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Hometown Services, Inc. v. Equitylock Solutions, Inc.

United States District Court, W.D. North Carolina, Asheville Division

October 20, 2014

HOMETOWN SERVICES, INC., Plaintiff,
v.
EQUITYLOCK SOLUTIONS, INC., Defendant.

MEMORANDUM OF DECISION AND ORDER

MARTIN REIDINGER, District Judge.

THIS MATTER is before the Court on the Defendant's Motion for Attorneys' Fees and Costs/Expenses [Doc. 26], and the Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Attorneys' Fees and Costs/Expenses [Doc. 28].

I. PROCEDURAL AND FACTUAL BACKGROUND

The Plaintiff Hometown Services, Inc. ("Plaintiff") brought this action against the Defendant Equitylock Solutions, Inc. ("Defendant") in relation to the January 10, 2012 Joint Venture Agreement ("JVA") between the parties. [Doc. 1-1 at 14-17]. The Plaintiff asserted numerous claims against the Defendant, including breach of contract, intentional misrepresentation, unfair and deceptive practices, violation of the North Carolina Trade Secrets Protection Act, conversion, and unjust enrichment. [Doc. 14]. Upon the Defendant's Motion to Dismiss [Doc. 15], this Court dismissed the action due to the Plaintiff's failure to submit the dispute to mediation before commencing suit. [Doc. 24]. The Defendant is now seeking to obtain attorney fees from the Plaintiff.

Having been fully briefed, this matter is ripe for disposition.

II. STANDARD OF REVIEW

In diversity actions, federal courts apply federal procedural law and state substantive law. See Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427 (1996). In the Fourth Circuit, state substantive law is applied to determine the award of attorneys' fees pursuant to a contractual or statutory provision. See Culbertson v. Jno. McCall Coal Co., Inc. , 495 F.2d 1403, 1405-06 (4th Cir. 1974) (denying the award of attorney fees pursuant to a West Virginia statute). North Carolina recognizes choice-of-law provisions in contracts. See Tanglewood Land Co., Inc. v. Byrd , 261 S.E.2d 655, 656 (1980). Here, the JVA contains a choice-of-law provision that it will be governed by North Carolina substantive state law. [Doc. 1-1 at 16].

North Carolina follows the general common law principle that civil litigants bear the cost of their own attorneys' fees. Therefore attorneys' fees may not be awarded without statutory authority. Stillwell Enters., Inc. v. Interstate Equip. Co. , 300 N.C. 286, 289, 266 S.E.2d 812, 814-15 (1980). The Defendant has asserted two North Carolina statutory bases it claims would support an award of attorneys' fees. These grounds are found in N.C. Gen. Stat. § 6-21.6 and, alternatively, N.C. Gen. Stat. § 6-21.5.

III. DISCUSSION

A. N.C. Gen. Stat. § 6-21.6

The Defendant invokes N.C. Gen. Stat. § 6.21.6 as one statutory authority for its request for attorney fees and costs in this case. In pertinent part, § 6.21.6 states:

(c) If a business contract governed by the laws of this State contains a reciprocal attorneys' fees provision, the court or arbitrator in any suit, action, proceeding, or arbitration involving the business contract may award reasonable attorneys' fees in accordance with the terms of the business contract. In determining reasonable attorneys' fees and expenses under this section, the court or arbitrator may consider all relevant facts and circumstances, including, but not limited to, the following:
(1) The amount in controversy and the results obtained.
(2) The reasonableness of the time and labor expended, and the billing rates ...

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