Brooks Millwork Company v. Levine, No. COA09-781 (N.C. App. 6/15/2010)

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BROOKS MILLWORK COMPANY, Plaintiff, v. DANIEL LEVINE and LEIGH LEVINE, Defendants.

No. COA09-781.

Court of Appeals of North Carolina.

Filed June 15, 2010.

Appeal by plaintiff from judgment entered 11 March 2009 by Judge Robert P. Johnston in Superior Court, Mecklenburg County, No. 08 CVS 6654, Heard in the Court of Appeals 18 November 2009.

Thomas B. Kobrin, for plaintiff-appellant.

James, McElroy & Diehl, P.A., by John R. Buric and Preston O. Odom, III, for defendants-appellees.

UNPUBLISHED OPINION

JACKSON, Judge.

Brooks Millwork Company ("plaintiff") appeals the 11 March 2009 order that granted defendants' motion for attorneys' fees. For the reasons stated herein, we affirm on the merits and sanction plaintiff for its numerous rules violations.

Daniel and Leigh Levine ("defendants") contracted with plaintiff for plaintiff to provide labor and materials for construction at defendants' property. The parties disagree as to whether plaintiff performed its obligations pursuant to the contract and whether defendants failed to make payments that were owed pursuant to the contract. On 4 February 2008, plaintiff filed a claim of lien upon defendants' property in the amount of $98,342.48. On or about 21 March 2008, plaintiff filed a complaint against defendants, alleging breach of contract and unjust enrichment and requesting enforcement of its lien. Defendants responded with a motion to dismiss, answered plaintiff's complaint, and counterclaimed for breach of contract and quantum meruit.

On 1 December 2008, plaintiff acknowledged a partial satisfaction of the claimed lien, reducing the principal amount owed by defendants from $98,342.48 to $63,358.48. A jury trial took place during the 20 January 2009 term of Mecklenburg County Superior Court, prior to which defendants made plaintiff three separate offers — ranging from $30,000.00 to $37,500.00 — to settle the case, all of which plaintiff refused. The jury found that defendants had breached their contract with plaintiff and that plaintiff was entitled to recover $25,575.61. Both parties moved for attorneys' fees. On 11 March 2009, the trial court granted defendants' motion for attorneys' fees and awarded defendants $20,242.50 in fees and $778.00 in costs, pursuant to North Carolina General Statutes, section 44A-35. Plaintiff appeals.

Plaintiff first argues that it is entitled to an award of attorneys' fees, which it labels "contractual" attorneys' fees, pursuant to North Carolina General Statutes, section 6-21.2, and that the trial court erred in refusing to award such attorneys' fees. We disagree.

Initially, we note that

[t]he case law in North Carolina is clear that to overturn the trial judge's determination [on the issue of attorneys' fees], the [party] must show an abuse of discretion. However, where an appeal presents [a] question[] of statutory interpretation, full review is appropriate, and we review a trial court's conclusions of law de novo.

Bruning & Federle Mfg. Co. v. Mills, 185 N.C. App. 153, 155-56, 647 S.E.2d 672, 674, cert. denied, 362 N.C. 86, 655 S.E.2d 837 (2007) (internal citations and quotation marks omitted). Thus, whether an award of attorneys' fees is authorized by statute is a question that we review de novo, whereas the amount of the attorneys' fee award is reviewable pursuant to an abuse of discretion standard.

With respect to contractual attorneys' fees, our Supreme Court has explained that "the general rule has long obtained that a successful litigant may not recover attorneys' fees, whether as costs or as an item of damages, unless such a recovery is expressly authorized by statute." Enterprises, Inc. v. Equipment Co., 300 N.C. 286, 289, 266 S.E.2d 812, 814 (1980) (citing Hicks v. Albertson, 284 N.C. 236, 200 S.E.2d 40 (1973)). North Carolina General Statutes, section 6-21.2 sets forth the framework for the award of contractual attorneys' fees:

Obligations to pay attorneys' fees upon any note, conditional sale contract or other evidence of indebtedness, in addition to the legal rate of interest or finance charges specified therein, shall be valid and enforceable, and collectible as part of such debt, if such note, contract or other evidence of indebtedness be collected by or through an attorney at law after maturity, subject to the following provisions:

. . . .

(2) If such note, conditional sale contract or other evidence of indebtedness provides for the payment of reasonable attorneys' fees by the debtor, without specifying any specific percentage, such provision shall be construed to mean fifteen percent (15%) of the "outstanding balance" owing on said note, contract or other evidence of indebtedness.

. . . .

(5) The holder . . . shall, after maturity of the obligation by default or otherwise, notify the maker, debtor, account debtor, endorser or party sought to be held on said obligation that the provisions relative to payment of attorneys' fees in addition to the "outstanding balance" shall be enforced and that such maker . . . has five days from the mailing of such notice to pay the "outstanding balance" without the attorneys' fees. If such party shall pay the "outstanding balance" in full before the expiration of such time, then the obligation to pay the attorneys' fees shall be void, and no court shall enforce such provisions.

N.C. Gen. Stat. § 6-21.2 (2007).

This Court previously has noted that this statute "does not require that a party seeking attorneys' fees under the statute qualify as a `prevailing party' in litigation." Trull v. Central Carolina Bank & Trust, 124 N.C. App. 486, 491, 478 S.E.2d 39, 42 (1996). Therefore, our inquiry with respect to plaintiff's claim for contractual attorneys' fees is separate from that of its status as the prevailing party. We further have held that "the purpose of [North Carolina General Statutes, section] 6-21.2 is to allow the debtor a last chance to pay his outstanding balance and avoid litigation, not to reward the prevailing party with the reimbursement of his costs in prosecuting or defending the action." Id. (citing RC Associates v. Regency Ventures, Inc., 111 N.C. App. 367, 373-74, 432 S.E.2d 394, 398 (1993)).

Here, defendants argue that plaintiff did not comply with the fifth section of North Carolina General Statutes, section 6-21.2 and therefore, cannot obtain attorneys' fees pursuant to that statute. We previously have addressed this section, noting that "[t]he statutory use of `shall' renders the provision requiring notice mandatory." Blanton v. Sisk, 70 N.C. App. 70, 74, 318 S.E.2d 560, 564 (1984), impliedly overruled on other grounds as stated in Paynter v. Maggiolo, 105 N.C. App. 312, 314-15, 412 S.E.2d 691, 693 (1992). Furthermore, "the serving of the complaint upon the defendants seeking to recover attorneys' fees does not satisfy the requirements of [North Carolina General Statutes, section] 6-21.2(5)." Id. at 75, 318 S.E.2d at 564.

Plaintiff does not contend that it satisfied the notice provision of North Carolina General Statutes, section 6-21.2(5). Because we find nothing in the record that would constitute notice and because plaintiff has not directed us to such notice, we hold that plaintiff has not met the requirements of the statute. Having held that plaintiff is not entitled to attorneys' fees pursuant to North Carolina General Statutes, section 6-21.2, we need not address whether the trial court abused its discretion in awarding plaintiff no attorneys' fees.

Plaintiff's second argument is that the trial court erred by awarding attorneys' fees to defendants pursuant to North Carolina General Statutes, section 44A-35. We disagree.

We review the "trial court's award of attorney's fees pursuant to [North Carolina General Statutes,] section 44A-35 for abuse of discretion. `To demonstrate an abuse of discretion, the appellant must show that the trial court's ruling was manifestly unsupported by reason, or could not be the product of a reasoned decision.'" Terry's Floor Fashions, Inc. v. Crown Gen. Contr'rs, Inc., 184 N.C. App. 1, 17, 645 S.E.2d 810, 820 (2007) (internal citations omitted). Furthermore, "the trial court `has the duty to pass upon the credibility of the witnesses who testify. [It] decides what weight shall be given to the testimony and the reasonable inferences to be drawn therefrom. The appellate court cannot substitute itself for the trial court in this task.'" Nationsbank of North Carolina v. Baines, 116 N.C. App. 263, 269, 447 S.E.2d 812, 815 (1994) (quoting General Specialties Co. v. Teer Co., 41 N.C. App. 273, 275, 254 S.E.2d 658, 660 (1979)).

North Carolina General Statutes, section 44A-35 provides, in relevant part, that "the presiding judge may allow a reasonable attorneys' fee to the attorney representing the prevailing 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 (2007).

In the instant case, the trial court found as fact that 4. On December 1, 2008, [p]laintiff served [d]efendants with a document entitled "Partial Satisfaction of Lien" attempting to reduce their lien claim from $98,342.48 to $63,358.48.

5. Prior to counsel[`s] beginning the final preparations for trial, [d]efendants (through counsel) offered to settle all of the disputes between the parties in exchange for [d]efendants[`] paying the [p]laintiff the sum of $30,000.00. That offer was rejected.

6. On the day of trial, during and subsequent to the pretrial conference with the undersigned, [d]efendants[`] offer was increased to $35,000.00 and then again to $36,250.00. Plaintiff rejected both offers. . . .

. . . .

8. The jury's award was less than one half of [p]laintiff's lien claim of $98,342.48, and $10,674.39 less than [d]efendants' last offer.

It then concluded as a matter of law that

3. Plaintiff recovered $10,674.39 less than the last offer made prior to commencement of trial. D...