Maple Hill Apartment Co. v. Robert W. Stine, A.I.A.

• Decision Date: 21 March 1986
• Docket Number: Docket No. 84499
• Citation: 382 N.W.2d 849,147 Mich.App. 687
• Parties: MAPLE HILL APARTMENT COMPANY, a Michigan co-partnership, Plaintiff-Appellant, v. ROBERT W. STINE, A.I.A., Architect and Associates, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 849

382 N.W.2d 849

147 Mich.App. 687

MAPLE HILL APARTMENT COMPANY, a Michigan co-partnership, Plaintiff-Appellant, v. ROBERT W. STINE, A.I.A., Architect and Associates, Defendant-Appellee.

Docket No. 84499.

Court of Appeals of Michigan.

Submitted April 25, 1985.

Decided Dec. 16, 1985.

Released for Publication March 21, 1986.

Donnelly W. Hadden, P.C. by Donnelly W. Hadden, Detroit, for plaintiff-appellant.

Samuel H. Gun, Southfield, and Vandeveer, Garzia, Tonkin, Kerr & Heaphy, P.C. by Dennis B. Cotter, Detroit, for defendant-appellee.

Before BRONSON, P.J., and T.M. BURNS and MacKENZIE, JJ.

T.M. BURNS, Judge (On Remand).

Plaintiff rejected a mediation panel evaluation and failed to obtain a verdict which was more than ten percent greater than the panel's evaluation. The trial court ruled that, pursuant to GCR 1963, 316.7(b)(1), defendant was entitled to "actual costs". The term "actual costs" is defined in GCR 1963, 316.8 to include "a reasonable attorney fee as determined by the trial judge for services necessitated by the rejection of the panel's evaluation". In our earlier opinion in this case, 131 Mich.App. 371, 346 N.W.2d 555 (1984), we construed the meaning of GCR 1963, 316.8, and remanded the case for recalculation of the recoverable fee. On April 17, 1985, the Supreme Court vacated our judgment and remanded the case for reconsideration in light of former Oakland County Circuit Court Rule 18.12, for the reason that GCR 1963, 316 did not take effect until after the mediation proceedings had been concluded. 422 Mich. 863, 365 N.W.2d 762 (1985).

Former Oakland County Circuit Court Rule (OCCR) 18.12 defines the term "actual costs" to include "reasonable attorney fees to be determined by the judge to whom the case is assigned". The wording of former OCCR 18.12 differs from the wording of GCR 1963, 316.8. While under either rule, attorney fees are to be "reasonable" and are to be determined by the judge assigned to or presiding over the case, GCR 1963, 316.8 contains an additional requirement that the attorney fees be "for services necessitated by the rejection".

Our previous opinion relied on this terminology to hold that a party rejecting a mediation evaluation is not to be burdened with unlimited liability for any costs which are "but-for" caused by the decision to proceed to trial. The result reached in our earlier opinion was based on the requirements that attorney fees be "reasonable" and that those fees be only for services "necessitated" by the rejection. Thus, under GCR 1963, 316.8 attorney fees are recoverable only for services which are made necessary or unavoidable by the rejection. Attorney fees are not always recoverable for all services rendered. Causation principles require an inquiry into which consequences would not have occurred but for the rejection and an inquiry into which consequences are reasonably foreseeable. However, GCR 1963, 316 does not provide for recovery of attorney fees for all services "caused" by the rejection. Rather, the court rule provides for recovery of attorney fees for services which are "necessitated" by the rejection. Services may be foreseeable while at the same time they are not necessitated. An attorney may rationally choose to provide many legitimate services requested by clients, but at the same time such services may not be necessary. Grossly inefficient and unduly wasteful conduct is never necessitated by a rejection. Such services are avoidable and unnecessary. The resulting costs incurred through no fault of the party rejecting the award are not recoverable.

In addition to the requirement that the services be necessitated, an attorney fee based on such services is recoverable under GCR 1963, 316 only if the fee is "reasonable". The determination of the reasonableness of a fee involves a consideration of whether the attorney acted properly in supplying the underlying services. A fee charged for unnecessary conduct might not be reasonable. Both the "reasonableness" requirement and the requirement that services be "necessitated" led to the result reached in our earlier opinion.

However, the court rule which is applicable in this case is former OCCR 18.12. That rule required only that the attorney fees be "reasonable". In Crawley v. Schick, 48 Mich.App. 728, 737, 211 N.W.2d 217 (1973), this Court set forth several guidelines for determining the "reasonableness" of attorney fees. The Crawley factors have been applied in a multitude of cases in which reasonable attorney fees are authorized by statute or court rule. See Burke v. Angies, Inc., 143 Mich.App. 683, 373 N.W.2d 187 (1985); Johnston v. Detroit Hoist & Crane Co., 142 Mich.App. 597, 370 N.W.2d 1 (1985); Nelson v. DAIIE, 137 Mich.App. 226, 359 N.W.2d 536 (1984); Bowen v. Nelson Credit Centers Inc., 137 Mich.App. 76, 357 N.W.2d 811 (1984); King v. General Motors Corp., 136 Mich.App. 301, 356 N.W.2d 626 (1984); In re L'Esperance Estate, 131 Mich.App. 496, 346 N.W.2d 578 (1984); Bradley v. DAIIE, 130 Mich.App. 34, 343 N.W.2d 506 (1983); Butt v. DAIIE, 129 Mich.App. 211, 341 N.W.2d 474 (1983); Petterman v. Haverhill, 125 Mich.App. 30, 335 N.W.2d 710 (1982); Heath v. Alma Plastics Co., 121 Mich.App. 137, 328 N.W.2d 598 (1982); Medbury v. General Motors Corp., 119 Mich.App. 351, 326 N.W.2d 139 (1982); and Liddell v. DAIIE, 102 Mich.App. 636, 302 N.W.2d 260 (1981). In addition, the Supreme Court adopted the Crawley factors and applied them to the no-fault insurance scheme in Wood v. DAIIE, 413 Mich. 573, 588, 321 N.W.2d 653 (1982). While a trial court should consider the guidelines of Crawley, it is not limited to those factors in making its determination. Id. Further, the trial court need not detail its findings as to each specific factor considered. Id. The award will be upheld unless it appears upon appellate review that the trial court's finding on the "reasonableness" issue was an abuse of discretion. Id. However, if any of the underlying facts, such as the number of hours spent in preparation, are in dispute, the trial judge should make findings of fact on those issues. See Desender v. De Meulenaere, 12 Mich.App. 634, 163 N.W.2d 464 (1968).

In the instant case, plaintiff challenged the amount of attorney fees requested by defendant. The trial court merely found that the bill of costs was reasonable and accepted the bill on its face. This was error. The trial court abused its discretion by failing to consider the Crawley factors and to determine a reasonable fee.

As to the awards for expert witness fees and defense of the counterclaim, we adopt the analysis in our original opinion. See 131 Mich.App. 371, 379-380, 346 N.W.2d 555.

Reversed and remanded for proceedings in which the Crawley factors are applied and any underlying disputed issues of fact are resolved.

BRONSON, P.J., concurs.

MacKENZIE, Judge (dissenting in part).

I concur with that portion of the majority opinion disallowing the awards for expert witness fees and for the defense of the counterclaim. I also concur with the majority that reasonable attorney fees for purposes of Oakland County Circuit Court Rule (OCCR) 18.12 should be determined by applying the factors enumerated in Crawley v. Schick, 48 Mich.App. 728, 211 N.W.2d 217 (1973). However, I cannot agree with the clear implication of the majority opinion that the method by which reasonable attorney fees are determined pursuant to GCR 1963, 316.8 materially differs from that held to apply to the Oakland County rule.

Where a defendant accepts a mediation evaluation but the plaintiff rejects it, GCR 1963, 316.7(b)(1) authorizes the assessment of actual costs to be paid by the plaintiff to the defendant if the plaintiff does not obtain a verdict in an amount at least ten percent greater than the evaluation. Pursuant to GCR 1963, 316.8, actual costs include taxable costs "and a reasonable attorney fee as determined by the trial judge for services necessitated by the rejection of the panel's evaluation".

In the earlier opinion in this case, Maple Hill Apartment Co. v. Stine, 131 Mich.App. 371, 346 N.W.2d 555 (1984), vacated and remanded 422 Mich. 863, 365 N.W.2d 762 (1985), the majority held that reasonable attorney fees for purposes of GCR 1963, 316.8 should be construed as those attorney fees "reasonably foreseeable" at the time a party opts to reject a mediation evaluation. On remand, the majority has abandoned that construction in favor of a construction which would require the trial court to make two separate inquiries. First, the court would determine whether the claimed attorney fees are reasonable. The majority implies that this initial determination should be made by applying the Crawley factors. Second, under the majority's analysis, the trial court would have to resolve whether the fees were necessitated by rejection of the mediation evaluation. Unfortunately, the majority provides trial courts no guidance as to how this question should be resolved.

While I fully agree that the "reasonably foreseeable" test of the earlier opinion should be discarded, in my opinion, the new approach suggested by the majority is equally unsatisfactory. The purpose of GCR 1963, 316.7 and 316.8 is to encourage resolution through mediation by imposing certain sanctions against a party who rejects a mediation award and obtains from a subsequent trial a result which is less favorable than the mediation award. To effect this purpose, the mechanics of the sanction rule must be both fair and relatively easy to apply. Insofar as the majority goes beyond the application of the Crawley factors in determining what constitutes a reasonable attorney fee for purposes of GCR 1963, 316 and focuses on whether services performed were "necessitated" by the rejection of a mediation evaluation, it significantly diminishes the efficacy of imposing such sanctions and consequently subverts the purpose of the court rule.

The premise of the majority opinion is that there is a substantive...