GE Supply, a Div. of General Elec. Co. v. Thomas

• Decision Date: 05 June 1995
• Docket Number: Nos. 94-1395,94-1559,s. 94-1395
• Parties: NOTICE: Fourth Circuit Local Rule 36(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. GE SUPPLY, a Division of General Electric Company, Plaintiff-Appellee, v. Richard E. THOMAS; Lois J. Thomas, Defendants-Appellants, and Residential Electric, Incorporated, Defendant. GE SUPPLY, a Division of General Electric Company, Plaintiff-Appellant, v. Richard E. THOMAS; Lois J. Thomas, Defendants-Appellees, and Residential Electric, Incorporated, Defendant. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1414

62 F.3d 1414

NOTICE: Fourth Circuit Local Rule 36(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

GE SUPPLY, a Division of General Electric Company, Plaintiff-Appellee, v. Richard E. THOMAS; Lois J. Thomas, Defendants-Appellants, and Residential Electric, Incorporated, Defendant.

GE SUPPLY, a Division of General Electric Company, Plaintiff-Appellant, v. Richard E. THOMAS; Lois J. Thomas, Defendants-Appellees, and Residential Electric, Incorporated, Defendant.

Nos. 94-1395, 94-1559.

United States Court of Appeals, Fourth Circuit.

Argued: June 5, 1995.

Decided: Aug. 3, 1995.

ARGUED: Edward Francis Halloran, KEMPSVILLE LAW OFFICES, Virginia Beach, VA, for Appellants.

Donald H. Clark, CLARK & STANT, P.C., Virginia Beach, VA, for Appellee.

Before WILKINS, NIEMEYER, and WILLIAMS, Circuit Judges.

OPINION

PER CURIAM:

Richard E. and Lois J. Thomas appeal from the district court's entry of summary judgment in favor of GE Supply, a division of General Electric Company, on an action to enforce a guaranty. GE Supply cross-appeals the district court's subsequent calculation of GE Supply's attorneys' fees pursuant to a provision in the guaranty. For the reasons that follow, we affirm the district court's entry of summary judgment in favor of GE Supply, but reverse and remand the district court's award of attorneys' fees to GE Supply.

I.

This case is before this Court for the second time. See GE Supply v. Thomas, 4 F.3d 985 (Table), 1993 WL 321586 (4th Cir. Aug. 23, 1993). We summarize the factual background and legal reasoning in Thomas I to the extent necessary for an understanding of the present appeal. GE Supply brought this action against Richard E. and Lois J. Thomas alleging that the Thomases had breached a contract of guaranty. In 1979, the Thomases' sons opened a new business, Residential Electric, Inc., (Residential), which they incorporated under the laws of Virginia. To help their sons obtain needed credit to operate the business, the Thomases signed a document entitled "Guaranty" under which the Thomases agreed to be responsible for the debts of the company to GE Supply. When Residential defaulted on its account in 1991, GE Supply sought to enforce the guaranty. The guaranty document signed by the Thomases, however, contained a drafting error. The document specified that GE Supply was providing financial assistance to the Thomases, and not to Residential as the parties had agreed. As the parties recognized, the document was unenforceable because the Thomases seemingly agreed to guaranty financial assistance to their own debts.

Accordingly, the primary issue before the district court and this Court on the first appeal was whether the equitable remedy of reformation of the agreement was properly applicable to allow recovery for GE Supply. ¹ The district court denied reformation, reasoning that "the evidence is not clear and convincing that these people did any more ... than sign for their sons to get a line of credit for $5,000 for Residential Electric and that there has just been no showing that this was a guaranty in favor of GE Supply for all these debts of Residential Electric." We disagreed with the district court, holding as follows:

The Thomases have conceded that they agreed to a guaranty. The district court evidently believed that granting reformation would be unjust because the Thomases would be liable for a larger amount than that which they agreed. However, it would be equally unjust to prevent GE Supply from obtaining the benefits of the conceded agreement, whatever those benefits may be. The district court should have determined whether reformation was appropriate and then interpreted the reformed agreement under the appropriate rules of contract construction. We conclude that the district court erred when it refused to reform the guaranty to reflect that GE Supply was providing financial assistance to Residential Electric, and not the Thomases.

Thomas I, 1993 WL 321586, * 2.

After concluding that the district court had erred in its reasoning concerning reformation, we briefly discussed those issues which we expressly left for the district court to address on remand. First, and most importantly, there was a question as to the meaning of the following phrase typed at the top of the agreement: "Note: Five Thousand Dollar ($5,000) per month limit and not to exceed." The parties disagreed as to whether the phrase was ambiguous and whether the phrase was included in the agreement. As we stated, in light of our ruling on reformation, it would be more appropriate for the district court to have the first opportunity to rule on the issue on remand. Second, we held that any challenges made by the Thomases as to the guaranty's enforceability, including whether the reformed guaranty was enforceable under the statute of frauds, was best left for the district court to address in the first instance.

On remand, on February 22, 1994, the district court conducted a pretrial hearing on GE Supply's motion for summary judgment. The district court granted the motion from the bench, addressing a number of points in its ruling. First, the district court acknowledged that this Court had ruled as a matter of law that the agreement should be reformed, at least to the extent that the name of Residential Electric should replace that of the Thomases. Second, the district court addressed whether the reformed guaranty was enforceable under the statute of frauds, as left open by this Court in Thomas I. The district court ruled that the reformation effectively remedied any statute of frauds problems with the agreement. Third, the district court addressed the other issue this Court left open in Thomas I: whether the phrase, "Note: Five Thousand Dollar ($5,000) per month limit and not to exceed," was clear and unambiguous. The district court stated:

I can in no way find this language ambiguous. I mean, it is what it is, and it is typed on here, and it says $5,000 per month limit and not to exceed. If it were simply a $5,000 limit, then it should have said $5,000 limit and not to exceed. And as [counsel for the Thomases] has pointed out, you have to endeavor to give each word meaning. And I can't give it any meaning other than $5,000 per month limit and not to exceed.

* * *

* * *

So as a matter of law, I rule that this note on this guaranty is clear and unambiguous on its face. It means $5,000 per month limit and not to exceed, and there is no other ruling the court can make.

(J.A. 517.) Because the district court found the phrase to be clear and unambiguous, it ruled that there was no reason to admit parol evidence on the issue.

Fourth, the district court addressed the Thomases' argument that there was never really any contract. The Thomases' theory below was that the guaranty was not a guaranty at all; instead, it was simply an offer for which there was a counter-offer, but no acceptance. The district court disagreed, holding as a matter of law that there was a contract because: (1) there was no dispute of fact that the guaranty was initially drafted by GE Supply and presented to the Thomases, which Ms. Thomas (by her own testimony) admitted signing--accordingly, there was an offer and an acceptance; (2) there was no question as to the applicability of the portion added to the top of the agreement (the $5,000 per month language) because, even if it were added later by GE Supply, it favored the Thomases (for without the added language, the Thomases had signed an unlimited guaranty and would have been liable for an even larger amount of money); (3) even if the added language were a counter-offer limiting the guaranty to $5,000 per month, GE Supply accepted the counter-offer by its subsequent performance. Accordingly, the district court found a clear and unambiguous contract, and nothing left for the jury to decide.

With summary judgment granted in favor of GE Supply, the district court entered an order of judgment in the following amounts: (1) $58,753 in contractual damages, jointly and severally, against the Thomases; and, (2) $35,912 against the Thomases in interest earned under the guaranty beginning on October 1, 1990. Thus, the district court awarded GE Supply a total of $94,665 plus post-judgment interest. The Thomases filed a timely notice of appeal on March 22, 1994.

The story at the district court level does not end here, however, because one issue remained before the district court: an award of attorneys' fees pursuant to a provision contained in the guaranty to GE Supply. On February 28, 1994, GE Supply filed its motion for attorneys' fees with numerous affidavits as to specific costs attached. The attorneys' fees sought in this case break down into two categories: (1) the Georgia law firm of Hotz & Associates, P.C., sought fees and expenses totalling $32,251.11; and, (2) the Virginia law firm of Clark & Stant, P.C., sought fees and expenses totalling $45,818.15. On March 18, 1994, the district court issued an order granting in part and denying in part the motion. As to the fees and expenses of Hotz & Associates, the district court denied any award of fees because the fees claimed needlessly duplicated those claimed by Clark & Stant and because the legal work completed did not turn on questions of Georgia law. As to the fees and expenses of Clark & Stant, the district court awarded $22,000 in costs and fees. The district court offered the following rationale in support of its ruling: (1) the three attorneys for Clark & Stant each charged the same rate ($125/hour) regardless of experience and expertise, indicating a lack of reasonable fees; and (2) the number of hours seemed exorbitant in light of the simple nature of the case and amount of money sought.

On March 28, 1994, GE Supply filed a motion for reconsideration of...