FRASER TREBILCOCK DAVIS & DUNLAP PC v BOYCE TRUST 2350
Docket Nos. 148931, 148932, and 148933
Supreme Court of Michigan
Argued January 15, 2015. Decided June 3, 2015.
497 Mich. 265
Fraser Trebilcock Davis & Dunlap, PC, brought an action for breach of contract in the Midland Circuit Court against Boyce Trust 2350, Boyce Trust 3649, and Boyce Trust 3650, after defendants failed to pay plaintiff in full for legal services its member lawyers had rendered. The case was tried by a jury after defendants rejected a case evaluation of $60,000. The jury found in plaintiff‘s favor, and the court, Jonathan E. Lauderbach, J., entered a judgment of $73,501.90. Defendants moved for a new trial, and plaintiff moved for case-evaluation sanctions under
In a unanimous opinion by Justice MCCORMACK, the Supreme Court held:
Plaintiff could not recover a reasonable attorney fee under
- Under
MCR 2.403(O)(6)(b) , if a party has rejected a case evaluation and the action proceeds to verdict, that party must pay the opposing party‘s actual costs, including a reasonable attorney fee for services necessitated by the rejection of the evaluation, unless the verdict is more favorable to the rejecting party than the cаse evaluation. The meaning of the phrase “attorney fee” was addressed in Omdahl v West Iron Co Bd of Ed, 478 Mich 423 (2007), which held that the term “attorney” requires an agency relationship between an attorney and the client whom he or she represents and, with that relationship, separate identities between the attorney and the client. Because, in the case of an individual attorney-litigant, the requisite distinction in identity between attorney and client is lacking, there is no attorney-client relationship from which an attorney fee may arise. This rationale applied to and foreclosed plaintiff‘s request for attorney fees underMCR 2.403(O)(6)(b) . Although plaintiff, as a corporation, was a legal entity distinct from its shareholders, and although plaintiff used its member lawyers as agents to litigate its interests in this suit, plaintiff routinely identified itself as its attorney throughout the litigation, and the record betrayed no distinction between the firm and the member lawyers who appeared on its behalf. This conflation of identity was consistent withMCR 2.117(B)(3)(b) , under which the appearance of plaintiff‘s member lawyers was tantamount to the appearance of every member of the firm. There was also no indication that plаintiff‘s member lawyers viewed or treated plaintiff as a client distinct from themselves. The nature of the fee plaintiff sought, which was remuneration for the legal services that it was forced to direct to the instant suit rather than to its clients by virtue of the defendants’ rejection of the case evaluation, confirmed that plaintiff‘s fee request was analogous to, and no more recoverable than, that of an individual attorney-litigant. - Michigan law does not prohibit a corporation such as plaintiff from representing itself. While a corporation generally may appear in court only through licensed counsel, and plaintiff, as a professional corporation, could only provide legal services through its duly licensed officers, employees, and agents under
MCL 450.1285(1) , those propositions limited, but did not eliminate, plaintiff‘s ability to represent itself; nor did it mean that plaintiff necessarily entered into the sort of relationship with its member lawyers that would be sufficient to support the recovery of an attorney fee under Omdahl. - The holding in this case was not at odds with Kay v Ehrler, 499 US 432 (1991), which held that an attorney who successfully represented himself in a civil-rights action was not entitled to recover attorney fees under
42 USC 1988(b) as part of his costs. Although some federal circuits have relied on a footnote in Kay to conclude that law firms represented by their own member lawyers may recover attorney fees for that representation, the footnote was nonbinding dictum that sought to reconcile an aspect of42 USC 1988 with Kay‘s central holding and was not applicable to the circumstances of this case.
Court of Appeals judgment reversed in part; trial court order awarding attorney fee vacated; case remanded to the trial court for further proceedings.
ACTIONS - CASE EVALUATIONS - CASE-EVALUATION SANCTIONS - ACTUAL COSTS - ATTORNEY FEES - ATTORNEY-CLIENT RELATIONSHIPS.
Thе status of a law firm as a legally distinct corporate entity does not, in itself, give rise to a distinction in identity between the firm and its member lawyers that would allow the firm to recover attorney fees under
Brown Law PLC (by W. Jay Brown) for defendants.
MCCORMACK, J. Before us is whether the plaintiff law firm can recover, as case-evaluation sanctions under
I. FACTUAL AND PROCEDURAL BACKGROUND
The plaintiff, Fraser Trebilcock Davis & Dunlap, P.C. (“Fraser Trebilcock“), is a law firm organized as a professional corporation under the laws of Michigan. Fraser Trebilcock provided legal services to the defendants, a group of trusts, in connection with the financing and purchase of four hydroelectric dams. Dissatisfied with the representation they received, the defendants refused to pay the full sum of fees billed by Fraser Trebilcock. To recover these unpaid fees, Fraser Trebilcock brought the instant suit against the defendants for breach of contract. Pursuant to
Throughout the litigation of this breach-of-contract action, Fraser Trebilcock appeared through Michael Perry, a shareholder of the firm, and other lawyers affiliated with the firm (collectively, “member lawyers“).1 At no point did Fraser Trebilcock retain outside counsel, and there is no indication that the firm entered into a retainer agreement with its member lawyers or received or paid a bill for their services in connection with the litigation. On its pleadings, Fraser Trebilcock identified the firm itself as “Attorneys for Plaintiff.”
After receiving the verdict, the parties filed posttrial motions: the defendants moved for a new trial, and Fraser Trebilcock moved for case-evaluation sanctions under
The defendants appealed the judgment and each of the two sanctions orders. In a split decision, the Court of Appeals affirmed the trial court in all respects but one, reversing the trial court‘s award of attorney fees to Fraser Trebilcock for time spent pursuing its request for case-evaluation sanctions. See Fraser TrebilcockDavis & Dunlap PC v Boyce Trust 2350, 304 Mich App 174; 850 NW2d 537 (2014). The panel unanimously agreed on this reversal,2 but divided over whether the remainder of the trial court‘s fee award undеr
The defendants then filed the instant application for leave to appeal, seeking this Court‘s review of the Court of Appeals majority‘s partial affirmance of the fee award to Fraser Trebilcock.4 Fraser Trebilcock cross-appealed, challenging the Court of Appeals’ partial
reversal of the fee award. We denied leave as to Fraser Trebilcock‘s cross-appeal, and ordered oral argument on the defendants’ application. See Fraser Trebilcock Davis & Dunlap PC v Boyce Trust, 497 Mich 873 (2014). For the reasons set forth below, we agree with the defendants that Fraser Trebilcock cannot recover a “reasonable attorney fee” under
II. ANALYSIS
Our disposition of this fee dispute turns on the proper interpretation of
(1) If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party‘s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. However, if the opposing party has also rejected the evaluation, a party
the majority‘s affirmance of the trial court‘s fee-reasonableness determination. Accordingly, these matters are not before us.
is entitled to costs only if the verdict is more favorable to that party than the case evaluation.
* * *
(6) For the purpose of this rule, actual costs are
(a) those costs taxable in any civil action, and
(b) a reasonable attоrney fee based on a reasonable hourly or daily rate as determined by the trial judge for services necessitated by the rejection of the case evaluation.
For the purpose of determining taxable costs under this subrule and under
MCR 2.625 , the party entitled to recover actual costs under this rule shall be considered the prevailing party.
As a general matter, the purpose of
The parties do not dispute that Fraser Trebilcock is entitled to recover, as case-evaluation sanctions under
ceeded to trial as a result of thе defendants’ rejection of the case evaluation. The question before us is whether such costs include a “reasonable attorney fee” for the legal services performed by Fraser Trebilcock‘s member lawyers over the course of that action. According to the defendants, this cannot be, because Fraser Trebilcock‘s self-representation did not give rise to an “attorney fee.” We agree.
This Court most recently addressed the commonly accepted meaning of the phrase “attorney fee” in Omdahl, explaining:
“Attorney” is defined as a “lawyer” or an “attorney-at-law.” Random House Webster‘s College Dictionary (2001). The definition of “lawyer” is “a person whose profession is to represent clients
in a court of law or to advise or act for them in other legal matters.” Id. (emphasis added). And the definition of “attorney-at-law” is “an officer of the court authorized to appear before it as a representative of a party to a legal controversy.” Id. (emphasis added). Clearly, the word “attorney” connotes an agency relationship between two people. “Fee” is relevantly defined as “a sum сharged or paid, as for professional services or for a privilege.” Id. [Omdahl, 478 Mich at 428.]
At issue in Omdahl was whether an individual attorney-litigant could recover attorney fees for the representation he provided to himself in the successful pursuit of a claim under the Open Meetings Act (OMA),
whom he or she represents” and, with that relationship, “separate identities between the attorney and the client.” Omdahl, 478 Mich at 428 n 1, 432. And see id. at 430 n 4 (“[B]oth a client and an attorney are necessary ingredients for an attorney fee award.“). Because, in the case of an individual attorney-litigant, the requisite distinction in identity between attorney and client is lacking, there is no attorney-client relationship from which an “attorney fee” may arise, id. at 432—an outсome this Court deemed consistent with decisions by “[t]he courts of this state as well as the federal courts,” which “have, in deciding cases of this sort, focused on the concept that an attorney who represents himself or herself is not entitled to recover attorney fees because of the absence of an agency relationship.” Id. at 428-429.5
We agree with the defendants that this same rationale applies to the instant case, and is fatal to Fraser Trebilcock‘s request for attorney fees under
cuses on distinguishing that precedent from the instant case, contending that Omdahl and its ilk do not foreclose the request for fees in this case because, unlike an individual attorney-litigant, an incorporated law firm such as Fraser Trebilcock enjoys an identity distinct from its member lawyers; thus, when those lawyers appeared on behalf of Fraser Trebilcock in the underlying breach-of-contract action, the agency relatiоnship necessary to give rise to an “attorney fee” was present.
There is no dispute that Fraser Trebilcock, as a corporation, is a legal entity distinct from its shareholders. See, e.g., Bourne v Muskegon Circuit Judge, 327 Mich 175, 191; 41 NW2d 515 (1950). There is also no dispute that Fraser Trebilcock used its member lawyers as agents to litigate its interests in the instant suit; indeed, there is no other way the firm could act on its own behalf. See generally Mossman v Millenbach Motor Sales, 284 Mich 562, 568; 280 NW 50 (1938) (recognizing that a corporation can “only act through its agents“). These facts alone, however, do not mean that the firm and its member lawyers necessarily enjoyed separate identities as client and attorney for the purposes of that litigation, such that the agency relationship between them would be sufficient to give rise to an “attorney fee” under Omdahl. To the contrary, we see no more of that relationship here than when an indi-
awarded under
vidual attorney engages in self-representation. For instance, Fraser Trebilcock routinely identified itself as its attorney throughout the litigation, and the record betrays no distinction in that regard between the firm and the member lawyers who physically аppeared on its behalf—a conflation of identity consistent with our court rules, which make clear that the appearance of Fraser Trebilcock‘s member lawyers was tantamount to “the appearance of every member of the firm,”
In sum, while we acknowledge that Fraser Trebilcock is a legally distinct corporate entity, we do not find that status sufficient to distinguish the representation it provided to itself through its member lawyers from the self-representation at issue in Omdahl, such that Fraser Trebilcock may recover a “reasonable attorney fee” under
services. In resisting this conclusion, Fraser Trebilcock stresses that a corporation, unlike an individual, may only appear in court through licensed counsel. We agree with this general proposition,
According to Fraser Trebilcock, this conclusion is at odds with the United States Supreme Court‘s decision in Kay, which this Court discussed favorably in Omdahl. In Kay, an attorney successfully represented himself in a civil-rights action challenging the constitutionality of a state statute; he sought attorney fees under
affirmed the lower courts’ rejection of this claim, citing the well-established “proposition that a pro se litigant who is not a lawyer is not entitled to attorney‘s fees,” Kay, 449 US at 435, and concluding that the оutcome should be no different for individual attorney-litigants seeking fees under § 1988. As noted in Omdahl, the Kay Court supported this conclusion in part with its observation that “the word ‘attorney’ assumes an agency relationship, and it seems likely that Congress contemplated an attorney-client relationship as the predicate for an award under § 1988.” Id. at 435-436 (footnote omitted). Fraser Trebilcock stresses, however, that the Kay Court immediately—and critically, for the purposes of its claimed fees—qualified this observation with the following footnote:
Petitioner argues that because Congress intended organizations to receive an attorney‘s fee even when they represented themselves, an individual attorney should also be permitted to receive an attorney‘s fee even when he represents himself. However, an organization is not comparable to a pro se litigant because the organization is always represented by counsel, whether in-house or pro bono, and thus, there is always an attorney-client relationship. [Id. at 436 n 7.]
As summarized by the Court of Appeals majority in this case, some federal circuits have relied upon this footnote in Kay to concludе that law firms represented by their own member lawyers can recover attorney fees for that representation.7 Fraser Trebilcock urges us, like the Court of Appeals majority, to do the same. We,
Nor do we see a good fit between the circumstаnces expressly contemplated in this dictum and those presently before us. Kay‘s footnote spoke to the attorney-client relationship that may arise between an organization and its in-house or pro bono counsel. Hoping to duck under Kay‘s umbrella, Fraser Trebilcock likens the member lawyers who appeared on its behalf to such in-house counsel, but we find this characterization inapt. As Kay‘s dictum reflects, the relationship between an organization and its in-house counsel is typically one of attorney and singular client; the attorney is employed by the organizаtion in order to provide legal services to the organization. There is no indication, however, that Fraser Trebilcock enjoyed this same type
of relationship with its member lawyers in the instant suit—namely, that these lawyers were employed by and affiliated with the firm to provide legal services to the firm as a distinct and exclusive client, rather than to provide such services on behalf of the firm to its clients. Whether and under what circumstances a law firm may recover fees for representation provided to it by in-house counsel is not before us, and we decline to reаch that question here. For present purposes, it is enough to say that, to the extent Kay can be read to recognize the existence of an attorney-client relationship between a law firm and its in-house counsel, this recognition does nothing to further Fraser Trebilcock‘s request for fees here.
III. CONCLUSION
For the reasons set forth above, we conclude that Fraser Trebilcock cannot recover a “reasonable attorney fee” under
YOUNG, C.J., and MARKMAN, KELLY, ZAHRA, VIVIANO, and BERNSTEIN, JJ., concurred with MCCORMACK, J.
