Augustine v. Allstate Ins. Co.
| Decision Date | 26 April 2011 |
| Docket Number | Docket No. 296646. |
| Parties | AUGUSTINE v. ALLSTATE INSURANCE COMPANY. |
| Court | Court of Appeal of Michigan — District of US |
OPINION TEXT STARTS HERE
Speaker Law Firm, PLLC (by Liisa R. Speaker, Kalamanzoo, and Jodi M. Latuszek), for plaintiff.
Garan Lucow Miller, P.C. (by Daniel S. Saylor, Detroit, and James L. Borin, Troy), for defendant.
Before: DONOFRIO, P.J., and CAVANAGH and STEPHENS, JJ.
In this first-party, no-fault-insurance action, defendant, Allstate Insurance Company, appeals as of right the trial court's order awarding plaintiff, Shirley Augustine, $327,090.60 for attorney fees and interest. The sole issue on appeal is attorney fees. Defendant maintains that, on remand, the trial court abused its discretion by awarding attorney fees to plaintiff. Because, on remand, the trial court failed to follow the directive of this Court, did not comply with the law-of-the-case rule, and did not properly apply Smith v. Khouri, 481 Mich. 519, 751 N.W.2d 472 (2008), we vacate the award of attorney fees and remand for rehearing and redetermination in accordance with this opinion.
This is the second time this matter is before this Court. See Augustine v. Allstate Ins Co, unpublished opinion per curiam of the Court of Appeals, issued August 21, 2008 (Docket No. 276537), 2008 WL 3876105 ( Augustine I ). In the first appeal, defendant challenged the trial court's award of attorney fees in the final judgment. Id. at 1. This Court vacated the award and remanded the case for further proceedings in light of Smith, which was decided after defendant filed its appeal. Augustine I at 1, 3. The Augustine I Court set out the substantive facts of the case as follows:
Plaintiff was seriously injured in an auto accident and sought first-party, no-fault benefits from her insurer, defendant, to pay for the permanent attendant care that she now requires. Defendant paid the benefits for two years but ceased payments over a dispute regarding plaintiff's refusal to provide more detailed documentation of the nature of her care. Plaintiff brought the instant suit and was victorious, recovering $371,700 of the $929,000 that she sought, plus interest in the amount of $42,524. Plaintiff subsequently sought attorney fees pursuant to MCL 500.3148(1) due to defendant's “unreasonable delay” in making benefit payments. The trial court awarded attorney fees in the amount of $312,625 based upon a finding that plaintiff's attorneys had done 543.75 hours of work at $500 per hour and 51.25 hours at $300 per hour.1 [ Id. at 1.]
Defendant appealed the final judgment, challenging the reasonableness of the award of attorney fees. After the briefs were filed, our Supreme Court decided Smith, 481 Mich. at 522, 751 N.W.2d 472 (opinion by Taylor, C.J.), which delineated the steps a trial court must take when considering a request for attorney fees. Augustine I at 2. This Court held that “[i]n light of the procedure set out by the Smith Court, which the trial court naturally did not follow, we must vacate the award of attorney fees and remand to the trial court to apply the procedure outlined in Smith.” Id. at 3.
In ruling in the first appeal, this Court provided specific instructions to be followed on remand, explicitly outlining the procedural steps set out in Smith for determining a reasonable attorney-fee award. Augustine I at 2–3. This Court explained that “in determining the hourly rate, the focus is on initially finding a reasonable fee, i.e., the ‘fee customarily charged in the locality for similar legal service.’ ” Id. at 3, citing Smith, 481 Mich. at 530, 751 N.W.2d 472 (opinion by Taylor, C.J.). It further indicated that “if warranted, the court can increase [the] rate based upon the relevant factors under Wood [ v. DAIIE, 413 Mich. 573, 588, 321 N.W.2d 653 (1982) ] and MRPC 1.5(a).” Id. at 3. This Court vacated the trial court's award of attorney fees, remanding the case for the trial court “to make specific findings, consistent with Smith, on each attorney whose fees plaintiff sought to recover....” Id. It also explicitly instructed that, on remand, “the trial court should take care in not relying upon previous awards to these attorneys without first determining whether those other awards were for work on cases similar to this one.” Id.
On remand, the trial court granted defendant's request for an evidentiary hearing regarding attorney fees. Defendant requested that its expert be given the opportunity to review the entire litigation file that plaintiff's attorneys relied on in support of their itemization of fees. Defendant argued that it needed to see if all the work that was attributed to the attorneys was reflected in the file in order to test the accuracy of the billings against the alleged work product. Plaintiff maintained that the request for the file went far beyond what was argued during the first appeal and that she feared that defendant would publish the contents of the file. Though defendant was willing to accept the file with redactions under a protective order, plaintiff argued that it was improper to allow defendant access to the attorneys' work product and privileged communications. Plaintiff contended that the entire file was privileged and that without the privileged information there would be nothing left for defendant's expert to review other than the billing summary. The trial court ruled that defendant could not see the litigation file unless it was used at the evidentiary hearing to refresh the recollection of an attorney witness, in which case the file would then be made available.
On October 9, 2009, the trial court conducted an evidentiary hearing on fees. It was established that the law firm of Liss, Seder & Andrews gave plaintiff the option of paying an hourly fee of $500 or entering into a contingency-fee arrangement for representation. The $500 hourly fee was based on factors such as the law firm's experience, track record, commitments made to other clients, and limited resources, and the difficulty of handling catastrophic no-fault-insurance cases. Plaintiff chose to enter into a contingency-fee arrangement.
Plaintiff's trial attorney, Nicholas Andrews, prepared the billing summary as part of his trial preparation and completed the summary after the trial. Liss, Seder & Andrews did not have an “office procedure or methodology” for keeping track of the time expended on cases on a daily basis. Senior partner Arthur Liss testified that he never made his time entries contemporaneously with his work. Andrews testified that he may have used an Excel spreadsheet or office notes to assist in the preparation of a billing summary. The minimum time increment for billing was 0.25 hours. Plaintiff's attorneys indicated that a significant amount of the time that the firm actually expended on the case was not billed and emphasized that these types of cases required extensive discussion between the attorneys in the office to strategize. The trial court admitted into evidence in support of the firm's claim for 625.25 hours the firm's billing summary, a listing of the dates of service, the identification of each of the four lawyers who provided a service, a brief description of the service provided, and a time entry. Liss and Andrews testified regarding their expertise, experience, trial results, and other fee awards that they had each received. Plaintiff also produced letters from four attorneys that had been sent to plaintiff's attorneys regarding the fees they charged and were awarded in similar cases. Though the trial court recognized the letters as being self-serving, the trial court admitted the letters into evidence over defendant's objection because they were records kept in the ordinary course of business.
Defense counsel James Borin testified for the defense. The trial court admitted Borin's law firm's billing statement that reflected hourly charges totaling 252.8 hours. The trial court also admitted a survey of the hourly rates of approximately 208 attorneys authorized to conduct mediation in Oakland County during the relevant time. The trial court also admitted the State Bar of Michigan's 2007 Economics of Law Practice survey on hourly billing rates. Defendant also produced Thomas H. Blaske, who testified as an expert regarding attorney fees. Blaske provided testimony regarding plaintiff's counsel's practice, hourly rates, and allegedly excessive charges based on plaintiff's counsel's billing summary alone. He also stated that he was unable to provide a complete analysis of the reasonableness of plaintiff's attorneys' services because he did not have plaintiff's litigation file to cross-check the services enumerated.
On December 30, 2009, the trial court issued an opinion and order that was later reduced to a judgment. The trial court acknowledged the remand order from this Court and then proceeded to perform an analysis of the evidence submitted. The trial court addressed the reasonableness of the hourly fee and, in making that determination, relied on the factors set forth in Wood, 413 Mich. at 588, 321 N.W.2d 653, Crawley v. Schick, 48 Mich.App. 728, 737, 211 N.W.2d 217 (1973), and MRPC 1.5 as referred to in Smith, 481 Mich. at 529–532, 751 N.W.2d 472 (opinion by Taylor, C.J.). The trial court commented on the arguments of the attorneys, the witnesses testimony, and generally on the character of the evidence regarding each party's view of the reasonable local fee that should be used. The trial court opined that these cases (the underlying action for attendant-care services) are among the most complex civil cases. The trial court observed that Andrews had a long relationship with the client, having represented her in a previous attendant-care dispute with the same carrier, and had obtained good results in both cases. In summary, the trial...
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