“Can I recover my attorney’s fees?” is a question we often receive at the outset of litigation. The general rule in North Carolina is that each party is responsible for its own attorney’s fees, unless the contract or a statute provides otherwise. This blog focuses specifically on parties’ rights to recover attorney’s fees pursuant to North Carolina Lien Law.

In the context of N.C. Gen. Stat. § 44A-35 the threshold question a Court must answer when deciding to award attorney’s fees is whether the party seeking fees was the prevailing party, as defined by statute. A prevailing party under N.C. Gen. Stat. § 44A-35, “is a party plaintiff or third party plaintiff who obtains a judgment of at least fifty percent (50%) of the monetary amount sought in a claim or is a party defendant or third party defendant against whom a claim is asserted which results in a judgment of less than fifty percent (50%) of the amount sought in the claim defended.”

What is important to note about the statute is that a defendant might be declared the prevailing party by the Court, even if they are ordered to pay the plaintiff some amount of their claimed lien amount. Consider this example. Contractor asserts a lien for $100,000.00 against Defendant. Defendant is ordered to pay Contractor $48,000.00 by the Court. Even though the Plaintiff “won” the lawsuit seeking to enforce the lien, when it comes time to determine whether an award of attorney’s fees is appropriate, the Defendant is the prevailing party under N.C. Gen. Stat. § 44A-35. This is because the Court’s finding as to what Defendant owes is less than 50% of the claimed lien amount (50% of the claimed lien amount in this example is $50,000.00).

Once a court has completed its initial inquiry as to who the prevailing party is under the statute, that is not the end of the analysis. The Court then looks at the conduct of each party to determine if, “there was an unreasonable refusal by the losing party to fully resolve the matter which constituted the basis of the suit or the basis of the defense.” This is a fact specific inquiry that is different in every case. However, it is wise for parties engaged in settlement negotiations in lien disputes to be sure that none of their actions can be construed as an unreasonable refusal to resolve the matter whether as a plaintiff or defendant.

Continuing with the example above, if the Plaintiff had at all relevant times maintained they were owed the full $100,000.00 claimed in their lien; however evidence of delays, incomplete, or defective work was clear, a Court might well conclude that Plaintiff paying the Defendant’s fees would be appropriate under N.C. Gen. Stat. § 44A-35. This is particularly true, if the Defendant offered $48,000.00 or more prior to trial. If, on the other hand, Defendant had maintained Plaintiff was owed $0.00 throughout the dispute, it is unlikely that Defendant’s motion for fees would be successful. As you can see, there is considerable discretion as to whether a Court should award fees to a prevailing party.

It is important that you have an attorney experienced in lien enforcement actions so that you do not fall into the trap of “winning” a lien enforcement action, while simultaneously owing the other party considerable attorney’s fees. At Vann Attorneys we have represented plaintiffs and defendants in lien enforcement actions and have a vast array of experience to make sure that our clients are in the best possible position to attain a favorable result, and hopefully, also recover their attorney’s fees. Whether you are a contractor in need of assistance with filing and perfecting a lien, or whether a contractor has asserted a lien against you, we would be delighted to speak with you regarding the best ways you can position yourself for success. Please contact us if you would like more information.