Davis v. Taylor

• Decision Date: 03 June 1986
• Docket Number: No. 8515DC769,8515DC769
• Citation: 344 S.E.2d 19,81 N.C.App. 42
• Court: North Carolina Court of Appeals
• Parties: Kathy Louise DAVIS v. Lawrence Julius TAYLOR.

Page 19

344 S.E.2d 19

81 N.C.App. 42

Kathy Louise DAVIS v. Lawrence Julius TAYLOR.

No. 8515DC769.

Court of Appeals of North Carolina.

June 3, 1986.

Coleman, Bernholz, Dickerson, Bernholz, Gledhill & Hargrave by G. Nicholas Herman, Douglas Hargrave, and Steven A. Bernholz, Hillsborough, for plaintiff-appellee.

Glover & Petersen, P.A. by James R. Glover, Long & Long, by Lunsford Long, and Midgette, Higgins, Frankstone & Graves by Thomas D. Higgins III, Chapel Hill, for defendant-appellant.

BECTON, Judge.

This appeal arose from two orders awarding attorneys' fees and court costs totaling $45,070.24 against Lawrence Julius Taylor, the defendant in a paternity and child support action.

I

On 28 March 1980, Kathy Louise Davis gave birth to Whitney Taylor Davis. At that time, Kathy Davis and Lawrence Taylor were students at the University of North Carolina. After the birth of Whitney, Davis and Taylor discussed whether Taylor would pay to support Whitney. Davis was receiving public assistance through the Orange County Department of Social Services, and she was represented by attorney Bruce Elmore of Asheville. After the attorneys began negotiations, Taylor began playing football for the New York Giants. Although attorney Elmore and Taylor's attorneys reached a tentative agreement on child support, Davis was referred to attorney Geoffrey Gledhill by an Orange County Child Support Enforcement officer. Gledhill, a partner in the firm Coleman, Bernholz, Dickerson, Bernholz, Gledhill & Hargrave, had a contract with Orange County to act as attorney for the Child Support Enforcement Program in proceedings under N.C.Gen.Stat. Sec. 110-135 (1985 Cum.Supp.).

Davis and attorney Gledhill met on 5 February 1982. On 10 February 1982, Davis signed a contingent-fee contract to have Gledhill's firm privately represent her in establishing paternity and obtaining child support for Whitney. The contract provided that the firm would receive one third of any award that was to be paid less frequently than monthly and that, in addition, the firm would retain all attorneys' fees awarded to Davis by agreement or by court order.

On 7 April 1982, Davis filed a paternity action against Taylor seeking child support, payment of public assistance funds received by Davis, and attorneys' fees. Taylor answered on 3 May 1982 denying paternity. On 5 May 1983, after approximately one year of extensive discovery, Taylor admitted paternity in an amended response to Davis' request for admissions. Partial summary judgment on this issue was entered orally on 16 May 1983.

Davis filed a motion on 23 June 1983 for temporary child support and attorneys' fees pending trial, and requested a pre-trial conference in aid of discovery. She also served additional discovery requests on Taylor. A hearing was held on 5 July 1983 before the trial court. Based on evidence presented at that hearing, Judge Paschal signed an order on 3 October 1983 ordering Taylor to pay attorneys' fees in the amount of $18,500 for services rendered to Davis from 10 February 1982 through 4 July 1983. Taylor's interlocutory appeal from this order was dismissed by this Court in Case No. 8415DC101, filed 18 September 1984. Taylor's petition for certiorari to this Court was denied on 24 September 1984.

Some time after September 1984, Davis' contingent-fee contract with her attorneys was changed to a non-contingent-fee contract in response to this Court's decision in Thompson v. Thompson, 70 N.C.App. 147, 319 S.E.2d 315 (1984), rev'd on other grounds, 313 N.C. 313, 328 S.E.2d 288 (1985).

On 18 and 19 February 1985, the trial court held a trial without a jury to settle the issues of child custody and child support. On 20 February 1985, the court heard evidence on Davis' claim for attorneys' fees for the period 5 July 1983 through 19 February 1985. In an order orally rendered on 20 February 1985 and signed 3 April 1985, Judge Hunt ordered Taylor to pay $24,565 in attorneys' fees and $2005.24 for court costs advanced to Davis by her counsel.

Taylor appeals from the two orders awarding attorneys' fees and expenses totaling $45,070.24 to Davis' counsel. With regard to the 3 October 1983 order, Taylor argues that the award is not supported by the findings of fact. He contends that the amount awarded was nearly double the amount the court found to be reasonable; that it includes fees for services related to custody and support without a finding that Davis was acting in good faith; and that the court's conclusions of law were not supported by detailed findings or by the evidence. With regard to the order signed 3 April 1985 covering the period after 4 July 1983, Taylor argues that the award improperly includes fees for services rendered by an associate who had left the firm before 5 July 1983; that it includes time mistakenly attributed to certain attorneys through arithmetic error; and that the court erred in concluding, without a detailed accounting, that 668 hours allegedly spent by Davis' counsel on this case were reasonable and necessary. Lastly, Taylor argues that no fees should have been awarded for services rendered pursuant to the contingent-fee contract.

We hold that the contingent-fee contract was void as against public policy and that, under Thompson v. Thompson, 313 N.C. 313, 328 S.E.2d 288 (1985), plaintiff's attorneys cannot recover fees for the reasonable value of services rendered pursuant to this contract. Therefore, the 3 October 1983 order is vacated, and the 3 April 1985 order is vacated and remanded to exclude fees for the period covered by the void contract. The 3 April 1985 order is also remanded for the trial court to correct errors in accounting for the hours spent by plaintiff's attorneys and to document in accordance with this opinion the hours that were reasonable and necessary to prosecute this case after the period covered by the void contract.

II

In Thompson v. Thompson, 70 N.C.App. 147, 157, 319 S.E.2d 315, 321-22 (1984), rev'd on other grounds, 313 N.C. 313, 328 S.E.2d 288 (1985), this Court held that a contract for legal services contingent upon securing a divorce or "contingent in amount upon the amount of alimony and/or property awarded is void as against public policy." This Court considered and relied primarily upon three broad policies. First, there is a policy in this State against contracts that "encourage or bring about a destruction of the home." Id. (quoting Matthews v. Matthews, 2 N.C.App. 143, 162 S.E.2d 697 (1968) ). This policy has no bearing in the case at bar.

Second, the Thompson Court relied on the lack of need for contingent-fee contracts in divorce actions. The Court cited N.C. Gen.Stat. Secs. 50-13.6 and 50-16.4 (1984) in a footnote as examples of "a statutory mechanism whereby a wronged [person] seeking representation in a domestic action may be assured the financial means by which to employ an attorney." 70 N.C.App. at 155 n. 2, 319 S.E.2d at 321.

The third policy consideration identified in Thompson was that the public, the legal profession and the bench would suffer if contingent-fee contracts became customary in divorce cases because clients are often distraught and charges of undue influence and overreaching would become frequent. We are not persuaded that this policy is any more relevant in the case at bar than it is, for example, in wrongful death actions, involving distraught plaintiffs; contingent-fee contracts routinely are allowed in those cases. See Randolph v. Schuyler, 284 N.C. 496, 504, 201 S.E.2d 833, 837-38 (1974). See generally In re Cooper, 81 N.C.App. 27, 344 S.E.2d 27 (1986).

A

The only policy from Thompson relevant in the case at bar is that statutory legal fees are available. But there is an additional policy applicable in actions seeking child custody and support under N.C.Gen.Stat. Sec. 50-13.5 (1984).

A contingent-fee contract to pay counsel some percentage of the amount recovered for support of a child alters and disrupts the judicial formulation and structuring of the support award. The trial court is required to carefully consider myriad factors, needs and restrictions in determining the schedule of support payments necessary and reasonable under the circumstances of each case. If the party seeking support for a child has the financial means to obtain legal counsel for this purpose, the payment of the legal fee will not affect the child's stream of income which the court seeks to guarantee. For the party seeking child support who cannot afford counsel, the legislature provided for the court to award reasonable fees. The statute was intended to make it possible for an interested party to bring an action to protect the interests of the child by meeting the opposing party on fair terms. Stanback v. Stanback, 270 N.C. 497, 155 S.E.2d 221 (1967). To allow a contingent-fee contract based on a percentage of a child support award would upset the equilibrium between judicially-monitored support schedules and judicially-monitored awards of attorneys' fees for plaintiffs who could not otherwise afford adequate legal representation. By allowing the trial court to determine the amount a party must pay in support and the amount reasonable for legal expenses, children's interests are protected without disturbing the incentive for attorneys to represent plaintiffs whose only "assets" are their rights to receive child support payments.

We are mindful that not all contingent-fee contracts are destructive of public policies. In many cases, the contingent fee provides the only possible means by which poor plaintiffs may seek legal redress. The contingent-fee arrangement protects many plaintiffs against incurring debts for legal services without a corpus from which to satisfy them. And the incentive provided by tying the fee to the recovery encourages more vigorous advocacy, often of the rights of the poor and the disadvantaged. The contingent fee is a valuable alternative to the hourly fee, and the broad arguments...