Michigan Court of Appeals Docket #296646, Published
Judges Donofrio, Cavanagh, and Stephens, Unanimous
Official Michigan Reporter Citation: Forthcoming, Link to Opinion 
STATUTORY INDEXING:
Calculating Attorney Fees Based on Contingent Fee
Calculating Attorney Fees Not Based on Contingent Fee
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous published opinion, the Court of Appeals vacated an award of attorney fees in the amount of $327,090.60 in favor of the plaintiff and remanded to the trial court for a second re-hearing and redetermination of the amount of the attorney fees in accordance with this Opinion.
This matter previously was appealed to the Court of Appeals in Augustine v. Allstate Insurance Company, unpublished Opinion per curiam of the Court of Appeals, issued August 21, 2008 (Docket # 276537). In the first hearing on attorney fees in Augustine I, the trial court awarded an attorney fee in the amount of $312,625.00 based upon a finding that the plaintiff’s attorneys had done 543.75 hours of work at $500.00 per hour and 51.25 hours at $300.00 per hour. The case involved a claim for permanent attendant care arising from serious injury sustained by the plaintiff. The plaintiff sought attendant care in the amount of $929,000.00 and recovered the amount of $371,700.00 plus penalty interest. In the first appeal, the Court of Appeals vacated the award of attorney fees and remanded in light of the Supreme Court’s recent decision in Smith v. Khouri, 481 Mich 519 (2008) which case had delineated the steps the trial court must take when considering a request for attorney fees. (Smith was a case involving a claim of dental malpractice in which case evaluation sanctions were awarded by the trial court, affirmed by the Court of Appeals, in an unpublished opinion but vacated by the Supreme Court with instructions on remand for recalculation in light of the standards set forth in the Supreme Court’s decision.)
In this second appeal from the trial court award of actual attorney fees pursuant to MCL 500.3148 of the No Fault Statute, the Court of Appeals determined that the trial court abused its discretion in failing to provide the Defendant with limited discovery in order to allow a meaningful examination of the issue of an award of attorney fees. The Court also found that the trial court abused its discretion because it misapprehended the law to be applied and the award of attorney fees was inconsistent with the previous remand directive of the Court. Further, the Court found that the trial court abused its discretion in admitting letters into evidence from other attorneys regarding the hourly rates requested, holding that such letters were inadmissible hearsay. Finally, the Court determined that the trial court erred in its award of attorney fees because the assessment of the work and the number of hours both failed for want of evidentiary support.
With regard to the discovery issue, the Court of Appeals held that Defendant Allstate had met its burden of showing the need for an opportunity to review the plaintiff’s counsel’s file in order to properly prepare for the evidentiary hearing on the claim for attorney fees based on an hourly fee where the law firm did not maintain a time billing procedure and lawyers of the law firm did not make contemporaneous time entries. In this case, the plaintiff’s counsel were hired on a contingency fee contract, however, the claim for attorney fees pursuant to MCL 500.3148 was based upon an hourly fee claim where the plaintiff’s counsel submitted a “summary billing statement” in support of the attorney fee award which was based on a retrospective exercise based on memory and possibly some office notes or Excel spreadsheets. In addressing the issue of attorney-client privilege, the Court of Appeals stated that if there were documents that could tend to corroborate the billing statement, such documents could be provided with the redaction of any impressions or thoughts on future work or strategies. The trial court’s failure to even entertain such a procedure was considered to be an abuse of discretion by the Court of Appeals.
With regard to the issue of the law to be applied in the procedure for the award of attorney fees, the Court of Appeals stated that when the first case was remanded, it was with instructions to the trial court to “make specific findings, consistent with Smith, on each attorney whose fees the plaintiff sought to recover. “ In Smith, supra, the Supreme Court outlined specific steps for determining reasonable attorney fees. First, the trial court should “determine the fee customarily charged in the locality for similar legal services” which shall be made “using reliable surveys or other credible evidence.” To establish the customarily charged fee, the fee applicant must present “something more than anecdotal statements.” Next, the trial court should “multiply that amount by the reasonable number of hours expended in the case.” Finally, the trial court “may consider making adjustments up or down to this base number in light of the other factors listed in Wood v. DAIIE, 413 Mich 573 (1982) and MRPC 1.5(a).” The Court of Appeals in this case held that the trial court did not comply with the first step in the Smith analysis which is to determine the fee customarily charged in the locality for similar legal services. Quoting from Smith, the Court stated that “the fees customarily charged in the locality for similar legal services can be established by testimony or empirical data found in surveys and other reliable reports.” The Court also held that the trial court failed to make specific findings regarding each attorney whose fees the plaintiff sought to recover.
With regard to the evidentiary issue, the Court of Appeals held that it was error for the trial court to allow letters from other attorneys into evidence over the objection that they were not relevant and that they were hearsay. Those letters were written by other attorneys who litigated catastrophic no fault cases regarding their hourly fees. The Court of Appeals held that the letters were not admissible under MRE 803(6) (The Business Records Exception) or 803(24) the so-called “Catch-All Exception” because the letters did not demonstrate the circumstantial guarantees of trustworthiness equal to the categorical exceptions.
Finally, the Court concluded that the assessment of the work and the number of hours failed for want of evidentiary support.
Once again, the trial court award of attorney fees was vacated and remanded to the trial court for rehearing and redetermination in accordance with this Opinion.
