Baker & Taylor, Inc. v. College Book Rental Company, LLC et al

Filing 376

ORDER that plaintiffs Motion for Attorneys Fees (#301) is GRANTED as previously provided in Order (#357) and further GRANTED as to the amount of such award, which the court determines to be $2,915,279.33, for which Defendants Jones and Griffin are jointly and severally liable. The Clerk to enter an Amended Judgment. Signed by District Judge Max O. Cogburn, Jr on 3/20/2015. (tmg)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:12-cv-00553-MOC
BAKER & TAYLOR, INC.,
Plaintiffs,
Vs.
DAVID GRIFFIN
CHARLES JONES
COLLEGE BOOK RENTAL COMPANY, LLC,
Defendants.

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ORDER

THIS MATTER is before the court on plaintiff’s Motion for Attorneys’ Fees (#301).
After an initial round of briefing, oral arguments were heard on plaintiff’s motion on January 7,
2015, and an Order (#357) entered allowing plaintiff’s motion, but holding in abeyance
determination of amount of attorneys’ fees. A second round of briefing was allowed on the
amount of fees, focusing on the issue of whether the use of the phrase “which may be incurred”
modified Defendant Griffin’s obligation under state law, which provides for a flat attorneys’ fee
of 15 percent. Plaintiff and Defendant Griffin have both filed timely supplements, making the
issue ripe for resolution.
At the hearing, the parties discussed whether the language contained in the guaranty
modified the statutory obligation under Chapter 6-21.2(2) of the North Carolina General Statutes
for a guarantor to pay and for this court to award a 15% attorney’s fee. The language of the
guaranty provided that the “[g]uarantor agrees to pay all costs, expenses, and fees, including

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reasonable attorney’s fees, which may be incurred by Baker & Taylor in enforcing this personal
guaranty…” (emphasis added).
In its supplemental pleading, plaintiff has pointed the court to two decisions in which
nearly identical language was used in the agreement and the court enforced the statutory
provision. See Trull v. Central Carolina Bank & Trust, 124 N.C.App. 486, 490 (1996) affirmed
in part, review dismissed in part 347 N.C. 262 (1997); Meineke Car Care Centers, Inc. v. RLB
Holdings, LLC, 3:08-cv-240, 2010 U.S. Dist. LEXIS 37184, at *7 (W.D.N.C. Mar. 18, 2010).
Both courts held that to invoke the statute’s automatic application of a 15 percent attorneys’ fee,
the underlying writing need only contain: (1) evidence of an indebtedness; and (2) a “provision
for ‘reasonable attorneys’ fees.’” As in this case, both writings also contained the phrase
“actually incurred.”
In Trull, the North Carolina Court of Appeals addressed an argument by the debtor that
the creditor should be limited to fees “actually incurred,” as follows:
Plaintiff additionally argues that an award of attorneys' fees to CCB under
these circumstances amounts to a windfall, in that the statutory 15% exceeds the
actual attorneys' fees incurred by CCB. The promissory note at issue in this case
provides for “reasonable attorneys' fees” and is therefore subject to the provisions
in G.S. 6-21.2 subsection (2), not subsection (1). Under subsection (1) an award
of attorneys' fees must be supported by evidence and findings of fact supporting
the reasonableness of the award, however, subsection (2) has predetermined that
15% is a reasonable amount. G.S. 6-21.2(2) expressly provides that when a
contract authorizing attorneys' fees does not specify the fee percentage then it
shall be construed to mean 15% of the “outstanding balance” owed on the
instrument. In this case, the trial court did not err by calculating the fee awarded
in accordance with the statutory mandate.
Trull, 124 N.C.App. at 493-494 (emphasis added). As this court “must apply the relevant state
law in determining the substantive rights and duties of the parties” in diversity actions, Auer v.
Kawasaki Motors Corp., U.S.A., 830 F.2d 535, 537 (4th Cir.1987) (en banc), Trull lends
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substantial support to plaintiff’s argument that the phrase “which may be incurred” has no impact
on the award of fees under North Carolina law. Further, a learned colleague, Honorable T.S.
Ellis, Senior United States District Judge for the Eastern District of Virginia, had occasion to
address the meaning of “actually incurred” in the context of an award of attorneys’ fees under
Virginia law in Airlines Reporting Corp. v. Sarrion Travel, Inc., 846 F.Supp.2d 533 (E.D.Va.
2012). Judge Ellis noted, as follows:
“Actually incurred” is a past participle phrase being used as an adjective and, as
such, is not restricted to referencing the past. See Waag v. Permann (In re
Permann), 418 B.R. 373, 379 (BAP 9th Cir.2009) (“As noted in one leading
grammar treatise, both present and past participles “can be used for referring to
past present or future time” and the past participle ‘signifies ‘perfectiveness' or
completion, but is not restricted to past time.’ ”) (quoting S. Chalker and E.
Weiner, The Oxford Dictionary of English Grammar at pages 282 and 286–87
(1994)).
Id. at 539, n. 7. While this court is reminded of another’s legal scholar’s wisdom -- the late
Honorable H. Brent McKnight -- that “words have meaning,” Judge Ellis’s decision indicates
that the ordinary meaning of certain words does not always comport with initial impressions of
those words. Indeed, as Judge Ellis determined, the phrase “actually incurred” in the context of
an award of attorneys’ fees does not just mean past fees capable of inclusion in a lodestar figure,
see Robinson v. Equifax Information Services, LLC, 560 F.3d 235, 243–244 (4th Cir.2009), but
future fees such as for collection of the judgment and defense of this court’s Judgment on appeal.
Thus, even where an agreement provides for an award of “attorneys’ fees actually incurred,” the
phrase encompasses future fees.
If the award of attorneys’ fees was governed by Chapter 6-21.2(1), the court would agree
that plaintiff would be limited to recovering its actual lodestar amount; however, plaintiff’s
award is governed by Chapter 6-21.2(2), which provides for recovery of a flat 15 percent of the
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indebtedness as attorneys’ fees. Because it is the statute itself which allows the shifting of the
fees, it is the statute itself which sets the amount of the fees. Thus, Chapter 6-21.2(2) operates
not as a sword, but as a shield for this debtor. North Carolina law is very clear that where the
contract “does not specify the fee percentage then it shall be construed to mean 15% of the
outstanding balance owed ….”

Trull, 124 N.C.App. at 494. Neither North Carolina law nor

federal decisions would support an inference that use of the phrase “actually incurred” in any
way impacts a Chapter 6-21.2(2) award of attorneys’ fees.
Even if this interpretation is wrong, it is readily apparent from its supplemental brief that
plaintiff would have little trouble showing a loadstar amount well in excess of 15 percent of the
outstanding indebtedness. Further, such interpretation actually works in favor of Defendant
Griffin as it is apparent that an award of fees actually incurred would be well in excess of the
statutory 15 percent.
As to Defendant Griffin’s arguments concerning joint and several liability for any
attorneys’ fee award, the court will run such award just as it has run liability on the indebtedness,
making both defendants jointly and severally liable for the attorneys’ fee.
***
As all of the conditions of Chapter 6-21.2(2) have been met and it appearing that the use
of the phrase “which may be incurred” in the guaranty does not alter the statutory obligation, the
court will award an attorneys’ fee of $2,915,279.33.
ORDER
IT IS, THEREFORE, ORDERED that plaintiff’s Motion for Attorney’s Fees (#301) is
GRANTED as previously provided in Order (#357) and further GRANTED as to the amount of

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such award, which the court determines to be $2,915,279.33, for which Defendants Jones and
Griffin are jointly and severally liable.

IT IS FURTHER ORDERED that the Clerk enter an Amended Judgment to reflect the
damages awarded by the Jury in the amount of $18,304,464.47, an award of $8,451,630.54 in
prejudgment interest, and an award of attorneys’ fees in the amount of $2,915,279.33, for a total
award of $29,671,374.30, in favor of plaintiff and against Defendants Jones and Griffin, both
jointly and severally, and that such award run with interest at the lawful federal Judgment rate,
nunc pro tunc, from the date the original Judgment (#294) was entered.

Signed: March 20, 2015

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