Opinion
No. COA03-231
Filed 6 January 2004 This case not for publication
Appeal by petitioner from order entered 26 September 2002 by Judge William Z. Wood, Jr., in Superior Court. Heard in the Court of Appeals 18 November 2003.
Cathryn Garner Carson for petitioner appellant. Gloria L. Woods for respondent appellee.
Forsyth County No. 02 CVS 1741.
This matter is an appeal from a trial court order remanding a State Personal Commission (SPC) award of attorney's fees to petitioner, Robert Winfrey, for costs accrued during the administrative portion of an underlying wrongful termination case. SPC initially awarded $23,715.00 in attorney's fees for the administrative portion of the case to Mr. Winfrey for his legal services. Ms. McIntyre was the prevailing party in the underlying employment action, and was awarded general attorney's fees in an 8 April 1999 order. These fees were later assigned to Mr. Winfrey in a 9 July 2001 order to ensure Mr. Winfrey's rights to them subsequent to his disbarment effective November 1999. In the underlying employment action, Ms. McIntyre was dismissed on 22 March 1995 from her position as an Income Maintenance Caseworker II in the Food Stamp Unit by respondent, Forsyth County Department of Social Services (DSS). DSS claimed Ms. McIntyre's job performance was unsatisfactory according to state and federal regulations. In a recommended decision on 24 January 1996, an Administrative Law Judge (ALJ) granted petitioner reinstatement, lost wages, lost benefits, and reasonable attorney's fees. The SPC then decided counter to the ALJ's recommended decision and issued an advisory recommendation that DSS's dismissal of petitioner was reasonable in light of the circumstances. DSS then rendered its final agency decision, fully accepting the SPC's recommended decision on 23 August 1996.
Upon judicial review, the Wake County Superior Court granted reinstatement of Ms. McIntyre, and an award of wages, benefits, and attorney's fees in an 8 April 1999 order. Our Court affirmed the decision in a 6 June 2000 unpublished opinion, and the Supreme Court denied certiorari to DSS's subsequent appeal on 20 December 2000 making our decision on the employment dispute final. McIntyre v. Forsyth Cty. DSS, 353 N.C. 266, 546 S.E.2d 106 (2000). In the subsequent 9 July 2001 order assigning Ms. McIntyre's rights to attorney's fees to Mr. Winfrey, the court acknowledged the differing laws concerning attorney's fees for the administrative portion of the case, N.C. Gen. Stat. § 126-4(11) (2001), and the judicial review portion of the case, N.C. Gen. Stat. § 6-19.1 (2001). That order stated: "This Court makes no determination atall about the merits of petitioner's asserted right to compensation under either [of the] above identified statutes."
In accordance with N.C. Gen. Stat. § 126-4(11) and SPC Rules, Mr. Winfrey, as Ms. McIntyre's assignee, submitted to SPC a request for attorney's fees and relevant documentation to recoup costs of his legal services performed during the administrative portion of the case. This request was made on 19 July 2001, and after amendment on 27 July 2001, was granted. On 5 February 2002, SPC awarded Mr. Winfrey $23,715.00 without documented findings of fact or conclusions of law. The fee amount for the judicial review portion of this case is in a separate opinion from this Court filed this date, 6 January 2004.
DSS petitioned the Forsyth County Superior Court for judicial review of the SPC award. DSS claimed that SPC had misapplied their own regulation, 25 N.C.A.C. 1B. 0438, which, as an error of law, called for de novo review. The trial court agreed, rendering an 18 September 2002 order that SPC's award was made under legal error. In this order, the court remanded the matter to SPC to reimburse Mr. Winfrey in accordance with SPC rules, mandating the award conform with the written contract with Ms. McIntyre dated 19 April 1995. After itemizing that contract, the court decided the appropriate fee was actually $7,041.00.
Mr. Winfrey, now appealing the $7,041.00 award ordered by the trial court, claims the trial court did not adhere to a standard of de novo review, but applied the whole record test. Mr. Winfrey claims that in using the whole record test, the trial court did notafford the agency deference due under that fact based test, and failed to make any findings of fact concerning an alleged modification of the fee agreement between Mr. Winfrey and Ms. McIntyre. We disagree and hold that the trial court correctly applied de novo review of SPC's application of their own regulation, and upon doing so, modified SPC's initial award in accordance with the plain meaning of that regulation.
Standard of Review
When reviewing an agency decision under N.C. Gen. Stat. § 150B-51(b), the nature of the error asserted by the party seeking review dictates the appropriate scope of review. When the party contends the agency's decision was affected by a legal error, de novo review is required; when the party contends the decision was not supported by the evidence or was arbitrary or capricious, the whole record test is used. Dillingham v. N.C. Dep't of Human Res., 132 N.C. App. 704, 708, 513 S.E.2d 823, 826 (1999). Our review of the trial court's consideration of the final agency decision is to determine whether the trial court failed to properly apply the standard of review articulated. Review is further limited to exceptions and assignments of error set forth to the order of the superior court. Walker v. N.C. Dep't of Human Resources, 100 N.C. App. 498, 502, 397 S.E.2d 350, 353 (1990), disc. review denied, 328 N.C. 98, 402 S.E.2d 430 (1991). However, an appellate court's obligation to review a trial court order for errors of law can be accomplished by addressing the dispositive issues before the agency and the superior court without examining the scope of reviewutilized by the superior court. Capital Outdoor, Inc. v. Guilford County Bd. of Adjust., 146 N.C. App. 388, 392-93, 552 S.E.2d 265, 268 (2001), rev'd per curium for reasons in dissent, 355 N.C. 269, 559 S.E.2d 547 (2002).
In this matter, DSS properly petitioned the trial court for judicial review of the SPC award under N.C. Gen. Stat. §§ 126 and 150B, and specifically alleged SPC failed to make findings of fact and conclusions of law pursuant to 25 N.C.A.C. 1B. 0414, 1B. 0437, and 1B. 0438. In reviewing the trial court's order, the trial court's standard of review was clearly a de novo application of the plain meaning of the governing SPC regulations. While the trial court did make findings of fact, it did so only as called for by application of the governing SPC regulation.
Governing SPC Regulation
The SPC is obligated to follow its own established regulations. N.C. Gen. Stat. § 126-4(11). The governing regulation in this instance for specifying attorney's fees owed is 25 N.C.A.C. 1B. 0438. As the governing regulation was temporarily amended in May 2001, we first determine whether that or the prior regulation is controlling.
In its preliminary findings, the trial court order states:
8. On February 5, 2002, the State Personnel Commission (hereinafter Commission) issued a Decision and Order awarding $23,715 in attorney's fees ("AF") for 158.1 hours at a rate of $150 per hour to former attorney Winfrey under N.C. Gen. Stat. § 126-4(11), 25 N.C.A.C. 1B. 0438 as amended May 200[1] and 25 N.C.A.C. 1B. 0414.
(emphasis added). It is evident from the language of the trial court order, and the fact that the trial court found no error as to SPC's use of 25 N.C.A.C. 1B. 0438 as temporarily amended May 2001 for its determination of legal fees, that the amended version was in fact used. While Mr. Winfrey assigned error to the use of the amended regulation, this assignment was waived in his brief. Therefore, we review the trial court's order for errors of law under the temporarily amended regulation.
As amended, 25 N.C.A.C. 1B. 0438 reads:
The Commission shall award the reimbursement of legal fees and costs as follows:
(1) Attorney fees incurred in connection with the contested case proceeding before the Commission and with any successful appeal of a Commission decision in the General Courts of Justice at a reasonable rate based on the prevailing market rate but at a rate no higher than the fee agreement between the parties;
* * * *
Fees shall not be awarded unless requested by an attorney or the Petitioner and documented by . . . a copy of the fee agreement between the parties and any relevant receipts or other documentation of prior payment.
25 N.C.A.C. 1B. 0438. Authority N.C. Gen. Stat. § 126-4(11); effective 1 March 1996; temporary Amendment effective 11 May 2001; amended effective 1 August 2002.
When the language of a regulation is clear and unambiguous, there is no room for judicial construction, and courts must give the regulations their plain meaning. Britt v. N.C. Sheriffs' Educ. Training Stds. Comm'n, 348 N.C. 573, 576, 501 S.E.2d 75, 77 (1998); see also Correll v. Division of Social Services, 332 N.C. 141, 144, 418 S.E.2d 232, 235 (1992) (pertaining to the plain meaning of a statute). We hold the language of the relevant regulation, in its amended form, is clear and unambiguous.
The plain meaning of the regulation requires SPC to award "reasonable" attorney's fees, but at no such time will "reasonable" be deemed higher than that set out in a fee agreement between the parties. Furthermore, there must be a copy of the fee agreement and any other relevant "documentation" which might affect the fee award. It is clear from this regulation that any modification of a fee agreement would be required to be shown through such evidencing documentation.
De Novo Application of the Governing Regulation
In its de novo review of the SPC award of attorney's fees, the trial court started with the plain meaning of the governing SPC regulation. In so doing, the court looked to the documentation mandated by the SPC regulation evidencing any fee agreement between Mr. Winfrey and Ms. McIntyre. The court found as fact the following:
4. The contract executed between Petitioner and Winfrey stated that:
Attorney's normal hourly rate is $125 per hour. After four hours have been billed at this hourly rate, Attorney agrees to REDUCE[D] his billed LEGAL FEE to Client to $10.00 per hour. In exchange [for] this billed legal fee reduction, Client agrees to pay Attorney: ONE-THIRD OF ANY RECOVERY OBTAINED IN THIS MATTER. Thescope of the recovery for which Attorney is to receive one-third also includes any compensation paid for Client not returning to work. Further, Attorney agrees that any court awarded legal fee, shall be used to re-imburse Client for funds Client actually paid pursuant to this agreement.
The trial court than looked for documentation, as required by SPC regulations, that may have evidenced modification of this initial agreement. In the following finding of fact it stated:
6. Winfrey presented no evidence to support an attorney's fee award at rate increase above Petitioner's April 19, 1995 obligation.
Therefore, the trial court made the following conclusions of law:
5. The Court remands this matter to the Commission with directions to issue to Petitioner, through and by her assignee, former attorney Robert Winfrey, an Order reimbursing Petitioner according to the April 19, 1995 contract itemized as follows: a) $500 for the first four hours attorney time; b) $1,541 for the additional 154.1 hours attorney time, and c) $5,000 for one-third Petitioner's recovery.
6. The Court awards Petitioner, through and by her assignee, Winfrey a sum of $7,041.
This conclusion of law sets forth the trial court's accurate application of the 2001 amended version of 25 N.C.A.C. 1B. 0438, as it awarded the administrative attorney's fees at a rate no higher than the fee agreement which was put in evidence. By adhering strictly to the only fee agreement in evidence, the court was following the plain meaning of the regulation. Upon our de novo review of the trial court's application of the amended SPC regulation to the facts of this case, we find no error. In an affidavit, Mr. Winfrey claims that the fee agreement was modified as to the following: (1) he would charge $150.00 per hour worked and Ms. McIntyre would be released from the contingency component of their contract; and (2) Mr. Winfrey would be paid a lump sum of $3,862.50 to compensate him for $25.00 multiplied by his hours worked, as compensation for the difference between the modified hourly charge and fees capped at $125.00 (pursuant to the unamended version of 25 N.C.A.C. 1B. 0438). His evidence for these modifications are his own affidavit, and a prior court order's finding of fact. The court order assigning Mr. Winfrey Ms. McIntyre's rights to attorney's fees, states:
4. That after the decision from the North Carolina Supreme Court that denied Respondent's Writ of Certiorari on December 20, 2000, petitioner and movant modified their written contract. One aspect of that change was petitioner agreed to pay directly from her recovery for lost wages and benefits the sum of $3,862.50 in exchange for being released from paying a potentially larger sum that was authorized by the contingency fee component of their contract and as payment for litigation costs advanced by the movant.
Proof of an oral agreement that modifies a written contract should be by clear and convincing evidence. Lambe-Young, Inc. v. Cook, 70 N.C. App. 588, 591, 320 S.E.2d 699, 702 (1984), disc. review denied, 313 N.C. 330, 327 S.E.2d 891 (1985); Tile and Marble Co. v. Construction Co., 16 N.C. App. 740, 742, 193 S.E.2d 338, 340 (1972). We conclude Mr. Winfrey's affidavit, and the lower court's finding of fact of some contract modification, does not meet the clear and convincing standard of evidence that the original feeagreement had been modified. Specifically, the only evidence put forth showing Mr. Winfrey's fee had been changed to $150.00 is his own affidavit. There is no evidence as to the basis of the prior court's order finding the fee agreement modification. Regardless, even assuming some modification, the court order mentions no modification to the fee agreement to an hourly fee of $150.00. Finally, there was no evidence put forth as to Ms. McIntyre's agreement to any modification.
SPC rules do not mandate an award of attorney's fees, but state that SPC "may" award fees in certain situations. See 25 N.C.A.C. 1B. 0414. While Ms. McIntyre's case fits within the list of enumerated situations, the requirements of 25 N.C.A.C. 1B. 0438 must be followed in pursuing the award. The plain language of 25 N.C.A.C. 1B. 0438, in both the prior and the recently amended form, requires that the fee agreement and accompanying relevant documentation be submitted to the SPC. Logic demands this would include any modification to that fee agreement. Furthermore, the SPC made no findings of a modification of the fee agreement, either of fact or law when awarding $23,715.00 (or $150.00 × 158.1 hours). Upon its de novo review, the trial court properly applied the amended version 25 N.C.A.C. 1B. 0438, the governing regulation in this case. In doing so, as a matter of law, it ordered reimbursement of attorney's fees to Mr. Winfrey pursuant to his fee agreement with Ms. McIntyre at the legal amount of $7,041.00. Upon close review of the court's order, the governing regulation, the briefs, and all materials in the record, we hereby affirm. Affirmed.
Judges WYNN and TIMMONS-GOODSON concur.
Report per Rule 30(e).