The bankruptcy court allowed Y2 Yoga to file a claim for post-petition attorneys fees pursuant to N.C.G.S. § 6-21.6(f). When that amount exceed the judgment amount upon which the claim was based, VR King objected that such was prohibted as the award of reasonable attorney’s fees may not exceed the amount in controversy.
The bankruptcy court rejected this interpretation, as § 6-21.6 indicates that the amount in controversy does not equate to the judgment obtained by referencing both the “amount in controversy” and the “results obtained” as factors courts should consider in determining reasonable attorney’s fees and expenses. Further, the legislative history indicated that prior to 2015, this provision was limited by the phrase "may not exceed the monetary damages awarded" but that was removed.
The Trustee also objected that, among other reasons, the total fees were unreasonable under § 6-21.6 , but this was dismissed as the Trustee did not address the specific factors of that statute, which include:
(1) The amount in controversy and the results obtained,
(2) The reasonableness of the time and labor expended, and the billing rates charged, by the attorneys,
(3) The novelty and difficulty of the questions raised in the action,
(4) The skill required to perform properly the legal services rendered,
(5) The relative economic circumstances of the parties,
(6) Settlement offers made prior to the institution of the action,
(7) Offers of judgment pursuant to Rule 68 of the North Carolina Rules of Civil Procedure and whether judgment finally obtained was more favorable than such offers,
(8) Whether a party unjustly exercised superior economic bargaining power in the conduct of the action,
(9) The timing of settlement offers,
(10) The amounts of settlement offers as compared to the verdict,
(11) The extent to which the party seeking attorneys’ fees prevailed in the action,
(12) The amount of attorneys’ fees awarded in similar cases, and
(13) The terms of the business contract.
The bankruptcy court did, however, then evaluate reasonableness under § 506(b), looking to the twelve Johnson factors, which are as follows:
(1) the time and labor required in the case,
(2) the novelty and difficulty of the questions presented,
(3) the skill required to perform the necessary legal services,
(4) the preclusion of other employment by the lawyer due to acceptance of the case,
(5) the customary fee for similar work,
(6) the contingency of a fee,
(7) the time pressures imposed in the case,
(8) the award involved and the results obtained,
(9) the experience, reputation, and ability of the lawyer,
(10) the “undesirability” of the case,
(11) the nature and length of the professional relationship between the lawyer and the client, and
(12) the fee awards made in similar cases.
The bankruptcy court then, in the following 14 pages, reviewed all of these criteria (many of which are virtually identical) finding the attorneys' fees were reasonable.
For a copy of the opinion, please see: