Hexion Specialty Chemicals, Inc. v. Oak-Bark Corporation
Filing
96
ORDER: The court DENIES Oak-Bark's 85 motion to amend the judgment to add an award of prejudgment interest, post judgment interest, and attorney's fees, GRANTS in part Oak Bark's 84 motion for bill of costs, AWARDS Oak-Bark $16,283.30 in costs, GRANTS in part Hexion's 87 motion for disallowance of Oak-Bark's bill of costs, and DENIES Hexion's 90 motion for reconsideration. Signed by Chief Judge James C. Dever III on 6/26/2012. (Sawyer, D.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No.7:09-CV-I05-D
HEXlON SPECIALTY CHEMICALS, INC.,
Plaintiff,
v.
OAK-BARK CORPORATION,
Defendant.
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ORDER
On July I, 2009, Hexion Speciality Chemicals, Inc., (''plaintiff'' or "Hexion") sued Oak-Bark
Corporation ("defendant" or "Oak-Bark") alleging breach of warranty concerning a 2006 asset
purchase agreement ("APA") in which Hexion purchased most ofthe assets and operations ofOak
Bark's chemical manufacturing plant in Columbus County, North Carolina. Oak-Bark denied
breaching the APA. On September 28,2011, the court granted Oak-Bark's motion for summary
judgment and denied Hexion's motion for partial summary judgment [D.E. 82]. On October 12,
2011, Oak-Bark filed a motion for bill of costs and a motion to alter the court's judgment for an
award of prejudgment and postjudgment interest, costs, and attorney's fees [D.E. 84-85]. On
October 26, 2011, Hexion filed a motion requesting disallowance of Oak-Bark's bill of costs
(including attorney's fees) [D.E. 87] and a motion for reconsideration of the summary judgment
order [D.E. 90]. As explained below, the court grants in part Oak-Bark's motion for bill of costs,
denies Oak-Bark's motion to alter the judgment, grants in part Hexion's motion for disallowance,
and denies Hexion's motion for reconsideration.
I.
Oak-Bark's request for prejudgment interest and postjudgment interest is properly classified
as a request to amend the court's judgment, and is governed by Rule 59(e) of the Federal Rules of
Civil Procedure. See Kosnoski v. Howley, 33 F.3d 376, 378 (4th Cir. 1994); see also Osterneckv.
Ernst & Whinney, 489 U.S. 169, 175 (1989) ("[U]nlike attorney's fees, which at common law were
regarded as an element of costs and therefore not part of the merits judgment, . . . interest
traditionally has been considered part of the compensation due plaintiff."). A party must file a
motion to alter or amend a judgment "no later than 28 days after the entry of the judgment." Fed.
R. Civ. P. 59(e). A court may then grant a Rule 59(e) motion "( 1) to accommodate an intervening
change in the controlling law[,] (2) to account for new evidence not available at trlal[,] or (3) to
correct a clear error of law or prevent manifest injustice." EEOC v. Lockheed Martin Corp., 116
F.3d 110, 112 (4th Cir. 1997) (quotation omitted); Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th
Cir. 1993). A party's mere disagreement with a court's ruling does not warrant the court's granting
a Rule 59(e) motion. See Hutchinson, 994 F.2d at 1081.
Awarding prejudgment interest is a ''matter within the district court's discretion."
Maksymchuk v. Frank, 987 F.2d 1072,1077 (4th Cir. 1993); see United States v. Gregory, 818 F.2d
1114, 1118 (4th Cir. 1987). A court should award prejudgment interest when doing so "serves the
legitimate goals of making a party whole, or compensating the injured party for the loss of the use
ofmoney he would otherwise have had." Marlen C. Robb & Son Boatyard & Marina. Inc. v. Vessel
Bristol, 893 F. Supp. 526, 540 (E.D.N.C. 1994); see EEOC v. Liggett & Myers. Inc., 690 F.2d 1072,
1074 (4th Cir. 1982). "[State] law governs the award of prejudgment interest in a diversity case."
Hitachi Credit Am. Corp. v. Signet Bank, 166 F.3d 614,633 (4th Cir. 1999). Because the parties
in this diversity case agree that North Carolina law governs the dispute, the court looks to North
Carolina law to determine whether to award prejudgment interest to Oak-Bark.
Section 24-5 ofthe North Carolina General Statutes provides that "[i]n an action for breach
of contract ... the amount awarded on the contract bears interest from the date of breach." N.C.
Gen. Stat. § 24-5(a). Unless the contract provides otherwise, "interest on an award in a contract
action ... shall be at the legal rate." Id. "The legal rate ofinterest [is] eight percent (8%) per annum
for such time as interest may accrue, and no more." N.C. Gen. Stat. § 24-1; see Thomas M. McInnis
2
& Assocs., Inc. v. Hall, 318 N.C. 421, 431, 349 S.E.2d 552, 558 (1986); Barrett Kays & Assocs.,
P.A. v. Colonial Bldg. Co.. Inc. ofRaleigh, 129N.C. App. 525, 529, 500 S.E.2d 108,111-12(1998).
A party is "entitled to interest from the date ofthe breach as a matter of law" only after "breach is
established." Cap Care Om.. Inc. v. McDonald, 149 N.C. App. 817, 824, 561 S.E.2d 578, 583
(2002).
Oak-Bark bases its request for prejudgment interest on the premise that this court held in its
summary judgment order that Hexion breached the APA. In its summary judgment order, however,
the court did not hold that Hexion breached the APA, and did not enter a judgment to that effect.
Rather, the court held that no rational jury could'find that Oak-Bark breached the APA. See Sept.
28,2011 Order [D.E. 82] 7-27. Accordingly, Oak-Bark is not entitled to prejudgment interest.
Alternatively, even ifthe court has discretion to award prejudgment interest to Oak-Bark, it
declines to do so due to the unique facts ofthis case. Notably, Oak-Bark has been receiving interest
payments on the escrowed funds "since the date they were first deposited upon execution of the
APA." Pl.'s Mem. Opp'nMot. Amend [D.E. 89] 6; cf. Escrow Agreement [D.E. 86-1] §§ 3(b), 5(a).
North Carolina law precludes an award of prejudgment interest when the party seeking the
award has already received or been awarded interest on the amount owed. See, e.g., United Cmty.
Bank v. McCarthy, No. 1:10-CV-I0-RlC-DLH, 2010 WL 2723726, at *2 (W.D.N.C. July 8, 2010)
(unpublished); Int'IHarvesterCreditColJ). v.Ricks, 16N.C. App. 491,496-97, 192 S.E.2d 707, 710
(1972). Thus, an award of prejudgment interest to Oak-Bark is not appropriate.
In opposition to this conclusion, Oak-Bark argues that prejudgment interest calculated at the
statutory rate of eight percent is more appropriate than the lower rate provided for in the Escrow
Agreement because the purpose ofthe interest paid pursuant to the Escrow Agreement ''was not to
make Oak-Bark 'whole' for the lost use ofthe [e]scrowed [t]unds ...." Def.'s Reply [D.E. 94] 6.
Essentially, Oak-Bark contends that the interest that it has received on the escrowed funds to this
point has not made it whole. See id.
3
Although the interest that Oak~Bark has received pursuant to the Escrow Agreement is not
as much as Oak~Bark now seeks pursuant to the statutory rate, it is interest nonetheless. IfOak~Bark
desired to receive the benefit ofa higher interest rate on the escrowed funds, it should have bargained
for such a higher rate in the APA and the Escrow Agreement. It did not. Accordingly, the court
declines to award Oak-Bark prejudgment interest.
Oak-Bark also seeks postjudgment interest. "Federal law, rather than state law, governs the
calculation ofpost[ljudgment interest in diversity cases." Hitachi, 166 F.3d at 633. Under federal
law, "[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court."
28 U.S.C. § 1961(a). Section 1961 sets forth the method for calculating the relevant interest rate.
Seeid.
Oak~Bark
states that it "is entitled to postjudgment interest in accordance with section
1961(a) beginning from the date ofthe [c]ourt's [j]udgment, as amended, and continuing until the
[j]udgment is fully paid and satisfied." Def.' s Mem. SUpp. Mot. Amend [D.E. 86] 8. However, the
court has not awarded Oak-Bark a "money judgment in a civil case." See 28 U.S.C. § 1961(a).
Accordingly, section 1961 does not entitle Oak-Bark to postjudgment interest.
n.
Oak-Bark seeks $47,481.03 in costs.
See Def.'s Mot. Bill of Costs [D.E. 84] 1.
Postjudgment motions for costs raise "legal issues collateral to the main cause of action" and are
therefore not governed by Rule 59(e). Kosnoski, 33 F.3d at 378 (quotation omitted); see Buchanan
v. Stanships. Inc., 485 U.S. 265,268-69 (1988) (per curiam); see~ Whitev. N.H. Dep'tofEmp't
Sec., 455 U.S. 445, 451-52 (1982). Rather, Rule 54(d)(I) ofthe Federal Rules of Civil Procedure
governs a postjudgment motion for an award of costs. See Fed. R. Civ. P. 54(d)(I). Rule 54(d)(I)
provides that "costs-other than attorney's fees-should be allowed to the prevailing party." Id.
A "prevailing party" is "a party in whose favor judgment is rendered" or "one who has been awarded
some relief by the court ...." Buckhannon Bd. & Care Home. Inc. v. W. Va. Dep't of Health &
4
Human Servs., 532 U.S. 598, 602 (2001) (alteration and quotations omitted); see Hanrahan v.
Hampton, 446 U.S. 754, 758 (1987) (per curiam). "[T]he rule gives rise to a presumption in favor
ofan award of costs to the prevailing party." Teague v. Bakker, 35 F.3d 978, 996 (4th Cir. 1994);
see Delta Air Lines, Inc. v. August 450 U.S. 346, 352 (1981). However, a "court has discretion to
award or deny costs to the prevailing party." Couram v. S.C. Dca>'t ofMotor Vehicles, 3: 10-00001
MBS, 2011 WL 6115509, at *2 (D. S.C. Dec. 8,2011) (unpublished); see Crawford Fitting Co. v.
J.T. Gibbons. Inc., 482 U.S. 437, 441-42 (1987), superseded.bystatute on other grounds, 42 U.S.C.
§ 1988; Farmer v. Arabian Am. Oil Co., 379 U.S. 227, 233-34 (1964), overruled on other grounds
.by Crawford, 482 U.S. 437. A court "must justify its decision to deny costs by articulating some
good reason for doing so." Cherty v. Champion Int'l Corp., 186 F.3d 442, 446 (4th Cir. 1996)
(alteration and quotation omitted); see Teague, 35 F.3d at 996. A court may deny an award ofcosts
when "there would be an element of injustice in a presumptive cost award." Cherty, 186 F.3d at
446; see Delta Air Lines, 450 U.S. at 355 n.14.
When an award ofcosts to the prevailing party is appropriate, the court looks to federal law
to determine the scope of the award. See Crawford, 482 U.S. 441-43. Section 1920 ofTitle 28 of
the United States Code lists the costs which may be taxed in a bill ofcosts in favor of a prevailing
party. See 28 U.S.C. § 1920; see also Crawford, 482 U.S. at 441 ("[Section] 1920 defines the term
'costs' as used in Rule 54(d)."). Taxable costs under section 1920 are:
(1) [flees of the clerk and marshal; (2) [flees for printed or electronically recorded
transcripts necessarily obtained for use in the case; (3) [flees and disbursements for
printing and witnesses; (4) [flees for exemplification and the costs ofmaking copies
of any materials where the copies are necessarily obtained for use in the case; (5)
[d]ocket fees under section 1923 ... ; (6) [c]ompensation ofcourt appointed experts,
compensation of interpreters, and salaries, fees, expenses, and costs of special
interpretation services ...."
28 U.S.C. § 1920.
In Crawforg, the Court held that the list in section 1920 is exhaustive as to "expenses that
a federal court may tax under the discretionary authority found in Rule 54(d)." Crawforg, 482 U.S.
5
at 441-42. Accordingly, "Rule 54(d) does not provide authority to tax as costs those expenses not
enumerated in [section] 1920." Herold v. Hajoca Corp., 864 F.2d 317,323 (4th Cir. 1988); see
Crawford, 482 U.S. at 441-42. However, ''where attorney's fees are expressly authorized by statute
... , the trial court is not limited to Rule 54(d), but, in addition, has authority to include litigation
expenses as part of a reasonable attorney's fee." Herolg, 864 F.2d at 323 (quotation omitted); see
Wheeler v. Durham City Bd. ofEduc., 585 F.2d 618,623 (4th Cir. 1978).
A court's local rules also inform an award ofcosts. Pursuant to Rule 83 ofthe Federal Rules
ofCivil Procedure, "a district court ... may adopt and amend rules governing its practice." See Fed.
R. Civ. P. 83(a)(I). Local rules promulgated pursuant to Rule 83 "have the force and effect oflaw,
and are binding upon the parties and the court which promulgated them." Jackson v. Bearg, 828
F.2d 1077, 1078 (4th Cir. 1987) (alteration and quotation omitted). "District courts have broad
discretion to interpret their local rules .... [and] [0]nly in rare cases will [appellate courts] question
the exercise ofdiscretion in connection with the application of... local rules." Qualls by & through
Qualls v. Blue Cross ofCal.. Inc., 22 F.3d 839, 842 n.2 (9th Cir. 1994) (quotation omitted). District
courts routinely apply local rules regulating the manner in which a party may seek costs, and what
costs are recoverable. See, e.i., Couram, 2011 WL 6115509, at *1-3; Bland v. Farifax Cnty., No.
1:10-CV-1030, 2011 WL 5330782, at *5 (E.D. Va. Nov. 7, 2011) (unpublished); Moss v.
Spartanburi Cnty. Sch. Dist. No.7, No. 7:09-1586-HMH, 2011 WL 1870280, at *2 (D.S.C. May
17,2011) (unpublished); Francisco v. Verizon S.. Inc., 272 F.R.D. 436,445-46 (E.D. Va. 2011).
This court has promulgated a local rule governing the taxation of costs. See Local Civ. R. 54.1.
Accordingly, this local rule further informs the scope of recoverable costs.
Oak-Bark requests $7,859.45 as reimbursement for "the cost of making copies of ...
materials where the copies are necessarily obtained for use in the case." Def.'s Mot. Bill of Costs
1, 3-4. Oak-Bark describes the remainder of its requested costs as "other costs" on the court
provided bill of cost form. See id. The "other costs" that Oak-Bark seeks are (1) $10,271.64 for
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deposition transcripts, (2) $3,104.13 for travel for depositions and mediation, (3) $20,847.58 for
expert fees, (4) $621.26 for shipping/postage, (4) $2,498.32 for computerized legal research, (5)
$278.65 for office supplies, and (6) $2,000 for escrow administration fees paid to Wells Fargo. Id.
3-11. Oak-Bark asserts that it is the "prevailing party in this action .... ," that its requested
"[e]xpenses meet the federal and state statutory guidelines[,]" and that "[t]here is no justifiable
reason that can be provided by Hexion for not awarding Oak-Bark its [e]xpenses." Def.'s Mem.
Supp. Mot. Amend 10. 1
Hexion concedes that Oak-Bark is the prevailing party, and is therefore is entitled to an award
of some of its requested costs. See PI.'s Mem. Opp'n Mot. Amend 7-8. Hexion, however, argues
that most of the costs that Oak-Bark requests are not taxable under section 1920. Id.8-11.
First, Hexion objects to Oak-Bark's request for $7,859.45 in photocopying expenses. Id.
9-10; see Def.'s Mot. Bill of Costs 3-4. Hexion concedes that "photocopying costs are nonnally
recoverable." P1.'s Mem. Opp'n Mot. Amend 9-10; see 28 U.S.C. 1920(4); Local Civ. R.
54.1(c)(1)(a). However, Hexion, relying on a line of cases unique to the Seventh Circuit, argues
that "multiple courts have held [that] charges for in-house reproduction may not exceed the charges
ofan outside printshop." PI.'s Mem. Opp'n Mot. Amend 9 (quotation omitted) (citing Haroco. Inc.
v. Am. Nat'IBank& Trust Co. ofChi., 38 F.3d 1429, 1441 (7th Cir. 1994); Martin v. United States,
931 F.2d 453,455 (7th Cir. 1991); Garner v. Whitmlim, 318 F. Supp. 2d 700, 702-03 (C.D. Ill.
2004».
The Fourth Circuit has not adopted the Seventh Circuit's unique rule concerning photocopies.
Rather, photocopying expenses "are taxable so long as they are necessarily obtained for use in the
case." AM Props. v. Town of Chapel Hill, 202 F. Supp. 2d 451,454-55 (M.D.N.C. 2002). Here,
the court fmds that the photocopies for which Oak-Bark seeks reimbursement were necessarily
To the extent that Oak-Bark seeks costs under North Carolina law or the APA (as opposed
to Rule 54 and section 1920), the request lacks merit and is denied.
I
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obtained for use in the case. See Def.'sMot. Bill ofCosts, Ex. 1 ("RichardsonAff.'')' 4(A); id., Ex.
2 ("Tayloe Aff.") , 5(c). Accordingly, the court awards Oak-Bark's photocopying costs in the
amount of $7,859.45.
Next, Hexionobjects to Oak-Bark's request for $10,271.64 in reimbursement for deposition
transcripts and mediator fees. Pl.'s Mem. Opp'n Mot. Amend 10; see Def.'s Mot. Bill of Costs 3,
5. Hexion argues that mediator fees are not recoverable pursuant to section 1920 or Local Civil Ru1e
54.1 (c)(I)(a). Pl.'s Mem. Opp'n Mot. Amend 10; see AM Props., 202 F. Supp. 2d at 456.
Accordingly, Hexion asks the court to reduce this item on Oak-Bark's bill of costs by $1,847.79,
which is Oak-Bark's share of the mediator's fees. PI.'s Mem. Opp'n Mot. Amend 10.
Mediator fees are not recoverable under section 1920 or Local Civil Ru1e 54.1(c). See 28
U.S.C. § 1920; Local Civil Ru1e 54.1 (c). Therefore, the court denies Oak-Bark's request for
$1,847.79 in mediator fees, but does award Oak-Bark $8,423.85 for deposition transcripts.
Next, Hexion argues that Oak-Bark's "[c]ounsel's travel costs associated with the
depositions and mediation are not taxable to Hexion." Pl. 's Mem. Opp'n Mot. Amend 10; see 28
U.S.C. § 1920; Local Civil Ru1e 54.1(c)(I)(a). The court agrees with Hexion. Accordingly, the
court denies recovery for these travel costs.
Next, Hexionobjectsto Oak-Bark's request for $20,847.58 in reimbursement for expert fees.
Pl.'s Mem. Opp'n Mot. Amend 10; see Def.'s Mot. Bill of Costs 3, 7. Hexion argues that section
1920(6) "only allows for recovery of court appointed experts, which none of Oak-Bark's experts
were." Pl.'s Mem. Opp'n Mot. Amend 10 (quotation omitted); see 28 U.S.C. § 1920(6). Hexion
is correct that the court did not appoint any ofOak-Bark' s expert witnesses. Accordingly, Oak-Bark
may not recover, under section 1920(6), expenses incurred for procuring these experts. See Hansen
v. Bradley, 114 F. Supp. 382, 386 (D. Md. 1953 )("Expert ... testimony is very usually compensated
by the party calling [the expert] and that wou1d not be a taxable item ofexpense."). Moreover, Oak
Bark's bill ofcosts and the supporting exhibits fail to provide information regarding any travel costs
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for Oak-Bark's expert witnesses. See Def.'s Mot. Bill of Costs, Exs. 1-3; cf. Holmes v. Cessna
Aircraft Co., 11 F.3d 63, 64-65 (5th Cir. 1994) (per curiam). Thus, the court declines to award any
costs to Oak-Bark associated with its expert witnesses.
Next, Hexion objects to Oak-Bark' s request for $621.26 for shipping and postage costs. Pl.' s
Mem. Opp'n Mot. Amend 10; see Def.'s Mot. Bill of Costs 3,8. Such costs are not recoverable
under section 1920 or Local Civil Rule 54.1(c). See 28 U.S.C. § 1920; Local Civ. R. 54.1(c); see
also Zeunerv. Rare Hospitality Int'l, Inc., 386 F. Supp. 2d 635,640 (M.D.N.C. 2005). Accordingly,
the court denies recovery for this expense.
Next, Hexion argues that Oak-Bark is not entitled to $2,498.32 for computerized legal
research. Pl.'s Mem. Opp'n Mot. Amend 10; see Def.'s Mot. Bill of Costs 3, 9. Hexioncontends
that legal research costs are "more properly listed as a component of attorneys' fees, and ...
therefore [are] not a taxable cost of litigation." Pl.'s Mem. Opp'n Mot. Amend 10.
Legal research costs are not recoverable as costs under section 1920 or Local Civil Rule
54. 1(c). See 28 U.S.C. § 1920; Local Civil Rule 54. 1(c); accord Attrezzi. LLC v. Maytag Corp.,
436 F.3d 32,43 (lst Cir. 2006); Sorbo v. United Parcel Serv., 432 F.3d 1169, 1180 & n.lO (10th
Cir. 2005); U.S. for Use & Benefit of Evergreen Pipeline Constr. Co.. Inc. v. Merritt Meridian
Constr. Corp., 95 F.3d 153, 173 (2d Cir. 1996); Jones v. Unisys Corp., 54 F.3d 624,633 (10th Cir.
1994); Haroco, Inc., 38 F.3d at 1440-41; Standley v. Chilhowee R-IV Sch. Dist., 5 F.3d 319,325
& n.7 (8th Cir. 1993); AM Props., 202 F. Supp. 2d at 455-56; Christian v. Vought Aircraft Indus.,
Inc., No. 5:09-CV-186-FL, 2010 WL 5477235, at "'2 (E.D.N.C. Dec. 29, 2010) (unpublished).
Accordingly, the court denies recovery for this expense.
Next, Hexion objects to Oak-Bark's request for $278.65 in costs for office supplies. Pl.'s
Mem. Opp'n Mot. Amend 11; see Def.'s Mot. Bill of Costs 3, 10. Office supplies are not
recoverable under section 1920 or Local Civil Rule 54.1(c). See 28 U.S.C. § 1920; Local Civ. R.
54.1 (c). Thus, the court denies recovery for this expense. See Shlikas v. Sallie Mae, Inc., Civil No.
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WDQ-06-2106,2011 WL5825660,at *2 {D. Md. Nov. 16,2011)(unpublished);FhannacyRecords
v. Nassar, 729 F. Supp. 2d 865, 874 (E.D. Mich. 2010); Heimerv. Osage Cmty. Sch. Dist., No. C04
2014,2005 WL 2807110, at *5 (N.D. Iowa Oct. 26, 2005) (unpublished); Ass'n for Disabled Ams..
Inc. v. Integra Resort Mgmt.. Inc., 385 F. Supp. 2d 1272, 1303-04 (M.D. Fla. 2005).
Next, Hexion argues that Oak-Bark cannot recover $2,000 in escrow agent fees. PI.' s Mem.
Opp'nMot. Amend 11; see Def.'sMot. Bill ofCosts 3,11. The court agrees. See 28 U.S.C. § 1920;
Local Civ. R. 54(c). Accordingly, the court denies recovery for this expense.
In sum, Oak-Bark's recoverable costs are $7,859.45 for copies and $8,423.85 for deposition
transcripts. Oak-Bark's requests for other costs are denied.
m.
Oak-Bark seeks $406,999.95 attorney's fees. See Def.'s Mot. Amend [D.E. 85] 4. Rule
54(d)(2) ofthe Federal Rules of Civil Procedure requires a party to make "[a] claim for attorney's
fees and related nontaxable expenses ... by motion unless the substantive law requires those fees
to be proved at trial as an element ofdamages." Id. A motion for attorney's fees must (1) "be filed
no later than 14 days after the entry of the judgment[,]" (2) "specify the judgment and the statute,
rule, or other grounds entitling the movant to the award[,]" (3) "state the amount sought or provide
a fair estimate ofit[,]" and (4) "disclose, ifthe court so orders, the terms ofany agreement about fees
for the services for which the claim is made." See Fed. R. Civ. P. 54(d)(2)(B).
In its motion to amend, Oak-Bark states that the court's order of September 28,2011, and
North Carolina law support an award of $406,999.95 in attorney's fees. Def.'s Mot. Amend 3-4;
see Def.'s Mem. Supp. Mot. Amend 11; see also Sept. 28, 2011 Order; N.C. Gen. Stat. §§ 6-21.2,
6-21.5.
Under North Carolina law, "a successful litigant may not recover attorneys' fees, whether as
costs or as an item ofdamages, unless such a recovery is expressly authorized by statute." Stillwell
Enters.. Inc. v. Interstate Equip. Co., 300 N.C. 286,289,266 S.E.2d 812, 814 (1980) ("[T]he non
10
allowance of counsel fees has prevailed as the policy of this state at least since 1879."); see Nucor
Corp. v. Gen. Bearing Corp., 333 N.C. 148, 154,423 S.E.2d 747, 751 (1992); Hicks v. Albertson,
284 N.C. 236,239,200 S.E.2d 40,42 (1973). A contractual provision obligating one party to pay
another party's attorney's fees is not enforceable absent a statutory basis for an award of attorney's
fees. Stillwell, 300 N.C. at 289,266 S.E.2d at 814-15. There are certain equitable exceptions to this
rule. See Ehrenhaus v. Baker, 717 S.E.2d 9, 32 (N.C. Ct. App. 2011). Oak-Bark does not contend
that this case falls under an exception. See Def.' s Mem. Supp. Mot. Amend 11-13.
Oak-Bark first seeks attorney's fees under section 6-21.2 of the North Carolina General
Statutes. Section 6-21.2 states that "[o]bligations to pay attorneys' fees upon any note, conditional
sale contract or other evidence of indebtedness ... shall be valid and enforceable ... subject to
[certain] provisions ...." N.C. Gen. Stat. § 6-21.2. "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%) ofthe 'outstanding balance' owing on said note, contract or other evidence ofindebtedness."
Id. § 6-21.2(2).
Section 6-21.2 gives a court "limited authority to impose attorneys' fees upon a debtor,
otherwise generally prohibited ...." Hedgecock Builders Supply Co. of Greensboro v. White, 92
N.C. App. 535,543,375 S.E.2d 164, 170 (1989). The statute is remedial in nature, and therefore
"should be construed liberally ...." Coastal Prod. Credit Ass'n v. Goodson Farms. Inc., 70 N.C.
App. 221,227,319 S.E.2d 650,655 (1984); see Stillwell, 300 N.C. at 293,266 S.E.2d at 817.
Accordingly, a court may award fees incurred by an attorney in any action "reasonably related to the
collection of the underlying note sued upon ...." Coastal Prod., 70 N.C. App. at 227-28, 319
S.E.2d at 655. However, a party seeking fees under section 6-21.2(2) must prove (1) that there is
"some written' evidence ofindebtedness' setting out the obligation to pay attorneys' fees in the event
the debt is collected through an attorney .... " and (2) that the "debtor [was] ... notified in writing
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that the attorneys' fees provision [would] be enforced if the outstanding balance [was] not paid
within five days." Hedgecock Builders, 92 N.C. App. at 543, 375 S.E.2d at 170. "Evidence of
indebtedness" includes "any printed or written instrument, signed or otherwise executed by the
obligor(s), which evidences on its face a legally enforceable obligation to pay money." Stillwell,
300 N.C. at 294, 266 S.E.2d at 817.
Oak-Bark argues that ''the ... APA and Escrow Agreement constitute Hexion's 'evidence
of indebtedness.'" Def.'s Mem. Supp. Mot. Amend 12. Oak-Bark's argument, however, fails for
at least two reasons. First, the APA and the Escrow Agreement are not evidence of Hexion's
indebtedness to Oak-Bark. See Lee Cycle Ctr.. Inc. v. Wilson Cycle Ctr.. Inc., 143 N.C. App. 1,
12-13,545 S.E.2d 745, 752 (2001). Accordingly, Oak-Bark is not eligible for an award under the
statute.
Second, and alternatively, even if the APA and the Escrow Agreement were evidence of
Hexion's indebtedness to Oak-Bark, the documents do not impose an independent obligation on
Hexion to pay Oak-Bark's attorney's fees in the event that the debt is collected through an attorney.
In opposition to this conclusion, Oak-Bark contends that section 11.4 of the APA requires Hexion
to pay any attorney's fees incurred by Oak-Bak in litigation connected to the APA or the Escrow
Agreement. See Def.'s Mem. Supp. Mot. Amend 13. The cited provision, however, is not that
broad. Instead, section 11.4 only requires Hexion to pay Oak-Bark' s attorney's fees when such fees
"arise from" or are connected with a specific basis for indemnification. See APA [D.E. 52-1] § 11.4.
The APA, in tum, imposes specific requirements on a party seeking indemnification from the other
party under section 11.4. See APA § 11.7. The record does not reflect that Oak-Bark complied with
the APA's indemnification requirements in seeking attorney's fees under section 11.4. Pl.'s Mem.
Opp'n Mot. Amend 13. Accordingly, the APA does not give Oak-Bark an enforceable right to
attorney's fees for Hexion's alleged breach. Cf. APA §§ 11.4,11.7. Absent such aright, Oak-Bark
12
may not recover an award under section 6-21.2. See, ~ Hedgecock Builders, 92 N.C. App. at 543,
375 S.E.2d at 170. Thus, the court declines to award attorney's fees under section 6-21.2.
Oak-Bark also argues that it is entitled to recover attorney's fees from Hexion pursuant to
section 6-21.5 ofthe North Carolina General Statutes. Def.'s Mem. Supp. Mot. Amend 13-16; see
N.C. Gen. Stat. § 6-21.5. Section 6-21.5 provides that "[i]n any civil action ... the court, upon
motion of the prevailing party, may award a reasonable attorney's fee to the prevailing party if the
court finds that there was a complete absence ofa justiciable issue ofeither law or fact raised by the
losing party in any pleading." N.C. Gen. Stat. § 6-21.5.
"Justiciable issues" under section 6-21.5 are issues "which are real and present as opposed
to imagined or fanciful." Sprouse v. N. River Ins. Co., 81 N.C. App. 311, 326, 344 S.E.2d 555,565
(1986); seeSunamericaFin. Corp. v. Bonham, 328N.C. 254, 257, 400 S.E.2d435,437 (1991); Free
Spirit Aviation. Inc. v. Rutherford Air.portAuth., 206 N.C. App. 192, 197-98,696 S.E.2d 559,563
(2010). A losing party's pleadings reflect "a complete absence of a justiciable issue" when it
"conclusively appear [s] that such issues are absent even giving the losing party's pleadings the
indulgent treatment which they receive on motions for summary judgment or to dismiss." Sprouse,
81 N.C. App. at 326, 344 S.E.2d at 565 (quotation omitted); see Free Spirit, 206 N.C. App. at
197-98,696 S.E.2d at 563.
The purpose of section 6-21.5 is "to discourage frivolous legal action ...." Short v. Bryant,
97 N.C. App. 327, 329, 388 S.E.2d 205,206 (1990); see Persis Nova Constr.. Inc. v. Edwards, 195
N.C. App. 55,66-67, 671 S.E.2d 23, 30 (2009). "[T]hat purpose may not be circumvented by
limiting the statute's application to the initial pleadings." Short, 97 N.C. App. at 329, 388 S.E.2d
at 206. Accordingly, a court must review "all relevant pleadings and documents to determine
whether attorneys' fees should be awarded." Lincoln v. Bueche, 166 N.C. App. 150, 153, 601
S.E.2d 237,241 (2004); see Barris v. Town of Long Beach, 704 S.E.2d 285, 289 (N.C. Ct. App.
2010).
13
The court has reviewed the entire record. Oak-Bark has not met its burden under section 6
21.5. Thus, the court declines to award attorney's fees to Oak-Bark under section 6-21.5. See,""
The Cincinnati Ins. Co. v. Dynamic Dev. Grp.. LLC, 336F. Supp. 2d552, 566-67 (M.D.N.C. 2004),
aff'g, 154 F. App'x 378 (4th Cir. 2005) (per curiam) (unpublished).
IV.
Finally, Hexion asks the court to reconsider its order granting Oak-Bark's motion for
summary judgment. See Pl.' s Mot. Reconsideration [D.E. 90]. Essentially, Hexion argues that the
court made a clear error of law in analyzing the complaint, the scheduling order, the record, the
Federal Rules of Civil Procedure, governing precedent, and the briefs concerning summary
judgment. Id.; see PI.' s Mem. SUpp. Mot. Reconsideration [D.E. 91] 2-12. The court disagrees with
Hexion's argument and denies the motion for reconsideration.
V.
In sum, the court DENIES Oak-Bark's motion to amend the judgment to add an award of
prejudgment interest, postjudgment interest, and attorney's fees [D.E. 85], GRANTS in part Oak
Bark's motion for bill of costs [D.E. 84], AWARDS Oak-Bark $16,283.30 in costs, GRANTS in
part Hexion' s motion for disallowance ofOak-Bark' s bill ofcosts [D.E. 87], and DENIES Hexion's
motion for reconsideration [D.E. 90]. The Clerk of Court shall close the case.
SO ORDERED. This ~ day of June 2012.
J
SC.DEVERID
Chief United States District Judge
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