Van Elslander v. Thomas Sebold & Associates, Inc.
297 Mich. App. 204
| Mich. Ct. App. | 2012Background
- Van Elslander appeals a sanctions award totaling $776,076.48 for case evaluation sanctions—fees and costs—following multi-stage litigation over water/mold damage to a Lake Michigan home.
- The first jury trial awarded Van Elslander $680,838.82; remand issued for a limited second trial on escrow/window-well damages.
- Second trial yielded no action for the Follises; sanctions were subsequently awarded against Van Elslander after evidentiary proceedings.
- Court upheld the existence of a causal nexus between rejecting the case evaluation and post-rejection proceedings, but found the exact costs/fees amount and several line items erroneous.
- The court remanded to revise taxable costs and attorney fees in light of Smith v. Khouri and related Michigan rules.
- Overall disposition: affirm sanctions in general but reverse/adjust the specific award amounts and remand for recalculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are case-evaluation sanctions proper under MCR 2.403(0)? | Van Elslander argues issues differed post-remand; sanctions improper. | Follises contend sanctions anchored to rejection and post-rejection proceedings. | Sanctions proper; affirmed in part, remanded for precise calculation. |
| Were taxable costs correctly awarded or miscalculated? | Costs included improper expert/witness fees and appeal-related costs. | Costs properly taxable under statute and rule. | Remand required to deduct improper items and recalculate costs. |
| Was the attorney-fee determination reasonable under Smith? | Fees and hourly rates based on subjective evidence, not reliable market data. | Court used Smith factors to determine reasonable fees. | Error in fee determination; remand for recalculation with reliable market data. |
| Were fee enhancements appropriate under Smith's framework? | Enhancements inflated beyond reasonable limits. | Enhancements permissible for exceptional circumstances. | Enhancements improper; remand to eliminate or adjust enhancements. |
Key Cases Cited
- Smith v Khouri, 481 Mich 519 (2008) (clarifies reasonable-fee framework and Smith factors)
- Wood v Automobile Inter-Ins Exch, 413 Mich 573 (1982) (six-factor test for reasonableness of fees)
- Severn v Sperry Corp, 212 Mich App 406 (1995) (discussion of when costs are taxable under MCR 2.625 and related rules)
- Haliw v City of Sterling Hts, 471 Mich 700 (2005) (refinements on cost recovery and attorney-fee determinations)
- Jerico Constr, Inc v Quadrants, Inc, 257 Mich App 22 (2003) (treatment of expert and related costs in sanctions context)
- Keiser v Allstate Ins Co, 195 Mich App 369 (1992) (standard for recoverable costs and expert-witness fees)