In Walter v. Walter, decided by the NC Court of Appeals on August 17, 2021, the court vacated an award of attorney fees in a contempt proceeding arising out of an alleged violation of a custody order because the party awarded fees did not prevail in the contempt proceeding. The court in Walter held that a party cannot be ordered to pay attorney fees if not found to be in contempt. Similarly, in McKinney v. McKinney, 253 NC App 473 (2017), the court of appeals reversed the trial court’s award of attorney fees to mother after concluding the trial court’s findings of fact did not support the conclusion father was in contempt for violating a custody order. See also Ruth v. Ruth, 158 NC App 123 (2003)(fees generally available only to prevailing party, except fees can be awarded to moving party when that party fails to prevail only because alleged contemnor complies with order after contempt proceeding initiated but before hearing).Continue Reading
New Legislation on Landlord’s Out-of-Pocket Expenses
One of the General Assembly’s last acts before adjourning in June was the enactment of S.L. 2018-50 (S 224), amending landlord-tenant law in apparent response to a decision by a Wake County Superior Court Judge. See “It’s Landlords vs. Tenants in Eviction Battle,” Raleigh News & Observer 6/18/2018.
Attorney Fee Motions and Judicial Notice of “Customary Fee for Like Work”
As civil litigators in North Carolina know, in order to support most motions for attorney fees (pursuant to statutes that authorize them), a party must present evidence as to the time and labor expended, the skill required, the experience and ability of the attorney, and the customary fee for like work. See, e.g., Cotton v. Stanley, 94 N.C. App. 367 (1989). In turn, a court’s order awarding a fee must make findings on these issues. It is typical for the moving party to present evidence of the first three factors through affidavits from the attorneys who did the work. These affidavits often will include hourly billing statements, invoices, and similar documentation. As for the fourth factor—“customary fee for like work”–parties often present affidavits from other attorneys confirming that the fee being sought is in line with the relevant market. In recent years, however, it seems it has become more common (albeit not yet typical) for parties to forgo acquiring these outside attorney affidavits and opt instead to ask the judge to take notice of a reasonable fee. The idea is that surely a judge—having observed years of billing rates in motion after motion—will be at least as good a source as a practicing lawyer. But is resorting to the court’s own expertise a permissible way for a party to demonstrate “customary fee”?Continue Reading
Attorney Fees in Child Custody Actions
As I mentioned in an earlier post, parties to civil actions are responsible for paying their own attorneys’ fees unless a statute specifically permits fee shifting. In child custody actions, G.S. 50-13.6 allows a court to shift some or all of one party’s fees to the other party under certain circumstances. The statute provides that:
In an action or proceeding for the custody or support, or both, of a minor child, including a motion in the cause for the modification or revocation of an existing order for custody or support, or both, the court may in its discretion order payment of reasonable attorney’s fees to an interested party acting in good faith who has insufficient means to defray the expense of the suit.
If the grounds for entitlement are met, awarding the fee is still in the court’s discretion, as is the amount awarded. Our courts have made clear, however, that fee orders will be remanded if they do not include specific findings of fact as to both entitlement and reasonableness. I discuss the required findings below.
Policy. The purpose of the fee-shifting provision in 50-13.6 is not to act as sanction against the party ordered to pay the other’s fees. Instead, it is to help level the playing field for a party at a financial disadvantage in litigating custody of a child. As our Supreme Court has said, the statute helps make it possible for a party “to employ adequate counsel to enable [him or her], as litigant, to meet [the other party] in the suit.” Taylor v. Taylor, 343 N.C. 50 (1996). For this reason, fee eligibility does not depend on the outcome of the case. Fees are available even to a party who does not prevail, as long as he or she participated in good faith. Hausle v. Hausle, 226 N.C. App. 241 (2013). Continue Reading
Paralegal Fees as Part of Attorney Fee Award?
In honor of this short court week, here’s a brief post answering a question I’ve been asked a few times: When a statute authorizes a court to award reasonable attorney fees as costs, can the fee award also include reasonable paralegal fees? (Note that paralegal fees are not separately included in the “complete and exclusive” list of allowable expenses in 7A-305(d).) Some trial judges and clerks of court routinely include paralegal fees in attorney fee awards and others do not. But have North Carolina’s appellate courts addressed the specific question one way or another? Yes, and the short answer is that trial courts do indeed have this discretion. In Lea Co. v. North Carolina Board of Transportation, the Supreme Court reviewed an attorney fee award in the context of a condemnation action. The court stated pointedly that,Continue Reading
Court Approval of Minor Settlements in North Carolina
A minor injured through negligence or other wrongdoing may bring an action through a representative to recover damages for pain and suffering, permanent injury, and impairment of earning capacity. (A claim for reimbursement of the minor’s medical expenses typically belongs to the parents.) Although minors generally are legally incapable of binding themselves to contracts, the law allows a minor’s claims to be resolved through a settlement agreement. The settlement, however, is not enforceable against the minor unless it has first been investigated and approved by the court. Sigmund Sternberger Found., Inc. v. Tannenbaum, 273 N.C. 658, 677 (1968); Ballard v. Hunter, 12 N.C. App. 613, 619 (1971). Even if the settlement is arranged by a parent, guardian, guardian ad litem, estate administrator, or attorney, the minor cannot be bound absent prior court approval. Sell v. Hotchkiss, 264 N.C. 185, 191 (1965); In re Reynolds, 206 N.C. 276 (1934); Hagins v. Phipps, 1 N.C. App. 63 (1968). The rule applies not just to claims settled after an action is filed, but also to pre-litigation settlements including waivers of a minor’s right to sue. Creech v. Melnik, 147 N.C. App. 471, 475 (2001).
The purpose of the court’s review is to protect the interests of the minor. The investigation must focus on the minor’s welfare and fairness to the minor under the circumstances. See Redwine v. Clodfelter, 226 N.C. 366, 370 (1946) (minor’s welfare is the “guiding star”); Reynolds v. Reynolds, 208 N.C. 578, 631−32 (1935) (affirming “fair, just, and equitable” settlement). Continue Reading
Attorney Fee Provisions in Business Contracts – New Legislation Loosening the “Sign by Hand” Requirement
First, Some Attorney Fee Basics. North Carolina generally follows the “American Rule” in requiring parties to civil litigation to be responsible for their own attorney fees: “It is well-established that the non-allowance of counsel fees has prevailed as the policy of this state at least since 1879.” Stillwell Enters, Inc. v. Interstate Equip. Co., 300 N.C. 286, 289 (1980). Attorney fee awards are allowed only when specifically authorized by statute. In general, fee-shifting is not allowed even when a party has agreed in a contract to reimburse another party’s attorney fees incurred in enforcing the agreement. Id. Two key statutory exceptions apply, however, to this rule against enforcement of attorney fee agreements. First, and most familiar, is G.S. 6-21.2, which allows enforcement of attorney fee-shifting provisions in notes, conditional sale contracts, and “other evidence of indebtedness.” I discuss the ins and outs of G.S. 6-21.2—enacted in 1967 and the subject of lots of case law—here.Continue Reading