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e-Journal Summary
Opinion Date: 07/02/2008
e-Journal Date: 07/03/2008
Full Text Opinion

Practice Area(s):   Attorneys

Issues: Calculation of "reasonable" attorney fees as part of case evaluation sanctions under MCR 2.403(O); Wood v. Detroit Auto. Inter-Ins. Exch.; Michigan Rules of Professional Conduct (MRPC) 1.5(a); Zdrojewski v. Murphy; MCR 2.403(O)(6); Coulter v. Tennessee (6th Cir.); Petterman v. Haverhill Farms, Inc.; Smolen v. Dahlmann Apts., Ltd.; Department of Transp. v. Randolph; Blum v. Stenson; Hensley v. Eckerhart; Burke v. Angies, Inc.
Court: Michigan Supreme Court
Case Name: Smith v. Khouri
e-Journal Number: 39821
Judge(s): Taylor and Young, Jr.; Concurring in part, Dissenting in part - Corrigan and Markman; Dissent - Cavanagh, Weaver, and Kelly

Reviewing a trial court's award of "reasonable" attorney fees as part of case evaluation sanctions under MCR 2.403(O) under some of the factors listed under Wood and MRPC 1.5(a), the lead opinion clarified "the trial court should begin the process of calculating a reasonable attorney fee by determining factor 3 under MRPC 1.5(a)," the "reasonable hourly or daily rate customarily charged in the locality for similar legal services, using reliable surveys or other credible evidence." This "should be multiplied by the reasonable number of hours expended." The court believed "having the trial court consider these two factors first will lead to greater consistency in awards." The trial court then "may consider making adjustments up or down in light of the other factors listed in Wood and MRPC 1.5(a)." To aid appellate review, the trial court should also "briefly indicate its views on each of the factors." The lead opinion emphasized the burden is on the fee applicant to present satisfactory evidence, in addition to the attorney's own affidavits, indicating "the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Both the parties and the trial courts "should avail themselves of the most relevant available data." Plaintiff in this dental malpractice case was entitled to case evaluation sanctions. However, the trial court made its decision regarding attorney fees as part of the case evaluation sanctions awarded to plaintiff "without first determining the reasonable hourly or daily rate customarily charged in the locality for similar legal services." Further, the trial court only made findings concerning plaintiff's lead trial attorney - it did not make any findings relevant to the other partner or the associates involved in the case. The court vacated the judgments of the trial court and the Court of Appeals concerning the case evaluation sanctions and remanded the case to the trial court to revisit the issue in light of the court's opinion. 

Justices Corrigan and Markman concurred with the reasoning and result of the lead opinion, with one exception - they disagreed with the conclusion "two factors should be eliminated from consideration when determining a reasonable attorney fee for case evaluation sanctions," specifically, "the ‘results obtained' and whether the fee is fixed or contingent." Both Wood and MRPC 1.5(a) "specifically list these two factors as considerations when assessing reasonable attorney fees without limitation," and the justices concluded there was no principled basis for excluding those factors from consideration in the case evaluation context. Thus, "both factors should be considered, along with all the other factors listed in Wood and the MRPC, when assessing reasonable attorney fees for case evaluation sanctions." Consideration of those factors does not "affect the trial court's ultimate authority to determine which factors, if any, justify an adjustment to the base calculation of reasonable attorney fees obtained in multiplying the reasonable hourly rate by the reasonable number of hours expended." 

The dissent concluded the majority's "new variation of the Wood-factors method changes little because, in the end, it still leaves the trial court with broad discretion in awarding reasonable attorney fees under the rule." The dissenting justices "would not tinker with the Wood factors." Since the "Wood-factor method is not broken," they dissented "from the majority's attempt to fix it." Further, the dissent saw "several problems with this new method" making "its results no more consistent and reviewable than the Wood-factors method that it aims to fine tune." Applying the Wood factors to the case, the dissent would affirm the trial court's determination concerning the lead trial attorney's reasonable fee because the ruling was not an abuse of discretion since it was guided by several of the Wood factors and the trial court's reasoning was supported by the information with which it was presented. However, the dissent agreed with the majority "the trial court did not conduct sufficient analysis to support its award of attorney fees regarding plaintiff's second, third, and fourth chair attorneys," and would remand the case to the trial court for further analysis regarding those awards under Wood.

Full Text Opinion

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