Adair v. Michigan

• Decision Date: 06 November 2012
• Docket Number: Docket No. 230858.
• Citation: 298 Mich.App. 801,827 N.W.2d 740,298 Mich.App. 383
• Parties: ADAIR v. MICHIGAN (On Third Remand).
• Court: Court of Appeal of Michigan — District of US

298 Mich.App. 383

298 Mich.App. 801

827 N.W.2d 740

ADAIR

v.MICHIGAN (On Third Remand).

Docket No. 230858.

Court of Appeals of Michigan.

Submitted Aug. 24, 2010, at Lansing.

Decided Nov. 6, 2012, at 9:15 a.m.

Secrest Wardle, Troy (by Dennis R. Pollard and Mark S. Roberts) for plaintiffs.

Bill Schuette, Attorney General, John J. Bursch, Solicitor General, Richard A. Bandstra, Chief Legal Counsel, and Timothy J. Haynes, Assistant Attorney General, for defendants.

Before: SAAD, P.J., and TALBOT and FORT HOOD, JJ.

ON THIRD REMAND

TALBOT, J.

This original action returns on remand from our Supreme Court for a determination of costs to be awarded to plaintiffs under § 32 of the Headlee Amendment, Const. 1963, art. 9, § 32.¹ We referred this matter to a special master, with the consent of the parties, to review the reasonableness of plaintiffs' claim for costs, including attorney fees, and to conduct fact-finding. We have reviewed the report of the special master, the objections of the parties to that report, and the meager evidentiary record. We decline to award plaintiffs any attorney fees. Plaintiffs have failed to carry their burden of proving the number of hours reasonably expended in litigating their recordkeeping claim during phases I and II of these proceedings. Moreover, plaintiffs are not entitled to attorney fees for phase III of these proceedings, as a matter of law, because the ratifiers of the Headlee Amendment did not intend § 32 to authorize an award for attorney fees incurred in postjudgment proceedings. With regard to the other costs incurred in the maintenance of this suit, we find the special master's construction of the term "costs" to be overly restrictive in light of Macomb Co. Taxpayers Ass'n v. L'Anse Creuse Pub. Sch., 455 Mich. 1, 564 N.W.2d 457 (1997). This narrow view of what constitutes an awardable cost under § 32 impedes our ability to assess costs in a fair and informed manner and, therefore, we are compelled to return this matter to the special master for the taking of additional proofs and for a recalculation of the costs to be awarded in accordance with this opinion.

COSTS AWARDABLE PURSUANT TO CONST. 1963, ART. 9, § 32

I. REASONABLE ATTORNEY FEES

Const. 1963, art. 9, § 32 governs the costs to be awarded to a taxpayer who sustains an action to enforce the provisions of the Headlee Amendment. Section 32 provides:

Any taxpayer of the state shall have standing to bring suit in the Michigan State Court of Appeals to enforce the provisions of Sections 25 through 31, inclusive, of this Article and, if the suit is sustained, shall receive from the applicable unit of government his costs incurred in maintaining such suit.

It is well established that § 32 costs include reasonable attorney fees.

Adair v. Michigan, 486 Mich. 468, 494, 785 N.W.2d 119 (2010) ; Macomb Co. Taxpayers, 455 Mich. at 7–10, 564 N.W.2d 457; Durant v. Dep't of Ed. (On Second Remand), 186 Mich.App. 83, 118, 463 N.W.2d 461 (1990). What is not so well established, however, is how the reasonableness of those fees is to be determined in actions to enforce the Headlee Amendment. Plaintiffs advocate a reasonableness calculation that employs the framework set forth in Smith v. Khouri, 481 Mich. 519, 751 N.W.2d 472 (2008). The state counters that Smith has no application in actions to enforce the Headlee Amendment because the intent underlying § 32 is to provide for the reimbursement of the costs the taxpayer incurred in maintaining the suit and not to compensate the taxpayer at an hourly rate that the taxpayer's attorney might otherwise command. Rather, according to the state, we should assess whether the $175–an–hour fee charged to plaintiffs by their attorneys reflects a reasonable hourly rate. We believe, as did the special master, that plaintiffs advance the more persuasive argument.

In Smith, our Supreme Court fashioned a framework to address how a trial judge is to determine reasonable attorney fees for the purpose of awarding case evaluation sanctions under MCR 2.403(O)(6)(b). Smith, 481 Mich. at 526–530, 751 N.W.2d 472 (opinion by TAYLOR, C.J.). The Court noted, however, that the "aim" of this framework is "to provide a workable, objective methodology for assessing reasonable attorney fees that Michigan courts can apply consistently to our various fee-shifting rules and statutes." Id. at 535, 751 N.W.2d 472. Section 32 is a fee-shifting provision. See id. at 526–527, 751 N.W.2d 472. Because § 32 is a fee-shifting provision and because our Supreme Court intended the Smith analytical framework to apply generally to requests for attorney fees under fee-shifting provisions, we apply the Smith framework to assess the reasonableness of the attorney fees sought by plaintiffs. In so doing, we note that other panels of this Court have employed prior manifestations of this reasonable-fee analytical framework when awarding costs and attorney fees in actions to enforce the Headlee Amendment. See, e.g., Bolt v. City of Lansing (On Remand), 238 Mich.App. 37, 60–62, 604 N.W.2d 745 (1999) ; Durant v. Michigan, unpublished order of the Court of Appeals, entered January 14, 2000 (Docket No. 211740).

A. THE SMITH V. KHOURI FRAMEWORK

The party requesting an award of attorney fees bears the burden of proving the reasonableness of the fees requested. Smith, 481 Mich. at 528, 751 N.W.2d 472 (opinion by TAYLOR, C.J.). Smith establishes an analytical framework to guide the lower courts in determining what constitutes a "reasonable fee." In general terms, the Smith framework requires a trial judge to determine a baseline reasonable hourly or daily fee rate derived from "reliable surveys or other credible evidence" showing the fee customarily charged in the locality for similar legal services. Id. at 530–531, 537, 751 N.W.2d 472. Once the trial judge has determined this hourly rate, the judge must multiply this rate by the reasonable number of hours expended in the case. The product of this calculation serves as the "starting point for calculating a reasonable attorney fee." Id. at 531, 537, 751 N.W.2d 472. Finally, the trial judge may make up-or-down adjustments to the fee after considering certain factors enumerated in Rule 1.5(a) of the Michigan Rules of Professional Conduct and Wood v. DAIIE, 413 Mich. 573, 321 N.W.2d 653 (1982), and any additional relevant factors. Smith, 481 Mich. at 529–531, 537, 751 N.W.2d 472 (opinion by TAYLOR, C.J.).

Because we find the failure of plaintiffs' proofs with regard to the number of attorney hours reasonably expended to be dispositive of plaintiffs' claim for attorney fees, we limit our discussion to this component of the framework set forth in Smith.

B. REASONABLE NUMBER OF HOURS EXPENDED

Plaintiffs, as the fee applicants, bear the burden of supporting their claimed hours with evidentiary support, including detailed billing records, which the state may contest with regard to reasonableness. Smith, 481 Mich. at 532, 751 N.W.2d 472; Augustine v. Allstate Ins. Co., 292 Mich.App. 408, 432, 807 N.W.2d 77 (2011). An itemized bill of costs by itself is insufficient to establish the reasonableness of the hours claimed. Petterman v. Haverhill Farms, Inc., 125 Mich.App. 30, 33, 335 N.W.2d 710 (1983). Indeed, the trier of fact is not required to accept an itemized bill of costs on its face, id., nor is the trier of fact required to accept an attorney's representation that the hours identified in the bill of costs were reasonably expended, Sturgis S & L Ass'n. v. Italian Village, Inc., 81 Mich.App. 577, 584, 265 N.W.2d 755 (1978) ; see also Augustine, 292 Mich.App. at 423, 807 N.W.2d 77. Rather, the fee applicant must demonstrate by documentation or specific testimony, or both, that the time identified as expended on a billable item was actually and reasonably expended. Augustine, 292 Mich.App. at 432–434, 807 N.W.2d 77; Petterman, 125 Mich.App. at 33, 335 N.W.2d 710.

For purposes of establishing what constitutes a reasonable number of hours expended in maintaining the recordkeeping claim, plaintiffs divided this case into three phases and presented some evidence tailored to each phase. Phase I began with the filing of plaintiffs' original complaint on November 15, 2000, and ended on June 9, 2004, with our Supreme Court issuing Adair v. Michigan, 470 Mich. 105, 680 N.W.2d 386 (2004), in which the Court remanded the matter to this Court to allow plaintiffs the opportunity to attempt to prove that they were entitled to relief on the recordkeeping claim. Phase II began on June 9, 2004, and ended on July 14, 2010, with the issuance of Adair v. Michigan, 486 Mich. 468, 785 N.W.2d 119, which affirmed this Court's grant of declaratory relief in favor of plaintiffs, reversed part of this Court's judgment, and remanded this matter for entry of an award of costs, including reasonable attorney fees. Phase III began on July 14, 2010, and extends through these postjudgment proceedings.

1. PHASE I

Plaintiffs' exhibit 9 is a 132–page spreadsheet that serves as plaintiffs' bill of costs. Each entry on the spreadsheet identifies the date of the service provided or expense incurred, the initials of the attorney who provided the service or incurred the cost, a brief, general description of the service provided or cost incurred, the hours spent on providing the service, the amount of any cost incurred, and the total fee or cost sought for each entry. Dennis Pollard and Richard Kroopnick, attorneys for plaintiffs, candidly admitted during their respective testimony before the special master that neither could ascertain from a review of the spreadsheet which recorded costs, or portion of the recorded costs, were solely attributable to litigating the recordkeeping claim. Pollard testified that "through our invoice, we don't identify that we work so many hours or so much time on one issue versus another." Plaintiffs' attorneys did not differentiate in their own recordkeeping between the recordkeeping claim and their other claims because "[w]e...