Morris & Doherty, PC v. Lockwood

• Decision Date: 11 December 2003
• Docket Number: Docket No. 235451.
• Citation: 259 Mich. App. 38,672 N.W.2d 884
• Parties: MORRIS & DOHERTY, P.C., Plaintiff-CounterDefendant-Appellant, v. Cristina LOCKWOOD, Defendant-CounterPlaintiff-Appellee.
• Court: Court of Appeal of Michigan — District of US

672 N.W.2d 884

259 Mich. App. 38

MORRIS & DOHERTY, P.C., Plaintiff-CounterDefendant-Appellant, v. Cristina LOCKWOOD, Defendant-CounterPlaintiff-Appellee.

Docket No. 235451.

Court of Appeals of Michigan.

Submitted August 7, 2003, at Detroit.

Decided October 7, 2003, at 9:10 a.m.

Released for Publication December 11, 2003.

Janis L. Adams, Birmingham, for the plaintiff.

Jaffe, Raitt, Heuer & Weiss, PC (by Jane Derse Quasarano), Detroit, for the defendant.

Before: JANSEN, P.J., and NEFF and KIRSTEN FRANK KELLY, JJ.

JANSEN, P.J.

Plaintiff appeals as of right from a circuit court opinion and order denying its motion for summary disposition and granting defendant's motion for summary disposition. We reverse and remand.

I

In 1995, defendant accepted a faculty position at a law school. Defendant subsequently notified the State Bar of Michigan to place her bar membership on "inactive" status. Sometime before November 1997, an automobile accident injured a third party. A friend of the third party contacted defendant to inquire about the third party's legal options. Defendant referred the third party to plaintiff. Thereafter, plaintiff entered into a contingent fee agreement with the third party. Plaintiff also agreed to provide defendant a referral fee by written confirmation of an oral referral fee agreement. The third party consented to the referral fee agreement. In the spring of 1999, plaintiff settled the third party's case for a sum of $1,920,000. Pursuant to the contingent fee agreement, plaintiff received approximately $623,000 in attorney fees. Consequently, defendant asserted that she was entitled to a referral fee of approximately $207,666.

In February 2000, plaintiff filed a complaint for declaratory relief, which acknowledged the existence of the referral fee agreement but alleged that plaintiff subsequently learned that defendant's membership in the State Bar of Michigan was placed on "inactive status." As such, the complaint requested a ruling regarding plaintiff's obligation to pay defendant the referral fee. Defendant filed an answer to plaintiff's complaint and also filed a counterclaim alleging that plaintiff was liable for breach of contract because defendant did not receive the referral fee.¹

In November 2000, plaintiff filed a motion for summary disposition, arguing that the State Bar of Michigan and the Michigan Legislature prohibit "inactive" members of the state bar from practicing law and that the receipt of a referral fee is considered the practice of law. As an ancillary argument, plaintiff contended that defendant's inability to practice law constituted a conflict of interest with the third party, and that public policy required the circuit court to void the referral fee agreement ab initio. Defendant also filed a motion for summary disposition, arguing that the Michigan Rules of Professional Conduct (MRPC) permit her to receive the referral fee because she is a "lawyer" entitled to receive fees, despite her "inactive" bar membership status.

The circuit court issued an opinion and order denying plaintiff's motion for summary disposition with regard to its request for declaratory relief and granting defendant's motion for summary disposition regarding breach of contract. Specifically, the circuit court determined that the term "lawyer," as used in MRPC 1.5(e), encompassed all people licensed to practice law, and not solely those with "active" bar memberships. Thus, the circuit court determined, MRPC 1.5(e) permitted the disputed referral fee arrangement. In addition, the circuit court determined that the practice of law does not include referrals.

II

On appeal, a circuit court's decision on a motion for summary disposition is reviewed de novo. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003); AFSCME v. Detroit, 252 Mich.App. 293, 304, 652 N.W.2d 240 (2002). This Court must review the record in the same manner as must the circuit court to determine whether the movant was entitled to judgment as a matter of law. Morales v. Auto-Owners Ins. Co., 458 Mich. 288, 294, 582 N.W.2d 776 (1998); Michigan Educational Employees Mutual Ins. Co. v. Turow, 242 Mich.App. 112, 114-115, 617 N.W.2d 725 (2000). We must consider the facts in a light most favorable to the nonmoving party. Dressel, supra.

The circuit court treated the motions for summary disposition as cross-motions pursuant to MCR 2.116(C)(10). Although defendant's motion was brought pursuant to MCR 2.116(C)(10), plaintiff's motion was brought pursuant to MCR 2.116(C)(8) and (9). For purposes of our review, this distinction is insignificant because, as noted, our review is de novo. See Dressel, supra; Beaty v. Hertzberg & Golden, PC, 456 Mich. 247, 253, 571 N.W.2d 716 (1997); Abela v. General Motors Corp., 257 Mich.App. 513, 517-518, 669 N.W.2d 271 (2003). A motion made under MCR 2.116(C)(10)² tests the factual support for the claim. Dressel, supra.

Pursuant to MCR 2.116(C)(8),³ summary disposition may be granted on the ground that the opposing party has failed to state a claim on which relief can be granted. Horace v. City of Pontiac, 456 Mich. 744, 749, 575 N.W.2d 762 (1998). MCR 2.116(C)(9) provides for summary disposition where the "opposing party has failed to state a valid defense to the claim asserted against him or her."⁴

A proper determination of the issues presented in this case requires us to interpret provisions of various Michigan statutes and their interaction with the MRPC and the State Bar Rules of Michigan (SBR). Statutory interpretation is a question of law that is considered de novo on appeal. Eggleston v. Bio-Medical Applications of Detroit, Inc., 468 Mich. 29, 32, 658 N.W.2d 139 (2003). With regard to statutory interpretation our Supreme Court stated the following:

[T]he primary goal of judicial interpretation of statutes is to discern and give effect to the intent of the Legislature. This Court discerns that intent by examining the specific language of a statute. If the language is clear, this Court presumes that the Legislature intended the meaning it has plainly expressed and the statute will be enforced as written. Unless otherwise defined in the statute, or understood to have a technical or peculiar meaning in the law, every word or phrase of a statute will be given its plain and ordinary meaning. [Federated Publications, Inc. v. City of Lansing, 467 Mich. 98, 107, 649 N.W.2d 383 (2002) (citations omitted).]

Statutory language should be construed reasonably, keeping in mind the purpose of the act. Draprop Corp. v. Ann Arbor, 247 Mich.App. 410, 415, 636 N.W.2d 787 (2001). If the plain and ordinary meaning of the language is clear, judicial construction is normally neither necessary nor permitted. Sun Valley Foods Co. v. Ward, 460 Mich. 230, 236, 596 N.W.2d 119 (1999); Toth v. AutoAlliance Int'l, 246 Mich.App. 732, 737, 635 N.W.2d 62 (2001). The rules of statutory construction merely serve as guides to assist the judiciary in determining intent with a greater degree of certainty. Title Office, Inc. v. VanBuren Co. Treasurer, 249 Mich.App. 322, 326, 643 N.W.2d 244 (2002).

If reasonable minds can differ about the meaning of a statute, judicial construction is appropriate. Adrian School Dist. v. Michigan Pub. School Employees Retirement System, 458 Mich. 326, 332, 582 N.W.2d 767 (1998); Ross v. Michigan, 255 Mich.App. 51, 55, 662 N.W.2d 36 (2003). The court must consider the object of the statute, the harm it is designed to remedy, and apply a reasonable construction that best accomplishes the statute's purpose, but should also always use common sense. Marquis v. Hartford Accident & Indemnity (After Remand), 444 Mich. 638, 644, 513 N.W.2d 799 (1994); Proudfoot v. State Farm Mut. Ins. Co., 254 Mich.App. 702, 708, 658 N.W.2d 838 (2003). Statutes should be construed to avoid absurd consequences, injustice, or prejudice to the public interest. McAuley v. Gen. Motors Corp., 457 Mich. 513, 518, 578 N.W.2d 282 (1998), overruled in part on other grounds Rafferty v. Markovitz, 461 Mich. 265, 602 N.W.2d 367 (1999); Houghton Lake Area Tourism & Convention Bureau v. Wood, 255 Mich.App. 127, 142-143, 150, 662 N.W.2d 758 (2003).

The Michigan Supreme Court is empowered to "provide for the organization, government, and membership of the state bar of Michigan, and to adopt rules and regulations concerning the conduct and activities of the state bar of Michigan and its members." MCL 600.904. The rules of statutory construction also apply to rules promulgated by the Michigan Supreme Court, such as the Michigan Court Rules (MCR), the MRPC, and the SBR. See, generally, Grievance Administrator v. Underwood, 462 Mich. 188, 193, 612 N.W.2d 116 (2000); McAuley, supra at 518, 578 N.W.2d 282; ISB Sales Co v. Dave's Cakes, 258 Mich.App 520, 672 N.W.2d 181 (2003).

III

Plaintiff's argue on appeal that a referral fee agreement between an attorney and an inactive attorney is not enforceable. We agree.

MRPC 1.5(e) provides, in relevant part, "A division of a fee between lawyers who are not in the same firm may be made." MRPC 5.4(a) provides, in pertinent part, "A lawyer or law firm shall not share legal fees with a nonlawyer." In addition, this Court, citing MRPC 5.4(a), has stated "`any fee received by an attorney may not be shared with a non-licensed attorney.'" Dupree v. Malpractice Research, Inc., 179 Mich.App. 254, 262, 445 N.W.2d 498 (1989), citing Polo by Shipley v. Gotchel, 225 N.J.Super. 429, 542 A.2d 947 (1987)

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Defendant and the circuit court hinge their entire analysis concerning the validity of the contract on dictionary definitions or loose meanings of the word "lawyer." The circuit court quoted Black's Law Dictionary (4th ed., 1968) to define "lawyer" as "[a] person learned in the law; as an attorney, counsel, or solicitor; a person licensed to practice law." Then, the circuit court concluded, "Given the plain meaning of the word, a lawyer does not need to be an active member of this State. The only...