Zeeland Farm Services, Inc. v. JBL Enterprises, Inc.

• Decision Date: 27 September 1996
• Docket Number: Docket No. 187349
• Citation: 219 Mich.App. 190,555 N.W.2d 733
• Parties: ZEELAND FARM SERVICES, INC., Plaintiff-Appellant, v. JBL ENTERPRISES, INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 733

555 N.W.2d 733

219 Mich.App. 190

ZEELAND FARM SERVICES, INC., Plaintiff-Appellant, v. JBL ENTERPRISES, INC., Defendant-Appellee.

Docket No. 187349.

Court of Appeals of Michigan.

Submitted June 13, 1996, at Grand Rapids.

Decided September 27, 1996, 9:40 a.m.

Released for Publication Nov. 22, 1996.

Timothy A. Hoesch, Holland, for plaintiff-appellant.

Roman K. Kosiorek, Grand Rapids, for defendant-appellee.

Before MARILYN J. KELLY, P.J., and NEFF and J. STEMPIEN, ^* JJ.

NEFF, Judge.

This case arises from a debt collection action begun by plaintiff Zeeland Farm Services, Inc., against defendant JBL Enterprises, Inc., in which plaintiff sought to recover the balance due on defendant's open account and the attorney fees incurred in collecting the debt as permitted by the credit agreement. Plaintiff appeals as of right a circuit court order that directed a verdict against plaintiff for those attorney fees on the ground that plaintiff failed to show that the attorney fees were reasonable. We reverse.

I

From May 1992 through May 1993, defendant purchased agricultural supplies and services from plaintiff on an open account under the parties' credit agreement, which defendant's president signed. ¹ Defendant failed to pay in accordance with the agreement and, following unsuccessful collection attempts, plaintiff filed its breach of contract claim in late May 1993 in the district court, seeking to collect the debt and all collection costs.

In June 1993, defendant answered, denying it owed plaintiff money on the open account and counterclaimed that plaintiff had negligently sprayed herbicides on defendant's fields, which resulted in continued weed growth and lower soybean yields. Plaintiff responded, noting that defendant had been denied disaster relief funds because the land was less than ideal for growing soybeans, which had contributed to the reduced yield. Plaintiff also denied that it had sprayed all the acreage that defendant claimed had been sprayed, and asserted that it had already paid defendant for the crop damage to the acreage that plaintiff had sprayed. Defendant amended its counterclaim, reducing the acreage it claimed had been negligently sprayed, and plaintiff again answered, contending that defendant's damages were caused by other factors.

In July 1993, the parties stipulated a change of venue to the circuit court. A few months later, the case was dismissed for nonpayment of the transfer fee, but it was later reinstated.

Trial began on December 19, 1994, and the next day, the jury returned a verdict against defendant with regard to its counterclaim and for plaintiff with regard to its complaint in the amount of $22,000 for the full amount of the debt due on the open account and for all attorney fees and collection costs.

In January 1995, defendant moved for judgment notwithstanding the verdict, claiming that plaintiff had not proved its damages with reasonable certainty. Plaintiff objected, claiming that defendant's motion was untimely because it was two days late. The circuit court denied defendant's motion as untimely, but suggested that defendant move for relief from judgment. Defendant followed that advice, claiming that plaintiff failed to prove its damages with reasonable certainty. Although plaintiff opposed defendant's motion, the court set aside the jury's verdict and granted a new trial.

The second trial was scheduled to begin in May 1995, and in a pretrial motion, defendant sought to prohibit any mention of the previous jury trial and verdict. Plaintiff objected, but the court ruled that no mention was to be made of the first jury's verdict on the grounds that the verdict was not relevant and that reference to it was prejudicial.

Plaintiff's credit manager, Wayne Guinn, testified at the second trial that defendant's president, William Pavlek, applied for credit by filling out and signing the credit application and that the application included a provision that the customer became liable for plaintiff's attorney fees and court costs if the customer failed to pay the bill. Pavlek concurred with that testimony. Guinn further testified that defendant's account balance for purchases as of May 28, 1993, was $9,934.95 and that the attorney fees in this case totaled $18,904.39.

At the conclusion of plaintiff's case, defendant moved for a directed verdict with regard to the attorney fee issue, claiming that plaintiff had failed to introduce evidence showing that the attorney fees were reasonable. The court granted defendant's motion on the ground that the plaintiff had failed to produce expert testimony addressing the reasonableness of the attorney fees. Subsequently, the court entered judgment against defendant in the amount of $4,621.47 for the net balance due on the open account plus ordinary costs in the amount of $535.39 for a total judgment of $5,156.86.

II

Plaintiff first contends that the trial court abused its discretion by directing a verdict against plaintiff with regard to the recovery of its attorney fees because plaintiff had presented evidence that those attorney fees were reasonable. Plaintiff further contends that expert testimony is not required or necessary to determine if attorney fees are reasonable. We agree that plaintiff presented a prima facie case, which entitled plaintiff to have the jury determine the credibility and weight of that testimony, and that expert testimony is not always required to prove the reasonableness of attorney fees.

A

We review a trial court's decision to grant a directed verdict for an abuse of discretion. Howard v. Canteen Corp., 192 Mich.App. 427, 431, 481 N.W.2d 718 (1992). An appellate court considers the evidence presented up to the time that the motion is made and views that evidence in the light most favorable to the nonmoving party while resolving all doubt in the nonmoving party's favor. Hatfield v. St. Mary's Medical Center 211 Mich.App. 321, 325, 535 N.W.2d 272 (1995). An appellate court recognizes the jury's and the judge's unique opportunity to observe the witnesses, as well as the factfinder's responsibility to determine the credibility and weight of trial testimony. Caldwell v. Fox, 394 Mich. 401, 407, 231 N.W.2d 46 (1975); Lester N. Turner, P.C. v. Eyde, 182 Mich.App. 396, 398, 451 N.W.2d 644 (1990). Generally, directed verdicts are viewed with disfavor. Berryman v. K mart Corp., 193 Mich.App. 88, 91, 483 N.W.2d 642 (1992).

B

The parties to a contract may include a provision that the breaching party will be required to pay the other side's attorney fees and such provisions are judicially enforceable. Central Transport, Inc. v. Fruehauf Corp., 139 Mich.App. 536, 548, 362 N.W.2d 823 (1984). However, recovery is limited to reasonable attorney fees. Papo v. Aglo Restaurants of San Jose, Inc., 149 Mich.App. 285, 299, 386 N.W.2d 177 (1986). A party claiming the right to recover attorney fees under a contract must introduce evidence of the reasonableness of the attorney fees to establish a prima facie case and to avoid a directed verdict. In re Howarth Estate, 108 Mich.App. 8, 12, 310 N.W.2d 255 (1981).

C

We first determine whether expert testimony is required to establish the reasonableness of attorney fees. Our review of the law leads us to the conclusion that no Michigan statute, court rule, or case law exists requiring expert testimony for such a purpose. A split in authority exists among our sister states with regard to this issue, with only a few states requiring expert testimony. See anno: Necessity of introducing evidence to show reasonableness of attorneys' fees where promissory note provides for such fees, 18 A.L.R.3d 733, §§ 3, 4.

In Michigan, MRE 702 ² instructs the court to analyze whether an expert's testimony will help the factfinder make the ultimate decision in a case. King v. Taylor Chrysler-Plymouth, Inc., 184 Mich.App. 204, 215, 457 N.W.2d 42 (1990). A trial court should use its common sense to decide whether an untrained person would be qualified to determine intelligently and to the best possible degree the particular issue without enlightenment from experts. Cirner v. Tru-Valu Credit Union, 171 Mich.App. 163, 169, 429 N.W.2d 820 (1988). For example, a jury does not require expert testimony to determine what a reasonable person would do in an ordinary negligence case. Bishop v. St. John Hosp., 140 Mich.App. 720, 724-725, 364 N.W.2d 290 (1984).

Our Supreme Court explained in Mulholland v. DEC Int'l Corp., 432 Mich. 395, 404, 443 N.W.2d 340 (1989), that

"[i]n a strict sense, every witness whosoever is an expert. In other words, the very fact that he is allowed to speak at all assumes that he is fitted to acquire knowledge on the subject; though in the vast majority of matters no demonstration of his fitness is needed....

In particular, it is a mistake to suppose that an 'expert' must be a person professionally occupied upon the matter to be testified to. This is a mistake having its special origin in the doctrine of Opinion evidence...." [Quoting 2 Wigmore, Evidence (3d ed), § 555, pp 634-635.]

In this case, Guinn is not a licensed attorney, but Guinn's testimony revealed that he had acquired knowledge regarding the reasonableness of attorney fees through his job. Among his duties as the credit manager, Guinn hires attorneys or firms for collection work, reviews their invoices, compares invoices from one attorney or firm with those of others, and evaluates the invoices for reasonableness and similarity with other attorneys' charges for similar debt collection matters. Guinn approves the invoices for payment only when he is satisfied that they are for work actually performed and for a reasonable amount.

The factors listed in MRPC 1.5(a) ³ are properly considered when deciding if attorney fees are reasonable in a given case. In re Condemnation of Private Property for Hwy. Purposes, 209 Mich.App. 336, 341-342, 530 N.W.2d 183 (1995). We are convinced that, just as a jury does not...