Bryson v. Sullivan, No. 9019SC739

• Decision Date: 05 March 1991
• Docket Number: No. 9019SC739
• Citation: 401 S.E.2d 645,102 N.C.App. 1
• Parties: James M. BRYSON, II, and Lois I. Bryson, Individually and as Administratrix of the Estate of James P. Bryson, Deceased v. Rachel B. SULLIVAN, Individually and as Administratrix of the Estate of Millie P. Bryson, Deceased.
• Court: North Carolina Court of Appeals

Page 645

401 S.E.2d 645

102 N.C.App. 1

James M. BRYSON, II, and Lois I. Bryson, Individually and as Administratrix of the Estate of James P. Bryson, Deceased v. Rachel B. SULLIVAN, Individually and as Administratrix of the Estate of Millie P. Bryson, Deceased.

No. 9019SC739.

Court of Appeals of North Carolina.

March 5, 1991.

Moser, Ogburn, Heafner, Schmidly & Wells by John N. Ogburn, Jr., and Stephen S. Schmidly, Asheboro, for plaintiffs-appellees.

Wyatt Early Harris Wheeler & Hauser by William E. Wheeler, High Point, for defendants-appellants.

GREENE, Judge.

In this civil action, defendants appeal the denial of their request for attorney fees which they sought under both N.C.G.S. § 1A-1, Rule 11 (Rule 11) and N.C.G.S. § 6-21.5 (1986).

The evidence before the trial court revealed these relevant facts: Defendant Rachel B. Sullivan (Rachel) is the daughter of Millie P. Bryson (Millie). Plaintiff James M. Bryson, II (Marc) is the grandson of Millie and the son of James P. Bryson (James) and Lois I. Bryson (Lois). James died in December 1986 and Lois was appointed administratrix of his estate. Millie suffered a stroke in August 1983 and from September 1983 to February 1987 she lived with and was cared for by James (until his death), Lois and Marc. From February 1987 to May 1989 Millie was cared for by Rachel.

On 26 June 1987, Millie filed a claim against Marc, Lois, individually and as administratrix of the estate of James, and others alleging that they had misappropriated and converted her property. Millie was declared incompetent on 16 December 1987, and Rachel was appointed her general guardian. This claim filed by Millie was eventually settled on 24 April 1989 with the execution of a consent decree. The parties executing the consent decree were Rachel, as guardian for Millie, Lois, individually and as administratrix of the estate of James, and Marc. McNeill Smith was the attorney for Marc and Lois in her individual capacity and in her capacity as administratrix of the estate of James.

The consent decree provided in pertinent part:

Any and all other claims, actions or causes of action which any of the parties might have had or might have against any of the other parties have been fully compromised, adjusted and settled; no party has admitted or been adjudged of any wrongdoing or fault on account of any matters alleged or which might have been alleged in the Complaint or Answer; and neither the plaintiff, her guardian or successor guardian, her representative or estate, nor any of the defendants, his or her representatives, successors or assigns, individually or in any capacity, shall recover anything further of any other party on account of anything occurring before the date of this judgment.

Millie died intestate on 10 May 1989 and Rachel was appointed administratrix of her estate. On 2 June 1989 Rachel sought and received from the Clerk of Superior Court of Randolph County an order allowing $14,400.00 as reimbursement to her for "room, board and transportation" provided by Rachel to Millie from December 1987 through May 1989. On 5 October 1989, Lois as administratrix of the estate of James, and Marc petitioned the Clerk of Superior Court of Randolph County to set aside the award to Rachel. The clerk denied the petition. On 22 November 1989, Marc and Lois, in her individual capacity and in her capacity as administratrix of the estate of James, filed a claim against Millie's estate for services rendered to Millie from September 1983 through February 1987. Rachel in her capacity as administratrix of the estate for Millie denied this claim.

Some short time before 22 February 1990, McNeill Smith advised Lois that "there was [sic] elements in ... [the 24 April 1989 consent order] which [had been] breached on the other side. One of the principal ones being the ... [petition filed by Rachel seeking reimbursement for room, board and transportation provided for Millie]...." McNeill Smith further advised Lois that "if you're going to do anything, though ... you've got to file it within the three months because the statute is very clear that the Superior Court is the place to consider the validity of the claim and you've got some guidance, take it and you ought to do it and you ought not to let the 3 months go by. But I might very well be a witness." McNeill Smith called Jack Ogburn, an attorney in Randolph County, who agreed to file this complaint and did so on 22 February 1990. The complaint sought to recover: (1) For services allegedly rendered to Millie; (2) for alleged self-dealing on the part of Rachel; and (3) breach of fiduciary duty on the part of Rachel. The lawsuit was filed by Marc and Lois in her individual capacity and in her capacity as administratrix of the estate of James.

On 12 March 1990, Rachel in her individual capacity and in her capacity as administratrix of the estate of Millie filed an answer and among other things pled the statute of limitations, the release contained in the 24 April 1989 consent decree, and res judicata. Rachel's answer also included a motion for "sanctions pursuant to Rule 11." Specifically, Rachel alleged:

Plaintiffs' complaint was signed and verified in violation of Rule 11 ... in that it was knowingly filed and served in the face of obvious defenses in bar of plaintiffs' claims of which plaintiffs and their counsel had prior actual notice and which notice was a matter of public record....

Plaintiffs' complaint ... was interposed for no other purpose than to harass defendant, cause unnecessary delay in the administration of the estate of Millie P. Bryson ... and [has] needlessly increased the cost of the administration of the estate of Millie P. Bryson, deceased, resulting in loss to the estate and its beneficiaries.

Defendant is entitled to have the Court impose sanctions upon plaintiffs for violation of Rule 11 ... by way of expenses incurred in defending this action and matters related thereto.

Rachel further requested in her answer an award for reasonable attorney fees pursuant to N.C.G.S. § 6-21.5. Specifically, she alleged:

Plaintiffs' complaint completely fails to raise any justiciable issue of law or fact. As a result defendant is entitled to an award of reasonable attorney fees assessed against plaintiffs pursuant to N.C.Gen.Stat. § 6-21.5.

On 30 April 1990, the plaintiffs voluntarily dismissed their "action pursuant to Rule 41(a) of the Rules of Civil Procedure with prejudice." On 10 May 1990, the defendants' motion for sanctions and for attorney fees came on for hearing. At that hearing the attorney for the defendants stated in open court:

I want that clear. We are not asking of Mr. Ogburn's firm to be assessed with any legal fees. The Plaintiffs have had three lawyers that I know of and so perhaps Mr. Ogburn's firm could have by more diligence found out more things about this before they got into it, but that occurs sometimes. But the Plaintiff[s] certainly knew what the situation was. So we asked that the Plaintiff[s] be taxed because they have failed to comply with the standard of objective reasonableness as to whether or not there was a valid claim, and likewise, with G.S. 6-21.5 as to whether or not there are ... [justiciable issues of law or fact]....

In denying the defendants' request for sanctions and attorney fees, the trial court entered thirty-eight separate findings of fact, only two of which the defendants contend are not supported by the evidence. They include:

36. At the hearing, Defendant's counsel admitted that the Defendants sought sanctions upon and attorneys fees from the Brysons and not their attorneys.

....

38. The Brysons filed this lawsuit in good faith and after diligent inquiry of counsel.

The trial court entered the following pertinent conclusions of law:

1. Plaintiffs voluntary dismissal of their action does not relieve this Court of its duty to consider the Rule 11 and attorneys fees Motions on the merits.

....

14. Plaintiffs have at all times relied on the advice of competent counsel in pursuing their claims and their causes have been well grounded in fact and law.

The defendants now contend that they are entitled to attorney fees against either plaintiffs or their attorney under both Rule 11 and N.C.G.S. § 6-21.5.

_____

The issues presented are (I) whether under Rule 11 the defendants (A) were entitled to attorney fees from plaintiffs' attorney, and (B) were entitled to attorney fees from plaintiffs; and (II) whether under N.C.G.S. § 6-21.5 the defendants (A) were entitled to attorney fees from plaintiffs' attorney, and (B) were entitled to attorney fees from plaintiffs.

We first address the question of whether the trial court was deprived of jurisdiction to determine the appropriateness of attorney fees under Rule 11 or N.C.G.S. § 6-21.5 because the plaintiffs filed a voluntary dismissal with prejudice pursuant to Rule 41(a)(1). The trial court concluded that it was not deprived of such jurisdiction and we agree.

As a general rule, "where plaintiff takes a voluntary dismissal pursuant to G.S. 1A-1, Rule 41(a)(1), no suit is pending thereafter on which the court could make a final order." Ward v. Taylor, 68 N.C.App. 74, 78, 314 S.E.2d 814, 818, disc. rev. denied, 311 N.C. 769, 321 S.E.2d 157 (1984). However, the trial court retains authority to apportion and tax court costs. Id. 68 N.C.App. at 79, 314 S.E.2d at 819. Attorney fees under Rule 11 and N.C.G.S. § 6-21.5 are not taxed as part of the costs of court. See Rule 11; N.C.G.S. § 6-21.5; compare N.C.G.S. § 6-21.1 (1986) (attorney fees included as part of costs) and N.C.G.S. § 75-16.1 (1988) (attorney fees taxed as part of court costs). Nonetheless, attorney fee requests under Rule 11 and N.C.G.S. § 6-21.5 raise collateral issues which often require consideration by the trial court after the action has been terminated, and a voluntary dismissal under 41(a) does not deprive the trial court of jurisdiction to determine these collateral...