MICHELLE GREEN V BELFOR USA GROUP INC
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STATE OF MICHIGAN
COURT OF APPEALS
MICHELLE GREEN, GREGORY GREEN, and
ELAINE GREEN,
UNPUBLISHED
October 23, 2008
Plaintiffs/Counter-DefendantsAppellees,
v
No. 276175
Oakland Circuit Court
LC No. 2005-067504-CK
BELFOR USA GROUP, INC., MATT
SNOWDEN, and SHELDON YELLEN,
Defendants/Counter-PlaintiffsAppellees,
and
DANIELLE P. MCCLUSKEY,
Appellant.
Before: Fort Hood, P.J., and Talbot and Borrello, JJ.
PER CURIAM.
Appellant (hereinafter “petitioner”) appeals as of right from the trial court’s order
granting attorney fees in favor of defendants/counter-plaintiffs (“defendants”) as a sanction for a
violation of MCR 2.114. We affirm in part and vacate in part.
This appeal arises from petitioner’s representation of plaintiffs. Plaintiffs’ residence
became uninhabitable following an incident involving the furnace that caused smoke/soot
damage. Plaintiffs entered into a contract with the corporate defendant to complete repairs to the
home and to handle affairs with plaintiffs’ insurance carrier, AAA. Before filing this lawsuit,
petitioner attempted to contact the individual defendants, but did not receive a response.
Consequently, petitioner filed and signed a complaint against the corporate defendant as well as
the individual defendants, Snowden, an agent of the corporation who dealt with plaintiffs, and
Yellen, the CEO of the corporation.
The individual defendants filed a motion for summary disposition alleging that the
complaint against them was frivolous because the contract was entered into with the corporate
entity. These defendants also requested sanctions, MCR 2.114, in the amount of $10,000
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because the complaint was allegedly not based on a reasonable investigation of fact and law.
After receipt of the motion, petitioner did not move for dismissal before the trial court. Rather,
petitioner filed a response to the motion for summary disposition, alleging that an agreement to
stipulate to dismiss had been reached, but defense counsel insisted on proceeding with the
hearing on the dispositive motion. Petitioner asserted that sanctions should be awarded against
defendants because an agreement to dismiss had been reached. In reply, defendants asserted that
petitioner refused to outright dismiss the individual defendants, but sought to file an amended
complaint with the dismissal that would require the defense to expend additional fees and costs
to respond to the documents. The trial court granted the motion for summary disposition and
concluded that sanctions were warranted. The trial court held that an agreement to dismiss had
not been reached because the parties had not dismissed the action against the individual
defendants.
After the trial court rendered its summary disposition decision, petitioner withdrew from
her representation of plaintiffs, and new counsel was substituted in her place. The attorneys
could not agree regarding an award of attorney fees, and an evidentiary hearing was scheduled.
Testimony was taken from counsel for defendants regarding his invoices. Because one attorney
represented all three defendants, the charged amounts were not correlated to one particular
defendant. When counsel for defendants was asked to apportion each charge and the amount of
work performed for each defendant, he opined that the work should be divided equally among
each defendant. Alternatively, defense counsel testified that it was impossible to conclude
whether the corporate defendant would have incurred the costs if the individual defendants had
never been named in the action. Early in the hearing, the trial court agreed, stating that it was
impossible to “unscramble the egg,” and the invoices submitted by defense counsel would be
divided into thirds and an award of two-thirds would be granted. Despite this expression of
agreement, the trial judge allowed the hearing to continue, but limited the proofs presented by
petitioner. Thus, petitioner was unable to present proofs contesting the testimony by defense
counsel that the legal fees could not be separating among the three defendants. The trial court
stated that petitioner was merely attempting to re-litigate the prior decision wherein the judge
held that the filing of the complaint against the individual defendants was frivolous. Ultimately,
the trial court entered an award of $17,782.33 against plaintiffs and petitioner, jointly and
severally. The underlying lawsuit was dismissed with prejudice, and petitioner appeals as of
right.
Attorney fees are not recoverable unless they are expressly allowed by statute or court
rule. Spectrum Health v Grahl, 270 Mich App 248, 252-253; 715 NW2d 357 (2006). The
decision to award attorney fees and the reasonableness of an attorney fee award are reviewed for
an abuse of discretion. Taylor v Currie, 277 Mich App 85, 99; 743 NW2d 571 (2007). When
there is no single correct outcome, and the trial court selects an outcome within the range of
principled outcomes, an abuse of discretion does not occur. Maldonado v Ford Motor Co, 476
Mich 372, 388; 719 NW2d 809 (2006). A trial court’s failure to exercise the power of discretion
constitutes a clear abuse of discretion. Kowalski v Fiutowski, 247 Mich App 156, 159; 635
NW2d 502 (2001). The trial court’s factual findings underlying the award of attorney fees are
reviewed for clear error. Taylor, supra. A finding is clearly erroneous when, although there is
evidence to support it, the reviewing court on the entire record is left with a definite and firm
conviction that a mistake was made. Solution Source, Inc v LPR Associates Ltd Parnership, 252
Mich App 368, 381-382; 652 NW2d 474 (2002).
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A trial court’s finding that an action is frivolous is reviewed for clear error. John J
Fannon Co v Fannon Products, LLC, 269 Mich App 169, 168; 712 NW2d 731 (2005). The facts
of the case determine whether a claim is frivolous as contemplated by MCR 2.114(F). Id. In
determining whether the attorney fees are reasonable, the trial court must examine: (1) the
professional standing and experience of the attorney; (2) the skill, time, and labor involved; (3)
the fee charged and the results achieved; (4) the degree of difficulty; (5) the expenses incurred;
and (6) the nature and length of the professional relationship between the attorney and client. Id.
at 171-172. The trial court is not required to provide a detailed finding of each factor. Id. at 172.
The trial court’s decision to grant an attorney fee is reviewed for an abuse of discretion,
but the findings of fact upon which the trial court based the award of attorney fees are reviewed
for clear error. Stallworth v Stallworth, 275 Mich App 282, 288; 738 NW2d 264 (2007). When
calculating the reasonable attorney fee, the trial court must begin its analysis by determining “the
reasonable hourly or daily rate customarily charged in the locality for similar legal services,
using reliable surveys or other credible evidence.” Smith v Khouri, 481 Mich 519, 522; 751
NW2d 472 (2008).1 To perform an objective analysis and aid appellate review, the trial court
must multiply the reasonable attorney fee by the reasonable number of hours expended before
considering the other factors required to reach a reasonable award. Id. Reasonable fees are not
equivalent to the actual fee charged. Id. at 529, n 12.
Petitioner first alleges that the trial court erred in awarding attorney fees pursuant to
MCR 2.114 where the individual defendants “thwarted” petitioner’s attempt to learn the facts by
failing to contact her before she filed the complaint. Additionally, in a letter to defense counsel,
petitioner asserted that her complaint was pleaded in the alternative in the event individual
defendant Snowden had absconded with the checks. On this record, we cannot conclude that the
trial court’s decision to award attorney fees was clearly erroneous with regard to the fee and
attorney fees associated with preparation of the summary disposition motion.
MCR 2.114(D)(2) provides that the signature of an attorney constitutes a certification that
“the document is well grounded in fact and is warranted by existing law ….” Although
petitioner contends that the individual defendants “thwarted” her efforts to learn of their
involvement, petitioner fails to cite any authority for the proposition that a party must respond to
inquiry of counsel before a lawsuit has been filed. Moreover, the extent of the involvement of
the individual defendants could have been learned through inquiry of petitioner’s clients,
plaintiffs. Specifically, in deposition, plaintiffs testified that the individual defendants were
named because they handled the transaction. Plaintiffs also testified that the contract was
1
The Smith decision was rendered in the context of a reasonable attorney fee award as part of
case evaluation sanctions. Id. However, there is no indication that the reasonable attorney fee
analysis is limited to case evaluation sanctions. We note that only two justices signed the lead
opinion in Smith, supra. However, the concurring opinion, joined by a second justice, agreed
with the holding cited by this panel. Smith, supra at 538 (opinion by Corrigan, J.). Rather, the
disagreement with the lead opinion regarding the elimination of two factors is not relevant to our
disposition.
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entered into with the corporation, not the individual defendants. Plaintiffs’ deposition testimony
did not reveal any action that occurred on an individual basis.
Petitioner’s explanation that filing the lawsuit against the individual defendants on an
alternative basis is also without merit. Petitioner opined that the lawsuit was properly filed
because of the potential dealing by individual defendant Snowden who may have, in an
individual capacity, absconded with the checks from the insurance company. However, this
information was available to petitioner without naming individual defendants. That is, petitioner
could have consulted with plaintiffs’ insurer to determine if checks had been redeemed without
plaintiffs’ knowledge. Perhaps more importantly, the filing of the complaint was contrary to
legal principles. Basic agency law provides that the principal is liable for the acts of an agent
acting within his actual or apparent authority. James v Alberts, 464 Mich 12, 15; 626 NW2d 158
(2001). (“Under fundamental agency law, a principal is bound by an agent’s actions within the
agent’s actual or apparent authority.”) With regard to corporate law, the general rule is that the
separate corporate entities are to be respected. Wells v Firestone Co, 421 Mich 641, 650; 364
NW2d 670 (1984). The fiction of a distinct corporate entity separate from stockholders is a
convenience designed to subserve the ends of justice, and the fiction is ignored by the courts
when it is used to subvert justice. Id. Petitioner has offered no reason to counter these basic
legal principles. Accordingly, we cannot conclude that the trial court’s holding was clearly
erroneous under the circumstances with regard to the request for attorney fees and the cost of
preparation of summary disposition motion in the amount of $10,000.
Petitioner next asserts that the trial court erred by pre-judging the hearing, erred in
conducting the hearing, and erred in the amount of the award. Due process enforces the rights
enumerated in the Bill of Rights and includes both substantive and procedural due process.
Kampf v Kampf, 237 Mich App 377, 381-382; 603 NW2d 295 (1999). Procedural due process
serves as a limitation on government action and requires government to institute safeguards in
proceedings that affect those rights protected by due process, including life, liberty, or property.
Id. at 382. Due process is a flexible concept applied to any adjudication of important rights.
Thomas v Pogats, 249 Mich App 718, 724; 644 NW2d 59 (2002). The procedural protections,
which include fundamental fairness, are based on what the individual situation demands. Id.
Fundamental fairness includes: (1) consideration of the private interest at stake; (2) the risk of an
erroneous deprivation of such interest through the procedures used; (3) the probable value of
additional or substitute procedures; and (4) the interest of the state or government, including the
function involved and the fiscal or administrative burdens imposed by substitute procedures.
Dobrzenski v Dobrzenski, 208 Mich App 514, 515; 528 NW2d 827 (1995). In civil cases, due
process generally requires notice of the nature of the proceedings, a meaningful time and manner
to be heard, and an impartial decision maker. Cummings v Wayne Co, 210 Mich App 249, 253;
533 NW2d 13 (1995). The opportunity to be heard does not require a full trial-like proceeding.
Id. However, it does require a hearing such that a party has the chance to learn and respond to
the evidence. Id. “A trial judge has ‘great power and wide discretion’ in controlling the course
of a trial and in exercising control over the conduct of witnesses and attorneys.” People Smith,
64 Mich App 263, 266; 235 NW2d 754 (1975).
Petitioner contends that the trial court simply concluded that it would award 2/3 of the
invoices and did not allow her to present evidence, did not allow her to make a separate record,
and did not allow any reduction for the filing of the counter-complaint. Although we cannot
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conclude that petitioner was deprived of due process of law, it is apparent on the record that the
trial court failed to exercise discretion, and that lapse constitutes a clear abuse of discretion.
Kowalski, supra. Initially, it was understood that the costs and attorney fee issue was to address
the validity of the requested $10,000. However, the trial court expressed its concern regarding
the need for the evidentiary hearing and then allowed attorney fees in excess of that amount.
Further, the trial court failed to perform the analysis set forth by the Smith Court. Smith,
supra. Specifically, the trial court failed to determine the reasonable rate in conjunction with the
reasonable number of hours expended to reach a baseline figure. Id. at 522, 530-533.
Thereafter, the trial court failed to individually examine the other factors, such as the difficulty
of the case, the nature of the professional relationship, and the skill involved, to determine a
reasonable attorney fee. Rather, the trial court stated very early on in the hearing that the logical
resolution of the issue was to simply split the requested fee into thirds and award two-thirds of
the requested amount. The court did not address petitioner’s argument that the inclusion of two
individual defendants2 did not create additional costs and did not allow petitioner to submit
proofs on the issue. Although a party must present an offer of proof for excluded evidence,
MRE 103(a)(2), it is apparent from the record that the trial court would not allow the admission
of the proofs particularly in light of its expressed agreement with the position of defendants early
in the hearing. Under these circumstances, the award of costs and attorney fees in excess of the
initial request for $10,000 was clearly erroneous. Consequently, we vacate the award in excess
of that amount and remand for a determination regarding a reasonable attorney fee.3
Affirmed in part, vacated in part. We do not retain jurisdiction.
/s/ Karen M. Fort Hood
/s/ Michael J. Talbot
/s/ Stephen L. Borrello
2
Although defense counsel may have been required to research the validity of the claim against
the individual defendants, there was no record evidence to indicate that the research differed
between the two individual defendants. As noted in the Smith decision, an attorney fee award
serves a purpose and should not provide a windfall. See Smith, supra at 528. Moreover, the trial
court abused its discretion by failing to consider the counterclaim seemingly filed on behalf of all
defendants.
3
We note that the presiding judge has since retired, and the parties will expend additional
resources to address the Smith decision. On remand, the burden is on the fee applicant to
produce satisfactory evidence, in addition to the attorney’s own affidavits, that the fee charged is
similar to those in the community for similar services by lawyers of comparable skill,
experience, and reputation. Id. at 531-532. Thus, the parties may wish to resolve this matter
amicably in lieu of additional hearings.
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