did modify the award and, as such,
our General Assembly has mandated that the superior court shall make
an award of court costs and reasonable attorney's fees. That award
relates only to those costs and attorney's fees incurred in bringing
forth petitioner's petition for judicial review. Accordingly, we
remand this case to the superior court for it to make theappropriate award.
Costs
Petitioner contends the superior court erred in affirming the
SPC's determination of costs, which limited the award to $6,970.45.
Petitioner maintains that she is entitled to $12,229.53 in
litigation costs incurred in bringing the case before the SPC.
Specifically, petitioner contends she is entitled to receive
additional costs relating to transcript costs, photocopying
expenses, postage, and expert witness fees.
In reviewing the applicable law regarding the powers of the
State Personnel Commission, as embodied in N.C. Gen. Stat. §§ 126-
4(11), 126-41, the SPC is specifically restricted as to what costs
it may award and that it may have exceeded its authority in this
instance. However, because respondent failed to properly preserve
its grounds for appeal, we do not address whether the SPC exceeded
its authorized powers. We affirm the superior court's decision as
to costs.
Affirmed in part, remanded in part.
Judges WYNN and TYSON concur.
Report per Rule 30(e).
Footnote: 1