Reed Properties, LLC v.Concentra Health Services, Inc., et al

Filing 44

ORDER denying except as to Plaintiffs request for attorneys fees 17 Motion for Summary Judgment ; denying 23 Motion for Summary Judgment. Signed by Senior Judge Graham Mullen on 4/16/2014. (eef)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:12CV691
REED PROPERTIES, LLC,
Plaintiff,
vs.
CONCENTRA HEALTH SERVICES,
INC. and CONCENTRA INC.,

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ORDER

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Defendants.
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This matter is before the Court upon the Defendants’ Motion for Summary
Judgment (Doc. No. 17), and Plaintiff’s Motion for Summary Judgment on Affirmative
Defenses (Doc. No. 23). The Court has extensively reviewed the briefs and exhibits
submitted by the parties.
This case involves a dispute between a landlord and tenant over who is liable for
extensive mold damage in the leased building. Defendants Concentra Health Services,
Inc. and Concentra Inc. (“Concentra”) entered into a two year commercial lease with
landlord Reed Properties, LLC (“Reed Properties”). Plaintiff Reed Properties seeks costs
to remediate and repair mold damage discovered after the expiration of the lease term.
Plaintiff also seeks damages for lost rent, as well as its attorneys’ fees.
Concentra first asserts that summary judgment should be granted in its favor
because Reed Properties cannot offer any competent evidence that Concentra’s alleged
negligence caused the mold. Concentra’s argument is based upon its effort to exclude the
testimony of Plaintiff’s expert, John McNamara, under Daubert. The Court has already

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denied Defendants’ motion to exclude Mr. McNamara’s testimony and reports (Doc. No.
43). Accordingly, the Court finds that there is a genuine issue of material fact as to
causation.
Concentra next argues that even if causation can be demonstrated, the Court
should find as a matter of law that Reed Properties failed to mitigate its damages by
waiting nearly three years to take any steps to get the building into a marketable
condition. Under North Carolina law, it is well settled that “the nonbreaching party to a
lease contract has a duty to mitigate his damages upon breach of such contract.” Isbey v.
Crews, 55 N.C. App. 47, 51, 284 S.E.2d 534, 537 (1981); Damare v. Barwick & Assocs.,
LLC, Civ. No. 3:05-cv-128, 2008 WL 686218, *3 (W.D.N.C. Mar. 7, 2008) (applying North
Carolina law). However, the “reasonableness of [the Plaintiff’s] mitigation efforts ‘depends
on the circumstances of the particular case and is a jury question except in the clearest of
cases.’” Team Gordon, Inc. v. Fruit of the Loom, Inc., Civ. No. 3:06cv201, 2009 WL 426555
*6 (W.D.N.C. Feb. 19, 2009) (quoting Radford v. Norris, 63 N.C. App. 501, 305 S.E.2d 64,
65 (1983)). Considering the evidence in the light most favorable to Plaintiff, there is a
genuine issue of material fact as to whether Reed Properties’ mitigation efforts were
reasonable.
Lastly, Concentra argues that Reed Properties’ request for attorneys’ fees fails as a
matter of law. Under North Carolina law, a prevailing party can recover attorneys’ fees only
if expressly permitted by statute. Stillwell Enterprises, Inc. v. Interstate Equip. Co., 300 N.C.
286, 289, 266 S.E.2d 812, 814 (1980). Here, Reed Properties apparently seeks the recovery
of attorneys’ fees under N.C. Gen. Stat. §§ 6-21.2. (Reed Properties’ Resp. to Defs. First Set
of Interr. No. 11.). N.C. Gen. Stat. § 6-21.2(2) provides that where “conditional sale contract
or other evidence of indebtedness provides for the payment of reasonable attorneys’ fees by

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the debtor, without specifying any specific percentage, such provision shall be construed to
mean fifteen percent (15%) of the “outstanding balance” owing on said note, contract or
other evidence of indebtedness.” Thus, a party may only recover attorneys’ fees as a
percentage of an “outstanding balance.”

Here, the damages Reed Properties seeks are

unliquidated and consequential. As it is undisputed that Concentra paid fully all rents owing
during the term of the Lease, this is not a lawsuit to enforce a debt, or a sum certain. The
types of damages sought by Plaintiff do not constitute an “outstanding balance” to which the
15% fee percentage can be applied.

Plaintiff seeks to avoid the clear language of N.C. Gen. Stat. §§ 6-21.2 by arguing
that Texas law should apply to its request for attorneys’ fees as Texas was the state where the
contract was formed. However, the Lease is governed by North Carolina law pursuant to its
choice-of-law provision. Specifically, Plaintiff asserts that the Court should invoke the
Lease’s severability clause to sever the North Carolina choice-of-law provision since North
Carolina law is “preventing” application of the attorneys’ fee provision. While creative,
Plaintiff’s argument is simply not supported by the provisions of the Lease or any case law.
Accordingly, Plaintiff’s request for attorneys’ fees fails as a matter of law.
Reed Properties argues that it is entitled to summary judgment on all Concentra’s
affirmative defenses except its failure to mitigate defense. Plaintiff’s motion lacks legal and
factual support. The Court finds that genuine issues of material fact exist as to each of
Concentra’s defenses.
IT IS THEREFORE ORDERED that Defendants’ Motion for Summary Judgment is
DENIED except as to Plaintiff’s request for attorneys’ fees; and

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IT IS FURTHER ORDERED that Plaintiff’s Motion for Summary Judgment on
Affirmative Defenses is hereby DENIED.

Signed: April 16, 2014

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