Ayotte v. Dep't of Health & Human Servs.
Decision Date | 22 April 2021 |
Docket Number | 350666 |
Citation | 337 Mich.App. 29,972 N.W.2d 282 |
Parties | Joseph AYOTTE, Plaintiff-Appellee, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant-Appellant. |
Court | Court of Appeal of Michigan — District of US |
Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Brian K. McLaughlin, Assistant Prosecuting Attorney, for the Department of Health and Human Services.
Allegiant Legal, PLLC, Marshall (by Paula A. Aylward ) for Joseph Ayotte
Before: Murray, C.J., and Markey and Letica, JJ.
In this case involving Title IV-E1 foster-care funding, defendant appeals by leave granted2 the circuit court's order awarding plaintiff $29,097.50 in attorney fees and $521 in costs under the Administrative Procedures Act (APA), MCL 24.201 et seq. On appeal, defendant advances three arguments for why the circuit court erred by awarding attorney fees and costs to plaintiff: (1) the circuit court did not have jurisdiction to award attorney fees and costs under the APA when the administrative law judge (ALJ) was not asked to make a determination regarding such fees and costs; (2) the circuit court erred by finding that defendant's arguments were vexatious under MCR 7.112 and MCR 7.216 ; and (3) the circuit court erred to the extent that it sanctioned defendant under the court's inherent authority. We agree and, therefore, reverse.
The underlying facts are not in dispute and are set forth in Ayotte v. Dep't of Health & Human Servs. , 326 Mich. App. 483, 486-488, 927 N.W.2d 730 (2018) :
Beyond the substantive legal arguments presented in the circuit court, plaintiff requested attorney fees and costs. The circuit court awarded attorney fees and costs under the APA because "the position of the Department is exceedingly unreasonable." The court explained:
I will award attorney fees because I think the position of [defendant] is exceedingly unreasonable. I think they have a duty to appeal these things if they find, if they are audited, they didn't even wait to be audited. I think the finding of ... the Department in the Virginia case[3 ] would have been a good reason to defend this, and I think it is appropriate to award attorney fees. Now the amount of attorney fees could be subject to litigation, I can't just order that you get anything you want. So if there's a further proceeding necessary on that I will hear it if it can't be agreed.
Thereafter, in a motion for attorney fees and costs and various other filings, plaintiff sought an award of $24,308 in attorney fees and $807.85 in costs. Plaintiff argued that the circuit court had the authority to enter such an award under MCL 600.2421d because defendant's position was frivolous, under MCR 7.216(C) because defendant's position was vexatious, and under the trial court's inherent authority to sanction litigants. In response, defendant argued that MCL 24.323(1) of the APA authorized only the presiding officer, in this case the ALJ, not the circuit court, to award attorney fees. Defendant also argued that, even if the APA applied, plaintiff's request for attorney fees should be denied because defendant's position was neither frivolous nor vexatious. Further, defendant did not engage in misconduct before the circuit court to warrant sanctions.
When this Court granted defendant's application for leave to appeal,4 the circuit court stayed all proceedings pending the outcome of the appeal. On appeal, this Court agreed with the circuit court that the November 11, 2014 detention order was not the first order of removal for purposes of Title IV-E funding. Ayotte , 326 Mich. App. at 494-495, 927 N.W.2d 730. This Court concluded that the "statutory scheme and agency interpretations align with the ruling of the trial court, and we do not find defendant's arguments to the contrary persuasive." Id. at 503, 927 N.W.2d 730.
Following this Court's decision in Ayotte , the circuit court returned to the issue of attorney fees and costs. Defendant argued that MCL 24.325 gave the circuit court authority to review the final action of a presiding officer regarding attorney fees and costs imposed under MCL 24.323, but the circuit court did not have the authority to award attorney fees. Defendant asserted that the procedural posture of the case required the ALJ to first make a determination regarding costs and fees. Citing Grass Lake Improvement Bd. v. Dep't Of Environmental Quality , 316 Mich. App. 356, 891 N.W.2d 884 (2016), Widdoes v. Detroit Pub. Sch. , 218 Mich. App. 282, 553 N.W.2d 688 (1996), and Sherman Pharmacy, Inc. v. Dep't of Social Servs. , unpublished per curiam opinion of the Court of Appeals, issued May 16, 1997 (Docket No. 188114), 1997 WL 33347963, defendant argued that, without a decision by the presiding officer regarding attorney fees, the circuit court could not review the matter.
Plaintiff argued that defendant's interpretation of the caselaw was incorrect and asserted that the cases were distinguishable because they involved review of an ALJ's decision on fees and costs. Plaintiff further argued that MCL 24.323 and MCL 600.2421d clearly provided the circuit court with the authority to award fees and costs, and MCR 7.112 and MCR 7.216 allowed the court to award costs and fees because the court was serving as an appellate tribunal. In any event, plaintiff asserted the court had the inherent authority to sanction defendant for "wast[ing] scarce judicial resources arguing something that was exceedingly unreasonable and untenable under the law ...." Defendant responded by arguing that there was a difference between advancing a legal argument that was devoid of merit and having a difference of opinion on the requirements of the law.
Ultimately, the court said that it agreed with defendant's proposition that an unsuccessful argument is not necessarily devoid of merit, "but I don't agree with it as applied to this case because I think it has been frivolous from day one." The court continued: The court explained that Therefore, the court concluded that it had the authority to award fees under MCL 600.2421d, MCL 24.323, and MCR 7.112 :
Plaintiff's counsel said that sh...
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