Wednesday, April 02, 2008, 6:43 AM

Summary Judgment During Discovery OK, Attorneys' Fees Using Wrong Legal Standard Not So Much

In Birmingham v. H & H Home Consultants and Design, Inc., the COA held that summary judgment during the pleadings and discovery phase was permissible, but that the award of attorneys' fees to the successful defendants of an unfair and deceptive trade practices claim using the standard for awarding such fees to successful plaintiffs was impermissible.

In Birmingham, the plaintiff bought a house, the defendants allegedly failed to disclose problems with the house before the sale, and plaintiff sued. Third party defendants were brought in, and before their time to respond, and before discovery was completed, the individual seller defendants successfully moved for summary judgment.

On appeal, plaintiff claimed the summary judgment was premature. The COA disagreed, noting that while "ordinarily it is error for a court to hear and rule on a motion for summary judgment when discovery procedures, which might lead to the production of evidence relevant to the motion, are still pending," this "rule presupposes that any information gleaned from the discovery will be useful." Here, the plaintiff failed to show how outstanding discovery would be useful in defending the summary judgment motion. The motion was therefore properly granted.

The plaintiff also appealed the trial court's award of attorneys' fees to the defendants. On this, the COA sided with the plaintiff. The COA noted that the unfair and deceptive trade practices laws, and specifically N.C.G.S. 75-16.1, allow both successful plaintiffs and successful defendants to recover their attorneys' fees. However, the legal standards for those recoveries differ, with plaintiffs' hurdle being unwarranted refusal to settle a willful violation, and defendants' hurdle being that the claim was instituted knowingly maliciously or frivolously. Because the trial judge here mistakenly applied the plaintiffs' standard to the defendants, the fee award was reversed and the issue was remanded for a do-over with the proper standard.

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