DeWald v. Isola

• Decision Date: 06 May 1991
• Docket Number: Docket No. 126816
• Citation: 470 N.W.2d 505,188 Mich.App. 697
• Parties: Jerome W. DeWALD, Plaintiff-Appellee, v. Amy Lynn ISOLA and Beth Lynn Isola, Defendants-Appellants. (After Remand) 188 Mich.App. 697, 470 N.W.2d 505
• Court: Court of Appeal of Michigan — District of US

Page 505

470 N.W.2d 505

Jerome W. DeWALD, Plaintiff-Appellee, v. Amy Lynn ISOLA and Beth Lynn Isola, Defendants-Appellants (After Remand)

Docket No. 126816.

188 Mich.App. 697, 470 N.W.2d 505

Court of Appeals of Michigan.

Submitted March 12, 1991, at Lansing.

Decided May 6, 1991, at 9:20 a.m.

Released for Publication June 21, 1991.

[188 MICHAPP 698] Sinas, Dramis, Brake, Boughton & McIntyre, P.C. by Bernard F. Finn and Deborah G. Adams, Lansing, for plaintiff-appellee.

Livornie & Wells by R. Richard Livorine, Haslett, for defendants-appellants.

AFTER REMAND

Before NEFF, P.J., and MURPHY and MARILYN J. KELLY, JJ.

MURPHY, Judge.

Plaintiff's claim against defendants was dismissed on December 7, 1987. Defendants appealed, arguing that the trial court erred in denying their motion for sanctions pursuant to M.C.L. Sec. 600.2591; M.S.A. Sec. 27A.2591 and MCR 2.114, 2.625(A)(2). On appeal, this Court reversed, finding that plaintiff's claim against defendants was frivolous, and remanded the case for assessment and imposition of sanctions in accordance with the statute and court rules. See DeWald v. Isola, 180 Mich.App. 129, 446 N.W.2d 620 (1989).

On remand, the trial court awarded defendants $2,587.50 for costs and reasonable attorney fees incurred as a result of the frivolous action pursued by plaintiff in the lower court, but denied defendants' request for costs and reasonable attorney fees incurred as a result of their appeal to this Court and the subsequent remand proceedings. Defendants appeal as of right. We affirm.

[188 MICHAPP 699] On appeal, defendants contend that the trial court erred when it ruled that the postjudgment costs and attorney fees incurred by defendants in their original appeal and on remand are outside the scope of the statute and court rule providing for an award of costs and reasonable attorney fees to the party who prevails over a frivolous claim or defense. We disagree.

It is well established that attorney fees are not generally recoverable, either as an element of costs or as an item of damages, unless expressly allowed by statute or court rule. Matras v. Amoco Oil Co., 424 Mich. 675, 695, 385 N.W.2d 586 (1986).

MCR 2.625(A)(2) provides:

In an action filed on or after October 1, 1986, if the court finds on motion of a party that an action or defense was frivolous, costs shall be awarded as provided by MCL 600.2591; MSA 27A.2591. [See also MCR 2.114.]

M.C.L. Sec. 600.2591; M.S.A. Sec. 27A.2591 provides in pertinent part:

(1) Upon motion of any party, if a court finds that a civil action or defense to a civil action was frivolous, the court that conducts the civil action shall award to the prevailing party the costs and fees incurred by that party in connection with the civil action by assessing the costs and fees against the nonprevailing party and their [sic] attorney.

(2) The amount of costs and fees awarded under this section shall include all reasonable costs actually incurred by the prevailing party and any costs allowed by law or by court rule, including court costs and reasonable attorney fees.

In ruling that the requested costs and attorney fees incurred on appeal and on remand were outside[188 MICHAPP 700] the scope of the statute and court rule, the trial court relied on Giannetti Bros. Construction Co. v. Pontiac, 175 Mich.App. 442, 438 N.W.2d 313 (1989). In that case, this Court determined that postjudgment appellate attorney fees were outside the scope of the "actual costs" recoverable pursuant to GCR 1963, 316.7 and 316.8 or MCR 2.403 as sanctions for rejecting a mediation evaluation. This Court reasoned that sanctions for appellate expenses are expressly set forth in MCR 7.216(C), which does not provide for mediation sanctions for appellate activities. Id., at 447, 438 N.W.2d 313. See also American Casualty Co. v. Costello, 174 Mich.App. 1, 13, 435 N.W.2d 760 (1989), and Plumbers & Pipefitters Local Union No. 190 v. Wolff, 141 Mich.App. 815, 818-819, 369 N.W.2d 237 (1985). Although the Giannetti decision concerned mediation sanctions, we agree with the trial court that the same reasoning may be applied in the present case.

M.C.L. Sec. 600.2445; M.S.A. Sec. 27A.2445 provides that an appellant may recover costs on appeal if he improves his position as a result of the appeal, and an appellee may recover costs on appeal if the appellant does not improve his position. MCR 7.219 sets forth the costs that the prevailing party on appeal may properly tax. Significantly, these taxable costs do not include attorney fees. However, MCR 7.216(C) sets forth a procedure by which a party may recover actual damages and expenses incurred as the result of a vexatious appeal or proceeding in an appeal. We conclude that the structure of the court rules shows an intent that appellate attorney fees may be allowed as taxable costs only when the appeal itself, or some proceeding within that appeal, is vexatious. Thus, in the absence of vexatious action by plaintiff on appeal, defendants could seek only the appellate costs provided by statute.

[188 MICHAPP 701] Recently, the United States Supreme Court reached a similar conclusion when it construed the sanction provision of F.R.Civ.P. 11 in Cooter & Gell v. Hartmarx Corp., 496 U.S. ----, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). The United States District Court for the District of Columbia had awarded sanctions to the respondents, including reasonable attorney fees, because the petitioner had violated Rule 11 by filing a factually baseless complaint. The United States Court of Appeals for the District of Columbia affirmed the award and additionally held that the respondents were entitled to reimbursement for attorney fees they had incurred in defending their award on appeal. The Supreme Court affirmed the sanctions awarded in the district court, but reversed the Court of Appeals' inclusion of appellate attorney fees in that award.

The Supreme Court rejected the respondents' argument, one which was similar to that made by defendants in the present case, that none of their appellate expenses, including attorney fees, would have been incurred if the petitioners' frivolous lawsuit had not been filed:

This line of reasoning would lead to the conclusion that expenses incurred "because of" a baseless filing extend indefinitely. Such an interpretation of the rule is overbroad. We believe Rule 11 is more sensibly understood as permitting an award only of those expenses directly caused by the filing, logically, those at the trial level. A plaintiff's filing requires the defendant to take the necessary steps to defend against the suit in district court; if the filing were baseless, attorneys' fees incurred in that defense were triggered by the Rule 11 violation. If the district court imposes Rule 11 sanctions on the plaintiff, and the plaintiff appeals, the expenses incurred in defending the award on appeal are directly caused by the district court's sanction and the appeal of that sanction, not the [188 MICHAPP 702] plaintiff's initial filing in district court. [496 U.S. at ----, 110 S.Ct. at 2461, 110 L.Ed.2d at 382. Citation omitted.]

The Court went on to explain that Federal Rule of Appellate Procedure 38 places a "natural limit" on the scope of F.R.Civ.P. 11 by providing the Court of Appeals with the authority to award sanctions if it determines that an appeal is frivolous. Id., 496 U.S. at ----, 110 S.Ct. at 2461-62, 110 L.Ed.2d at 383. If the appeal of a Rule 11 sanction is itself frivolous, Rule 38 gives appellate courts ample authority to award expenses. Id. However, the Court noted:

If the appeal is not frivolous under...