Krystine M Muha v. Allstate Property and Casualty Ins Co
332801
| Mich. Ct. App. | Oct 26, 2017Background
- Allstate (third-party plaintiff) obtained a case evaluation awarding $120,000 in its favor against third-party defendant Walid Odeh; Allstate accepted the evaluation and Odeh effectively rejected it.
- After a bifurcated bench trial on negligence and damages, the court entered judgment for Allstate for $388,643.42 plus interest and taxable costs.
- Under MCR 2.403(O)(1) and Smith v Khouri, because Odeh rejected the evaluation and the verdict favored Allstate, Allstate was entitled to actual costs, which include reasonable attorney fees per MCR 2.403(O)(6)(b).
- Allstate submitted a bill of costs, counsel biography, and an Economics of Law Practice Survey seeking $111,090 in attorney fees (370.3 hours at $300/hr) plus taxable costs.
- The trial court denied attorney fees, finding Allstate failed to present proper admissible evidence of a reasonable hourly rate, that the bill included unidentified individuals, contained excessive/redundant entries, and was not limited to prosecution of the third-party claim.
- The Court of Appeals found errors in the trial court’s reasoning (e.g., the survey was admissible, many entries were attributable to the known counsel, and the court failed to identify specific billing problems) and remanded for an evidentiary hearing to determine reasonable fees under MCR 2.403(O)(6)(b) and Smith.
Issues
| Issue | Plaintiff's Argument (Allstate) | Defendant's Argument (Odeh) | Held |
|---|---|---|---|
| Whether Allstate is entitled to "actual costs" including attorney fees after Odeh rejected case evaluation | Allstate: Yes; rule mandates actual costs (including reasonable attorney fees) when evaluation accepted and rejected and verdict favors accepting party | Odeh: (implicit) contest fee amount/adequacy of proof to award fees | Held: Allstate was entitled to actual costs; remand required to determine reasonable attorney fees with proper proof |
| Whether the evidence Allstate submitted was admissible to prove a reasonable hourly rate | Allstate: Submission of counsel biography and Economics of Law Practice Survey supports $300/hr | Odeh: The submissions were insufficient; biography and motion allegations are not admissible proof; unidentified billers undermine request | Held: Economics of Law Practice Survey is admissible; trial court erred by wholly rejecting fees without permitting proper proof; remand for evidentiary hearing |
| Whether the billed time and rates were reasonable and limited to the third-party claim | Allstate: Time was necessary and related to the third-party claim; high skill justified rate and hours | Odeh: Bill contains excessive, redundant entries and includes services not limited to the third-party action; some billers unidentified | Held: Trial court failed to identify specific problematic entries and improperly denied all fees; remand for trial court to assess and, if needed, pare unreasonable or unrelated entries with evidence from parties |
| Appropriate remedy and procedural next step | Allstate: Award fees based on submitted materials | Odeh: Deny or severely limit fees given inadequate proof | Held: Reverse trial court's complete denial; remand for evidentiary hearing where both sides may present admissible proof and the trial court shall calculate reasonable fees under governing standards |
Key Cases Cited
- Smith v Khouri, 481 Mich 519 (establishing rule for case evaluation sanctions and attorney-fee recovery methodology)
- Great Lakes Gas Transmission Ltd Partnership v Markel, 226 Mich App 127 (noting mandatory award of actual costs on proper showing)