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Why is the law so good? First, note that the trial court’s ruling will not be
disturbed on appeal absent a showing of abuse of discretion. An abuse of
discretion occurs when the trial court’s ruling “is so arbitrary that it could
not have been the result of a reasoned decision”. The key to getting attorney’s
fees is to make sure your trial court makes a “reasoned decision”. This has been
helped along by Washington v. Horton , which, in 1999, became the seminal case
on attorney’s fees under 6-21.1 (ironically upon appeal of an award of
attorney’s fees by none other than Allstate Insurance Company).
In Washington v. Horton, the Court listed
six factors to be considered by the trial court as follows:
- Settlement offers made prior to the
institution of the action;
- Offers of judgment pursuant to Rule 68,
and whether the “judgment finally obtained” was more favorable than such
offers;
- Whether defendant unjustly exercised
“superior bargaining power”;
- In the case of unwarranted refusal by an
insurance company, the context in which the dispute arose (although the
Court also noted that this factor is only to be considered in cases where
the insurance company was a named defendant and will not be further
addressed in this article).
- The timing of the settlement offers;
- The amounts of the settlement offers as
compared to the jury verdict [citation omitted]; and the whole record.
Factor #1 (settlement offers made prior to the
filing of the lawsuit) is the first factor the Court considers. It has been held
that reasonable attorney’s fees can be awarded even where the jury verdict is
less than the pre-suit offer. In Hardesty v. Aldridge, in a published opinion,
the Court of Appeals held that even where the jury verdict was $350.00 and the
pre-suit offer was $1,887.50, or more than five (5) times the jury verdict,
attorney’s fees were still allowed as long as the Court made a finding as to
Washington factor number 1. This means that you don’t have to “win” every
factor, just that the trial court has to make a finding as to that factor.
Factor #2 (comparing Offer of Judgment to
Judgment Finally Obtained) receives perhaps the most attention because this is
the factor that enables an attorney to get a verdict less than the Offer of
Judgment, yet still get an award of attorney’s fees. The Judgment Finally
Obtained (JFO) is the “amount ultimately entered representing final judgment (ie,
verdict as modified by any applicable adjustments…)”. In calculating the JFO,
you add together the verdict, interest, attorney’s fees (that you are
requesting) and costs. In calculating this amount, you can claim both attorney’s
fees and costs incurred both before and after the Offer of Judgment.
Example:
Offer of Judgment: $5,000.00 Verdict: $2,000.00
Verdict: $2,000.00 Interest: $ 160.00
Attorney’s Fees: $9,105.00
Costs: $1,448.00
Judgment Finally Obtained: $12,713.00
In this example, even though the verdict was
substantially less than the Offer of Judgment, the actual JFO is two and a half
times greater than the Offer of Judgment. This seems to be an important factor
to the trial court and allows it to award attorney’s fees in cases where the
Offer of Judgment has prevailed.
Since Washington v. Horton was filed on
February 16, 1999, thirteen cases have been handed down from our Court of
Appeals and Supreme Court addressing whether attorney’s fees awarded pursuant to
NCGS §6-21.1 were reasonable. Out of the thirteen cases evaluated, seven of
those cases had Verdicts less than the Offer of Judgment, but the JFO exceeded
the Offer of Judgment. The Courts are saying that when the “judgment finally
obtained” exceeds the Offer of Judgment, even where the jury verdict standing
alone was less than the offer, the trial court’s granting of attorney’s fees
motions would be upheld.
Factor #3 (whether defendant unjustly exercised
“superior bargaining power”) can be a difficult factor to meet, especially if
your Verdict is less than the pre-suit offers and/or the Offer of Judgment.
Defense attorneys will often argue that they are not using superior bargaining
power, because the trend is for extremely small verdicts in these types of
cases. Thus, they claim, they are merely offering what is becoming the norm in
jury verdicts. However, one way in which an insurance company clearly uses
unjust, superior bargaining power is when they make “take it or leave it” type
offers. Another example of unjust, superior bargaining power may be when an
insurance company refuses to even respond to an offer, or makes only one offer
throughout the entire litigation process without considering any type of
movement to get the case settled. But also be aware, it is probably okay to
concede to the court that you cannot meet this factor. In Robinson v. Shue, the
Plaintiff’s attorney conceded that the insurance company had not exercised
superior bargaining power. The Court of Appeals acknowledged this concession.
Remember, the key is to have the trial court consider the factor; you don’t have
to actually win the factor.
Factors #5 and #6 can often be addressed
together (timing of settlement offers and amount of offers compared to the
verdict). The Court of Appeals in North Carolina has held that a judgment
entered by the trial court granting the Plaintiff’s Motion for Attorney’s Fees
would be affirmed on appeal, as long as the Court makes Findings of Fact
regarding the timing of the offers, and considers the whole record. Several
recent cases have held that attorney fees awarded by trial courts will be upheld
even where the settlement offers were more than the jury verdict. As long as the
Court reviews the record as a whole and cites within its Order the amount of the
settlement offers and the jury verdict, the trial court’s discretion in granting
the Plaintiffs Motion for Attorney’s Fees would not be disturbed on appeal.
While it is important for the trial court to
consider all of the factors, detailed findings are not required for each factor.
It is not necessary that the Court enter a finding of fact on each and every
factor outlined in Washington v. Horton. As long as there are adequate findings
of fact based on the whole record, it is not reversible error for the trial
court to not make a specific finding of fact on each and every element as
outlined in Washington v. Horton. In three of the cases handed down since
Washington, the trial court did not make a Finding of Fact as it related to
whether the defendant unjustly exercised superior bargaining power. The Court
held that this was not reversible error, since the Court had entered Findings of
Fact as it related to the other Washington v. Horton factors, and upheld the
trial court’s granting of the Plaintiff’s Motion for Attorney’s Fees.
Once the Court is satisfied that the trial
court reviewed the entire record, and in doing so, reviewed the Washington v.
Horton factors, they will make a determination that attorney’s fees should be
awarded. If the trial court is inclined to award fees, it must determine whether
the record supports a finding as to the amount to be awarded. “To determine if
an award of counsel fees is reasonable, the entire record must contain findings
of fact as to the time and labor expended, the skill required, the customary fee
for like work, and the experience or ability of the attorney based on competent
evidence.” Be aware that many defense attorneys will argue that you should be
awarded a contingent fee based upon the amount of the verdict. However, because
the statute provides for “reasonable fees”, the amount of the fees should be
based upon the actual work performed by the attorney. Therefore, it is important
that you submit an accurate reflecting of the time that you expended on the case
for the judge to consider the reasonableness of your fees.
In order to successfully argue a Motion for
Attorney’s Fees, you should file your Motion and ensure that it is calendared
before the trial judge, as the legislature contemplated that the judge who
presided at the trial would determine whether a fee for the attorney of the
party recovering should be allowed and, if so, the amount. The judge presiding
over the trial, would be in a better position than any other to make this
determination. It is also very acceptable to have your Motion ready at the
conclusion of the trial, and you can just plug in the amount of the verdict and
the final amount of your hours expended. You can also agree with opposing
counsel to file Motions and have the arguments considered by written Brief or
Memorandum. Whichever way you choose to have your request for fees considered,
it is important that the trial judge make the requisite findings of fact
pursuant to Washington. In analyzing the cases handed down since Washington, the
first four out of five cases were remanded back to the trial court to make
findings of fact regarding the Washington factors. Since those first five cases,
all other attorney’s fees have been upheld because the trial courts made the
necessary findings of fact, and the Appellate court will not disturb said award
absent abuse of discretion. Clearly, it took awhile for attorneys and trial
judges to realize the necessity of addressing all of the Washington factors, but
once this occurred at the trial court level, all of the attorney fees awarded
has been consistently upheld.
If you do a Memorandum of Law in support of
your Motion, you need to address each of the Washington factors as well as the
case law supporting awards of attorney’s fees. You should also include an
Affidavit of Counsel (signed by yourself) attesting to the Washington factors
and how they apply to your case, as well as information regarding specifically
outlining the time and labor you expended, the skill required in handling
personal injury cases, and your experience and ability in handling these types
of cases. It is good to include the percentage of like cases you handle, how
many cases per year you try, organizations you belong to, seminars you give, or
other education you may have in the litigation arena.
In addition to an Affidavit of Counsel, you
should file Affidavits of supporting attorneys (no more than three should be
needed) from the same county in which you tried your case. Each of these
attorneys should know the factual background of your case, the amount of hours
you are submitting for consideration, the hourly rate you charge, and something
about your skill and experience. This knowledge should be reflected in the
Affidavit as well as a statement that the hourly rate requested is fair, just
and reasonable and within the standard prevailing in the legal community for
attorneys with like skill, learning and experience.
Remember, these are “trying” times. Because
attorneys are now clearly able to be awarded attorney’s fees in small cases
(less than $10,000), even when their verdicts are less than pre suit offers or
the Offer of Judgment, it is now economically feasible (if not profitable) to
try these cases when insurance companies are being unreasonable in their offers
(as they so often can be). Attorney fee awards are consistently being upheld by
our Appellate courts, even when the verdicts are substantially less than pre
suit offers or the Offer of Judgment, as long as the trial court considers and
makes findings as to the Washington factors. |
