Keywell & Rosenfeld v. Bithell

• Decision Date: 20 February 2003
• Docket Number: Docket No. 229117.
• Citation: 254 Mich. App. 300,657 N.W.2d 759
• Parties: KEYWELL AND ROSENFELD, Plaintiff-Appellant, v. Thomas C. BITHELL and Irene Bithell, Defendant-Appellees.
• Court: Court of Appeal of Michigan — District of US

657 N.W.2d 759

254 Mich. App. 300

KEYWELL AND ROSENFELD, Plaintiff-Appellant, v. Thomas C. BITHELL and Irene Bithell, Defendant-Appellees.

Docket No. 229117.

Court of Appeals of Michigan.

Submitted October 29, 2002, at Detroit.

Decided December 6, 2002, at 9:05 a.m.

Released for Publication February 20, 2003.

Kolin & Associates, PLC (by Marjorie L. Kolin), Farmington Hills, for the plaintiff.

Carson & Powell, P.C. (by Steven C. Powell), Birmingham, for the defendant.

Before: WHITBECK, C.J., and SAWYER and KIRSTEN FRANK KELLY, JJ.

PER CURIAM.

Plaintiff Keywell and Rosenfeld (K & R) appeals as of right the July 21, 1998, judgment the trial court entered after the jury found in favor of Thomas and Irene Bithell. K & R, a law firm that has ceased providing legal services and is in the process of dissolving, instituted this action to collect $414,726.85 in attorney fees it claims that the Bithells owe it: $374,169.34 for an easement suit, $3,126.65 for a zoning variance matter, $34,596.93 for insurance litigation, and $2,834.33 for a property tax assessment matter.¹ We reverse and remand.

I. Basic Facts And Procedural History

A. The Underlying Dispute

In 1984, the Bithells purchased a house in Bloomfield Township for approximately $147,000. The house was directly across the street from the Oakland Hills Country Club (the Club). At the time, a gate at the south end of the Club's driving range allowed people traveling to and from the Club access to Oakhills Drive. However, in 1988, the Club constructed a new gate directly in front of the Bithells' house to allow trucks and machinery access to its property, which considerably increased the traffic and noise around the Bithells' house. The Bithells believed that the Club lacked a necessary zoning variance to make this change.

The traffic and noise were just the start of the Bithells' problems concerning the Club. After the Bithells moved into their house, Bithell developed very serious health conditions. One of Bithell's sons developed an ongoing problem with migraines, and his oldest daughter also became sick. The Bithells did not know that the Club's private sewer line ran under their house to the public sewer line on their property. There was no documentary evidence in the chain of title to the house showing an easement for the sewer. The house had, on a number of occasions, become damp in the basement, but the Bithells were usually able to dry the area. However, the wetness problem became dramatically worse in March 1991 when they discovered raw sewage seeping into the basement and collecting on their property.

The Bithells, who repaired and disinfected their house after the seepage, attempted to resolve the gate and sewage issues with the Club and Bloomfield Township, to no avail. Though Bithell had seen sewage pooling on the Club's golf course across the street from his house, the Club denied that its sewer was leaking onto the Bithells' property. The Club continued to use the sewer, which in turn continued to cause sewage to leak into the Bithells' basement. Bithell only connected his health problems with the sewage problem at the house when he made an offhand comment to his physician, who reportedly warned him to abandon the house and all its contents immediately. The Bithells then left their home, which had increased in value to approximately $220,000, and all its contents. Later, the Bithells were able to sell the property on which their house was located for $450,000. They then spent $50,000 to destroy the house and remove the debris, and another $200,000 to pay their mortgage and the penalties that had accrued.

B. K & R's Involvement

In 1991, having just learned of the sewage problem, but before Bithell discovered that his illness was related to the sewage at the house, the Bithells sought legal assistance from K & R. The couple chose K & R because K & R attorney Robert R. Cleary, who specialized in labor and employment law, had worked for Bithell at the Taubman Company for a number of years. Taubman, a major retail shopping center developer, had continued to use Cleary as its attorney even after he left the business for private practice.

K & R attorneys sent a demand letter to the Club on behalf of the Bithells, including their children, asking for $850,000 to settle their dispute. When the Club refused, K & R attorneys sent a letter to the Club, Bloomfield Township, and Township Supervisor Fred Korzon offering to forgo requesting injunctive relief if they agreed to relocate the Bithells to a "comparable home" in the same school district. The other parties rejected this offer as well, prompting K & R attorneys to file a ninecount complaint in Oakland Circuit Court on behalf of the Bithells and their children against the Club, Bloomfield Township, and Korzon. They sought monetary damages and injunctive relief. Generally speaking, at that time the case was a relatively uncomplicated property dispute focused on easement and trespass issues.

After the attorneys filed the complaint, Cleary prepared an "initial litigation plan" for the Bithells. The plan summarized the factual background of the Bithells' claims and candidly discussed the strengths and weaknesses of each claim and potential defense. The plan also stated overall goals with respect to negotiating a settlement and the possibility of going to trial, identified experts and their expected testimony, and generally described how the firm intended to prepare and manage the litigation. The plan, in section D, described the staffing Cleary anticipated that the case would need, and stated:

Cost-effective staffing demands an initial evaluation of the elements of the litigation plan and the proper delegation of tasks and responsibilities to the appropriate staff level. In the instant case, it is anticipated that the following staff levels will be utilized to minimize client costs without sacrificing the quality of legal services to be provided:

Partner: Robert R. Cleary

Associates: Lucy R. Benham Eric B. Gaabo

Robert Cleary and Lucy Benham will retain ultimate responsibility for potentially dispositive decisions and will review all court filings which directly or indirectly impact Plaintiffs [the Bithells]. Lucy Benham is responsible for day to day litigation and discovery strategy and will maintain consistent client contact in all important decisions. Mr. Gaabo will provide legal research as required during the course of this litigation and will be responsible, with Lucy Benham, for drafting all motions, briefs, and discovery pleadings.

The delegation of assignments and responsibilities of this matter will be made throughout the defense of this litigation to ensure that all work is done at the appropriate staff level in order to minimize cost without sacrificing the quality of the legal representation. [Exhibit 1 to K & R's brief on appeal, pp. 3-4.]

The plan, in section O, also purported to establish a "fee agreement," stating:

The legal fees and expenses incurred by Keywell and Rosenfeld in bringing this lawsuit shall be paid as follows:

1. Plaintiffs [the Bithells] shall pay a $7,000 retainer on or prior to July 15, 1991 which shall be applied to Plaintiffs' current balance owed.

2. Plaintiffs shall pay, on a monthly basis, twenty five [sic] percent (25%) of all fees billed after July 15, 1991.

3. Plaintiffs shall pay, on a monthly basis, 100 percent of all monthly expenses incurred by Keywell and Rosenfeld in this matter.

4. In the event that Plaintiffs obtain a monetary recovery either through settlement or as damages following trial, Plaintiffs shall pay:

a. The remaining balance of all fees incurred through July 15, 1991;

b. The remaining balance of seventy five [sic] percent (75%) of fees incurred after July 15, 1991; and

c. An additional amount equal to five percent of such monetary recovery.

5. If plaintiffs recover nothing from Defendants through settlement or a trial on the merits, Plaintiffs shall pay:

a. One hundred percent (100%) of attorney fees, costs and expenses.

Cleary signed the plan on behalf of K & R. The Bithells did not sign the plan.

The Bithells later expanded their litigation to include claims regarding the gate the Club had constructed across from their house and an emphasis on the personal injury aspects of the sewage problem, not merely the underlying property issue. Additionally, the Bithells became involved in an action against their insurer for the damage to their house, an administrative zoning proceeding concerning the Club's gate, and a tax proceeding to lower the house's assessed value in light of the sewage problem. K & R represented the Bithells in all these matters. The pretrial processes for these four cases were extremely expensive in that K & R had to pay for court reporters for depositions, a variety of experts, sewer testing, biological testing, and medical opinions. The Bithells paid K & R's costs through November 1991, although never at the time K & R incurred them. The Bithells stopped paying anything after costs reached $50,000. Evidently, the Bithells calculated the costs amassed to that point, including items or services for which they had directly paid the provider, added those costs to what they had already paid K & R, deducted that subtotal from $50,000, and paid the remaining amount to K & R to the penny; K & R received slightly less than $50,000 for the costs it had already incurred for the Bithells. The Bithells did not pay K & R's fees at all, and those fees continued to mount.

For a period of about nine to ten months in 1992, Cleary did not have time to review the firm's bills for the Bithells' attorney fees and other costs. As a result, the firm did not send any bills during this time to the Bithells. Cleary was busy because, though still a partner in K & R, he had begun substituting for a Taubman attorney who had taken a leave of absence. Taubman was paying K & R a $15,000 retainer each month for Cleary's services, and...