Michigan Court of Appeals; Docket # 350908; Unpublished
Judges Cavanagh, Jansen, and Shapiro; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Penalty Attorney Fees and Other Court Rule Sanctions [§3148]
General/Miscellaneous [§3148]
TOPICAL INDEXING:
Attorney Fee Liens
Case Evaluation – Accept/Reject in PIP Cases
SUMMARY:
In this unpublished per curiam opinion, the Court of Appeals affirmed the judgment granting defendants $172,984.70 in attorney fees and costs as case evaluation sanctions because there was no evidence to suggest the trial court abused its discretion by awarding attorney fees in an amount greater than what defendants’ counsel was actually paid and no basis that the trial court abused its discretion by failing to hold an evidentiary hearing on Defendants’ request for case evaluation sanctions.
This case arose from a third-party no-fault action in which Plaintiff appealed the judgment of the trial court in favor of the Defendants for attorney fees and costs as case evaluation sanctions. Case evaluation was held on July 10, 2017 and the acceptance or rejection deadline was August 7, 2017. Both Plaintiff and Defendants rejected the award of $275,000 against Defendants. Consequently, the case went to trial in May of 2018 and resulted in a verdict of no cause of action. On August 24, 2018, Defendants moved for case evaluation sanctions against Plaintiff. In response, Plaintiff argued that Defendants had failed to demonstrate the amount of attorney’s fees claimed and that an evidentiary hearing was therefore necessary. Over the course of four hearings, Defendants ultimately revised their bill of costs to request $341,490 in case evaluation sanctions, $281,240 in attorney fees, and $57,984.70 in costs. The trial court awarded each of the requested costs to defendant. Plaintiff objected to the inclusion of post-verdict attorney fees incurred by defendants when seeking case evaluation sanctions and the trial court agreed, removing them as unrecoverable. Ultimately, without disclosing how much Defendants’ counsel billed or was paid by the insurance company, the trial court agreed with the plaintiff’s argument that the amount of attorney fees sought by defendants was “extremely excessive” and awarded defendant $115,000 in attorney fees. Plaintiff appealed.
The Court began its analysis by evaluating Plaintiff’s argument that the trial court abused its discretion by awarding attorney fees in an amount greater than what defendant’s counsel was ultimately paid. In this case, the Court noted that Defendants’ counsel billed 765.7 hours. Dividing the $115,000 attorney fee award by this number equated to a rate of $150 per hour. The court noted that the professional standing and experience of each attorney had been set forth in Defendants’ motion for sanctions and provided a reasonable attorney fee. The court further noted that defendants’ amended bill of costs contained affidavits from Defendants’ counsel which set forth their qualifications and stated that rates of $450, $350, and $200 for senior partners, partners, and associates, respectively, were reasonable. The Court agreed, finding “no evidence to support plaintiff’s assertion that $160 per hour or $115,000 is an amount greater than actually charged or for the amount the insurance company actually paid.” Further, while recognizing that some of the lack of evidence resulted from the trial court’s determination that plaintiff was not entitled to know the rates and total amount of attorney fees charged by defendants’ counsel, the Court also noted that these numbers were not required for purposes of determining a reasonable fee. Specifically, the Court looked to MCR 2.403(O), which provides for the award for a “reasonable attorney fee” and noted that this Court had already expressly held in Cleary v. Turning Point, 203 Mich. App. 208, 212; 512 N.W.2d 9 (1193) that “reasonable fees are not equivalent to the actual fees charged.” Accordingly, the court held that “to the degree that there is any record evidence to support that the trial court’s award of $115,000 was greater than the amount defendants’ counsel charged or received from the insurance company, that evidence is not sufficient, by itself, to justify a determination that the trial court abused its discretion.”
Next, the Court turned to Plaintiff’s argument that the trial court abused its discretion by failing to hold an evidentiary hearing on Defendants’ request for case evaluation sanctions. Again, the Court disagreed, holding that while “[g]enerally, a trial court should hold an evidentiary hearing when a party is challenging the reasonableness of the attorney fees claimed,” this is not the case when a Defendant’s bill of costs and accompanying documentation can “provide[] the trial court with a reasonable evidentiary basis to evaluate and decide [the] defendant’s motion for costs” without holding an evidentiary hearing. Here, the Court found that there were “no fewer than four hearings” on Defendants’ motion for case evaluation sanctions and that Plaintiff “never provided a single objection to the number of hours billed by defendant,” but instead centered arguments on the rate and amount actually billed and charged and Plaintiff’s failure to obtain unredacted billing records. Further, the Court noted that the evidence Plaintiff intended to obtain at an evidentiary hearing – including defendants’ counsel’s rate charged and whether reduced payments were received – were “not relevant to the issue of what constituted a reasonable fee.” Additionally, the court noted that Plaintiff’s failure to take testimony from Defendants’ counsel at the final hearing on Defendants’ motion “did not render the trial court’s failure to sua sponte offer yet another hearing to ostensibly obtain additional evidence erroneous.” Similarly, in response to Plaintiff’s assertion that he would use the evidentiary hearing to inquire about specific charges that remained on the invoices, the court reasoned that “[i]n light of the trial court expressly affording plaintiff an opportunity to provide specific objections to any of defendants’ claimed costs and plaintiff’s failure to provide any such objection, plaintiff waived any issue regarding specific costs.”
Finally, the Court analyzed Plaintiff’s argument that the trial court’s award must be vacated and the matter remanded due to the trial court’s failure to follow the analysis required in Smith v. Khouri, 481 Mich. 519; 751 N.W.2d 472 (2008). The Court agreed that the trial court committed errors of law related to its determination of a reasonable attorney fee by failing to discuss any of the Smith factors in reaching its holding. However, the court ultimately concluded that this error was harmless. Thus, the court affirmed the trial court’s holding and ultimately found that the total attorney fee award was not excessive “in either the rate or the number of hours billed.”