The North Carolina Court of Appeals recently reversed an award of attorney fees by the trial court on the basis that the trial court did not render the appropriate findings of fact. We’re talking about Brown’s Building Supply, Inc. v. Johnson, No. COA14-836 (March 17, 2015).
The facts of the case are largely irrelevant. It’s essentially a dispute over a home renovation gone awry, and a monetary judgment in favor of plaintiff construction company against defendant homeowners after a bench trial.
On appeal, the appellate court affirmed the judgment in favor of plaintiff construction company but reversed the award of attorney fees. We’re here to discuss the attorney fees.
Attorney fee awards in North Carolina require a statutory basis. N.C.G.S. 44A-35 allows attorney fee awards in certain construction cases, and provides as follows: “[T]he presiding judge may allow a reasonable attorneys’ fee to the attorney representing the prevailing party. This attorneys’ fee is to be taxed as part of the court costs and be payable by the losing party upon a finding that there was an unreasonable refusal by the losing party to fully resolve the matter which constituted the basis of the suit or the basis of the defense.”
“N.C. Gen. Stat. § 44A–35 creates an exception to the general rule that attorneys’ fees are not recoverable.” Martin & Loftis Clearing & Grading, Inc. v. Saieed Const. Systems Corp., 168 N.C. App. 542 (2005).
Some attorney fee award amounts are fixed by statute, in terms of the dollar value. Others, like the award sanctioned in N.C.G.S. 44A-35, simply permit “reasonable” fee awards.
In the event of a “reasonable” award, how is the fee amount justified by the trial court such that a reviewing court can adjudge award? The appellate court answered: “Where a statute authorizes the award of only reasonable fees, these findings are necessary to support the reasonableness of the award. Without these findings, the reviewing court is ‘effectively preclude[d] . . . from determining whether the trial court abused its discretion[.]'”
So, what are the necessary findings where a court is awarding “reasonable” fees? The Court must render written findings of fact as to:
1. The time and labor expended by the attorney.
2. The skill required for the lawsuit.
3. The customary attorney fee for “like work”.
4. The experience or ability of the attorney.
Without these findings, the appellate court concluded, the trial court its discretion in awarding attorney fees.
Here, the trial court did render findings of fact as to the attorney fees, mind you, including the actual fees incurred as well as what constitutes a “reasonable” amount. But, that was not enough. Where the four criteria are not explicitly addressed — the appellate court acknowledges that the record “reveals evidence in support” of the four criteria — the award will not stand.
Fee awards are rare, tricky business. It’s best to dot all the “i’s”, cross all the “t’s” and put the decimal point in the correct place.
Mike Thelen practices in Womble, Carlyle’s Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.
Categories: Municipal Laws