46TH CIRCUIT TRIAL COURT V CRAWFORD CNTY
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STATE OF MICHIGAN
COURT OF APPEALS
46TH CIRCUIT TRIAL COURT,
FOR PUBLICATION
April 1, 2004
9:15 a.m.
Plaintiff/Counterdefendant/Third
Party Defendant-Appellee,
v
No. 246823
Crawford Circuit Court
LC No. 02-005951-CZ
CRAWFORD COUNTY and CRAWFORD
COUNTY BOARD OF COMMISSIONERS,
Defendants/Counterplaintiffs/Third
Party Plaintiffs-Appellants,
and
KALKASKA COUNTY,
Intervening Third Party
Plaintiff/CounterdefendantAppellant,
and
OTSEGO COUNTY,
Third Party Defendant.
46TH CIRCUIT TRIAL COURT,
Plaintiff/Counterdefendant/Third
Party Defendant-Appellee,
v
No. 248593
Crawford Circuit Court
LC No. 02-005951-CZ
CRAWFORD COUNTY and CRAWFORD
COUNTY BOARD OF COMMISSIONERS,
Defendants/Counterplaintiffs/Third
Party Plaintiffs-Appellants,
-1-
and
KALKASKA COUNTY,
Intervening Third Party
Plaintiff/CounterdefendantAppellant,
and
OTSEGO COUNTY,
Third Party Defendant.
46TH CIRCUIT TRIAL COURT,
Plaintiff/Counterdefendant/Third
Party Defendant-Appellee,
No. 251390
Crawford Circuit Court
LC No. 02-005951-CZ
v
CRAWFORD COUNTY and CRAWFORD
COUNTY BOARD OF COMMISSIONERS,
Defendants/Counterplaintiffs/Third
Party Plaintiffs-Appellants,
and
KALKASKA COUNTY,
Intervening Third Party
Plaintiff/CounterdefendantAppellant,
Updated Copy
June 18, 2004
and
OTSEGO COUNTY,
Third Party Defendant.
Before: Sawyer, P.J., and Bandstra and Smolenski, JJ.
-2-
BANDSTRA, J.
In Docket No. 246823, defendants Kalkaska County, Crawford County, and the Crawford
County Board of Commissioners appeal by leave granted the lower court's February 4, 2003,
order declaring that the three counties involved in this case are responsible for the legal expenses
of the plaintiff in this matter, the 46th Circuit Trial Court. In Docket Nos. 248593 and 251390,
defendants Kalkaska County, Crawford County, and the Crawford County Board of
Commissioners appeal by leave granted the lower court's May 21 and September 22, 2003,
orders awarding plaintiff attorney fees and costs in the amount of $350,386 and $316,007,
respectively. The appeals were consolidated. We reverse and remand.
I. Basic Facts and Procedural History
This case arises out of a funding dispute between the 46th Circuit Trial Court and the
three counties—Otsego, Kalkaska, and Crawford—served by that court.1 The Trial Court is a
court constituted by the circuit court, district courts, and probate courts in the three counties,
"unified" pursuant to a Supreme Court order. See Administrative Order No. 1996-9. The
funding disputes giving rise to this appeal largely arise out of the budgeting changes made as
part of the unification process.
During the fall of 2000, as part of their responsibilities as the local funding units for the
Trial Court, each of the counties approved funding for implementation of a proposed plan to
increase retiree health and income benefits for employees of the Trial Court.2 However,
approximately one year after the January 2001 implementation of the plan, Kalkaska and
Crawford counties formally rescinded their approval of the plan. Although Kalkaska County
nonetheless continued to provide its share of the funding for the plan through 2002, Crawford
County failed to completely fulfill its funding obligations under the plan and also refused to
make the necessary appropriations to fully fund its share of the Trial Court's proposed budget for
fiscal years 2001, 2002, and 2003.
In October 2002, the Trial Court filed suit against Crawford County and its board of
commissioners under Administrative Order No. 1998-5.3 In count I of the complaint, the Trial
1
For ease of reference, the 46th Circuit Trial Court will hereinafter be referred to simply as "the
Trial Court." References to "the lower court" are to the visiting judge assigned to preside over
this matter.
2
Since this appeal was filed, the lower court proceedings have proceeded through trial to a
verdict in favor of the Trial Court. Although the trial findings may well be appealed, we rely on
them to a limited extent for background on issues that do not appear to be in dispute.
3
Administrative Order No. 1998-5, § III provides, in relevant part, that a court may file a civil
action to compel funding "[i]f, after the local funding unit has made its appropriations, [the]
court concludes that the funds provided for its operations by its local funding unit are insufficient
to enable the court to properly perform its duties and that legal action is necessary . . . ."
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Court alleged that Crawford County had breached an express agreement it had entered with the
Trial Court regarding implementation and funding for the new retiree health care and pension
benefits plan. Count II of the complaint alleged in the alternative that, even if no such agreement
was expressly made, there was an implied contract and Crawford County was estopped from
refusing to fund the plan, having already received the benefit of various concessions made by
Trial Court employees in exchange for increased benefits under the plan. Counts III and IV of
the complaint more generally alleged that Crawford County and its board of commissioners
failed to provide sufficient funds to enable the Trial Court to operate during fiscal years 2001,
2002, and 2003.
In addition to answering these charges, Crawford County and the Crawford County
Board of Commissioners filed a countercomplaint for declaratory relief, alleging that the Trial
Court exceeded its authority in implementing the retiree health care and pension benefits plan.
Crawford County further alleged that the Trial Court had fraudulently misrepresented the cost of
the plan to the local funding units, and that such misrepresentation vitiated any agreement
regarding the plan that might otherwise be enforceable. Kalkaska County was permitted to
intervene in the suit by filing a third-party complaint containing allegations similar to those filed
by the Crawford County defendants in their countersuit against the Trial Court. The Trial Court
thereafter filed a countercomplaint against Kalkaska County, which mirrored the claims and
allegations made by the Trial Court in its complaint against the Crawford County defendants.
In addition to the countersuit and third-party complaint filed against the Trial Court,
Crawford and Kalkaska counties joined in filing a separate suit against Otsego County, in which
it was alleged that, as the control unit for the local funding units, Otsego County violated the
Uniform Budgeting and Accounting Act, MCL 141.421 et seq., by participating in the
implementation of the new retiree health care and pension benefits plan.4 Following
consolidation of the various actions and assignment of a visiting judge to preside over the matter,
the parties began litigating the issue of responsibility for the Trial Court's attorney fees and other
expenses in relation to this matter.
On February 4, 2003, the lower court granted the Trial Court's motion seeking payment
of its attorney fees by the counties, but reserved the determination of the amount of those fees
until the Trial Court had submitted detailed billing statements.5 In concluding that the counties
4
Each of the claims in that suit were ultimately either withdrawn by Crawford and Kalkaska
counties or dismissed by the lower court.
5
The February 4, 2003, order granting the Trial Court's motion also provided that the first
statement was to include all attorney fees incurred by the Trial Court in relation to this matter
before February 1, 2003. Thereafter, billing statements were to be submitted monthly, after
which the lower court would review the invoices and any objections, then enter an order
determining the amount to be paid. Each of the counties, as the local funding units for the Trial
Court, would then be responsible for an equal share of the fees, which was to be paid within
thirty days of the entry of the order settling the amount of those fees.
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were responsible for payment of the Trial Court's attorney fees, the lower court relied, in part, on
MCL 49.73, which requires that a county board of commissioners "employ an attorney to
represent elected county officers" named "as a defendant" in certain civil matters. In finding the
statute applicable here, the lower court reasoned that, because Crawford and Kalkaska counties
had filed a countersuit and a third-party complaint against the Trial Court, the Trial Court was a
"defendant" within the meaning of MCL 49.73. Alternatively, the lower court found that the
Trial Court had inherent power to require the counties to pay attorney fees expended to assure an
adequate judicial budget.
Pursuant to this order, the Trial Court submitted billing statements for all attorney fees
and expenses incurred by it in relation to this matter before February 1, 2003. Following review
of the statements, the lower court concluded that counsel for the Trial Court was entitled to be
paid the full amount of the statements, "and not at a rate dictated by [the] . . . counties."
Accordingly, in an order dated April 29, 2003, but not entered until May 21, 2003, the lower
court approved payment of $350,386 in attorney fees and costs, based on rates of between $230
and $300 an hour. It is not disputed that these rates are well over the rate of $130 an hour
received by counsel for the various counties. The order further provided that the three counties
were each responsible for one-third of the attorney fees and expenses.
Defendants Crawford and Kalkaska counties and the Crawford County Board of
Commissioners sought leave to appeal from the lower court's February 4, 2003, and May 21,
2003, orders, arguing that the lower court erred in finding the counties responsible for the
entirety of the Trial Court's legal fees, that the fees charged by counsel for the Trial Court were
unreasonable and unnecessary, and that paying such fees would put the counties in the position
of having to suspend or severely cut back on essential public services. On May 23, 2003, this
Court granted defendants' application for leave to appeal, as well as a motion for a stay of the
lower court's May 21, 2003, order, which stay was to be continued until resolution of the appeal
or further order of this Court.
Notwithstanding the stay issued by this Court,6 the lower court entered, on September 22,
2003, a second order awarding the Trial Court an additional $316,007 for attorney fees and
expenses incurred after those covered by the May 21, 2003, order. The lower court again
ordered each of the three counties to pay one-third of the amount, and Crawford and Kalkaska
counties and the Crawford County Board of Commissioners again sought leave to appeal, which
this Court granted after consolidation of these matters. On appeal, defendants Crawford and
Kalkaska counties and the Crawford County Board of Commissioners challenge the lower court's
award of attorney fees and costs on a number of grounds, each of which is addressed below.7
6
In light of the fact that we are reversing the September 22, 2003, order on other grounds, we
need not consider defendants' arguments that the trial court was without jurisdiction to enter that
order.
7
Defendants also raise a number of issues not directly related to the award of attorney fees.
However, we do not address those matters because they exceed the scope of review permitted by
(continued…)
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II. Analysis
A. Attorney Fees under MCL 49.73
Defendants first argue on appeal that the lower court erred in concluding that MCL 49.73
applies under the facts of this case. Specifically, defendants assert that the statutory obligation
of a county board of commissioners to employ counsel to represent its county officials in certain
civil matters is limited to actions wherein the official is a named defendant, and does not extend
to situations where, as here, judicial proceedings are initiated by a county official. We agree.
Although this Court typically reviews a trial court's decision regarding attorney fees for
an abuse of discretion, Schoensee v Bennett, 228 Mich App 305, 314; 577 NW2d 915 (1998), the
question presented here is one of statutory interpretation that we review de novo, Solution
Source, Inc v LPR Assoc Ltd Partnership, 252 Mich App 368, 377; 652 NW2d 474 (2002). "The
primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of
the Legislature," and "[t]he first step in determining legislative intent is to review the language of
the statute itself." Id. at 372-373. "If the statute is unambiguous, the Legislature is presumed to
have intended the meaning expressed and judicial construction is neither required nor permitted."
Id. at 373.
MCL 49.73 provides, in relevant part, as follows:
The board of commissioners of a county shall employ an attorney to
represent elected county officers, including the . . . judges of the county district,
probate, and circuit courts in civil matters, as a defendant, when neither the
prosecuting attorney or county corporation counsel is able to represent the
particular officer. Legal advice, counsel, or court action shall be required under
this section only in a case which involves an official act or duty of the office of
the county officer. The attorney shall receive reasonable compensation as shall
be determined by the board of commissioners.
We find no ambiguity in the language of the statute. As this Court has previously
recognized, MCL 49.73 requires a county board of commissioners to employ attorneys to
represent a county officer when the officer "is named as a defendant, but contains no language
authorizing, let alone requiring, employment of attorneys to represent a county official who
initiates an action."8 Wayne Co Sheriff v Wayne Co Bd of Comm'rs, 148 Mich App 702, 711(…continued)
our order granting leave to appeal, which limits the issues on appeal to those "raised in the
application and supporting brief."
8
We recognize that the 46th Circuit Trial Court is arguably not itself a "county officer" within
the plain meaning of MCL 49.73. However, because defendants do not challenge the Trial
Court's status in this regard, and considering that there is another basis on which to find the
statute inapplicable to this matter, we do not address that matter further. For this same reason,
we also decline to address defendants' claim that the lower court erred in failing to determine
whether the prosecuting attorney or county corporate counsel were able to represent the Trial
Court in these proceedings.
-6-
712; 385 NW2d 267 (1983) (emphasis in original); see also Seventeenth Dist Probate Court v
Gladwin Co Bd of Comm'rs, 155 Mich App 433, 459; 401 NW2d 50 (1986) (a trial court, as the
plaintiff in a court funding action, is not entitled to attorney fees under MCL 49.73).
In finding the statute applicable here, the lower court recognized this limitation but
concluded that because the Crawford County defendants had initiated a countersuit against the
Trial Court, and Kalkaska County had been permitted to intervene as a third-party plaintiff, the
Trial Court was nonetheless a "defendant" within the meaning of MCL 49.73. However, as
defendants note, the countersuit and third-party complaint at issue here sought only declaratory
and injunctive relief in defense of the claims asserted in the suit initiated by the Trial Court, and
in fact mirrored many of the original allegations and affirmative defenses found in the Crawford
County defendants' answer to the complaint initially filed. Consequently, we agree with
defendants that the filing of the countersuit and third-party complaint at issue here did not render
the Trial Court a "defendant" within the meaning of MCL 49.73.9 Nonetheless, as explained
below, we do not find the lower court's decision to award the Trial Court attorney fees and
expenses to be erroneous.
B. Attorney Fees under the Doctrine of Inherent Power
In addition to concluding that MCL 49.73 provided authority for the Trial Court to
employ counsel at defendants' expense, the lower court here also concluded that such authority
arose out of the doctrine of separation of powers and the inherent power granted to courts
flowing from it. We agree.
The principles the lower court relied on in this regard have been accepted in Michigan for
at least the last thirty-five years. In Wayne Circuit Judges v Wayne Co, 383 Mich 10, 33; 172
NW2d 436 (1969) (Wayne I), Justice Black, with Justice Dethmers concurring, noted the
"unanimous" authority that a court charged with the responsibility for judicial service "receives
and accepts with that responsibility the inherent power and duty to take such action as is
reasonably necessary to fulfil the constitutional obligation thus undertaken." On rehearing two
years later, the Supreme Court adopted the Black-Dethmers opinion as the opinion of the Court,
noting that it had been "authenticated" by decisions handed down by the supreme courts of
Missouri and Pennsylvania:
In view of the developing strength of the principle of inherent power and
duty of the judiciary, called into play as it was by the opinion of Justices
Dethmers and Black aforesaid, this Court is constrained on rehearing to adopt that
opinion; adding only that the judiciary . . . must stand foursquare in support of the
constitutional doctrines which, most recently in the [Commonwealth, ex rel
Carroll v Tate, 442 Pa 45; 274 A2d 193 (1971)] case, were declared. "Must" we
9
The lower court's rationale might be sustained given a different set of facts, e.g., a
countercomplaint raising a substantive cause of action seeking other than declaratory or
injunctive relief in defense of the allegations in the original complaint.
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have accented, just as the Tate Court stressed "must possess" in this terse and
pointed summary of constitutional necessity . . . :
"Expressed in other words, the Judiciary must possess the inherent power
to determine and compel payment of those sums of money which are reasonable
and necessary to carry out its mandated responsibilities, and its powers and duties
to administer Justice, if it is to be in reality a co-equal, independent Branch of our
Government. This principle has long been recognized not only in this
Commonwealth but also throughout our Nation." [Wayne Circuit Judges v Wayne
Co, 386 Mich 1, 8-9; 190 NW2d 228 (1971) (Wayne II), quoting Tate, supra at
52.]
A more recent and oft-cited discussion of the inherent power doctrine is found in
Employees & Judge of the Second Judicial Dist Court v Hillsdale Co, 423 Mich 705; 378 NW2d
744 (1985). The opinion of the majority agreed with the dissenting justices that "an inherent
power analysis is implicated when judicial functions are in jeopardy" and reiterated that the
"Court has stood 'foursquare' in support of the constitutional doctrine of inherent power" while
concluding that the doctrine was not implicated under the facts of the case at hand. Id. at 724.
In a dissent concurred in by two other justices, Justice Riley noted that, "'irrespective of
specific grant by constitution or legislation,'" the inherent power doctrine supplies "'authority to
incur and order paid all such expenses as are reasonably necessary for the holding of court and
the administration of the duties of courts of justice.'" Id. at 734 (Riley, J., dissenting), quoting 20
Am Jur 2d, Courts, § 78, p 440, and 59 ALR3d, § 2, p 574. Justice Riley explained that
[t]his inherent authority of the court is nonajudicatory. It does not deal with
justiciable matters. It only relates to the administration of the business of the
court.
One aspect of the administration of district and circuit courts is the
determination of the operational needs of the court and the establishment of a
budget to provide for these needs. [Hillsdale, supra at 734-735.]
It is clear from these and other precedents, see, e.g., Judicial Attorneys Ass'n v Michigan,
459 Mich 291, 299-300; 586 NW2d 894 (1998); Livingston Co v Livingston Circuit Judge, 393
Mich 265, 273; 225 NW2d 352 (1975); Ottawa Co Controller v Ottawa Probate Judge, 156
Mich App 594, 602-603; 401 NW2d 869 (1986); Gladwin, supra at 451-452, that a court has
inherent power to take whatever steps are reasonably necessary to fulfill the judicial function.
Further, it is clear that this includes the authority to "employ outside counsel to litigate its
interests." Hillsdale, supra at 747 (Riley, J., dissenting). Beginning in 1985, see Hillsdale,
supra at 725-727, our Supreme Court has in effect ratified that authority by issuing a series of
administrative orders specifying the procedures to be used by courts with respect to this kind of
litigation. See Administrative Order No. 1998-5, § III. Finally, because "a court will need to
employ outside counsel" for such litigation, the inherent power doctrine authorizes a court to
recover reasonable attorney fees arising out of such inherent power litigation. Hillsdale, supra at
747 (Riley, J., dissenting).
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Defendants do not argue that the Trial Court has no right to recover attorneys fees under
the doctrine of inherent power. Instead, defendants argue that attorneys fees recoverable under
the doctrine should be limited to those arising out of litigation over portions, but not all, of the
Trial Court's complaint. Specifically, defendants argue that the inherent power doctrine applies
to count III of the complaint, where the Trial Court sought an increase in general funding
allegedly reasonably necessary for court operations,10 but not counts I and II, which claimed a
contract (or implied contract) had been formed between the Trial Court and defendants for the
payment of increased retiree health care and pension benefits.
Defendants argue that this limitation flows out of the inherent power doctrine discussed
above, without citing any precedent that has imposed this kind of limitation. We acknowledge,
see discussion below, that the inherent power precedents require caution to avoid any
overstepping into the legislative spending prerogative. However, we conclude that, under the
facts of this case, the limitation urged upon us here does not flow out of the inherent power
analysis but, to the contrary, would undermine that power.
We reach this conclusion because the alleged contract (or implied contract) regarding the
enhanced retiree health care and pension benefits was part and parcel of the dispute regarding the
Trial Court's general operating budget. The record here shows that the Trial Court employees
had voluntarily agreed to personnel reductions, job reassignments and combinations, wage and
benefit structure changes, and other alterations necessary to implement the unification of the
court required under Administrative Order No. 1996-9. The challenged retirement health care
and pension benefits were proposed as an incentive for and in appreciation of that cooperation,
and to assure positive employee morale. Thus, the increased benefits at issue under the contract
theories in counts I and II had to be considered together with the more general operating
expenditures at issue in count III, to determine whether the amounts in their entirety were
"reasonably necessary" for the operation of the newly unified Trial Court. To hold that the right
to recover attorney fees should be limited to those arising only out of certain of the counts
alleged, in this context, would severely undermine the inherent power the Trial Court has to
litigate its budgetary needs.11
10
Although this argument would equally apply to count IV of the Trial Court's complaint,
defendants do not make that argument.
11
Defendants also argue that the inherent power doctrine was inappropriately applied here,
before a determination that the litigation was brought in good faith. The one case defendants cite
in support of this proposition, City of Warren v Dannis, 136 Mich App 651, 661-662; 357 NW2d
731 (1984), considered an issue totally different than that we face here (a dispute between a city
and its treasurer, not involving the inherent power doctrine whatsoever), did so in dictum, and is
not precedentially binding on us. MCR 7.215(J)(1). Even if a good-faith limitation on the
inherent power doctrine applied, the record here shows nothing to indicate a lack of good faith.
To the contrary, the Trial Court initiated these proceedings only after trying to work things out
with defendants and otherwise complying with Administrative Order No. 1998-5. Further,
following trial, the lower court found the Trial Court's claims to be meritorious. While that
(continued…)
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For the same reason, we reject defendants' arguments that an award of attorney fees and
expenses should be limited to those incurred after the complaint was filed and should not extend
to those incurred with regard to any appeals arising out of the litigation. Attorney services are
generally required before the filing of a complaint and often required when trial litigation results
in appellate proceedings. The inherent power doctrine would be severely undermined if the
ability to recover attorney fees and expenses did not extend to those necessary services.
Having determined that the lower court properly concluded that the Trial Court had the
inherent power to seek payment by defendants for attorney fees incurred in litigating this entire
matter, we next turn to defendants' arguments that the fees that were assessed were not
reasonable. As previously noted, we generally review reasonable attorney fee determinations
under an abuse of discretion standard. Schoensee, supra. However, any questions of law that
affect the determination are reviewed de novo. State Treasurer v Abbott, 468 Mich 143, 148;
660 NW2d 714 (2003).
Apart from Justice Riley's opinion in Hillsdale, supra, further addressed below, there are
no precedents from Michigan discussing how to determine the "reasonableness" of attorney fees
in this kind of case. However, we find some general guidance in the precedents establishing the
inherent power doctrine.
These precedents acknowledge that exercise of this power constitutes a usurpation of the
Legislature's appropriation prerogative. Under the Michigan Constitution, the "power of the
purse" is ordinarily the domain of the Legislature. See Hillsdale, supra at 739 (Riley, J.,
dissenting). The inherent power doctrine is an exception to that rule because it allows a court to
require that moneys be spent as reasonably necessary to fund the judicial branch. Id. at 739-740.
Thus, that power should be used cautiously, to assure that the "intrusion by the judicial branch"
is "slight" and therefore "does little to weaken the legislative branch." Id. at 737 n 5. "[C]ourts,
while emphatically asserting the inherent power doctrine, [recognize] limits on this power . . .
and [are] mindful of the need to exercise it responsibly." Id. at 738. The power "must be
cautiously exercised [and] should pass every test of that guarded control which self-restraint
exacts . . . ." Wayne I, supra at 33.
Consistent with and in light of these considerations, our Supreme Court has issued a
series of administrative orders designed "[t]o guard against all possibility of abuse . . . and to
guard for that matter against even the appearance of any such abuse . . . ." Wayne II, supra at 9.
The administrative order applicable to these proceedings specifies that chief judges of trial courts
should work closely with local funding units to resolve funding disputes amicably and authorizes
the State Court Administrator to help in resolving impasses. See Administrative Order No.
1998-5, §§ III and IV. Further, the administrative order requires that personnel management
policies of the trial courts "must be consistent with the written employment policies of the local
(…continued)
result might be overturned on appeal, it certainly would still militate against the conclusion that
the suit was so frivolous as to have been filed in bad faith.
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funding unit" if at all possible. Id. at §§ IV and VI.12 The order's goal is to "[structure] more
positive relations between chief judges and their funding units in the interest of promoting
greater understanding [and] cooperation . . . ." Judicial Attorneys, supra at 306.
We also find some guidance in MCL 49.73, which provides that, in cases where county
commissions must pay fees associated with defending public officials, the determination of a
"reasonable" fee is left to those commissions. For the reasons discussed above we have
concluded that this statute is not applicable to provide the Trial Court a claim for attorney fees
here. Further, the final determination of the reasonableness question is a matter to be resolved
by the lower court, Hillsdale, supra at 747 n 12, not defendants. Nonetheless, we must find
appropriate limits to the inherent power doctrine, to assure no overstepping, through
overspending, into the legislative area of appropriations. With that in mind, we conclude that the
statute's guidance on this limited question cannot be completely ignored.
Of similar import is Justice Riley's discussion of the attorney fees issue in Hillsdale.
Justice Riley reasoned that attorney fees are to be reviewed using the six-factor guideline set
forth in Crawley v Schick, 48 Mich App 728; 211 NW2d 217 (1973), and adopted by the
Supreme Court in Wood v DAIIE, 413 Mich 573; 321 NW2d 653 (1982):
"[T]he facts to be taken into consideration in determining the
reasonableness of a fee include, but are not limited to, the following: (1) the
professional standing and experience of the attorney; (2) the skill, time and labor
involved; (3) the amount in question and results achieved; (4) the difficulty of the
case; (5) the expenses incurred; and (6) the nature and length of the professional
relationship with the client." [Hillsdale, supra at 750-751 (Riley, J., dissenting),
quoting Crawley, supra at 737.]
Justice Riley further noted that Wood adopted the suggestion in Crawley that this list was not
exhaustive, and made specific reference to "'[t]he fee customarily charged in the locality for
similar legal services'" as another factor that may be considered. Hillsdale, supra at 751 n 15
(Riley, J., dissenting), quoting Disciplinary Rule 2-106 of the Code of Professional
Responsibility.
On the basis of these authorities, we draw the following conclusions about the
determination of a reasonable attorney fee in this context. First, in contrast to the usual
"reasonableness" case, great caution must be used here to avoid determining fees at too high a
level, the imposition of which would constitute an unwarranted intrusion into the power of the
purse reserved to county commissions. Thus, due consideration should be given to the fees
12
In addition, to assure an appropriately limited intrusion into the legislative appropriation
function, precedents establish that "the court should . . . bear the burden of proving that its
appropriation request is reasonable and necessary to the court's operation," Hillsdale, supra at
744 (Riley, J., dissenting), using a "clear and convincing evidence" standard, Gladwin, supra at
453. Defendants do not argue that the lower court misapplied this burden of proof here.
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being charged by other attorneys in the locality for similar legal services. In this regard, the fees
being paid by a defendant county commission should not be ignored because they provide a
specific measure of the compensation reasonably to be paid in this type of litigation and in this
locality. Approaching the attorney fees question in this fashion advances the goals of
cooperation and coordination of benefits between courts and their funding units, as stated in
Administrative Order No. 1998-5.
With those considerations in mind, we turn to a review of the lower court's analysis
regarding the question of reasonable attorney fees. The lower court addressed this issue in a
series of opinions and orders.
Without actually deciding the issue, the lower court reasoned in an opinion issued
January 30, 2003, that it would likely "rely upon what I deem to be the reasonable hourly rate for
the services performed by lawyers in this community because this is where the litigation is
pending . . . . [B]ecause the case is in this area it will be the fees for comparably experienced
lawyers that I will use. And by 'comparably experienced,' I mean comparably experienced in
this particular area." Similarly, in a second opinion rendered on March 5, 2003, the lower court
stated that "I must defer to the boards of commissioners unless I'm satisfied that the amount they
have set [for attorney fees] is palpably unreasonable. And inasmuch as counsel was retained at a
certain rate for the counties, it would appear to me that that's probably a reasonable rate, and that
I will be obligated to honor that particular rate."
Notwithstanding those pronouncements, after the case had developed further, the lower
court adopted a different viewpoint in an order issued on April 29, 2003:
The undersigned is also now satisfied, after a careful review of the matter,
that the hourly rates charged by the Trial Court's several attorneys are reasonable,
even though higher than the rates typically commanded by similarly experienced
lawyers in Crawford, Kalkaska and Otsego counties and higher than the hourly
rates being paid by those counties to the attorneys representing them. First of all,
it is unrealistic to expect that local attorneys would be willing to become involved
in a major dispute between the court before which they often appear and the
counties where they live and work and with which they likely have significant
professional interaction. Second, even if local attorneys are willing to represent
the Trial Court, it is more credible for outside attorneys to be representing the
parties. Third, there were sound reasons for the Trial Court to conclude that
representing it would overwhelm local counsel. Furthermore, this Court is
satisfied that it is often necessary for counsel in the area served by the Trial Court
to involve outside counsel to assist with matters and that it is common practice to
pay the latter counsel their standard rates, not the lesser rates charged by local
attorneys.
The lower court, finally, provided further reasoning for this approach in an opinion issued
September 17, 2003:
The fees charged by the Trial Court's counsel are not rendered
unreasonable by the counties' counsel charging a lesser hourly rate. First, the
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Trial Court's attorneys and their efforts are worth the rates being charged. That
the counties' attorneys are willing to accept a lesser rate does not lessen the
quality of either the Trial Court's counsel or their efforts. Second, lawyers who
regularly represent municipalities tend to be willing to accept much lesser hourly
rates because there are offsetting accommodations.
Because county
commissioners perceive that the public focuses on hourly rates, not on total
billings, it is understood that, so long as rates are kept low, billings will not be
scrutinized. As a result, government counsel tend to bill more time. Because
their clients review and question time entries, other lawyers record time more
selectively. That difference is the incentive for accepting lesser rates.
If this was the usual attorney fees case, we would not conclude that the lower court
determination was an abuse of discretion in the sense that "the result is so palpably and grossly
violative of fact and logic that it evidences perversity of will or the exercise of passion or bias
. . . ." Schoensee, supra at 314-315. To the contrary, the lower court gave proper consideration
to the factors discussed in Wood, supra, as being relevant and applied them to the facts here.13
Nonetheless, applying the inherent power authorities discussed above, we conclude that the
lower court failed to give sufficient consideration to the attorney fees being charged by defense
counsel. While initially indicating that defense attorney fees would serve as a guideline for
determining the reasonableness of the Trial Court's attorney fees, the lower court in its later
rulings on the issue instead came up with reasons to almost completely ignore those defense
attorney fees.
Nonetheless, the reasoning of the lower court on this difficult issue does provide us some
guidance in two important respects. First, while we do not conclude that it justifies a complete
disregard of defense attorney fees, the reasoning of the lower court amply demonstrates why it
would be inappropriate to require a perfect match between defense fees and those available to a
court forced into litigation to secure the budget reasonably necessary to fulfill its judicial
function. Succinctly stated, there are simply many reasons why the attorney fees properly to be
charged on each side might legitimately differ. Second, we agree with the lower court in its
conclusion that a simple examination of the hourly rate being charged on each side is
insufficient. Some consideration must also be given to the total costs for attorney fees on each
side of the litigation because different billing practices might, in effect, partially equalize any
difference there may be in hourly rates.
13
This is not to say that we are convinced by the lower court's analysis in all regards. For
example, the lower court adduced reasons why local counsel might not be well-suited to
represent the Trial Court in this matter. That analysis somewhat missed the mark because
defendants themselves were represented by Lansing (not local) counsel and were complaining
about the imposition of much higher billing rates from affluent suburban Detroit. Further,
contrary to the lower court's reasoning, it would seem that local counsel would not be adverse to
representing their local judiciary, thereby probably ingratiating themselves with local judges and
court personnel. Nonetheless, we do not conclude that the trial court's reasoning or decision in
this regard was an "abuse of discretion" as defined by precedent.
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With these considerations in mind, we conclude that the following procedure should be
used in determining the reasonable attorney fees question in the context of this kind of inherent
powers litigation. First, as the lower court did here, a close examination of the hourly billings
should be made to assure that time billed was properly spent in prosecuting the inherent power
claim on behalf of the judiciary. Having determined the number of hours appropriately billed,
the court should then determine whether the hourly fee charged was reasonable under the usual
Wood factors. Again, this was properly analyzed by the lower court here.14
With reasonable attorney fees thus established, a limitation should be imposed based on
defense counsel fees.15 Specifically, the court should compute the fees that would have been
incurred if counsel for the plaintiff court had used an hourly rate that was 150 percent of that
charged by counsel for defendants. In addition to this "hourly rate limitation," the trial court
should also consider evidence regarding the total fees incurred by defendants in the aggregate to
defend against the claim and set a "total fees limitation" equal to 150 percent of that amount.
Attorney fees awarded to the plaintiff court's counsel must then be subject to the limitation that is
less restrictive, i.e., that results in a larger award of attorney fees than does the other.16
We are, of course, loath to impose this kind of limitation to a question as case-specific as
the determination of appropriate attorney fees. Nonetheless, as we have discussed above, this is
an extraordinary kind of case. It presents a dispute between two constitutionally separated
branches of our government where one must invade the province of the other. That invasion
14
The limitation we find necessary to impose here, see discussion below, is not based in any way
on a conclusion that the fees billed by counsel for the Trial Court were excessive. The lower
court's conclusion that the fees requested by plaintiff 's counsel were reasonable in this complex
case is amply supported by the record.
15
The limitations discussed here apply to attorney fees, paralegal fees, and other fees associated
with the legal representation of a plaintiff court. Other costs associated with prosecuting an
inherent power claim should be considered separately to determine their reasonableness using
the same criteria as in the ordinary case, without any limitations specific to this kind of case.
16
As examples, limitations would operate as follows in a case where counsel for defendant
funding unit(s) charge $100 an hour and work one hundred hours on the litigation for a total of
$10,000 in attorney fees. If defense counsel reasonably charged $200 an hour for fifty hours, the
reasonable attorney fees award of $10,000 would not be subject to any limitation. While the
hourly rate limitation would result in a cap of $7,500 (fifty hours at a rate of 150 percent of
$100), this would not apply because the total fees limitation would allow an award up to $15,000
(150 percent of $10,000). If plaintiff 's counsel reasonably charged $200 an hour for one
hundred hours, the attorney fees award would be limited to $15,000, which is the limitation
imposed by both the hourly rate limitation (one hundred hours at a rate of 150 percent of $100)
and by the total fees limitation (150 percent of $10,000). If plaintiff court's counsel reasonably
charged $300 an hour for fifty hours, the entire $15,000 attorney fees would be awarded; that
amount would be allowable because it equals the cap imposed by the total fees limitation (150
percent of $10,000) and the hourly rate limitation, being at the lower amount of $7,500 (fifty
hours at a rate of 150 percent of $100), would not apply.
-14-
concerns the power of the purse, probably the most closely guarded and coveted of all powers
reserved to the legislative branch. Finally, the inherent power doctrine grants the courts the right
to seek reimbursement from local funding units for attorney fees necessary to bring suit against
those same funding units. We conclude that, to assure some semblance of cooperation and a
positive relationship even in these difficult situations, some limitation on the amount of fees
reimbursable must be imposed.
The record here does not establish whether the reasonable attorney fees determined by
the lower court would be subject to these limitations. As noted earlier, it appears that plaintiff's
counsel's hourly rate exceeded 150 percent of that charged by defense counsel. However, the
trial court did not clearly make any finding regarding the total fees incurred by defendants in the
aggregate. Accordingly, we reverse the award of attorney fees and remand for further
consideration of the issue consistent with this opinion.
C. Timing of Attorney Fees Decisions and Failure to Hold Evidentiary Hearing
Defendants also argue that the lower court abused its discretion or otherwise erred by
refusing to defer an award of attorney fees until litigation was complete, and by failing to
conduct an evidentiary hearing regarding the reasonableness and necessity of the attorney fees
and expenses charged by counsel for the Trial Court. We disagree.
With respect to the timing of the lower court's award of attorney fees, defendants argue
that the automatic stay provisions found in MCR 2.614(A) reflect "the policy of the Michigan
judiciary that no party be required to pay any part of a judgment until the opportunity for
appellate review has become available."17 Thus, defendants argue, the lower court's award of
attorney fees before completion of litigation and an opportunity for review by this Court was
"premature." We find the provisions of MCR 2.614(A) regarding judgments inapposite to the
attorney fees award at issue here. We agree with the lower court that counsel for plaintiff cannot
be expected to wait for the conclusion of what might well be protracted litigation before
receiving any payment for services or expenses. To the extent an award of fees might later be
modified, a retroactive adjustment would suffice to address defendants' concerns. In any event,
however, this argument is moot. Litigation in this matter is now complete, and the issue of the
reasonableness of the attorney fees awarded by the lower court is now properly before us. See
City of Jackson v Thompson-McCully Co, LLC, 239 Mich App 482, 493; 608 NW2d 531 (2000)
("[a]n issue is moot if an event has occurred that renders it impossible for the court, if it should
decide in favor of the party, to grant relief").
Moreover, we find no abuse of discretion in the lower court's decision to award the Trial
Court's requested attorney fees without first conducting an evidentiary hearing on the matter.
17
MCR 2.614(A) grants an automatic stay of execution or other proceedings for the enforcement
of a judgment until the expiration of twenty-one days after its entry. This twenty-one-day period
coincides with the period in which an appeal to this Court, whether by right or by leave granted,
must be taken. See MCR 7.204 and MCR 7.205.
-15-
See Bielawski v Bielawski, 137 Mich App 587, 592-593; 358 NW2d 383 (1984). Defendants are
correct that, generally, a trial court should hold an evidentiary hearing when a party is
challenging the reasonableness of the attorney fees claimed. Miller v Meijer, Inc, 219 Mich App
476, 479; 556 NW2d 890 (1996). However, where the parties have created a sufficient record to
review the issue, an evidentiary hearing is not required. See Head v Phillips Camper Sales &
Rental, Inc, 234 Mich App 94, 113; 593 NW2d 595 (1999); Giannetti Bros Constr Co v Pontiac,
175 Mich App 442, 450; 438 NW2d 313 (1989).
In their brief on appeal, defendants assert that they requested an evidentiary hearing
below, but provide no record citation to verify that assertion. See MCR 7.212(C)(7). Our
review of the record indicates that, although defendants filed numerous objections regarding the
attorney fees requested by the Trial Court, they did not request an evidentiary hearing regarding
fees encompassed by the lower court's May 21, 2003, order, and merely made passing reference
to the need for an evidentiary hearing regarding only a portion of the fees covered by the lower
court's September 22, 2003, order. A party's failure to request an evidentiary hearing on the
issue of attorney fees constitutes a forfeiture of the issue. See Kernen v Homestead Dev Co, 252
Mich App 689, 691-692; 653 NW2d 634 (2002). Moreover, even if defendants did request a
hearing, the detailed billing statement and accompanying documentation, which included
affidavits from the Trial Court's various counsel and extensive briefing from both sides, provided
the lower court with a reasonable evidentiary basis to evaluate and decide the attorney fees
question. Head, supra. Accordingly, we do not conclude that the lower court abused its
discretion by deciding the issue solely on the pleadings and supporting documentation submitted
by the parties. Bielawski, supra; see also Jager v Nationwide Truck Brokers, Inc, 252 Mich App
464, 488-489; 652 NW2d 503 (2002).
Of course, the lower court did not determine whether the limitations we have above
concluded must be considered in this kind of case apply here. Accordingly, we are remanding
this matter to the lower court for whatever further fact-finding may be necessary to make that
determination. The record is insufficient to establish, and we draw no conclusion regarding,
whether an evidentiary hearing will be required on this issue.
D. Assessment of Interest and Fees Incurred in Connection with Obtaining Payment
Defendants also argue that the lower court erred in awarding the Trial Court attorney fees
incurred in connection with obtaining payment for its legal expenses, and by ordering that all
such fees would accrue "interest at the judgment rate" from the date the orders awarding those
fees were entered. However, because these issues were not raised before and decided by the trial
court, they are not properly preserved for our review. See Fast Air, Inc v Knight, 235 Mich App
541, 549; 599 NW2d 489 (1999). Further, they are without merit. Defendants rely exclusively
on Yurgosky v Commonwealth of Pennsylvania Admin Office of Pennsylvania Courts, 554 Pa
533; 722 A2d 631 (1998), but that precedent is unpersuasive. Although that case also involved a
court funding dispute in which the plaintiff court sought payment of legal expenses by its
funding unit, the Pennsylvania Supreme Court offered no basis for its stark pronouncement that
the award of attorney fees in that case may not include "interest assessed on outstanding bills for
legal services [or] attorney's fees generated to obtain payment of bills for legal services . . . ." Id.
at 545. Additionally, we note that the Michigan Legislature has provided for the assessment of
-16-
interest on attorney fees and costs. See, generally, MCL 600.6013(6). Finally, we have earlier
determined that the inherent power doctrine requires payment of precomplaint and appellate
attorney fees and expenses. That same logic applies to attorney fees and expenses incurred to
secure payment of inherent power costs from reluctant funding units.
E. Conclusion
The limitations on attorney fees we have outlined must be considered in this inherent
power doctrine case. Accordingly, we reverse the lower court orders awarding attorney fees and
expenses. We remand for proceedings consistent with this opinion. We retain jurisdiction.
/s/ Richard A. Bandstra
/s/ David H. Sawyer
/s/ Michael R. Smolenski
-17-
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