By Attorney Edward Jesson
One of the questions we frequently get asked when we are advising clients about their options when contemplating entering into a lawsuit is: Can I make the other side pay for my attorney’s fee? The answer to this question is very fact dependent, but the general answer is “no”.
It is a common misconception that you are able to claim the money you pay your attorney to pursue a case in court as damages on top of the damages that you have actually suffered. While in many other countries it is commonplace to have a “loser pays” system, wherein the loser of the lawsuit is responsible for paying the other side’s legal fees, that is not the case in the United States. In fact, the general principal that each opposing party must pay their own legal fees regardless of who wins the lawsuit is known as the “American Rule.” For example, if you sue someone for $100,000.00 it costs you $20,000.00 in legal fees to win that lawsuit—at the end of the day under the American Rule, you are only entitled to $100,000.00, not $120,000.00. So in reality, after paying your attorney that $20,000.00, you are only netting $80,000.00.
However, the American Rule is just a general rule and, under North Carolina law, there are certainly exceptions to that rule. Generally speaking, in order for there to be an exception to the American Rule in North Carolina, there has to be a statute authorizing the award of attorney’s fees to the winning party in the lawsuit (usually referred to as the prevailing party in North Carolina’s General Statutes). For example, the winning party in a lawsuit brought under North Carolina’s Unfair and Deceptive Trade Practices Act, or North Carolina’s Wage and Hour Act, will generally be entitled to an award of reasonable attorney’s fees.
Another instance where questions regarding an award of attorney’s fees frequently arises is when there is a contractual provision stating that one party or the other is entitled to attorney’s fees should a lawsuit be brought based on a breach of the contract. In order for an attorney’s fee provision in a contract to be enforceable: (1) the contract must be a “business contract”, i.e. a contract entered into primary for business or commercial purposes and not a consumer nor employment contract; and, (2) the attorney’s fee provision must be reciprocal, meaning no matter who loses, the loser pays.
There are many other statutes in North Carolina that allow for the award of attorney’s fees. If you are considering litigation, the potential for an award (or lack thereof) of attorney’s fees can often be an important consideration. The attorneys at Jesson & Rains can help you evaluate your options in order to make the most informed decision possible.
By Attorney Edward Jesson
To the chagrin of many North Carolinians who believe they have been wronged, with very few exceptions, you need to have been actually “damaged” successfully bring a lawsuit against another party. While there are several types of damages available to litigants in North Carolina, in most cases, a plaintiff in a lawsuit will be seeking monetary damages.
Monetary damages are, for the most part, meant to be compensatory in nature. The money damages that you may eventually be awarded are meant to compensate you, or “make you whole,” for the loss you have suffered. For example, what if you find a dead mouse in your McDonald’s sandwich? While shocking, unless you ate it and suffered illness or medical expenses, you would not be awarded much in court other than the cost of the sandwich – and who wants to pay a lawyer for that?
Take an example where you believe that someone has made a slanderous or defamatory statement against you. Even if you could prove that the person made the statement and that it was false, that might not be enough to win your lawsuit. You would then need to prove that because of the defendant making that defamatory statement you were in some way monetarily damaged. It is very difficult to get non-economic damages, like emotional distress, in North Carolina.
A plaintiff can be awarded what are known as nominal damages in North Carolina. These are damages that acknowledge that a defendant violated the law (for example, making a defamatory statement) but also acknowledge that no actual loss was suffered by the plaintiff in that situation. An example of nominal damages could be awarding a plaintiff $1.00 when the defendant made a defamatory statement. Yes, a defamatory statement was made, but the plaintiff did not suffer any real harm from that statement being made. And again, who wants to pay a lawyer for that?
There are many other categories of damages that can be claimed in North Carolina, which are very dependent on the specific circumstances of the case. It is important, when discussing a lawsuit with an attorney, to discuss the damages portion up front to ensure that you have a reasonable expectation of what you may stand to gain (or lose) if the lawsuit does end up in front of a jury. It is not always enough that the potential defendant has violated the law if you cannot prove damages. The attorneys at Jesson & Rains can help guide you through what your options are if you feel that you may have a claim against another in a lawsuit.
By Attorney Edward Jesson
A Sheriff’s deputy has just showed up at your door and handed you a summons. Or you received a summons via FedEx or Certified Mail. Do you need to hire a lawyer to move forward with things? This is highly dependent on a lot of things, but often most importantly, whether the Defendant that has been sued is an individual or a business entity.
In North Carolina, an individual has the right to represent his or herself. So, if you have been sued in your individual capacity you have the right to represent yourself in court. This is known as proceeding pro se. Sometimes we even recommend our clients proceed pro se. For example, if an individual has been sued in small claims court for a small amount of money, often times the legal fees that might be incurred in defending that small claims action would exceed the damages that were being claimed. Moreover, small claims court is fairly well designed for those who wish to proceed pro se with a lot of the formalities that are present in District and Superior Court being relaxed.
However, if the summons is for District or Superior Court, while an individual is still permitted to represent themselves in those proceedings, generally we would advise against that. In District and Superior Court the North Carolina Rules of Civil Procedure, the North Carolina Rules of Evidence, and applicable Local Rules, and various other rules and regulations apply. The majority of the time we find that individuals proceeding pro se end up getting tripped up by these rules—often with serious long lasting financial consequences.
However, things are much different if the Defendant being sued is a business entity such as a corporation or a limited liability company. In North Carolina a business entity cannot represent itself nor can a member or owner of the business represent the business in court unless that individual is an attorney licensed to practice law in North Carolina (or has been admitted to practice in North Carolina on another basis).
If a business owner (that is not permitted to practice law in North Carolina) files a response on behalf of the business that they own, they are engaging in the unlicensed practice of law which is a Class 1 Misdemeanor in North Carolina. Any documents filed by an unlicensed attorney could be stricken by the Court which could result in a judgment being entered against the Defendant, even though the Defendant may have thought that they properly responded. Repeated violations of the law could result in financial sanctions being awarded by the Court or injunctions being sought by the local district attorney.
Generally speaking, if you receive a summons, regardless of what it is, it is in your best interest to at least consult with an attorney to see what your options are. Depending on the situation, it may be advisable to move forward and represent yourself. However, in a lot of circumstances the litigation can be a mine field for those who are not used to appearing in court on a regular basis.
If you receive a summons, or have any other questions about the litigation process, the attorneys at Jesson & Rains are ready to help.
By Attorney Edward Jesson
Last December, Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020—better referred to as the CASE Act. The CASE Act instructed the U.S. Copyright Office to create the Copyright Claims Board (“CCB”) as an efficient and user-friendly option to resolve copyright disputes where the amount disputed is less than $30,000.00.
Generally speaking, before the CASE Act, a copyright holder would have had to file a lawsuit in federal district court in order to enforce his or her copyright. The problem with this is that federal litigation is both expensive and time consuming. Many professional content creators and small businesses simply could not afford to enforce their rights under copyright law. Moreover, the people who were infringing on those rights knew that in all likelihood nothing would be done as a result of their copyright infringement.
The CCB will be permitted to hear three different types of claims: (1) Creators bringing infringement claims against people infringing on their copyrights; (2) Users can request that the CCB issue a statement ruling that their use of something does not infringe on the copyright owner’s rights; and (3) Users who receive a Digital Millennium Copyright Act (“DCMA”) takedown notice (similar to a cease and desist) are able to challenge that notice if they feel it is inaccurate.
It is important to note that, if the copyright holder prefers, they can still bring the claim in federal district court (assuming all other jurisdictional factors are satisfied) or move forwards with mediation and arbitration. Also, the Respondent can “opt-out” of the CCB proceeding, requiring the copyright holder to move forward with a federal lawsuit. However, there are several incentives for those named as respondents in CCB proceedings to opt-in to the proceeding. For example, on top of the cost of litigation in federal court, a successful plaintiff in a federal proceeding can be awarded up to $150,000.00 per work infringed whereas, in the CCB setting, that amount is limited to $15,000.00 per work infringed. The CASE Act also caps the damages that can be awarded by the CCB at $30,000.00 whereas, in federal court, those damages are unlimited.
Once the CCB is fully established (as of writing, it is currently still in the rule making stage), it will provide small businesses and individual creators a cost and time effective way of enforcing their copyrights under federal law. If you believe that your copyright has been infringed or that you have been wrongly accused of infringing on a copyright, please call the attorneys at Jesson & Rains for a consultation on the matter today.
In North Carolina, a Plaintiff (the party filing a lawsuit) can seek an “Order of Attachment” in certain circumstances. Generally, this means that any property in North Carolina that the Defendant owns, including bank accounts, can be seized by the County Sheriff to satisfy any eventual judgment pending the outcome of the lawsuit. This can be problematic for several reasons: first of all, the Plaintiff may lose the case and not be awarded any damages and the property was seized unnecessarily! Also, at the beginning of a lawsuit, the number that a Plaintiff claims he or she has been damaged may not be a realistic number and is based purely on their opinion of the case. Having large sums of money seized during the pendency of a case (which could take years to settle) could cause a business to go bankrupt.
Thankfully, an attachment order will only be issued in a few circumstances. The Defendant must be:
The Plaintiff must pay a bond to the Court which must be high enough to compensate the Defendant if the Defendant prevails in the lawsuit or is damaged by an improper attachment. Obviously that bond will greatly vary and is somewhat up to the discretion of the judge who is hearing the attachment order.
Fortunately, if you have received an attachment order, you do have options to dissolve or modify the order. To dissolve the order, you must show that something was done improperly in obtaining the order (for example, that you do not fall into one of the categories of people who can have their property attached). If you are unable to make that showing, you can try to have the attachment order modified—either the amount of the attachment, the bond, the terms, or both.
Attachment orders are just one more way that lawsuits can cause problems to the people involved. If you, or someone you know, receives a summons, attachment order, or notice of garnishment, the attorneys at Jesson & Rains, PLLC are ready to assist.
By Attorney Edward Jesson
In most counties in North Carolina (if not all), every case filed in District or Superior Court there will require some form of mandatory alternative dispute resolution (“ADR”). Generally speaking, if a case is filed in District Court the alternative dispute resolution method will be arbitration. If a case is filed in Superior Court, the alternative dispute resolution method will be mediation. Further, many contracts contain provisions that provide if a dispute arises the aggrieved party must submit their claim to arbitration instead of or before filing a lawsuit.
A third-party neutral person (the mediator) is selected by the parties involved in the dispute, or, if the parties cannot reach an agreement, appointed by the Court. Generally, the mediator will be a local attorney selected by the parties for his or her expertise in the law that is in dispute. While participation in court ordered mediation is mandatory, the nature of mediation means that the mediator cannot force the parties to resolve their dispute, the mediator can only make his or her best effort to get the parties to compromise. Most of the time, the parties will each have the opportunity to give an opening statement and discuss the case together in the same room. Then the parties will move into separate rooms and the mediator will go room to room, discussing the strengths and weaknesses of each party’s case trying to broker a deal to settle the dispute. If the parties come to an agreement, that agreement is reduced to writing and will typically be enforceable by the court. However, if the parties cannot come to an agreement, the mediator cannot force the parties to settle. The mediator is only there to facilitate a negotiation as opposed to being there to decide the case.
In contrast, the arbitrator is there to decide the case. The arbitrator will decide which party is entitled to relief and what that relief is based on the claims presented. The arbitrator, in effect, gets to act like a privately hired judge and jury in deciding points of law and factual issues based on witness testimony. In North Carolina District Court, the parties are ordered to an early arbitration which is limited in time to one hour. At the end of that hour, the arbitrator (who is appointed by the court from a panel) decides who “wins” the case. It is important to note that in mandatory district court arbitration, if one party disagrees with the decision (which almost always happens), that party can appeal the arbitrator’s decision, and the parties will simply continue with the litigation process.
That is in stark contrast to voluntary arbitration: In voluntary arbitration, the arbitrator (again, selected by the parties for his or her expertise in law being contested) is permitted to make a final decision, and, absent a very limited set of exceptions, the arbitrator’s decision is final and can generally be enforced by the court if need be. Often, contractual arbitration is governed by the American Arbitration Association (“AAA”). AAA has a certain set of rules and requires the parties to select arbitrators from certain “panels.” While one advantage of arbitration is often said to be that it is more cost effective than litigation, that is not always the case, especially if you get involved with three arbitrator panels from the AAA or for particularly complex cases.
Like most things involving disputes and dispute resolution, there is no “one size fits all” approach. If you, your business, or someone you know, is involved in a legal dispute, it is best to seek counsel of an attorney that has experience dealing with that specific type of dispute. As always, the attorneys at Jesson & Rains, PLLC are ready and willing to help!
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