United States District Court, W.D. North Carolina, Charlotte Division
MB REALTY GROUP, INC. and MATT BECKHAM, Plaintiffs,
THE GASTON COUNTY BOARD OF EDUCATION, GASTON COUNTY, CARSTAPHEN FAMILY FOUNDATION, THE STOWE FOUNDATION, INC., CATHERINE ROBERTS, and TRACY PHILBECK, Defendants.
D. Whitney, Chief United States District Judge
MATTER is before the Court on Defendants Carstarphen Family
Foundation and the Stowe Foundation, Inc.'s (the
“Foundations”) Motion for an Award of
Attorneys' Fees and Costs. (Doc. No. 147). Plaintiffs
have responded. (Doc. No. 149). The Foundations have not
replied and the time for filing a reply has expired. This
motion is now ripe for review. For the reasons stated below,
the Foundations' Motion is DENIED.
litigation stems from Plaintiffs' contention that MB
Realty Group, Inc. (“MBRG”) was “cut . . .
out” of a deal wherein Plaintiffs planned to purchase a
78-acre parcel from the Foundations and then subsequently
sell the same parcel of land to Defendant Gaston County Board
of Education (the “GCBOE”), resulting in an
alleged $400, 000 profit for Plaintiffs. (Doc. No. 32, pp.
4-8). After Plaintiffs failed to close on the property by the
extended closing date of May 16, 2017, provided by the
Foundations, the GCBOE eventually purchased the parcel
directly from the Foundations. Id.
sued the Foundations for breach of the implied covenant of
good faith and fair dealing, unjust enrichment, quantum
meruit, and violation of the North Carolina Unfair and
Deceptive Trade Practices Act (“UDTPA”). (Doc.
No. 32). The Foundations filed a Motion to Dismiss the
Amended Complaint, (Doc. No. 48), which this Court denied,
(Doc. No. 77). Following discovery, the Foundations filed a
Motion for Summary Judgment. (Doc. No. 99). At the conclusion
of oral arguments on April 10, 2019, the Court entered an
Oral Order in open court denying the Foundations' motion
as to the breach of good faith and fair dealing and unjust
enrichment/quantum meruit claims, and the Court
granted summary judgment as to the punitive damages and UDTPA
claims. See Text-Only Minute Entry, Apr. 10, 2019.
On May 14, 2019, the Court issued a written order
memorializing its Oral Order. (Doc. No. 145).
STANDARD OF REVIEW
Foundations assert three bases for an award of attorneys'
fees. (Doc. No. 148, p. 1).
1D-45 provides that the court “shall award”
attorney fees “resulting from the defense against [a]
punitive damages claim, against a claimant who files a claim
for punitive damages that the claimant knows or should have
known to be frivolous or malicious.” N.C. Gen. Stat.
Under N.C. Gen. Stat. § 1D-45, a claim for punitive
damages is “frivolous” where its proponent can
present no rational argument based upon the evidence or law
in support of it. Furthermore, a claim is
“malicious” where it is wrongful and done
intentionally without just cause or excuse or as a result of
Philips v. Pitt Cnty. Mem'l. Hosp., Inc., 775
S.E.2d 882, 884 ( N.C. Ct. App. 2015) (citations and
quotation marks omitted).
confronted with a motion for attorneys' fees premised
upon section 6-21.5, a court “may award a
reasonable attorney's fee to the prevailing party if the
court finds that there was a complete absence of a
justiciable issue of either law or fact raised by the losing
party in any pleading.” N.C. Gen. Stat. § 6-21.5
(2017) (emphasis added). The purpose behind section 6-21.5 is
to discourage frivolous legal action. McLennan v.
Josey, 785 S.E.2d 144, 148 ( N.C. Ct. App. 2016).
However, because the statute detracts from the common law, it
must be strictly construed. Persis Nova Constr. v.
Edwards, 671 S.E.2d 23, 30 ( N.C. Ct. App. 2009)
North Carolina's Unfair and Deceptive Trade Practices
Act, N.C. Gen. Stat. § 75-1.1 et seq., permits
a court, in its discretion, to allow a reasonable
attorney's fee when a “party instituting [a §
75-1.1] action knew, or should have known, the action was
frivolous and malicious.” N.C. Gen. Stat. §
75-16.1(2). In order to prevail on a motion for
attorneys' fees under section 75-16.1, the defendant must
(1) be the “prevailing party[, ]” and (2) prove
that the plaintiff “knew, or should have known the
[§ 75-1.1] action was frivolous and malicious.”
Lincoln v. Bueche, 601 S.E.2d 237, 244 ( N.C. Ct.
App. 2004). Even where the facts of a particular case will
support a finding that the requirements of section 75-16.1
have been met and an award of attorney's fees may be
warranted, the court retains the discretion to deny the
award. Llera v. Sec. Credit Sys., Inc., 93 F.Supp.2d
674, 681 (W.D. N.C. 2000) (citing cases). It is within this
framework that the Court will now consider the merits of the
Plaintiffs' overarching theory was that the Foundations
violated the UDTPA and breached the implied covenant of good
faith and fair dealing, or unjust enrichment/quantum
meruit in the alternative, by engaging in what
Plaintiffs alleged was a conspiracy to get MBRG and Beckham
out of the way so the Foundations could close on a deal with
the GCBOE. Plaintiffs cited to evidence including: (1)
language in emails between members of the Foundations, (2)
deposition testimony about the importance of the MBRG sale to
the GCBOE in order for MBRG to close with the Foundations,
and (3) Bill Carstarphen's comments to the Gaston
Gazette. See (Doc. No. 149, pp. 3-4). At all times
in the instant action, Plaintiffs cited to evidence they
believed supported a rational argument for punitive damages.
While this Court, at summary judgment, found that Plaintiffs
produced sufficient evidence for their contractual claims,
not their exemplary damages claim, the Court's finding
does not require the conclusion that Plaintiffs'
punitive damages claim was “frivolous” or
“malicious” or that there was a
“complete absence” of a justiciable
issue of either law or fact to warrant an award of
attorney's fees.See N.C. Gen. Stat. § 6-21.5
(2015) (The granting or ...