North Carolina Lawyers Weekly
The winner of a breach of contract claim can recover attorneys’ fees as set out in the contract. The winner can also recover the fees it incurred in successfully pursuing the related claims of breach of fiduciary duty and constructive fraud, as well as its request to pierce the corporate veils of the contracting defendant and the LLC that owns it.
Defendants shall pay plaintiff $917,553.80 in attorneys’ fees and $14,435.15 in costs.
Plaintiff and the contracting defendant, Marquis Diagnostic Imaging of North Carolina, LLC (MDI-NC), entered into an MRI lease agreement (the MRI agreement), which MDI-NC breached by failing to pay plaintiff the amounts due under the contract. MDI-NC is owned by defendant Marquis Diagnostic Imaging, LLC (MDI), which is owned by defendants Luke and Venesky.
Where attorneys’ fees are not recoverable for litigating certain claims in an action but are recoverable for other claims in that same action, fees incurred in litigating both types of claims are recoverable if the time expended on litigating the non-recoverable and the recoverable claims overlaps and the claims arise from a common nucleus of law or fact.
Of course, piercing the corporate veil is not a theory of liability but a means of seeking relief from those who would otherwise be shielded by the corporate form.
Prior to the initiation of this lawsuit and throughout its duration, defendants represented that MDI-NC was completely insolvent. What money MDI-NC had – the funds acquired from selling MDI-NC’s assets – did not go to pay plaintiff for any remaining portion of the MRI agreement and was instead transferred to other creditors of MDI-NC and other entities that Luke and Venesky owned. Enforcing the MRI Agreement required plaintiff to request veil-piercing relief on its breach of contract claim, and the court granted plaintiff’s request against all defendants.
Because piercing the corporate veil is not a separate claim but a means to recover on an underlying claim, plaintiff’s request to pierce the corporate veil was inextricably interwoven with its claim to enforce the MRI Agreement and arose from a common nucleus of law or fact. Accordingly, because plaintiff may recover reasonable fees associated with enforcement of the MRI Agreement under G.S. § 6-21.6, plaintiff will be permitted to recover its reasonable fees associated with litigating its requested veil-piercing relief. All defendants shall be subject to the court’s award of attorneys’ fees, as judgment on MDI-NC’s breach of contract was entered against all defendants.
In addition to its breach of contract claim, plaintiff asserted claims against all defendants for unfair or deceptive trade practices under G.S. § 75-1.1, fraudulent transfer under G.S. § 39-23 et seq., and wrongful distribution and personal liability under G.S. § 57D-406 et seq., and against Luke and Venesky individually for breach of fiduciary duty and constructive fraud (collectively, the extra-contractual claims). Although only a subset of these claims proceeded to trial, and plaintiff was not successful on all of its own claims, the court finds that the time spent on all of these claims overlapped with plaintiff’s recoverable claim and request for relief and arose from a common nucleus of law or fact shared with plaintiff’s recoverable claim and request for relief.
Moreover, plaintiff has won substantial relief through this lawsuit, including all of the compensatory damages it sought against defendants. Consequently, plaintiff shall be permitted to recover reasonable attorneys’ fees incurred in prosecuting these extra-contractual claims.
MDI-NC’s counterclaims alleged that plaintiff fraudulently induced MDI-NC to enter the MRI Agreement and sought damages and rescission of the MRI Agreement. As such, defending against these counterclaims was a necessary part of enforcing the MRI Agreement, and plaintiff’s fees associated with litigating this claim are recoverable under the MRI Agreement and § 6-21.6.
The court excludes those hours it deems excessive, redundant, or otherwise unnecessary from plaintiff’s request for attorneys’ fees. Eliminating these charges results in a total award of $917,553.80. After a review of the relevant factors, the court concludes that this amount is reasonable and clearly not excessive.
Furthermore, the costs requested by plaintiff all belong to categories set out in G.S. § 7A-305(d), and those costs were reasonable and necessary, customary in amount, and clearly not excessive.
Fees and costs awarded.
Insight Health Corp. v. Marquis Diagnostic Imaging of North Carolina, LLC (Lawyers Weekly No. 020-044-18, 27 pp.) (Louis Bledsoe III, J.) Marcus Hewitt and Jeffery Whitley for plaintiff; Wyatt Stevens, Ann-Patton Hornthal and John Noor for defendants. 2018 NCBC 66
