               IN THE SUPREME COURT OF NORTH CAROLINA

                                     No. 390A18

                                Filed 29 March 2019

EMILY N. PREISS and WINE AND DESIGN, LLC

             v.
WINE AND DESIGN FRANCHISE, LLC, HARRIET E. MILLS, PATRICK MILLS,
and CAPITAL SIGN SOLUTIONS, LLC


      Appeal pursuant to N.C.G.S. § 7A-27(a) from an order on motion for sanctions

dated 19 July 2018 entered by Judge Gregory P. McGuire, Special Superior Court

Judge for Complex Business Cases, in Superior Court, Wake County, after the case

was designated a mandatory complex business case by the Chief Justice under

N.C.G.S. § 7A-45.4.   Heard in the Supreme Court on 6 March 2019.


      Law Offices of Hayes Hofler, P.A., by R. Hayes Hofler, III, pro se, appellant.

      Batten Lee, PLLC, by Kari R. Johnson, Gloria T. Becker, and Matthew D.
      Mariani, for defendant-appellees Harriet E. Mills, Patrick Mills, and Capital
      Sign Solutions, LLC.



      PER CURIAM.


      AFFIRMED.
STATE OF NORTH CAROLINA                   IN THE GENERAL COURT OF JUSTICE
                                              SUPERIOR COURT DIVISION
COUNTY OF WAKE                                      17 CVS 11895

EMILY N. PREISS and WINE AND
DESIGN, LLC

                           Plaintiffs,
                                                  ORDER ON MOTION FOR
v.                                              SANCTIONS AND TO COMPEL
                                                      DEPOSITION
WINE AND DESIGN FRANCHISE,
LLC; HARRIETT E. MILLS;
PATRICK MILLS; and CAPITAL
SIGN SOLUTIONS, LLC,

                           Defendants.

      THIS MATTER comes before the Court upon Defendants Harriett E. Mills,

Patrick Mills, and Capital Sign Solutions, LLC’s (“the Mills Defendants”) Motion for

Sanctions and to Compel Deposition, (“Motion”, ECF No. 93), and a memorandum in

support of the Motion. (ECF No. 94.) The Mills Defendants seek sanctions pursuant

to Rule 37 of the North Carolina Rules of Civil Procedure. N.C. Gen. Stat. § 1A-1,

Rule 37 (hereinafter, references to the General Statutes will be to “G.S.” and

references to the Rules of Civil Procedure will be to “Rule(s)”). On June 11, 2018,

Plaintiffs filed a response in opposition to the Motion. (Pl. Resp. Opp. Mot. for

Sanctions and Compel Depo., ECF No. 107.)

      On July 6, 2018, the Court held a hearing on the Motion. At the hearing, the

Court advised counsel that it would grant the Motion and asked counsel for the Mills

Defendants to file with the Court an affidavit in support of her request for attorneys’

fees and costs.   Thereafter, counsel for the Mills Defendants, Gloria T. Becker

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(“Becker”), filed two affidavits in support of her request for attorneys’ fees. (ECF Nos.

114 and 115.)

      THE COURT, having carefully considered the Motion, the briefs filed in

support of and in opposition to the Motion, the arguments of counsel at the hearing,

and other appropriate matters of record, concludes, in its discretion, that the Motion

should be GRANTED for the reasons set forth below.

                            I.    FACTUAL BACKGROUND

      On February 12, 2018, the Court filed the Case Management Order (“CMO”)

in this action. (CMO, ECF No. 49.) The CMO provided that “[t]he depositions of

Plaintiffs Emily Preiss and Wine and Design, L.L.C. shall take place . . . no later than

April 16, 2018. Defendants shall be permitted to take Plaintiffs’ deposition before

any other party is deposed.” (ECF No. 49, at p. 4.)

      On March 16, 2018, Defendants noticed the deposition of Emily Preiss

(“Preiss”) for April 11, 2018, after confirming that date and time of was agreeable to

all Parties. (Pl. Mot. for Protective Order, ECF No. 62, at ¶ 1.)

      On April 4, 2018, Plaintiffs filed a Motion for Protective Order pursuant to

Rule 26(c) requesting that the Court “disallow” the Mills Defendants from taking

Preiss’s noticed deposition on April 11, 2018 because “the notices of deposition [were]

interposed on Ms. Preiss to annoy, confuse, harass and oppress her [and ] [e]ven if

not for those purposes, Ms. Preiss cannot be expected to give a coherent deposition

under her present mental incapacities.” (ECF No. 62, at p. 3.) Also on April 4, 2018,

Plaintiffs filed a Motion for Extension of Discovery Deadlines (ECF No. 64) requesting


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a 30-day extension of the time allowed to complete fact discovery. On April 5, 2018,

the Mills Defendants filed written responses to the Motion for Protective Order (ECF

No. 65) and the Motion for Extension of Discovery Deadlines (ECF No. 66) in which

they catalogued the various ways counsel for Plaintiffs had utilized motions practice

to avoid participating in the discovery process.

       The Court issued an Order that expedited the briefing schedule for the

Motions. (Order Expediting Briefing, ECF No. 67.) The Court was unable to hold a

hearing on Plaintiffs’ motions until April 11, 2018, effectively preventing the Mills

Defendants from taking the noticed depositions of Preiss on that date. (Notice of

Hearing and Or. To Appear, ECF No. 71.)

       At the hearing on April 11, 2018, the Court orally notified counsel that the

depositions of Preiss and Wine and Design, L.L.C. would thereafter be Ordered to

take place on April 25, 2018, starting at 9:00 a.m., at the offices of counsel for the

Mills Defendants in Raleigh, North Carolina.

       On April 12, 2018, the Court issued an Order on Plaintiffs’ Motion for

Extension of Discovery Deadlines. (ECF No. 73.) The Order stated that “[t]he

depositions of Plaintiffs Emily Preiss and Wine and Design, L.L.C. shall take place

on April 25, 2018 . . . starting at 9:00 a.m.” (ECF No. 73, at p. 2 (emphasis in

original).)

       Also on April 12, 2018, the Court issued an Order on Plaintiff’s Motion for

Protective Order (ECF No. 74) that contained a second explicit statement that “the

depositions of Plaintiffs Emily Preiss and Wine and Design, L.L.C. shall take place


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at 4141 Parklake Avenue, Suite 350, Raleigh, North Carolina 27612 on April 25, 2018

beginning at 9:00 a.m.” (ECF No. 74, at p. 2 n. 1.)

       On April 25, 2018 at 9:00 a.m. Becker and counsel for Defendant Wine and

Design Franchise, LLC were present at the designated location for the deposition,

had a court reporter present, and were prepared to take Preiss’s deposition. However,

neither Preiss nor Plaintiff’s counsel, R. Hayes Hofler (“Hofler”) appeared at the

designated location. At 9:30 a.m. neither Preiss nor Hofler had yet appeared, and

Becker released the court reporter to leave. Shortly thereafter, Hofler telephoned

Becker and claimed that he mistakenly believed the deposition was scheduled to

begin at 10:00 a.m. (Br. Supp. Mot. for Sanctions, ECF No. 94, at p. 2.) When Becker

asked if Hofler was on his way to Raleigh from his Durham office1, Hofler responded

that he had not yet left his office. (Id.) Becker advised Hofler that, under the

circumstances, she would not recall the court reporter and wait indefinitely for Hofler

and Preiss to appear.2

                                  II.    LEGAL ANALYSIS

    A. Rule 37(d) justifies an award of sanctions against Hofler, in this case

       Rule 37 provides that

              If a party . . . fails [ ] to appear before the person who is to
              take his deposition, after being served with proper
              notice, . . . the court in which the action is pending on
              motion may make such orders in regard to the failure as
              are just, and among others it may take any action
              authorized under subdivisions a, b, and c of subsection

1 Mills Defendants contend, and Hofler does not dispute, that Hofler’s offices are at least 30
minutes away from the location designated for the depositions.
2 Preiss apparently appeared at the deposition location, alone, at 10:30 a.m.



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             (b)(2) of this rule. In lieu of any order or in addition
             thereto, the court shall require the party failing to act to
             pay the reasonable expenses, including attorney’s fees,
             caused by the failure, unless the court finds that the failure
             was substantially justified or that other circumstances
             make an award of expenses unjust.

Rule 37(d)(emphasis added).     The available sanctions under Rule 37(b)(2)(a)–(c)

include:

             a. An order that the matters regarding which the order
                was made or any other designated facts shall be taken
                to be established for the purposes of the action in
                accordance with the claim of the party obtaining the
                order;

             b. An order refusing to allow the disobedient party to
                support or oppose designated claims or defenses, or
                prohibiting him from introducing designated matters in
                evidence;

                [and]

             c. An order striking out pleadings or parts thereof, or
                staying further proceedings until the order is obeyed, or
                dismissing the action or proceeding or any part thereof,
                or rendering a judgment by default against the
                disobedient party.

      Although the Court would be inclined to consider more severe sanctions,

Becker made clear at the hearing that she seeks only an award of fees in this

situation.

      There is no dispute that Preiss and Hofler did not appear at the designated

time and location for the Court-ordered deposition of Preiss. Instead, Hofler contends

that he mistakenly thought that the deposition was scheduled to begin at 10:00 a.m.,

and was willing to proceed with the deposition at a later time after he and Preiss



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arrived at the deposition location. Hofler argues that he should not be required to

pay attorneys’ fees because Preiss did not fail to appear at her deposition, she merely

arrived late, and her late arrival was the result of Hofler’s mistake. (ECF No. 107,

at pp. 6–8.) Such mistake, Hofler contends, is a “circumstance[ ] mak[ing] an award

of expenses unjust.” (Id (citing Rule 37(d)).)

      The Court is not persuaded by Plaintiffs’ argument, considering the factual

and procedural background of this Motion and this case.          The time set for the

deposition was noted clearly in open court, featured in bold-face type in the Order on

the Motion for Extension of Discovery Deadlines, and cross-referenced in the Order

on the Motion for Protective Order issued that same day. There was no excuse that

substantially justified Hofler’s mistake as to the time for the deposition.

   B. Counsel for the Mills Defendants has presented sufficient evidence to
      justify an award of attorneys’ fees in the amount requested

      “[A]n award of attorney’s fees usually requires that the trial court enter

findings of fact as to the time and labor expended, skill required, customary fee for

like work, and experience or ability of the attorney based on competent evidence.”

Couch v. Private Diagnostic Clinic, 146 N.C. App. 658, 672, 554 S.E.2d 356, 366

(2001).

      The Mills Defendants seek a total of $4,100.00 in fees for services and costs.

Mills Defendants submitted affidavits in support of the attorneys’ fees and costs

incurred from Preiss and Hofler’s failure to appear at the deposition. (Becker Affs.,

ECF Nos. 114 and 115.) The Mills Defendants seek fees in the amount of $3,770.00

for: 10.3 hours of legal services performed by Becker at an hourly rate of $225.00; 5.9

                                          -7-
hours of legal services performed by Matthew D. Mariani at an hourly rate of $175.00;

and 5.6 hours of paralegal work at an hourly rate of $75.00. (ECF No. 115, at ¶ 6.)

The Mills Defendants also seek costs for Superior Court Reporting (appearance and

deposition fee) of $330.00. (Id.)

      The hourly fees charged by Becker and Mariani are discounted to the Mills

Defendants, and are substantially below the hourly rates they typically charge. (ECF

No. 115, at ¶¶ 3 and 4.) The hourly rates charged by the two attorneys and the

paralegal also are lower than rates charged by comparably skilled and experienced

attorneys practicing complex business litigation law in North Carolina. The Mills

Defendants submitted evidence that the standard and customary rates charged for

such services “range from $250.00/hour to $400.00/hour for a Partner; $200.00/hour

to $300.00/hour for associates; and $100/hour to $150[.00]/hour for paralegals.” (ECF

No. 115, at ¶ 5.)

      The Mills Defendants also submitted evidence that the professional services

performed as a result of Preiss and Hofler’s failure to appear at the deposition

included “drafting and serving of the amended Notices of Deposition . . . ; attendance

of the actual depositions where [P]laintiffs and counsel failed to appear; drafting and

filing of the [Motion]; researching case law, drafting and filing of the Memorandum

of Law in Support of the [Motion]; preparation for the hearing on the [Motion]; travel

to/from and attendance of hearing on [the Motion]; and drafting of” the first

evidentiary affidavit. (ECF No. 115, at ¶ 7.) The Court concludes that each of the

tasks described in Becker’s affidavit are attributable, and were reasonably necessary,


                                          -8-
to respond Preiss and Hofler’s failure to appear at the noticed deposition.

      The Mills Defendants have provided sufficient evidence of the time and labor

required to litigate this discovery violation and the costs incurred.         The Mills

Defendants’ counsel are experienced civil litigation attorneys, and the Court

concludes that the skill needed to perform the services attributable to Preiss and

Hofler’s failure to appear at the noticed deposition required attorneys with such

experience. The Court finds the rates charged by counsel in the present matter are

lower than those charged by other attorneys with similar experience, skill, and ability

to that of the Mills Defendants’ counsel.

      Accordingly, the Court finds that the amount of fees and costs requested by

counsel for the Mills Defendants is reasonable, and the Court must award such

reasonable fees and expenses pursuant to Rule 37(d).

                          III.   CONCLUSION AND ORDER

      THE COURT, having considered the Motion, the briefs filed in support of and

in opposition to the Motion, and other appropriate matters of record in this case

including the fact that the April 25, 2018 deposition was Court-ordered after

Plaintiffs filed motions in an attempt to avoid the previously scheduled depositions

of Preiss, CONCLUDES in its discretion that the Motion for Sanctions should be

GRANTED.

      THEREFORE, IT IS ORDERED that R. Hayes Hofler, as Plaintiffs’ Counsel,

is hereby sanctioned pursuant to Rule 37(d), is individually liable to counsel for the

Mills Defendants for $4,100.000, the amount Mills Defendants’ counsel incurred as a


                                            -9-
result of Plaintiffs’ failure to attend a Court-ordered deposition.

      Hofler must pay such amount to Mills Defendants’ counsel on or before

Friday, August 3, 2018.

      The Court reserves, for consideration at a later date, the Mills Defendants’

motion to compel the deposition of Plaintiffs.



SO ORDERED, this the 19th day of July, 2018.




                                         /s/ Gregory P. McGuire
                                         Gregory P. McGuire
                                         Special Superior Court Judge for
                                         Complex Business Cases




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