Monday, December 15, 2008, 10:07 AM

Supreme Court Affirms COA Award of Attorneys' Fees

In Terry's Floor Fashions, Inc. v. Crown Gen. Contr'rs, Inc., the NC Supreme Court on Friday affirmed a split COA decision affirming an award of attorneys' fees to plaintiff in a subrogation-lien case brought by a unpaid subcontractor.

The subcontractor had done work on a dentist's office. The dentist refused to pay the general contractor (GC), so the sub wasn't paid. The sub thus put a lien on the property and sued the GC and the dentist. The dentist was slapped with attorneys' fees under N.C. Gen. Stat. § 44A-35 for unreasonably refusing to resolve the dispute. That finding was based on correspondence from the dentist's counsel stating that the dentist wouldn't settle no matter what but instead would litigate to judgment through "exhaustion of all appeals"; and counsel added, "If we must file pleadings, then we will be looking to your client for a settlement payment to [defendant dentist], and that is the only settlement we will consider."

In upholding the fee award, the COA majority observed that the dentist was told by his own consultant that it would cost only about $7,000 to remedy the GC's deficient performance under the prime contract and that it was unreasonable for the dentist to insist that the GC's deficient performance extinguished the dentist's obligations under the prime contract. Judge Tyson dissented, arguing that the dentist didn't unreasonably refuse to settle the case because he made two separate and substantial settlement offers to plaintiff and "asserted reasonable defenses against plaintiff’s claims." Judge Tyson also said the trial court failed to make appropriate findings of fact as to the time and labor expended, skill required, customary fee for like work, and experience or ability of the attorney based on competent evidence. The Supreme Court rejected Judge Tyson's analysis and affirmed the fee award.

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