Hunt v. Hadden

• Decision Date: 02 February 2016
• Docket Number: Case Number 14-10713
• Citation: 159 F.Supp.3d 800
• Parties: David Hunt and Carol Santangelo, Plaintiffs, v. Donnelly Hadden, and Donnelly W. Hadden, P.C., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

159 F.Supp.3d 800

David Hunt and Carol Santangelo, Plaintiffs,
v.
Donnelly Hadden, and Donnelly W. Hadden, P.C., Defendants.

Case Number 14-10713

United States District Court, E.D. Michigan, Southern Division.

Signed February 2, 2016

159 F.Supp.3d 803

Michael C. Curhan, Bloomfield Hills, MI, for Plaintiffs.

M. Ellen Dennis, Saline, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART MOTION FOR COSTS AND ATTORNEY'S FEES

DAVID M. LAWSON, United States District Judge

The Court entered judgment in this case on October 23, 2015, finding the defendants

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liable to the plaintiffs for statutory conversion under Michigan Compiled Laws § 600.2919a. The plaintiffs have filed a timely motion for attorney's fees and costs under Federal Rule of Civil Procedure 54(d). They also ask the Court to award prejudgment interest. The defendants oppose the motion, asserting that an award of attorney's fees under the statute is discretionary and the Court should exercise its discretion and not award fees, the amount of fees requested is excessive, costs (other than filing fees) should not be awarded, and prejudgment interest should be limited. The motion papers adequately set forth the relevant facts and law, and oral argument will not aid in the disposition of the motion. Therefore, it is ORDERED that the motion be decided on the papers submitted, and the hearing scheduled for February 3, 2016 is CANCELLED . See E.D. Mich. LR 7.1(f)(2). The plaintiffs have demonstrated their entitlement to attorney's fees and certain costs, including prejudgment interest in an amount to be determined. Therefore, the Court will grant the plaintiffs' motion in part.

I. Background

The facts of the case are well known to the parties. A brief summary will suffice here. Plaintiff C. David Hunt, a neurosurgeon, and his wife, Carol Santangelo, hired defendant Donnelly Hadden, an attorney, to represent them in an action to recover damages Hunt suffered when the condominium they leased in Marquette, Michigan was found to have vented carbon monoxide fumes into the living quarters. Dr. Hunt suffered from prolonged exposure to toxic fumes that had been circulating throughout the condominium; the exposure to the toxins left him permanently disabled and unable to work.

Hadden sued the condominium owners and the condominium association on behalf of Hunt and Santangelo. He negotiated a settlement of that case, but retained more of the settlement proceeds than his fee agreement allowed. He also counseled his clients to sign a broad release that had the effect of barring any further action against the developer, the builder, and the HVAC contractor, who, presumably, were the primary targets (and perhaps the deeper pockets) of the liability claim. When this came to light, the plaintiffs sued Hadden and his professional corporation in this court by filing an eleven-count complaint alleging various theories of liability that focused on legal malpractice, conversion, fraud, and loss of consortium. After early efforts to resolve the dispute proved fruitless, the case was robustly litigated by the defendants. At some point, after it became known that the defendants had no insurance and their collectability was in doubt, the plaintiffs abandoned their legal malpractice claim (most likely due to the expense of having to obtain expert witnesses to prove the case within a case) and focused on the conversion claims. The Court granted the plaintiffs partial summary judgment on the statutory conversion claim, and the parties eventually stipulated to the amount of damages. Judgment in the amount of $10,028.44 was entered on October 23, 2015.

The plaintiffs now seek attorney's fees of $146,756.25, costs of $642.27, prejudgment interest at five percent from the day of the conversion to the day of judgment, and a declaration that they may seek additional attorney's fees following the appeal. Hadden argues that attorney's fees cannot be awarded unless the plaintiffs show that the defendants acted willfully and wantonly. He also maintains that the hourly rate used by the plaintiffs' attorney in computing his fee request—$375—is excessive, and the amount of time expended is unreasonably overstated. Hadden also insists that the plaintiffs cannot recover any costs other than the filing fee, and prejudgment

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interest cannot be awarded in a motion filed under Rule 54.

II. Attorney's Fees

In a diversity action such as this, when considering an award of attorney's fees, the Court must apply state substantive law and federal procedural law. See First Bank of Marietta v. Hartford Underwriters Ins. Co. , 307 F.3d 501, 528 (6th Cir.2002) (citing Erie R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ); see also Alyeska Pipeline Co. v. Wilderness Soc'y , 421 U.S. 240, 260 n. 31, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) (“In an ordinary diversity case where the state law does not run counter to a valid federal statute,... state law denying the right to attorney's fees or giving a right thereto, which reflects a substantial policy of the state, should be followed.”); Chambers v. NASCO, Inc. , 501 U.S. 32, 52, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). Rule 54(d) states that requests for attorney's fees must be made by motion, which must “specify the judgment and the statute, rule, or other grounds entitling the movant to the award.” Fed. R. Civ. P. 54(d)(2)(A), (2)(B)(ii).

Michigan's statutory conversion statute expressly authorizes recovery of attorney's fees when a plaintiff establishes a violation of the statute. The statute states:

A person damaged as a result of [statutory conversion] may recover 3 times the amount of actual damages sustained, plus costs and reasonable attorney fees.

Mich. Comp. Laws § 600.2919a(1).

A. Entitlement to Attorney's Fees

The defendants point out that because the statute allows that a plaintiff “may” recover attorney's fees, a fee award is discretionary. Case law supports that view. See Aroma Wines & Equip., Inc. v. Columbian Distribution Servs., Inc. , 303 Mich.App. 441, 449, 844 N.W.2d 727, 732 (2013), aff'd in part and rev's on other grounds 497 Mich. 337, 871 N.W.2d 136 (2015) (noting that under section 600.2912a(1), “treble damages and attorney fees are discretionary”).

The defendants insist that the plaintiffs are not entitled to attorney's fees because the defendants did not act willfully or wantonly in converting funds, contending that the plaintiffs must make the same case for attorney's fees as they would have had to demonstrate to recover treble damages. That argument is not persuasive. “[T]reble damages are in their nature punitory.” Shepard v. Gates , 50 Mich. 495, 498, 15 N.W. 878, 879 (1883). Attorney's fees under Michigan law, on the other hand, are generally compensatory in nature. See McAuley v. Gen. Motors Corp. , 457 Mich. 513, 520, 578 N.W.2d 282, 285–86 (1998) (“That an award of attorney fees is typically compensatory in nature is illustrated by the well-established body of law holding that a litigant representing himself may not recover attorney fees as an element of costs or damages under either a statute or a court rule because no attorney fees were incurred.”). The “purpose of compensatory damages is to make the injured party whole for the losses actually suffered.” Ibid. (citing Stilson v. Gibbs , 53 Mich. 280, 284, 18 N.W. 815 (1884) ). A prevailing plaintiff should ordinarily be entitled to attorney fees upon a showing that “he has incurred such fees.” Ibid.

The defendants also make reference to the American rule, which assigns the burden of attorney's fees to the respective litigants, “unless a statute, court rule, or common-law exception provides the contrary.” Nemeth v. Abonmarche Dev., Inc. , 457 Mich. 16, 37–38, 576 N.W.2d 641 (1998). However, because section 600.2919a(1) expressly allows for an award of attorney's fees, that argument has no traction.

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The defendants also argue that the plaintiffs should not receive attorney's fees because their recovery was de minimis . The defendants state that they made a $10,000 offer of judgment a year ago, and the judgment in this case was only $28.44 more than the offer. However, the $10,000 that the defendants offered to pay included costs and attorney's fees. Accepting such an offer after spending more than 300 hours litigating this case for the better part of a year would have been woefully inadequate. The plaintiffs argue that this offer of judgment was nothing more than a tactic to put the plaintiffs at greater risk in this case, which appears to be a plausible conclusion in light of the defendants' proclivity of contesting every legal point to its ultimate conclusion, regardless of the strength of their position. The plaintiffs eventually recovered the full amount they were seeking on the statutory conversion claim. They have shown that they are entitled to a discretionary award of attorney's fees under section 600.2929a(1).

B. Amount of Attorney's Fees

When determining an amount of a reasonable attorney's fee, federal courts generally begin by calculating the “lodestar” (the product of multiplying the number of hours reasonably...