The case is over, and you’ve won. Feeling bullish, you move for attorneys’ fees. Before the trial court reaches the fees issue, however, your opponent files a Notice of Appeal from the order deciding the merits. Is that an appropriate appeal?
The North Carolina Court of Appeals gave us some helpful guidance today on when interlocutory appeals on the merits of a case are proper when there is a motion for attorneys’ fees still pending. See Hausle v. Hausle. First, I’ll allow Judge McCullough’s understated warning about this topic to speak for itself:
North Carolina law regarding the finality of an order or judgment which preserves an issue of attorney fees is not a model of clarity.
Another warning, discussed more below: the Supreme Court may be revisiting this issue soon.
In Hausle, the trial court denied plaintiff’s motion to modify certain prior custody orders, but reserved decision on several other issues, including whether to award attorneys’ fees. As appellate practitioners know well, such an order is interlocutory (leaving something left to be decided) instead of final (leaving nothing left to be decided), and generally not immediately appealable. One well-worn exception to this prohibition is the right to immediately appeal an order that is final “as to one or more, but fewer than all, claims or parties” when the trial court “certifies there is no just reason for delay.” N.C. R. Civ. P. 54(b). Hausle reaffirms and clarifies an important truth about Rule 54: A trial court’s Rule 54(b) certification only allows an immediate appeal if the certification is proper.
This issue came to the forefront a few years ago in Bumpers v. Cmty. Bank of N. Va., 364 N.C. 195, 695 S.E.2d 442 (2010). (We blogged about a different aspect of this case last year.) In Bumpers, the trial court certified for immediate appeal an order deciding the merits of a Chapter 75 (unfair and deceptive practices) case at summary judgment but leaving an attorneys’ fees question pending. On appeal, the North Carolina Supreme Court set forth this test: when an award of attorneys’ fees is contingent on a party prevailing on the merits, it is not a “substantive” issue whose lack of resolution prevents an immediate appeal on the underlying merits order. As applied to Chapter 75, the Court “adopt[ed] the bright-line rule that an unresolved claim for attorney fees under Section 76-16.1 does not preclude finality of a judgment resolving all substantive issues of a claim under Section 75-1.1.”
What was not clear after Bumpers was whether an order or judgment leaving a “non substantive” attorneys’ fees issue undecided was immediately appealable because it was a final order or because it was an order capable of being certified for immediate appeal under Rule 54(b). In other words, must a Bumpers-type order be certified under Rule 54(b) to be immediately appealable?
The Hausle Court today answered emphatically, YES. The Court reviewed the Bumpers case, as well as two other Court of Appeals cases along the way, Lucas v. Lucas, 209 N.C. App. 492, 706 S.E.2d 270 (2011) and Duncan v. Duncan, — N.C. App. —, 732 S.E.2d 390 (2012), disc. review granted, — N.C. —, 736 S.E.2d 186 (2013). Here is the bottom line for analyzing the immediate appealability of an order leaving the issue of attorneys’ fees undecided, under Hausle:
1. Has a Merits Order been entered finally resolving the merits of the dispute, and leaving the issue of attorneys’ fees to be decided later?
2. If yes, then does the decision whether to award attorneys’ fees depend on how the Merits Order turned out, as opposed to requiring an independent substantive analysis of some other merits issue, like good faith?
3. If yes, then has the trial court certified the Merits Order for immediate review in accordance with Rule 54(b)?
4. If yes, then the Merits Order is an immediately appealable interlocutory order.
Clarity! Still, I can imagine there being close cases under Step #2, as to whether the award of attorneys’ fees sufficiently touches on the substantive merits so as to prevent immediate appeal of the Merits Order.
Furthermore, note that the Supreme Court granted the petition for discretionary review (PDR) filed in Duncan. In Duncan, the Court of Appeals decided that a Bumpers-like order was not immediately appealable because of a failure at Step #3: the trial court had not certified the Merits Order for immediate review. In the Petition for Discretionary Review, the Appellant essentially asks the Supreme Court to throw out Step #3, and declare that a Bumpers-like order is not an interlocutory order that is final as to some issues, susceptible of certification under Rule 54(b), but rather is a final order that does not require a Rule 54(b) certification at all.
The case is scheduled for argument on April 16. We’ll keep you posted on what the Court decides.