{ "id": 8359222, "name": "MALCOLM M. LOWDER, MARK T. LOWDER and DEAN A. LOWDER, Plaintiffs v. ALL STAR MILLS, INC., LOWDER FARMS, INC., CAROLINA FEED MILLS, INC., ALL STAR FOODS, INC., ALL STAR HATCHERIES, INC., ALL STAR INDUSTRIES, INC., TANGLEWOOD FARMS, INC., CONSOLIDATED INDUSTRIES, INC., AIRGLIDE, INC., and W. HORACE LOWDER, Defendants, and CYNTHIA E. LOWDER PECK, MICHAEL W. LOWDER, DOUGLAS E. LOWDER, LOIS L. HUDSON, Individually and as Guardian Ad Litem for STEVE H. HUDSON, BRUCE E. HUDSON, BILLY J. HUDSON, ELLEN H. BALLARD, JENNELL H. RATTERREE, DAVID P. LOWDER, JUDITH R. LOWDER HARRELL, EMILY P. LOWDER CORNELIUS and MYRON P. LOWDER, Intervening Defendants", "name_abbreviation": "Lowder v. All Star Mills, Inc.", "decision_date": "1986-08-19", "docket_number": "No. 8620SC28", "first_page": "470", "last_page": "481", "citations": [ { "type": "official", "cite": "82 N.C. App. 470" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "54 U.S.L.W. 5017", "category": "reporters:specialty", "reporter": "U.S.L.W.", "weight": 2, "year": 1986, "pin_cites": [ { "page": "5022" }, { "page": "5022" } ], "opinion_index": 0 }, { "cite": "79 L.Ed. 2d 891", "category": "reporters:federal", "reporter": "L. Ed. 2d", "case_ids": [ 11338115 ], "weight": 2, "year": 1984, "opinion_index": 0, "case_paths": [ "/us/465/0886-01" ] }, { "cite": "323 S.E. 2d 922", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1984, "opinion_index": 0 }, { "cite": "312 N.C. 621", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4757614, 4751602, 4754239, 4750583, 4751711 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc/312/0621-04", "/nc/312/0621-02", "/nc/312/0621-01", "/nc/312/0621-05", "/nc/312/0621-03" ] }, { "cite": "319 S.E. 2d 650", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1984, "pin_cites": [ { "page": "656" } ], "opinion_index": 0 }, { "cite": "70 N.C. App. 221", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521343 ], "weight": 2, "year": 1984, "pin_cites": [ { "page": "229" } ], "opinion_index": 0, "case_paths": [ "/nc-app/70/0221-01" ] }, { "cite": "322 S.E. 2d 772", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1984, "pin_cites": [ { "page": "774", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "312 N.C. 473", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4751898 ], "weight": 2, "year": 1984, "pin_cites": [ { "page": "475" } ], "opinion_index": 0, "case_paths": [ "/nc/312/0473-01" ] }, { "cite": "321 S.E. 2d 140", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "opinion_index": 0 }, { "cite": "311 N.C. 760", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4680069, 4685382, 4684653, 4686961, 4685335 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc/311/0760-03", "/nc/311/0760-02", "/nc/311/0760-04", "/nc/311/0760-05", "/nc/311/0760-01" ] }, { "cite": "313 S.E. 2d 849", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "opinion_index": 0 }, { "cite": "68 N.C. App. 40", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526632 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc-app/68/0040-01" ] }, { "cite": "273 S.E. 2d 247", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "301 N.C. 561", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8569785 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc/301/0561-01" ] }, { "cite": "263 S.E. 2d 624", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "45 N.C. App. 348", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8548878 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/nc-app/45/0348-01" ] }, { "cite": "309 S.E. 2d 193", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1983, "opinion_index": 0 }, { "cite": "309 N.C. 695", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4762459 ], "weight": 2, "year": 1983, "opinion_index": 0, "case_paths": [ "/nc/309/0695-01" ] }, { "cite": "300 S.E. 2d 230", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "opinion_index": 0 }, { "cite": "60 N.C. App. 275", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520630 ], "year": 1983, "opinion_index": 0, "case_paths": [ "/nc-app/60/0275-01" ] }, { "cite": "302 S.E. 2d 250", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "opinion_index": 0 }, { "cite": "308 N.C. 387", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4705412, 4707654, 4705971, 4705464, 4708059 ], "year": 1983, "opinion_index": 0, "case_paths": [ "/nc/308/0387-05", "/nc/308/0387-01", "/nc/308/0387-02", "/nc/308/0387-03", "/nc/308/0387-04" ] }, { "cite": "300 S.E. 2d 241", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "opinion_index": 0 }, { "cite": "60 N.C. App. 699", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523608 ], "year": 1983, "opinion_index": 0, "case_paths": [ "/nc-app/60/0699-01" ] }, { "cite": "335 S.E. 2d 19", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "314 N.C. 541", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4696388, 4687435, 4687597, 4690541, 4693085 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/314/0541-02", "/nc/314/0541-03", "/nc/314/0541-04", "/nc/314/0541-01", "/nc/314/0541-05" ] }, { "cite": "330 S.E. 2d 649", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1985, "opinion_index": 0 }, { "cite": "75 N.C. App. 233", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525548 ], "weight": 2, "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/75/0233-01" ] } ], "analysis": { "cardinality": 986, "char_count": 26187, "ocr_confidence": 0.815, "pagerank": { "raw": 1.5234159647846818e-07, "percentile": 0.6696846032336248 }, "sha256": "2744b0792dd68acd597a01a76314da17582300ddb9e6d12807f60b2cef2d24fa", "simhash": "1:870d5582b20ab53e", "word_count": 4139 }, "last_updated": "2023-07-14T22:29:18.916973+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Arnold and Wells concur." ], "parties": [ "MALCOLM M. LOWDER, MARK T. LOWDER and DEAN A. LOWDER, Plaintiffs v. ALL STAR MILLS, INC., LOWDER FARMS, INC., CAROLINA FEED MILLS, INC., ALL STAR FOODS, INC., ALL STAR HATCHERIES, INC., ALL STAR INDUSTRIES, INC., TANGLEWOOD FARMS, INC., CONSOLIDATED INDUSTRIES, INC., AIRGLIDE, INC., and W. HORACE LOWDER, Defendants, and CYNTHIA E. LOWDER PECK, MICHAEL W. LOWDER, DOUGLAS E. LOWDER, LOIS L. HUDSON, Individually and as Guardian Ad Litem for STEVE H. HUDSON, BRUCE E. HUDSON, BILLY J. HUDSON, ELLEN H. BALLARD, JENNELL H. RATTERREE, DAVID P. LOWDER, JUDITH R. LOWDER HARRELL, EMILY P. LOWDER CORNELIUS and MYRON P. LOWDER, Intervening Defendants" ], "opinions": [ { "text": "BECTON, Judge.\nThis appeal is from (1) an order approving payment of $244,197.97 in fees and expenses to attorneys, accountants and receivers and (2) a judgment awarding $300,308.93 in attorneys\u2019 fees under N.C. Gen. Stat. Sec. 55-55(d) (1982) all incurred in connection with a court-ordered receivership.\nI\nThis is the fourth time in six years this case has been through the appellate process; the procedural history and factual background of this matter are documented in several reported decisions. See Lowder v. All Star Mills, Inc., 75 N.C. App. 233, 330 S.E. 2d 649, disc. rev. denied, 314 N.C. 541, 335 S.E. 2d 19 (1985); Lowder v. All Star Mills, Inc., 60 N.C. App. 699, 300 S.E. 2d 241, disc. rev. denied, 308 N.C. 387, 302 S.E. 2d 250 (1983); Lowder v. All Star Mills, Inc., 60 N.C. App. 275, 300 S.E. 2d 230, aff'd in part, rev\u2019d in part, 309 N.C. 695, 309 S.E. 2d 193 (1983); Lowder v. All Star Mills, Inc., 45 N.C. App. 348, 263 S.E. 2d 624 (1980), aff'd in part, rev\u2019d in part, 301 N.C. 561, 273 S.E. 2d 247 (1981).\nBriefly, the case arose both as a derivative shareholder action brought by minority shareholders on behalf of All Star Mills, Inc. (Mills) and Lowder Farms, Inc. (Farms), and an individual action for damages and other relief. The suit alleged that Horace Lowder abused his authority as chief executive officer of defendant corporations and misappropriated corporate opportunities in a scheme involving several corporations owned by the Lowder family. Plaintiffs alleged and proved that Horace Lowder wrongfully diverted assets from two corporations, in which plaintiffs owned an interest, into five corporations established and primarily owned by Horace Lowder. Plaintiffs sought, among other things, liquidation and dissolution of Mills, Farms, and Consolidated Industries, Inc. (Consolidated).\nAfter a jury trial in 1983, judgment was entered finding that Horace Lowder had misappropriated assets of All Star Foods, Inc. (Foods), All Star Hatcheries, Inc. (Hatcheries) and All Star Industries, Inc. (Industries). The assets of Foods, Hatcheries and Industries were impressed with a constructive trust in favor of Mills. After a non-jury trial in 1984, an order appointing temporary receivers for Mills and Farms, that had been issued in February 1979 pending the outcome of trial, was made permanent. The court also ordered the liquidation and dissolution of Mills, Farms and Consolidated. These judgments were affirmed on appeal, 75 N.C. App. 233, 330 S.E. 2d 649, as was the award of counsel fees incurred by attorneys appointed to provide services to the receivers during the temporary receivership, 309 N.C. 695, 309 S.E. 2d 193.\nThe liquidation and dissolution of the defendant corporations in receivership is currently underway. During the several years of litigation, the trial court has approved the employment of, and payment of fees and expenses to, court-appointed receivers, attorneys and accountants covering specific periods of time and specific professional services. And although they have not yet been paid, judicial approval of the fees and expenses assures these parties that, ultimately, they will be fairly compensated for their years of service.\nOn 23 August 1985, the trial court issued an Order approving the receivers\u2019 petition for authorization to pay their accountants and attorneys whom the court had expressly authorized the receivers to employ. The fees were for services previously rendered and documented in connection with the operation of the corporate defendants in receivership. The receivers also requested authorization to obtain reimbursement for services they rendered on behalf of the corporate defendants. The court authorized and directed the corporate defendants to pay the receivers\u2019, accountants\u2019 and attorneys\u2019 fees, but it did not apportion the payment obligations among the defendants.\nAlso on 23 August 1985, the trial court entered a judgment awarding attorneys\u2019 fees and expenses under G.S. Sec. 55-55(d) for the successful prosecution of the derivative shareholder action. The court ordered Mills and Farms to reimburse plaintiff Malcolm Lowder for expenses incurred in litigating the derivative claim and ordered the same defendants to pay plaintiffs\u2019 attorneys\u2019 fees and expenses.\nThe defendants challenge the 23 August 1985 Order and Judgment. They contend that the trial court erred (1) in ordering payment of the fees and expenses of the receivers, accountants and attorneys because the court failed to equitably allocate these costs among the corporate defendants; (2) in awarding attorneys\u2019 fees under G.S. Sec. 55-55(d) because the plaintiff shareholders were not \u201csuccessful\u201d in their derivative action against Farms and conferred no \u201csubstantial benefit\u201d on this corporate defendant; (3) in awarding attorneys\u2019 fees without sufficient evidence or factual findings; and (4) in awarding a $40,000 bonus to plaintiffs attorneys.\nWe affirm the trial court\u2019s order approving fees and expenses relating to the receivership. The award of fees under G.S. Sec. 55-55(d) is remanded for more detailed findings of fact and for the exclusion of the $40,000 bonus.\nII\nDefendants\u2019 first argument is that the court failed to allocate the various expenses related to the receivership among the seven corporate defendants according to the proportion of services performed or expenses incurred on behalf of each corporation. We agree that when a final judgment is entered in this case, total costs must be equitably apportioned among the defendant corporations. Lowder v. All Star Mills, Inc., 60 N.C. App. at 289, 300 S.E. 2d at 238. But the order appealed from is not the final judgment in this case. The receivership has been made permanent and other fees and expenses certainly will accrue. We find no error in the approval of the payments detailed in the Order. This assignment of error is overruled.\nIll\nDefendants next contend that attorneys\u2019 fees cannot be awarded against Farms in this case because the derivative claims were wholly unsuccessful as to Farms. General Statute Section 55-55(d) provides in part:\nIf the action on behalf of the corporation is successful, in whole or in part, . . . the court may award the plaintiff the reasonable expenses of maintaining the action, including reasonable attorneys\u2019 fees.\nDefendants argue that plaintiffs were \u201cmere intermeddlers\u201d who did not advance any corporate interest of Farms in the litigation.\nFirst, the original complaint in this case alleged a multitude of wrongful acts by Horace Lowder against several corporate and individual defendants and sought several forms of relief. The fees and expenses awarded under G.S. Sec. 55-55(d) must relate solely to the derivative action on behalf of corporate defendants Mills and Farms; it must not include fees and expenses incurred in connection with other parts of the proceedings, such as claims for liquidation and dissolution. See Miller v. Ruth\u2019s of North Carolina, Inc., 68 N.C. App. 40, 313 S.E. 2d 849, disc. rev. denied, 311 N.C. 760, 321 S.E. 2d 140 (1984). The trial court specifically addressed this point in its judgment and provided that the award did not cover services rendered in the bankruptcy court, in representing the receivers, or in prosecuting the minority shareholders\u2019 action for liquidation and dissolution.\nDefendants admit that plaintiffs were successful, at least in part, on the merits in their action on behalf of Mills. The jury returned a verdict finding that Horace Lowder had misappropriated corporate opportunities of Mills, and the court imposed constructive trusts in favor of Mills to enforce the return of its assets. But, defendants argue, because the jury found that Horace Lowder did not misappropriate a corporate opportunity of Farms, plaintiffs did not succeed on the merits as to Farms and cannot recover fees or expenses under G.S. Sec. 55-55(d).\nEven though plaintiffs were not successful at trial on the specific issues submitted to the jury relating to Farms, plaintiffs were partially successful in their action on behalf of Farms. When the trial court received and adopted the findings of the jury, the court also made several specific \u201cadditional independent findings and conclusions\u201d which the court found and concluded were \u201csufficient reasons to justify the relief requested by plaintiffs notwithstanding the presence or absence of the jury verdict.\u201d These included findings that (1) Horace Lowder was increasing his \u201cexercise of complete control\u201d over the companies; (2) he refused to allow plaintiff a position of more authority or participation in the companies; (3) he exhibited \u201can attitude of domination of the companies\u2019 affairs\u201d by (a) his handling of tax claims against the companies without counsel, (b) his practice of management without consultation with other shareholders, (c) his control of other companies in which he had larger interests, and (d) his taking of treasury stock for himself without consultation with other stockholders; and (4) plaintiff was unlikely to \u201crealize his reasonable expectations\u201d regarding the affairs of the companies. The judgment was explicitly tailored to redress these problems and to protect plaintiffs\u2019 interests, including their interest in Farms.\nFurthermore, in the original complaint, plaintiffs specifically sought, among other things, to have Horace Lowder removed as director of Farms; to prevent Horace Lowder from attempting to defend Farms against Internal Revenue Service claims for a substantial amount of unpaid taxes plus penalties; and to have a permanent receiver appointed to protect the assets of Farms and properly defend the tax claims. The trial court found, and we agree, that plaintiffs were successful in pursuing these forms of relief.\nHorace Lowder was removed. A temporary receiver was appointed, and later made permanent, to protect the assets of Farms. And the receiver and his attorneys succeeded in negotiating with the IRS to reduce or eliminate the tax claims against Farms. Moreover, these benefits obtained for Farms were defended successfully on two separate appeals. We conclude that plaintiffs were successful on the merits in part in the prosecution of their derivative claims on behalf of Farms, .notwithstanding the jury verdict.\nWe decline to interpret \u201csuccess on the merits\u201d as narrowly as defendants do in this case. Defendants also urge us to adopt a new requirement \u2014 that the plaintiffs\u2019 action confer a \u201csubstantial benefit\u201d on the corporation. Because we believe the removal of the self-dealing, controlling director from office and the appointment of a permanent receiver to protect the corporation in this case did confer a substantial benefit on Farms, we need not consider whether an award should fail for lack of such circumstances.\nFinally, we reject defendants\u2019 contention that the award of $60,061.78 in attorneys\u2019 fees against Farms is unconscionable because plaintiffs\u2019 attorneys originally accepted the case on a contingent fee basis. The record indicates that the contingent fee contract with plaintiffs\u2019 attorneys provided that any fees received by plaintiffs\u2019 counsel from any source would be credited against the twenty-five percent obligation in the contract. This is patently reasonable.\nIV\nDefendants argue that even if plaintiffs did succeed on the merits, the fee award under G.S. Sec. 55-55(d) must be reversed because the court failed to consider the proper factors to determine the award. First, defendants assert that there can be no fee award in the absence of a monetary benefit conferred on the corporation. Because the rationale for awarding fees under that statute is to allow the cost of the action to be paid out of the proceeds, defendants argue, the court must identify some financial benefit conferred on the corporation by the derivative action from which costs and fees may be awarded. Defendants point to the language in the statute requiring the court to \u201cdirect the plaintiff to account to the corporation for the remainder of any proceeds of the action.\u201d\nContrary to defendants\u2019 contention, the statute does not provide, directly or indirectly, that the award of fees and expenses cannot exceed the specific monetary recovery. The statute requires the plaintiffs to account to the corporation in the event there is a \u201cremainder of any proceeds of the action,\u201d and clearly allows derivative actions for injunctive relief to prevent wrongful depletion of corporate assets. Many justifiable and successful actions will benefit a corporation over a long period of time \u2014 such as actions to enjoin gross mismanagement \u2014 and the benefit to the corporation may be difficult or impossible to quantify. The statute does not impose a requirement to quantify the financial success of the derivative claim before fees may be awarded. The plaintiff need only succeed, in whole or in part, on behalf of the corporation. Whether the expense incurred by plaintiffs in conferring a benefit on the corporation is excessive or unreasonable is a determination for the trial court to make in adjusting the award of costs and fees.\nWe do find merit in defendants\u2019 argument that the court failed to include sufficient findings of fact to support the specific fee amounts awarded. The only findings of fact relevant to whether the attorneys\u2019 hours and rates were reasonable in this case were the findings that plaintiffs\u2019 attorneys were successful on behalf of Mills and Farms; that a bonus was justified, see Part V, infra; and the following:\n4. Plaintiff Malcolm Lowder has incurred $6,085.99 in reasonable expenses directly as the result of the prosecution of this action.\n5. Plaintiffs\u2019 counsel, Moore, Van Allen, Allen & Thigpen, has provided legal services, and advanced expenses, in the prosecution of the derivative action on behalf of Plaintiffs which, at rates which are reasonable for cases such as this, aggregate to a total of $260,308.93.\nThere are no findings indicating the number of hours reasonably expended; the nature or quality of the work; the customary charge (hours or rates) by other attorneys for similar services; the actual hourly rates used in arriving at the total fee award; whether this representation precluded opportunities to represent other clients; or whether the services were rendered on a contingency basis. The findings are deficient under Owensby v. Owensby, 312 N.C. 473, 322 S.E. 2d 772 (1984). Although our review of the record reveals that evidence for all or nearly all of these findings is readily available, an effective review of the trial court\u2019s exercise of discretion is not possible in this case. Therefore it must be remanded for more specific findings. Owensby.\nBecause certain additional issues raised in defendants\u2019 argument are likely to arise on remand, we address them here. First, we see no abuse of discretion in approving a gradual, annual increase in each attorney\u2019s hourly rate to account for his or her increased experience and expertise, particularly in a case such as this one spanning several years. Second, the variation in rates among attorneys who worked on different aspects of the representation may be justified by findings of fact explaining the difference in terms of complexity, attorney experience, relative success or the like. Indeed, it is by this variation, not bonuses, that attorneys may be rewarded for excellent service and perseverance through complex and lengthy proceedings.\nFinally, we note that the court failed to support its determination that 80% of the attorneys\u2019 fees and expenses be paid by Mills and 20% by Farms. We realize it is difficult to justify any specific numerical division of this burden, and the difficulty inherent in this determination will be taken into account by the appellate courts if called upon to review the trial court\u2019s decision. But a more specific explanation for the unequal apportionment must be offered than the general statement that the benefits obtained on behalf of each corporate defendant were disproportionate.\nV\nDefendants\u2019 final argument is that the $40,000 merit bonus added by the court to the attorneys\u2019 fee award was improper. We agree.\nThe trial court found that the case was \u201cbitterly contested, involving unique questions of law and . . . intense personal conflict. In addition, the matter has been quite protracted, through no fault of Plaintiffs or Plaintiffs\u2019 counsel.\u201d The court then, in its discretion, increased the award by $40,000.\n\u201cWhere attorneys\u2019 fees are properly awarded, the amount of the award rests within the discretion of the trial court and is reviewable on appeal only for an abuse of discretion.\u201d Owensby, 312 N.C. at 475, 322 S.E. 2d at 774 (citation omitted). An award of a merit bonus, based on factors that are properly considered in the initial determination of the hourly rates and the number of hours reasonably expended, is an abuse of discretion. Coastal Productions Credit Association v. Goodson Farms, Inc., 70 N.C. App. 221, 319 S.E. 2d 650, disc. rev. denied, 312 N.C. 621, 323 S.E. 2d 922 (1984). In this State, the proper time to consider the many factors relevant in determining reasonable fees is in setting the attorneys\u2019 hourly rates. Id. These factors include the novelty and complexity of the issues involved; the magnitude of the task; and the nature, scope and quality of the legal services. See Owensby; Coastal Productions.\nIn Coastal Productions, this Court left open the question whether, in the \u201crare case,\u201d North Carolina trial courts may follow the federal rule and award a merit bonus when the attorneys show they have provided \u201csuperior quality representation and exceptional success. See Blum v. Stenson, \u2014 U.S. \u2014, 79 L.Ed. 2d 891, 104 S.Ct. 1541 (1984).\u201d 70 N.C. App. at 229, 319 S.E. 2d at 656.\nUnder the federal rule, most of the numerous considerations relating to the value of the legal services are subsumed within the calculation of the \u201clodestar\u201d figure \u2014 the product of the reasonable hours and the hourly rates. Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 54 U.S.L.W. 5017, 5022 (U.S. July 2, 1986). The Supreme Court\u2019s reasoning is persuasive:\n[W]e specifically held in Blum that the \u201cnovelty [and] complexity of the issues,\u201d \u201cthe special skill and experience of counsel,\u201d the \u201cquality of representation,\u201d and the \u201cresults obtained\u201d from the litigation are presumably fully reflected in the lodestar amount, and thus cannot serve as independent bases for increasing the basic fee award. Id., at 898-900. Although upward adjustments of the lodestar figure are still permissible, id., at 901, such modifications are proper only in certain \u201crare\u201d and \u201cexceptional\u201d cases, supported by both \u201cspecific evidence\u201d on the record and detailed findings by the lower courts. See id., at 898-901.\n\u2022 A strong presumption that the lodestar figure \u2014 the product of reasonable hours times a reasonable rate \u2014 represents a \u201creasonable\u201d fee is wholly consistent with the rationale behind the usual fee-shifting statute, including the one in the present case. These statutes were not designed as a form of economic relief to improve the financial lot of attorneys, nor were they intended to replicate exactly the fee an attorney could earn through a private fee arrangement with his client. Instead, the aim of such statutes was to enable private parties to obtain legal help in seeking redress for injuries resulting from the actual or threatened violation of specific federal laws. . . .\nMoreover, when an attorney first accepts a case and agrees to represent the client, he obligates himself to perform to the best of his ability and to produce the best possible results commensurate with his skill and his client\u2019s interests. Calculating the fee award in a manner that accounts for these factors, either in determining the reasonable number of hours expended on the litigation or in setting the reasonable hourly rate, thus adequately compensates the attorney, and leaves very little room for enhancing the award based on his post-engagement performance. In short, the lodestar figure includes most, if not all, of the relevant factors comprising a \u201creasonable\u201d attorney\u2019s fee. . . .\n54 U.S.L.W. at 5022.\nFurthermore, by limiting the number of points in the process of calculating a fee award at which a trial court may adjust the figures, in its discretion, to accurately reflect the value of services rendered, the appellate courts are better able to review the trial court\u2019s decisions.\nEven assuming, as we did in Coastal Productions, that the federal merit-bonus rule may be applied in this State, there is nothing in the record, either in the evidence or in the court\u2019s findings, to show that this is a \u201crare case\u201d warranting a merit bonus.\nVI\nFor the reasons set forth above, the Order approving payment of fees and expenses to receivers, attorneys and accountants is affirmed. The Judgment awarding attorneys\u2019 fees under G.S. Sec. 55-55(d) is remanded for the court (1) to make additional findings in accord with this opinion and (2) to exclude the $40,000 merit bonus.\nThe Order of 23 August 1985 is affirmed.\nThe Judgment of 23 August 1985 is remanded.\nJudges Arnold and Wells concur.", "type": "majority", "author": "BECTON, Judge." } ], "attorneys": [ "Moore, Van Allen, Allen & Thigpen, by Jeffrey J. Davis and Randel E. Phillips, for plaintiff appellees.", "Kluttz, Hamlin, Reamer, Blankenship & Kluttz, by William C. Kluttz, Jr., for receiver appellees.", "Boyce, Mitchell, Bums & Smith, P.A., by Lacy M. Presnell III and Susan K. Burkhart, for defendant appellants except All Star Mills, Inc.", "Hopkins, Hopkins & Tucker, by William C. Tucker, for intervening-defendant appellants and defendant appellant All Star Mills, Inc." ], "corrections": "", "head_matter": "MALCOLM M. LOWDER, MARK T. LOWDER and DEAN A. LOWDER, Plaintiffs v. ALL STAR MILLS, INC., LOWDER FARMS, INC., CAROLINA FEED MILLS, INC., ALL STAR FOODS, INC., ALL STAR HATCHERIES, INC., ALL STAR INDUSTRIES, INC., TANGLEWOOD FARMS, INC., CONSOLIDATED INDUSTRIES, INC., AIRGLIDE, INC., and W. HORACE LOWDER, Defendants, and CYNTHIA E. LOWDER PECK, MICHAEL W. LOWDER, DOUGLAS E. LOWDER, LOIS L. HUDSON, Individually and as Guardian Ad Litem for STEVE H. HUDSON, BRUCE E. HUDSON, BILLY J. HUDSON, ELLEN H. BALLARD, JENNELL H. RATTERREE, DAVID P. LOWDER, JUDITH R. LOWDER HARRELL, EMILY P. LOWDER CORNELIUS and MYRON P. LOWDER, Intervening Defendants\nNo. 8620SC28\n(Filed 19 August 1986)\n1. Receivers \u00a7 12.1\u2014 receivership fees and expenses \u2014failure to allocate among corporations \u2014order not final\nThe trial court did not err in approving receivership fees and expenses of accountants, attorneys and receivers without allocating the various expenses among the seven corporate defendants in proportion to the services performed or expenses incurred on behalf of each corporation where the court\u2019s order is not a final judgment. When a final judgment is entered in the case, the total costs must be equitably apportioned among the defendant corporations.\n2. Attorneys at Law \u00a7 7.5; Corporations \u00a7 6\u2014 attorney fees \u2014success in shareholder derivative action\nPlaintiffs were successful on the merits in part in the prosecution of a shareholder derivative action on behalf of a corporation so as to support an award of attorney fees under N.C.G.S. \u00a7 55-55(d), notwithstanding the jury found that the controlling director did not misappropriate a corporate opportunity, where the court made certain independent findings concerning the controlling director, the controlling director was removed, a receiver was appointed to protect the corporate assets, and the receiver and his attorney successfully negotiated with the IRS to reduce or eliminate tax claims against the corporation.\n3. Corporations \u00a7 6; Attorneys at Law \u00a7 7.5\u2014 shareholder derivative action \u2014 attorney fees \u2014 monetary benefit to corporation not required\nThe statute allowing an award of attorney fees and expenses in a shareholder derivative action does not require that the fees and expenses be paid out of a monetary benefit received by the corporation as a result of the action. N.C.G.S. \u00a7 55-55(d).\n4. Corporations \u00a7 6; Attorneys at Law \u00a7 7.5\u2014 shareholder derivative action \u2014 attorney fees \u2014insufficient findings\nThe trial court\u2019s findings were insufficient to support amounts awarded as attorneys\u2019 fees in a shareholder derivative action where no findings were made indicating the number of hours reasonably expended; the nature or quality of the work; the customary charge by other attorneys for similar services; the actual hourly rates used in arriving at the total fee award; whether this representation precluded opportunities to represent other clients; and whether the services were rendered on a contingency basis.\n5. Corporations \u00a7 6; Attorneys at Law \u00a7 7.5 \u2014 shareholder derivative action \u2014 attorneys\u2019 lees \u2014 annual increase in hourly rate\nIn awarding attorneys\u2019 fees under N.C.G.S. \u00a7 55-55(d) in a shareholder derivative action, the court does not abuse its discretion in approving a gradual, annual increase in each attorney\u2019s hourly rate to account for his or her increased experience and expertise, particularly in a case spanning several years.\n6. Corporations \u00a7 6; Attorneys at Law \u00a7 7.5\u2014 shareholder derivative action \u2014 attorneys\u2019 fees \u2014 variation in rates\nIn awarding attorneys\u2019 fees in a shareholder derivative action, a variation in rates among attorneys who worked on different aspects of the representation may be justified by findings of fact explaining the difference in terms of complexity, attorney experience, relative success or the like.\n7. Corporations \u00a7 6; Attorneys at Law \u00a7 7.5\u2014 shareholder derivative action \u2014 attorneys\u2019 fees \u2014 merit bonus\nThe trial court erred in adding a merit bonus of $40,000 to the fees awarded to plaintiffs\u2019 attorneys in a shareholder derivative action. Even if the federal merit-bonus rule may be applied in this state, there was nothing in the record to show that this is a \u201crare case\u201d warranting a merit bonus.\nAppeal by defendants Lowder Farms, Inc., All Star Foods, Inc., All Star Hatcheries, Inc., All Star Industries, Inc., and Consolidated Industries, Inc., and all intervening defendants from Seay, Judge. Judgment and Order entered 23 August 1985 in Superior Court, STANLY County. Heard in the Court of Appeals 15 May 1986.\nMoore, Van Allen, Allen & Thigpen, by Jeffrey J. Davis and Randel E. Phillips, for plaintiff appellees.\nKluttz, Hamlin, Reamer, Blankenship & Kluttz, by William C. Kluttz, Jr., for receiver appellees.\nBoyce, Mitchell, Bums & Smith, P.A., by Lacy M. Presnell III and Susan K. Burkhart, for defendant appellants except All Star Mills, Inc.\nHopkins, Hopkins & Tucker, by William C. Tucker, for intervening-defendant appellants and defendant appellant All Star Mills, Inc." }, "file_name": "0470-01", "first_page_order": 498, "last_page_order": 509 }