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VHS of Michigan, Inc v Jones, et al (COA – UNP 5/12/2022; RB #4408)   

Michigan Court of Appeals; Docket #355953; Unpublished  
Judges Jansen, Cavanagh, and Riordan; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING: 
Not Applicable

TOPICAL INDEXING: 
Attorney Fee Liens 


SUMMARY:
In this unanimous, unpublished, per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order in favor of Plaintiff VHS of Michigan, Inc. (“VHS”), in VHS’s action against Defendant Dailey Law Firm, PC (“Dailey”) for conversion. The Court of Appeals held, first, that Dailey committed a conversion when he deposited a check—issued by Citizens Insurance Company of the Midwest (“Citizens”), the no-fault insurer highest in priority for payment of Dailey’s client’s claim for no-fault PIP benefits, and made payable to both Dailey and VHS—into his Interest on Lawyers Trust Account (IOLTA) while he negotiated with VHS about whether he could retain any portion of the check to cover his attorney fee for recovering payment in the first place.  The Court of Appeals held, second, that Dailey could not assert an attorney’s charging lien over payment received from Citizens for medical services VHS rendered to Dailey’s client.

Jay Juan-Jarmaine Jones was injured in a car crash and retained Dailey to help him file a claim for no-fault PIP benefits.  Dailey assisted Jones in applying for benefits through the Michigan Assigned Claims Plan (MACP), which assigned Jones’s claim for benefits to Citizens.  At some point after the crash, Jones underwent two MRIs at VHS.  Citizens and VHS negotiated the rate for the two MRIs, and Citizens sent Dailey two checks totaling $9,532.80, the negotiated rate.  The checks were made payable to “Sinai Grace Hospital and Dailey Law Firm PT,” and, after receiving the checks, Dailey deposited them in his Interest on Lawyers Trust Account (IOLTA).  VHS requested that Dailey turn the funds over to it, but Dailey refused, informing VHS that he intended to retain one-third of the $9,532.80 to cover his attorney fee.  VHS, for its part, refused to accept a reduced amount and honor Dailey’s attorney fee, instead filing suit against Dailey for conversion.  The trial court ruled that Dailey did convert the funds and awarded VHS treble damages.

The Court of Appeals affirmed the trial court’s summary disposition order in favor of VHS, holding, first, that Dailey did convert the funds by depositing the check in its entirety in his IOLTA account without VHS’s authority.  Under MCL 440.3110(4), if a check is made out to two or more payees, it can only be acted on by “all” the payees.  If only one party payee acts on the instrument without authority or approval of the other parties—as Dailey did in this case with VHS—that party has committed a conversion.  

“Because VHS, as the moving party, presented evidence showing the Citizens checks were payable to both VHS and Dailey, and because VHS offered evidence showing only Dailey acted on the Citizens checks, the burden then shifted to Dailey to ‘demonstrate a genuine issue of disputed fact exists for trial’ regarding Dailey’s alleged conversion. AFSCME, 267 Mich App at 261. In response to VHS’s motion for summary disposition, Dailey only offered one exhibit—copies of the front of the Citizens checks including Dailey’s deposit slip purportedly showing Dailey’s deposit of the Citizens checks into its IOLTA. Evidence of the Citizens checks with the deposit slip to the IOLTA did not bolster Dailey’s contention it did not convert the Citizens checks. Indeed, Dailey’s evidence effectively furthered VHS’s contention Dailey wrongfully exerted domain over the Citizens checks. Again, an instrument payable to ‘2 or more persons not alternatively’ requires action by ‘all’ parties. MCL 440.3110(4). By offering evidence showing only its acts with respect to the Citizens checks, Dailey supported VHS’s argument there was no genuine dispute of fact as to its conversion of the Citizens checks. Therefore, the trial court did not err in finding that Dailey converted the Citizens checks.” 

Dailey argued, nonetheless, that it did not convert the check because it only intended to keep a portion of the funds.  The Court noted two problems with this argument:

“First, while Dailey argued its intent was to only keep a portion of the funds, Dailey actually kept all the funds. Indeed, it is undisputed by the parties Dailey has never disbursed any funds to VHS from the Citizens checks and Dailey admits in its pleadings to this Court all the funds from the Citizens checks remain in its IOLTA. Moreover, Dailey’s argument it intended to only keep a portion of the funds did not effectively refute VHS’s argument Dailey converted the funds. Again, once the burden shifts to the nonmoving party, the nonmoving party must present some documentary evidence establishing a genuine dispute of fact. AFSCME, 267 Mich App at 261. Dailey presented to the trial court no documentary evidence to this effect. Consequently, Dailey failed to meet its burden as the nonmoving party and there was no error on this basis.”  

Dailey next argued, however, that he held an attorney’s charging lien over the funds and that, “By granting summary disposition in VHS’s favor . . . the trial court effectively invalidated its right to be paid attorney fees.”  The Court of Appeals disagreed, pointing out that the trial court’s order did not preclude Dailey from recovering attorney fees from the only individual or entity that owed him attorney fees: his client.  The Court of Appeals recognized that in the case of Miller v Citizens Ins Co, 490 Mich 905 (2011), the Michigan Supreme Court held that “a medical provider is not obliged to reduce its costs to contribute to an insured’s attorney fees,” and thus, “to the extent Dailey believes it is owed attorney fees, Dailey’s remedy is to file suit against Jones,” not withhold the funds from VHS in an attempt to force VHS to cover his attorney fee.

“Miller II reiterates two principles discussed by the parties. Miller II acknowledged an attorney’s right to collect attorney fees under a contingency agreement. Id. Even so, our Supreme Court concluded this right does not “extinguish[] the [medical provider’s] contractual right to payment for its services.” Id. That is, a medical provider is not obliged to reduce its costs to contribute to an insured’s attorney fees. Id. 

Again, the trial court’s order did not preclude Dailey from recovering attorney fees. By awarding VHS the entire amount of funds from the Citizens checks, the trial court effectively restricted Dailey from recovering attorney fees from VHS. This order did not, however, prevent Dailey from receiving compensation for its efforts. As Dailey states, “Jones is responsible for paying his attorney fee from the amount recovered from Citizens pursuant to the agreement.” To the extent Dailey believes it is owed attorney fees, Dailey’s remedy is to file suit against Jones. Because the trial court’s order did not limit Dailey’s rights in this regard, there is no error for which reversal is warranted.” 


Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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