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Winrow v. Discovery Ins. Co.

North Carolina Court of Appeals
Mar 4, 2008
189 N.C. App. 212 (N.C. Ct. App. 2008)

Summary

relying on several North Carolina cases in explaining that an offeree may accept an offer until it is revoked, and that such revocation must be communicated to the offeree to effectively terminate the offeree's power to accept

Summary of this case from Goldberg v. C.B. Richard Ellis, Inc.

Opinion

No. 06-1681.

Filed March 4, 2008.

Pasquotank County No. 04CVD525.

Appeal by plaintiffs from orders entered 21 June 2006 by Judge Amber Davis in Pasquotank County District Court. Heard in the Court of Appeals 30 August 2007.

Hornthal, Riley, Ellis Maland, LLP, by L.P. Hornthal, Jr., for plaintiff-appellants. Walker, Allen, Grice, Ammons Foy, L.L.P. by O. Drew Grice, Jr., for defendant-appellees.


Plaintiffs appeal from a final order denying their motion for attorney's fees pursuant to N.C. Gen. Stat. § 6-21.1, and from interlocutory orders: (1) allowing partial summary judgment, (2) denying plaintiffs' motion to set aside stipulations, and (3) denying plaintiffs' motion to reconsider the order allowing partial summary judgment and the order denying the motion to set aside stipulations. For the reasons which follow, we affirm the final order denying plaintiffs' motion for attorney's fees made pursuant to N.C. Gen. Stat. § 6-21.1, and affirm the interlocutory orders because they were on the merits and were necessary to the final order.

I. Background

On 13 January 2004, plaintiff Takia Winrow ("Winrow"), a resident of Virginia, purchased an insurance policy from defendant Discovery Insurance Company ("Discovery"), through its agent defendant Carl Lewis, d/b/a Central Insurance Agency ("Lewis"), for collision insurance coverage on her 2000 Saturn automobile. The policy identified plaintiff State Employees Credit Union ("SECU") as the lienholder and loss payee. With her application, Winrow gave Lewis a copy of her Virginia driver license. Lewis inadvertently entered " North Carolina driver license" into the records of Discovery. When Discovery sought a North Carolina driving record for defendant, it learned that the number was not a valid North Carolina driver license number. Discovery thereupon cancelled the insurance policy effective 14 February 2004. Winrow was involved in a one-car auto accident on 27 February 2004. Discovery denied coverage on the basis of the policy cancellation.

Plaintiffs filed suit on 27 July 2004, alleging breach of contract, negligence, necessity to reform the contract to reflect the intent of the parties, and unfair and deceptive trade practices. The complaint sought actual damages of $9,102.00, treble damages and attorney's fees pursuant to the Unfair and Deceptive Trade Practices Act (UDTPA), attorney's fees pursuant to N.C. Gen. Stat. § 6-21.1, interest and court costs. Lewis answered on 25 August 2004, admitting to the foregoing facts, but denying that they formed a basis for liability and pleading the affirmative defense of contributory negligence. On 16 September 2004, plaintiffs replied that Lewis' allegation of contributory negligence was barred by the last clear chance doctrine. Discovery answered on or about 20 September 2004, denying liability, pleading the affirmative defense of contributory negligence, and cross-claiming for indemnity or contribution. On 23 September 2004, plaintiffs replied that Discovery's allegation of contributory negligence was barred by the last clear chance doctrine. Lewis filed an answer to the cross-claim on 4 October 2004, denying liability for contribution or indemnity.

Plaintiffs dismissed the unfair and deceptive trade practices claim with prejudice on 3 August 2005. Plaintiffs moved for summary judgment on the breach of contract and reformation claims on 27 March 2006, and alternatively, for an order specifying the uncontroverted facts pursuant to Rule 56(d). On 11 April 2007, the trial court heard plaintiffs' summary judgment motion. After hearing from both plaintiffs' attorney ("Hornthal") and defendants' attorney ("Grice"), the trial court rendered judgment in open court allowing summary judgment on the contract and breach of contract claims, and identifying the uncontroverted facts for purposes of a future trial on plaintiffs' claim of negligence. The trial judge instructed Hornthal to draw up the summary judgment order, to which he responded, "I will prepare an order, and I will fax it to Mr. Grice and get his take on it before asking you to enter it." The trial judge and the parties then discussed scheduling a jury trial on the negligence claim.

At 9:58 am on 13 April 2007, Grice sent a letter to Hornthal by fax, which stated, in pertinent part:

My understanding of the proposal is that you will dismiss the negligence claims against Mr. Lewis, his agency, and Discovery. In return, we will not appeal the contract issues. That will leave your motion for attorney fees and costs, which either party could appeal. If that is the proposal you are making, we accept.

At 2:24 pm on 13 April 2007, R 85 Hornthal faxed a signed Stipulation Regarding Further Proceedings to Grice which stated:

IT IS STIPULATED by the parties as follows:

1. The Court is authorized to enter judgment for the plaintiffs against Discovery Insurance Company on plaintiffs' First and Third Claims for Relief in the sum of Nine Thousand One Hundred Two Dollars ($9,102.00), together with interest thereon at the rate of 8% per annum from February 27, 2004 until paid.

2. The defendants waive their right to appeal from the Order Allowing Partial Summary Judgment and Making Rule 56(d) Determinations and the Judgment Pursuant to Stipulation #1 above.

3. The plaintiffs hereby stipulate to the dismissal with prejudice by the Court of plaintiffs' Second Claim for Relief (Negligence).

4. The only matters remaining for determination by the Court are plaintiffs' motion for counsel fees, pursuant to N.C. Gen. Stat. § 6-21.1 and the awarding of costs of court.

5. Both sides reserve the right to appeal from the determination by the Court pursuant to stipulation no. 4 above.

6. The Clerk of Superior Court is authorized to file a facsimile version of this action as in case of an original.

A letter from Hornthal accompanying the signed stipulation stated, "Assuming your satisfaction, I would appreciate your signing and faxing this back to me and I will arrange for filing with the court."

At 3:28 pm on 18 April 2006, Hornthal faxed to Grice a revised proposed order of summary judgment, along with a letter which stated in pertinent part:

Enclosed you will find a revised order which I propose to hand up to [the trial judge tomorrow]. It . . . removes an award of pre-judgment interest, as we have elected to waive any right to the recovery of such.

Finally . . . please bring with you the stipulations which I transmitted to you last week, in order that they may be made a part of the record in the case.

At 4:18 pm on 18 April 2006, Grice faxed to Hornthal a fully executed copy of the Stipulation Regarding Further Proceedings, with Grice's signature, along with a letter which stated, "Please be advised that I do not consent to the new Order you are proposing as it contains language not previously agreed upon and inconsistent with our agreement."

On 19 April 2006 plaintiffs filed a Motion to Set Aside Stipulation, alleging:

2. At the time the Stipulation was agreed to and signed, the undersigned counsel was inadvertent to case law [regarding pre-judgment interest.]

. . . .

8. Just cause exists to set aside the Stipulation because of the inadvertence and mistake of the undersigned counsel for the plaintiffs.

The trial court held a hearing on 19 April 2006 on the Motion to Set Aside Stipulation, advised the attorneys that "[t]his case has become an absolute mess[,]" and took the matter under advisement for the purpose of reviewing the applicable law. Sometime between 19 April 2006 and 15 June 2006, plaintiffs moved pursuant to N.C. Gen. Stat. § 6-21.1 for attorney's fees.

In any personal injury or property damage suit, or suit against an insurance company under a policy issued by the defendant insurance company and in which the insured or beneficiary is the plaintiff, upon a finding by the court that there was an unwarranted refusal by the defendant insurance company to pay the claim which constitutes the basis of such suit, instituted in a court of record, where the judgment for recovery of damages is ten thousand dollars ($10,000) or less, the presiding judge may, in his discretion, allow a reasonable attorney fee to the duly licensed attorney representing the litigant obtaining a judgment for damages in said suit, said attorney's fee to be taxed as a part of the court costs.
N.C. Gen. Stat. § 6-21.1 (2003).

On 21 June 2006 the trial court entered orders awarding plaintiffs $9,102.00 together with interest at 8% per annum from 27 February 2004 and court costs of $2,064.74 for the breach of contract and reformation claims, and denying plaintiffs' Motion to Set Aside Stipulation. In a separate order also entered on 21 June 2006, the trial court determined that the award of "$9,102.00 plus the addition of prejudgment interest is in excess of $10,000.00,"and accordingly denied plaintiffs' motion for attorney's fees. Plaintiffs appeal.

II. Grounds for Review

The order denying defendants' motion for attorney's fees is the final judgment in this case because it "determines the entire controversy between the parties, leaving nothing to be decided in the trial court." Ratchford v. C.C. Mangum, Inc., 150 N.C. App. 197, 199, 564 S.E.2d 245, 247 (2002). Plaintiffs appeal as of right from that order. N.C. Gen. Stat. § 7A-27(b) (2005). Additionally, we invoke our discretion to review the interlocutory orders in this case because they "involv[e] the merits and necessarily affect[] the [final] judgment." N.C. Gen. Stat. § 1-278 (2005).

III. Analysis

A. Waiver of Right to Prejudgment Interest

As a threshold question, plaintiffs ask this Court to determine whether or not the statutory right to prejudgment interest can be waived. If it cannot, plaintiffs concede that defendants must prevail in the instant appeal.

"In an action for breach of contract, except an action on a penal bond, the amount awarded on the contract bears interest from the date of breach." N.C. Gen. Stat. § 24-5 (2005).

Plaintiffs argue that the statutory right to prejudgment interest can be waived because it is for the benefit of a party litigant, not for the protection of the public, and because there is no law or public policy which prevents waiver. Defendants argue that the law of Brown v. Millsap, 161 N.C. App. 282, 588 S.E.2d 71 (2003), rvs'd per curiam, 358 N.C. 212, 594 S.E.2d 1 (2004) (adopting the reasoning of the dissenting opinion), and the State's public policy against "[a]llowing the prevailing party to tweak the court's award to suit their own needs" prevent plaintiffs from waiving prejudgment interest.

While defendants do not refer this Court to the authority by which they contend that "[a]llowing the prevailing party to tweak the court's award to suit their own needs" violates the State's public policy, we agree that waiver of prejudgment interest in some circumstances would be contrary to the law of Brown. Brown is clear that prejudgment interest must be added to a final judgment on the merits or to a jury verdict before determining whether the amount of the recovery is $10,000.00 or less, 161 N.C. App. at 286, 588 S.E.2d at 73-74 (Tyson, J., dissenting), but we conclude that Brown does not control a case which has not been decided by a jury or in which final judgment on the merits has not yet been entered. "Furthermore, it is well settled that North Carolina public policy encourages prompt settlement of disputed claims." Menard v. Johnson, 105 N.C. App. 70, 73, 411 S.E.2d 825, 827 (1992). Preventing plaintiffs from waiving prejudgment interest before final judgment is entered would undermine that policy because to hold otherwise would encourage defendants to drag out litigation until the interest tipped the amount at issue above $10,000.00, thus avoiding the risk of an attorney fee award under N.C. Gen. Stat. § 6-21.1.

B. Plaintiffs' Stipulation

Plaintiffs contend that they waived prejudgment interest, as was their right. However, before plaintiffs advised defendants and the trial court of their desire to waive prejudgment interest, plaintiffs stipulated that prejudgment interest would be added to the judgment. Despite the stipulation, plaintiffs contend that their waiver of prejudgment interest was effective, because the stipulation was not valid in that the offer to stipulate was revoked before it was accepted. Alternatively, they argue that the trial court should have relieved them of the stipulation because it was entered into inadvertently and by mistake, and accordingly recognized their waiver of prejudgment interest.

Generally, stipulations are agreements between parties, and are binding on the parties who enter them. Thomas v. Poole, 54 N.C. App. 239, 241, 282 S.E.2d 515, 517 (1981), disc. review denied, 304 N.C. 733, 287 S.E.2d 902 (1982).

As agreements between parties, they are governed by the law of contract. See Bolton Corp. v. T.A. Loving Co., 317 N.C. 623, 628, 347 S.E.2d 369, 372 (1986) ("[An] executed agreement terminating or purporting to terminate a controversy is a contract, to be interpreted and tested by established rules relating to contracts." (Citation and quotation marks omitted.)); See also 83 C.J.S. Stipulations § 46 (2000).

A valid contract requires offer and acceptance. Normile v. Miller, 313 N.C. 98, 108-09, 326 S.E.2d 11, 18 (1985). If the offer is revoked by the offeror before acceptance, the offeree has no power to accept it. Id. "Generally, notice of the offeror's revocation must be communicated to the offeree to effectively terminate the offeree's power to accept the offer." Id. at 109, 326 S.E.2d at 18 (emphasis added). North Carolina recognizes the Dickinson v. Dodds exception to this rule, which states that even if notice of revocation of the offer is not communicated directly by the offeror to the offeree, "[i]t is enough that the offeree receives reliable information, even indirectly, that the offeror had taken definite action inconsistent with an intention to make the contract." Id. (citation and internal quotation marks omitted) (noting that this rule is from Dickinson v. Dodds, 2 Ch. Div. 463 (1876), "a notorious English case").

Plaintiffs do not argue that they communicated notice of revocation of the offer to stipulate to defendants before acceptance of the offer. They argue instead that they impliedly revoked the offer to stipulate when they sent defendants' attorney a proposed revised order for summary judgment including a waiver of prejudgment interest, accompanied by a letter advising defendants of the inclusion of the waiver of the right to prejudgment interest in the proposed revised order. We disagree with plaintiffs.

We conclude that the transmission of the proposed revised order, which added a term not raised by the parties before the trial court at the summary judgment hearing, and not mentioned during the trial court's rendition of judgment in open court, together with the letter advising defendants of the inclusion of the waiver of the right to prejudgment interest which also requested that defendants' attorney "please bring with you the stipulations which I transmitted to you last week, in order that they may be made a part of the record in the case," was not a sufficiently definite action to revoke the offer. Furthermore, we were unable to find the Dickinson v. Dodds exception applied to any North Carolina case other than the sale of land which had been offered to a third party, and the Restatement of Contracts (Second) acknowledges "[n]o case not involving land has been found which follows the rule of Dickinson v. Dodds[.]" Restatement of Contracts (Second) § 43, Reporter's Note, cmt. c (1981). On these facts, we decline plaintiffs' offer to extend the Dickinson v. Dodds exception.

Next, plaintiffs argue that even if the stipulation was valid when signed by the parties, it should have been set aside by the trial court on the grounds that it was agreed to inadvertently or by mistake. Defendants argue that any inadvertence or mistake on the part of plaintiffs or their attorneys was not sufficient grounds to set aside the stipulation.

A stipulation for settlement, as this plainly is, is different from a stipulation of fact. 73 Am. Jur. 2d Stipulations § 14 (2001). Setting aside a stipulation for settlement requires "a showing . . . equivalent to that necessary to set aside a contract in equity." Id.

"[O]rdinarily a mistake, in order to furnish ground for equitable relief, must be mutual[.]" Financial Services v. Capitol Funds, 288 N.C. 122, 137, 217 S.E.2d 551, 560 (1975). "A unilateral mistake, unaccompanied by fraud, imposition, undue influence, or like oppressive circumstances, is not sufficient to avoid a contract[.]" Id. While "[r]elief has been granted where there exists a mutual mistake as to a material fact comprising the essence of the agreement . . . a bare mistake of law generally affords no grounds for reformation" or recission of a contract. Dalton v. Dalton, 164 N.C. App. 584, 587-88, 596 S.E.2d 331, 333 (2004) (internal citations, quotations, emphasis, ellipses, and brackets omitted). "Mere ignorance of law, unless there be some fraud or circumvention, is not a ground for relief in equity [to] avoid the legal effect of acts which have been done." Mims v. Mims, 305 N.C. 41, 60, 286 S.E.2d 779, 792 (1982) (citation and internal brackets omitted). "[N]either ignorance nor carelessness on the part of an attorney will provide grounds for . . . relief" from an order of a court. Briley v. Farabow, 348 N.C. 537, 546, 501 S.E.2d 649, 655 (1998) (citation and quotation marks omitted).

There is no evidence that plaintiffs' attorney's ignorance of Brown was not unilateral. In fact, the evidence in the record tends to show that defendants were very keenly aware of Brown at the time they signed the stipulation. The record also contains no evidence of oppressive circumstances which might weigh in plaintiffs' favor. In sum, plaintiffs cite no authority for the proposition that their attorney's ignorance of the law is a basis to set aside the stipulation.

Furthermore, we are not convinced that plaintiffs' inclusion of prejudgment interest in their stipulation was inadvertent. See Cashner v. Freedom Stores, Inc., 98 F.3d 572, 577 (10th Cir. 1996) ("[R]elief is not available for a party who simply misunderstands the legal consequences of his deliberate acts."); Andrulonis v. United States, 26 F.3d 1224, 1235 (2d Cir. 1994) ("[H]indsight assessment of [a party's] bargain is not a permissible ground for . . . relief."); United States v. Bank of New York, 14 F.3d 756, 759 (2d Cir. 1994) ("When a party makes a deliberate, strategic choice to settle, she cannot be relieved of such a choice merely because her assessment of the consequences was incorrect."); Nemaizer v. Baker, 793 F.2d 58, 62 (2d Cir. 1986) ("Mere dissatisfaction in hindsight with choices deliberately made by counsel is not grounds for finding the mistake, inadvertence, surprise or excusable neglect necessary to justify . . . relief.").

The record contains no evidence which suggests that plaintiffs' inclusion of prejudgment interest in the stipulation, at a point in the process when it could have been waived, was anything other than a deliberate choice to maximize the settlement amount for their clients.

IV. Conclusion

Plaintiff stipulated to a settlement which included prejudgment interest on a breach of contract. Plaintiff has not shown any reason why this Court should determine that the stipulation was invalid because it was revoked before acceptance, or that it should be set aside for equitable reasons. The stipulated settlement was for an amount greater than $10,000.00, and barred plaintiffs from seeking attorney's fees pursuant to N.C. Gen. Stat. § 6-21.1. Accordingly, we affirm the order of the trial court denying plaintiffs' motion for attorney's fees.

Affirmed.

Judges ELMORE and STEELMAN concur.

Report per Rule 30(e).


Summaries of

Winrow v. Discovery Ins. Co.

North Carolina Court of Appeals
Mar 4, 2008
189 N.C. App. 212 (N.C. Ct. App. 2008)

relying on several North Carolina cases in explaining that an offeree may accept an offer until it is revoked, and that such revocation must be communicated to the offeree to effectively terminate the offeree's power to accept

Summary of this case from Goldberg v. C.B. Richard Ellis, Inc.
Case details for

Winrow v. Discovery Ins. Co.

Case Details

Full title:WINROW v. DISCOVERY INS. CO

Court:North Carolina Court of Appeals

Date published: Mar 4, 2008

Citations

189 N.C. App. 212 (N.C. Ct. App. 2008)

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