Kennedy v. Robert Lee Auto Sales
313 Mich. App. 277
Mich. Ct. App.2015Background
- Kennedy purchased a 2003 Chevrolet Impala, made a $2,200 down payment, and later defaulted; the retail installment contract and security interest were assigned to CPSI, which sued Kennedy. Kennedy filed counterclaims and a third-party complaint against Robert Lee Auto Sales alleging violations of the MMWA and MCPA among other claims.
- CPSI settled with Kennedy (debt cancelled, credit record corrected); Kennedy’s claims against Robert Lee proceeded in Ingham Circuit Court.
- At a summary-disposition hearing, the parties negotiated a settlement: Robert Lee agreed to refund $2,675.18 (down payment + two payments) and the parties left determination of statutory attorney fees and costs to the trial court if they could not agree.
- Kennedy petitioned the court for $14,943.04 (mostly attorney fees); Robert Lee argued fees should be limited (proposed roughly one-third of recovery).
- The trial court awarded $1,000 total for costs and attorney fees, expressing skepticism about entitlement and criticizing the amount of billing; Kennedy appealed.
- The Court of Appeals vacated and remanded, holding the trial court abused its discretion by not applying the Smith v Khouri framework (or otherwise adequately analyzing fee factors), and directed the trial court to follow Smith’s methodology on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to statutory fees under the settlement | Kennedy argued settlement reserved "statutory attorney fees" and trial court should award fees under MCPA/MMWA despite no judgment | Robert Lee argued entitlement is doubtful because settlement produced no judgment and fees should be limited | Court: Kennedy is entitled; reservation in settlement and precedent (Lavene) permit awarding statutory fees after settlement |
| Whether Smith v Khouri framework applies to MCPA/MMWA fee awards | Kennedy urged application of Smith (hours × reasonable rate as starting point, then adjust) | Robert Lee implicitly argued traditional approach or narrower Smith application; cited contrary panels | Court: Smith framework applies to these fee-shifting statutes and should guide fee calculation |
| Proper method to calculate reasonable attorney fees | Kennedy submitted billing, surveys, and asked court to compute under Smith starting point and adjust with Wood/MRPC factors | Robert Lee urged a low, proportional award tied to recovery or to work defending CPSI claims | Court: Trial court must determine customary local rate, multiply by reasonable hours, then adjust using Wood and MRPC 1.5(a) factors; trial court failed to do so |
| Whether $1,000 award was an abuse of discretion | Kennedy argued trial court failed to analyze required factors and ignored remedial purpose of statutes | Robert Lee justified a minimal award given small recovery and labeled the case "nickel and dime" | Court: $1,000 award was an abuse of discretion because the court considered only the small recovery and did not apply Smith/Wood/MRPC factors; vacated and remanded |
Key Cases Cited
- Smith v. Khouri, 481 Mich. 519 (Mich. 2008) (announces starting-point Smith framework: customary rate × reasonable hours, then adjust with Wood/MRPC factors)
- Lavene v. Winnebago Indus., 266 Mich. App. 470 (Mich. Ct. App. 2005) (settlement reservation of statutory fees permits court to determine fee amount)
- Jordan v. Transnational Motors, Inc., 212 Mich. App. 94 (Mich. Ct. App. 1995) (remedial nature of MCPA/MMWA requires courts consider special consumer-protection circumstances in fee awards)
- Moore v. Secura Ins., 482 Mich. 507 (Mich. 2008) (standard of review: attorney-fee awards reviewed for abuse of discretion)
- Smolen v. Dahlmann Apartments, Ltd., 186 Mich. App. 292 (Mich. Ct. App. 1990) (discusses fee-award methodology and rejects rigid presumptive formula prior to Smith)