Michigan Court of Appeals; Docket #314523; Unpublished
Judges Beckering, Hoekstra, and Gleicher; 2-1 (Judge Gleicher concurring in part and dissenting in part); Non-unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
Link to Conc./Dissent
On 7/2/2015, the Michigan Supreme Court directed the clerk to schedule mini-oral argument on whether to grant the application for leave to appeal; Link to Order
Oral argument was held 1/14/2016; Click here for oral argument video
On 6/6/2016, the Michigan Supreme Court issued an opinion in this case; Link to Opinion
STATUTORY INDEXING:
Allowable Expenses for Attendant Care [§3107(1)(a)]
Allowable Expenses for Conservatorships and Guardianships [§3107(1)(a)]
Work Loss Benefits: Nature of the Benefit [§3107(1)(b)]
Replacement Service Expense Benefits: Nature of the Benefit [§3107(1)(c)]
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Calculating Attorney Fees Based on Contingent Fee [§3148]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this 2-1 unpublished per curiam Opinion (with Judge Gleicher concurring and dissenting in part), the Court of Appeals held that attorney fees for services rendered as a guardian and conservator were compensable as allowable expenses under MCL 500.3107(1)(a) because the fees were incurred for “reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” Accordingly, the Court of Appeals remanded the case for a factual determination as to whether the fees in this case were incurred in this manner.
The Court of Appeals further held that penalty attorney fees awarded pursuant to MCL 500.3148(1) were reasonable as to their amount, and that the trial court did not err by failing to make express findings on all the attorney fee factors enumerated in Smith v Khouri, 481 Mich 519 (2008).
Feridon Pirgu was struck by defendant’s insured while riding a bicycle, suffering a closed head injury. Feridon became legally incapacitated and plaintiff Linda Pirgu was named his guardian and conservator. Plaintiff sought PIP benefits and the claim was assigned to Citizens Insurance Company, which initially provided coverage. After a priority dispute, it was determined that Citizens was obligated to pay benefits. Citizens later stopped paying benefits and plaintiff brought an action seeking coverage. A jury awarded plaintiff $70,237 for attendant care benefits, wage loss benefits, and penalty interest. The trial court also granted more than $23,000 in attorney fees for defendant’s unreasonable refusal to pay benefits. Plaintiff appealed, challenging the amount of attorney fees awarded under §3148(1), as well as the denial of fees for services provided by the attorney who represented plaintiff in her role as guardian and conservator, but did not represent her in the initial no-fault action.
Regarding the attorney fees awarded under §3148(1), the Court of Appeals rejected plaintiff’s argument that the trial court did not follow the fee-award framework in Smith v Khouri. The court said that fees can be adjusted based on various factors, including those set forth in Wood v DAIIE, 413 Mich 573 (1982), and Michigan Rule of Professional Conduct 1.5(a).
Noting it was bound to follow Univ Rehab Alliance Inc v Farm Bureau General Ins Co of Michigan, 279 Mich App 691 (2008), the Court of Appeals reasoned:
“A panel of this court in Univ Rehab Alliance expressly rejected the defendant’s argument that Smith applies when determining an award of attorney fees under MCL 500.3148(1) and that, pursuant to Smith, a trial court must first determine a ‘baseline’ fee by multiplying the reasonable hourly-rate — the fee customarily charged in the locality for similar legal services — and then adjust the fee upward or downward according to the factors set forth in Wood and MRPC 1.5(a). … Unless and until a conflict panel determines otherwise or our Supreme Court weighs in on the issue of whether Smith applies to a determination of attorney fees under MCL 500.3148(1), we are bound by Univ Rehab Alliance.”
In holding that the fee award in this case was reasonable, the Court of Appeals said:
“Although the trial did not expressly make findings on every [fee] factor [in Smith], it was not required to do so. … And, although the trial court did not comment on every factor, the record reveals that the trial court recognized the appropriate factors and was cognizant of the factors in reaching its decision. … [W]e cannot conclude that trial court’s ruling was outside the range of principled outcomes.”
Regarding the argument that fees should not have been awarded as allowable expenses under §3107(1)(a) to the lawyer representing plaintiff in her role as guardian and conservator, the Court of Appeals cited In re Carroll (On Remand), 300 Mich App 152 (2013). In re Carroll said that services provided by a guardian could comprise allowable expenses under §3107(1)(a), as long as the services were “reasonably necessary” and “did not otherwise constitute replacement services.”
Looking at In re Carroll and the plain language of §3107(1)(a), the Court of Appeals held the trial court erred in finding that plaintiff could not recover fees for her lawyer’s services rendered in her role as guardian and conservator. The court said:
“Indeed, MCL 500.3107(1)(a) makes no reference as to who performs services that result in reasonable charges incurred for reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation. Rather, it simply mandates that: ‘(1) the expense must be for an injured person’s care, recovery, or rehabilitation, (2) the expense must be reasonably necessary, (3) the expense must be incurred, and (4) the charge must be reasonable.’ … [S]o long as the attorney’s services on behalf of a guardian or conservator meet those four requirements, there is no statutory prohibition against an attorney recovering fees for representing a guardian or conservator under MCL 500.3107(1)(a).”
There was no dispute that the fees charged by Attorney Findling in this case were incurred, and so the Court of Appeals examined whether the fees: 1) were associated with Feridon’s care, recovery, or rehabilitation; 2) were reasonably necessary; and 3) were reasonable. However, because the trial court had precluded admission of Attorney Findling’s billing records, the Court of Appeals said there was no evidence to make a determination in this regard. Therefore, the court concluded:
“[W]e remand to the trial court with instructions to determine: (1) whether Findling’s fees were for Feridon’s care, recovery, or rehabilitation; (2) whether Findling’s fees were reasonably necessary; and (3) whether Findling’s fees were reasonable. In addition, consistent with our opinion in In re Carroll … we note that the court should consider whether the fees for Findling’s services fall within the category of ‘allowable expenses,’ ‘replacement services’ or neither. …”
In conclusion, the Court of Appeals said:
“[P]ursuant to the plain language of MCL 500.3148(1), an award of attorney fees is only warranted for advising a client in an action seeking PIP benefits if PIP benefits are overdue and the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment. This should be distinguished from an attorney who represents a guardian/conservator and charges a fee for reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation. Otherwise, MCL 500.3107(1)(a) could be read to allow attorney fees in a manner that conflicts with MCL 500.3148(1).”
In a separate concurrence and dissent, Judge Gleicher said that while she agreed with “most” of the majority opinion, she disagreed regarding the calculation of attorney fees under §3148(1).
