J G Wentworth Ssc Lp v. Anthony Morris ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
J G WENTWORTH SSC, LP, UNPUBLISHED
February 22, 2018
Plaintiff/Counter-Defendant,
v No. 333413
Wayne Circuit Court
ANTHONY MORRIS, LC No. 15-005847-CZ
Defendant/Cross-Defendant,
and
INTEGRITY LIFE INSURANCE COMPANY and
GENERAL AMERICAN LIFE INSURANCE
COMPANY,
Defendants/Counter-
Plaintiffs/Cross-Plaintiffs-
Appellees/Cross-Appellants,
and
EXTENDED HOLDINGS, LTD and RSL
FUNDING, LLC,
Defendants/Cross-Defendants-
Appellants/Cross-Appellees.
Before: RIORDAN, P.J., and BOONSTRA and GADOLA, JJ.
PER CURIAM.
Defendant Anthony Morris separately sold rights to a single annuity payment to two
separate purchasers—plaintiff J. G. Wentworth SSC, LP (Wentworth) and defendant/cross-
appellee RSL Funding, LLC (RSL). In this resulting dispute, which was ultimately resolved by
interpleader, defendants/cross-appellees Extended Holdings, Ltd. (Extended), and RSL appeal by
right the trial court’s May 26, 2016 final judgment and order, and thereby challenge certain
earlier orders of the trial court. In the cross-appeal, defendants/cross-appellants Integrity Life
Insurance Company (Integrity) and General American Life Insurance Company (General
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American) challenge the amount of attorney fees awarded to them by the trial court. We affirm
in part, vacate in part, and remand for further proceedings consistent with this opinion.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
This case derives from a personal injury action brought by Morris against the city of
Detroit. That action was resolved in 1990 by a structured-settlement agreement. Under the
settlement agreement, the city was required to make monthly payments to Morris for life, plus
several lump-sum payments on specified dates. The city assigned its payment obligations under
the agreement to General American in 1990. In turn, General American purchased an annuity
from Integrity, naming Morris as the annuitant. Under the terms of both the settlement
agreement and the annuity, Morris was entitled in part to a lump-sum payment of $60,000 in
2015.1
Between 1998 and 2007, Morris sold his right to receive various payments under the
structured settlement agreement—including the $60,000 lump sum payment—to Wentworth.
Notwithstanding this sale, Morris agreed in January 2012 to sell rights to $40,000 of the $60,000
payment to RSL, who assigned to Extended its right to receive the payment. As required by the
Revised Structured Settlement Protection Act (RSSPA), MCL 691.1301 et seq., RSL applied to
the trial court for approval of the transfer to Extended of the right to receive the $40,000 payment
from Morris. The trial court issued an Unopposed Order of Transfer, approving “the Transfer of
Structured Settlement Payment Rights . . . to [RSL’s] assigned, Extended Holdings, Ltd. . . .from
Anthony J. Morris.” The order of approval included provisions releasing the annuity issuer and
owner (in this case, Integrity and General American, respectively) from liability related to the
transfer and ordering RSL and Extended to indemnify and hold harmless the annuity issuer and
owner from any and all liability, “including but not limited to any claims asserted by any person
or entity not a party hereto, claiming an interest in the Assigned Payments.”
Before any of the $60,000 payment was remitted to any party, Wentworth discovered the
transaction between Morris and RSL. Wentworth then initiated this action, naming Morris,
Integrity, General American, and RSL (but not Extended), as defendants. Integrity answered
Wentworth’s complaint and asserted, as an affirmative defense, that it was entitled to
interpleader relief. Integrity later filed a counterclaim and a cross-claim for interpleader relief
under MCR 3.603. The cross-claim named Extended as a cross-defendant.
Integrity also filed another cross-claim for injunctive relief against RSL, alleging that on
the same day that Wentworth instituted this action, RSL and Extended had filed an arbitration
demand in Texas naming Morris, Wentworth, and Integrity as respondents. Integrity further
alleged that the arbitration proceeding concerned the same subject matter as that at issue in this
1
Originally, an addendum to the annuity agreement provided that Morris would receive that
payment on July 1, 2015. The addendum was later amended, by hand, to instead make the
$60,000 payment due on June 1, 2015. Confusion subsequently arose regarding the precise date
that the $60,000 payment was actually due (or whether one or two payments were due).
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action, and that Integrity had never agreed to arbitration. Integrity moved for a temporary
restraining order or preliminary injunction seeking to stay the arbitration and to enjoin RSL from
seeking to compel Integrity to participate in it. Ultimately, the trial court entered a stipulated
order providing that neither RSL nor Extended would seek to compel Wentworth, Integrity, or
General American to participate in the Texas arbitration proceeding.2
After filing an appearance for the limited purpose of challenging the trial court’s
jurisdiction over it, Extended immediately moved for summary disposition under
MCR 2.116(C)(1) (lack of personal or in rem jurisdiction). The trial court never decided
Extended’s motion for summary disposition.
In due course, the trial court granted Integrity and General American the interpleader
relief they sought. The court determined that Wentworth was entitled to the entire $60,000
payment, and it therefore ordered Integrity to remit that sum to Wentworth. The trial court also
ordered Wentworth, RSL, and Extended to pay costs and attorney fees incurred by Integrity and
General American in obtaining a preliminary injunction, defending the lawsuit, and bringing
their action for interpleader. The court denied RSL’s and Extended’s motions for
reconsideration, and subsequently entered a stipulated final judgment and order dismissing the
action with prejudice.
This appeal and cross-appeal followed.
II. STANDARD OF REVIEW
We review de novo a trial court’s ruling on a motion for summary disposition, its
determinations regarding personal jurisdiction, Lease Acceptance Corp v Adams, 272 Mich App
209, 218; 724 NW2d 724 (2006), equitable issues, questions of statutory interpretation, In re
Forfeiture of 1987 Mercury, 252 Mich App 533, 538; 652 NW2d 675 (2002), questions
regarding the proper interpretation and application of court rules, and issues involving the
common law, Brecht v Hendry, 297 Mich App 732, 736; 825 NW2d 110 (2012). We review for
an abuse of discretion the trial court’s decision to grant a preliminary injunction. Hammel v
Speaker of House of Representatives, 297 Mich App 641, 647; 825 NW2d 616 (2012). We also
“review a trial court’s decision regarding whether to grant an award of attorney fees and costs for
an abuse of discretion.” Doe v Boyle, 312 Mich App 333, 343; 877 NW2d 918 (2015). “An
abuse of discretion exists when the decision is outside the range of principled outcomes,” or
when it is premised on “the court’s misunderstanding of controlling legal principles.” Davis v
City of Detroit Fin Review Team, 296 Mich App 568, 612; 821 NW2d 896 (2012).
We review for clear error a trial court’s findings of fact. MCR 2.613(C); see also
Markilie v Bd of Co Rd Com’rs of Livingston Co, 210 Mich App 16, 22; 532 NW2d 878 (1995).
2
Although RSL and Extended objected to some of the contents of this order (particularly the
portion ordering them to pay costs and attorney fees), they expressly agreed to the language
prohibiting them from seeking to compel Wentworth, Integrity, or General American to
participate in the Texas arbitration proceeding.
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A finding is clearly erroneous only if this Court is “left with a definite and firm conviction that a
mistake has been made.” Id.III. MAIN APPEAL
A. PERSONAL JURISDICTION
RSL and Extended argue that the trial court erred by failing to consider and decide
Extended’s motion for summary disposition and by exercising personal jurisdiction over it. We
disagree.
After initially filing its motion for summary disposition and noticing it for a hearing to be
held on September 25, 2015,3 Extended made no reference to its motion in three subsequent
motion hearings. Indeed, at an October 9, 2015 hearing, when the trial court stated its belief that
there was only one motion for summary disposition before it—i.e., RSL’s motion—Extended’s
attorney did not correct the court. Nor did Extended re-notice its motion for a later date after the
initial hearing date had passed without argument on its motion, as it could have under
MCR 2.119(E)(1). Only after the trial court ruled against Extended on the substantive merits of
the parties’ respective claims did Extended raise the issue of its undecided motion in a motion for
reconsideration. In its February 9, 2016 opinion and order denying reconsideration, the trial
court stated that “the Register of Actions indicates that the [sic] Extended Holding’s motion for
summary disposition due to lack of personal jurisdiction was withdrawn on October 9, 2015 and
therefore was not argued by the parties at the hearing and not considered by the Court.”
The trial court’s finding that Extended had withdrawn its motion was not clearly
erroneous. MCR 2.613(C); Markilie, 210 Mich App at 22. The register of actions contains
several entries for October 9, 2015. In addition to reflecting that a hearing on one or more
motions took place on that date, it reflects the notation “Dismiss Hearing or Injunction,” and
indicates that the “dismissed” hearing was “CANCELED” after having been reset by the court
from September 25, 2015 to October 2, 2015, and then to October 9, 2015. The register of
actions does not specifically state which motion’s hearing was cancelled. But Extended’s motion
for summary disposition had originally been noticed for September 25, 2015, although there
were also other motions noticed for that date, including RSL’s motion for summary disposition
and Integrity and General American’s motion for costs and fees incurred in obtaining injunctive
relief regarding the Texas Arbitration proceedings. At the beginning of the October 9, 2015
motion hearing, the trial court stated “I believe Extended Holdings is out, correct?,” to which
counsel for Wentworth replied that his client was willing to dismiss Extended but that he
believed there were still “issues between Integrity and Extended that may preclude them from
being dismissed at this point.” Counsel for Extended said nothing. There was no further
discussion of Extended’s status as a party. Later in the hearing, counsel for Wentworth stated to
3
The Register of Actions does not reflect that a hearing was actually held on September 25,
2015. It does, however, reflect that a hearing was rescheduled from September 25, 2015 to
October 2, 2015, and then further rescheduled from October 2, 2015 to October 9, 2015.
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the court that RSL and Extended had “not filed any responsive pleadings. Their first response
was the summary disposition which is before your Honor today.” Counsel for Extended also
said nothing in response to the trial court’s statement, “I believe there is one motion for summary
disposition” (referencing RSL’s motion for summary disposition).
We are far from possessing the definite and firm conviction that a mistake was made.
MCR 2.613(C); Markilie, 210 Mich App at 22. Although the register of actions does not
indicate precisely which motion hearing was cancelled, it certainly could have been Extended’s
motion; this would explain why Extended’s counsel did not correct the court when it stated its
belief that only one summary disposition motion—RSL’s— remained. And we do not view
Extended’s stipulation to some orders of the trial court subject to a reservation of its personal
jurisdiction defense as conclusively establishing that it never withdrew the specific motion at
issue. Finally, the mere fact that Extended did not place its withdrawal of its motion on the
record at the October 9, 2015 hearing does not mean that such a withdrawal did not occur; the
transcript of the hearing itself indicates that the parties and court went “off the record” at least
once, and the register of actions also lists a “special conference” occurring on that day.
Additionally, it is undisputed that Extended did not attempt to re-notice its motion or
otherwise assert a personal jurisdiction defense until after the trial court had ruled on the merits
of the case. Even assuming that Extended’s motion was not withdrawn, Extended contributed to
the court’s purported error by failing to take the necessary steps to ensure that the court timely
heard and decided Extended’s pending motion. “Error requiring reversal may only be predicated
on the trial court’s actions and not upon alleged error to which the aggrieved party contributed by
plan or negligence.” Lewis v LeGrow, 258 Mich App 175, 210; 670 NW2d 675 (2003). “Trial
courts are not the research assistants of the litigants; the parties have a duty to fully present their
legal arguments to the court for its resolution of their dispute.” Walters v Nadell, 481 Mich 377,
388; 751 NW2d 431 (2008). Even assuming that the trial court’s finding that Extended had
withdrawn the motion was clearly erroneous, we would be disinclined to allow Extended to
transform the trial court’s failure to decide the motion into an appellate parachute. See Freed v
Salas, 286 Mich App 300, 308; 780 NW2d 844 (2009) (noting that it is well-settled that parties
cannot harbor error as an appellate parachute).4
B. PRELIMINARY INJUNCTION
RSL and Extended also argue that the trial court abused its discretion by entering a
preliminary injunction against them in favor of General American. We disagree.
4
Although we do not decide the issue, we note that Extended received the assignment of an
annuity originally issued in Michigan according to the laws of Michigan, which was required to
be approved by a Michigan court; the order of the trial court required that Integrity make the
payment to Extended, and set various rights and responsibilities of the parties to the transaction.
It is thus at least cognizable that Extended’s contacts with Michigan would be sufficient to
establish limited personal jurisdiction. See MCL 600.725.
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At a July 1, 2015 motion hearing, RSL and Extended affirmatively assented to the trial
court’s entry of a stipulated order precluding them from seeking to compel General American to
participate in the Texas arbitration proceedings. By expressly stipulating to entry of the order in
question, appellants waived their instant claim of error. See Nexteer Auto Corp v Mando
America Corp, 314 Mich App 391, 395; 886 NW2d 906 (2016). Waiver extinguishes any error
and precludes appellate review. The Cadle Co v City of Kentwood, 285 Mich App 240, 255; 776
NW2d 145 (2009).5
C. INTERPLEADER
RSL and Extended also argue that the trial court erred by granting equitable interpleader
relief to Integrity and General American. Specifically, they argue that the doctrine of unclean
hands bars Integrity and General American from such equitable relief because Integrity made
material misrepresentations concerning the date that the $60,000 annuity payment was to be
paid, and that those representations caused this controversy to arise in the first place. We
disagree.
“The clean hands maxim is an integral part of any action in equity.” Stachnik v Winkel,
394 Mich 375, 382; 230 NW2d 529 (1975). The doctrine of unclean hands “is a self-imposed
ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad
faith relative to the matter in which he seeks relief, however improper may have been the
behavior of the defendant.” Id. (quotation marks and citations omitted). Further, “a tortious act
can never be the foundation of an equitable right.” Putnam v Fitzgerald, 44 Mich 113, 116; 6
NW 198 (1880).
At common law, interpleader sounded in equity, Gairing v McClelland, 311 Mich 315,
319; 18 NW2d 838 (1945),6 and the court rule governing interpleader actions, MCR 3.603, bears
no indication that our Supreme Court intended to alter the common law. Accordingly, the
5
Even assuming, arguendo, that RSL and Extended did not waive their instant claim of error,
and further assuming that their argument is meritorious, they are nevertheless unentitled to
reversal on that basis. Again, “error requiring reversal may only be predicated on the trial
court’s actions and not upon alleged error to which the aggrieved party contributed by plan or
negligence.” Lewis, 258 Mich App 210. Moreover, “[a] party may not take a position in the trial
court and subsequently seek redress in an appellate court that is based on a position contrary to
that taken in the trial court.” Living Alternatives for Developmentally Disabled, Inc v Dep’t of
Mental Health, 207 Mich App 482, 484; 525 NW2d 466 (1994). By stipulating to entry of the
order they now seek to contest, RSL and Extended contributed to the trial court’s purported
error, and they therefore cannot capitalize upon it as a ground for reversal. “Any other
conclusion would be contrary to the rule that defendants cannot harbor error as an appellate
parachute.” People v Pipes, 475 Mich 267, 278; 715 NW2d 290 (2006); accord Freed, 286 Mich
App at 308.
6
See also 48 CJS Interpleader, § 4 (“[i]nterpleader is an equitable remedy or proceeding, which
is governed by equitable principles and rules”).
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unclean hands doctrine might provide a valid defense against interpleader under a proper set of
circumstances.
This case, however, does not present such circumstances. “When many persons have
been defrauded and available funds are insufficient to make all these persons whole, a race to the
courthouse can be expected.” Marsh v Foremost Ins Co, 451 Mich 62, 71; 544 NW2d 646
(1996). Therefore, the unclean hands doctrine must be applied with great care in interpleader
actions. See Sakon v Santini, 257 Mich 91, 93; 241 NW 160 (1932). Such actions involve
multiple adverse parties, and it would be inherently inequitable to bar one party from
interpleader relief based on the soiled hands of another party. Id. Accordingly, the doctrine
“ought not to be applied against one brought in by interpleader,” nor should it be applied where
doing so will prejudice the rights of those with clean hands. Id. In this case, application of the
unclean hands doctrine against Integrity would have impacted Wentworth (as an interpleaded
party) and General American (as an obligor subject to multiple liability). Consequently,
assuming (without deciding) that Integrity’s hands were unclean, it would nevertheless have
been inappropriate for the trial court to have barred the interpleader action on that basis. Id.Moreover, “[a] defendant with unclean hands may not defend on the ground that the
plaintiff has unclean hands as well.” Attorney General v PowerPick Club, 287 Mich App 13, 53;
783 NW2d 515 (2010). RSL failed to comply with the provisions of the RSSPA in this case, and
its hands are therefore unclean with regard to the transactions at issue in this case. RSL was the
“transferee” in its transaction with Morris. See MCL 691.1302(u). Accordingly, under
MCL 691.1307(6), RSL had the “sole responsibility” to comply with the requirements of
MCL 691.1303, which, among other things, required RSL to provide “the payee” (i.e., Morris)
with a “disclosure statement” at least three days before he signed the transfer agreement, setting
forth both “[t]he amounts and due dates of the structured settlement payments to be transferred”
and “[t]he discounted present value of the payments to be transferred . . . under federal standards
for valuing annuities[.]” In its briefs on appeal, RSL admits that when it entered into a transfer
agreement with Morris, it was unaware of both the actual due date for the $60,000 payment and
the amount that then remained due to be paid to Morris (i.e., nothing—he had previously
assigned his rights to Wentworth). Under MCL 691.1307(6), it is immaterial why RSL lacked
such information. The relevant consideration is that without such information, RSL could not
have provided Morris with the disclosures required by MCL 691.1303. It is impossible to
provide a disclosure statement including information that one does not have, and it is equally
impossible to calculate the discounted present value of an annuity payment without knowing
either the amount of that payment or when it is due.
RSL contends that it had no obligation, common law or statutory, to obtain such
information. But as the trial court recognized, under MCL 691.1307(6), RSL did, in fact, have a
statutory obligation to do so. “The very foundation of a court of equity is good conscience, and
it will not lend its aid . . . to assist law violators.” Society of Good Neighbors v Van Antwerp,
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324 Mich 22, 28; 36 NW2d 308 (1949). Because RSL’s hands are unclean with regard to this
transaction, it cannot assert an unclean hands defense against General American and Integrity.7
In light of the fact that we reject RSL’s unclean hands theory, we hold that the trial court
did not err by granting interpleader relief to General American and Integrity. The RSSPA
unambiguously provides that neither a structured settlement obligor nor an annuity issuer
“shall . . . bear any responsibility or liability arising from a transferee’s failure to comply with”
MCL 691.1303. MCL 691.1307(6).8 As already noted, RSL failed to comply with
MCL 691.1303. Had it done so, it would have been aware of the actual due date for the $60,000
payment, and it also would have been aware that those funds were no longer owed to Morris.
In sum, under MCL 691.1307(6), neither General American nor Integrity can be held
liable for RSL’s damages in this case, and neither has ever claimed any right to receive or
permanently retain the $60,000 at issue. Consequently, General American and Integrity are
disinterested parties with no direct stake in the outcome of this case. Under such circumstances,
we discern no error in the trial court’s decision to grant them equitable interpleader relief under
MCR 3.603.
D. ATTORNEY FEES
Finally, RSL and Extended contend that the trial court erred by assuming that it
possessed the authority to award attorney fees to Integrity and General American. We disagree.
RSL and Extended do not challenge the amount of costs and attorney fees awarded, but only
challenge the trial court’s decision to order any costs and attorney fees at all.
“Michigan generally follows the ‘American rule’ regarding attorney fees, which provides
that fees are not generally recoverable unless a statute, court rule, or common-law exception
provides otherwise.” Silich v Rongers, 302 Mich App 137, 147-148; 840 NW2d 1 (2013). In
this case, however, Integrity and General American are correct that the trial court had the
discretion to grant them their costs and reasonable attorney fees.
7
Furthermore, RSL’s failure to comply with all of the requirements of the RSSPA made its
subsequent assignment to Extended ineffective. See MCL 691.1305(d) (“A payee may make a
further transfer of structured settlement payment rights only after complying with all of the
requirements of this act.”). Extended therefore possessed no right to the payment at issue,
because its rights arose only through RSL’s assignment.
8
MCL 691.1305(c) also provides that “[a]n annuity issuer or a structured settlement obligor is
not required to divide a periodic payment between the payee and a transferee or assignee or
between 2 or more transferees or assignees.” The $60,000 payment at issue in this case qualifies
as a “periodic payment” under MCL 691.1302(j). Consequently, General American and
Integrity had no obligation to divide the $60,000 payment between the purported transferees (i.e.,
Wentworth and RSL).
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The RSSPA provides a statutory basis for a fee award. MCL 691.1305(b) provides in
pertinent part:
The transferee is liable to the structured settlement obligor and the annuity
issuer for both of the following:
* * *
(ii) Other liabilities or costs, including reasonable costs and attorney fees,
arising from the structured settlement obligor’s and the annuity issuer’s
compliance with the order of the court or from the transferee’s failure to comply
with this act.
As Integrity (the annuity issuer) and General American (the obligor) note, the transfer order
obtained by RSL ordered Integrity to pay $40,000 of the $60,000 payment to Extended, despite
the fact that the right to receive those same funds had previously been assigned to Wentworth. In
other words, the costs and attorney fees incurred by Integrity and General American in this
matter arise out of both their attempts to lawfully comply with the trial court’s previous orders
and from RSL’s failure to abide by the notice requirements of the RSSPA. Accordingly, the trial
court had the discretion to award Integrity and General American their costs and fees in this
matter under MCL 691.1305(b)(ii).
Additionally, under the court rule governing interpleader actions, MCR 3.603, the trial
court had discretion to award Integrity and General American their costs and attorney fees as
disinterested stakeholders. MCR 3.603(E) provides:
Actual Costs. The court may award actual costs to an interpleader plaintiff. For
the purposes of this rule, actual costs are those costs taxable in any civil action,
and a reasonable attorney fee as determined by the trial court.
(1) The court may order that the plaintiff’s actual costs of filing the
interpleader request, tendering the disputed property to the court, and participating
in the case as a disinterested stakeholder be paid from the disputed property or by
another party.
(2) If the plaintiff incurs actual costs other than those described in subrule
(1) due to another party’s unreasonable litigation posture, the court may order that
the other party pay those additional actual costs.
(3) An award made pursuant to this rule may not include reimbursement
for the actual costs of asserting the plaintiff’s own claim to the disputed property,
or of supporting or opposing another party’s claim.
Therefore, the trial court correctly recognized its authority to award attorney fees in this
action.
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IV. CROSS APPEAL
Integrity and General American argue in their cross-appeal that the trial court misapplied
the controlling legal test for determining the reasonableness of awarded fees, as set forth by our
Supreme Court in Smith v Khouri, 481 Mich 519; 751 NW2d 472 (2008), and recently clarified
in Pirgu v United Servs Auto Ass’n, 499 Mich 269; 884 NW2d 257 (2016). Specifically, they
contend that the trial court failed to consider all of the relevant Smith factors and approve the
rates charged and the number of hours billed by Integrity and General American’s attorneys. We
agree that remand is required for the trial court to consider the relevant Smith factors.
In determining the reasonableness of requested attorney fees, “a trial court should begin
its analysis by determining the fee customarily charged in the locality for similar legal services.”
Smith, 481 Mich at 530. To do so, courts generally rely “on data contained in surveys such as
the Economics of the Law Practice Surveys that are published by the State Bar of Michigan.” Id.
at 531. “The trial court must then multiply that rate by the reasonable number of hours expended
in the case to arrive at a baseline figure.” Pirgu, 499 Mich at 281. Finally, the court must
consider “all” of the following nonexclusive factors (along with any other relevant factors) “to
determine whether an up or down adjustment is appropriate”:
(1) the experience, reputation, and ability of the lawyer or lawyers
performing the services,
(2) the difficulty of the case, i.e., the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service properly,
(3) the amount in question and the results obtained,
(4) the expenses incurred,
(5) the nature and length of the professional relationship with the client,
(6) the likelihood, if apparent to the client, that acceptance of the particular
employment will preclude other employment by the lawyer,
(7) the time limitations imposed by the client or by the circumstances, and
(8) whether the fee is fixed or contingent. [Id. at 281-282.]
“In order to facilitate appellate review, the trial court should briefly discuss its view of each of
the factors above on the record and justify the relevance and use of any additional factors.” Id. at
282.
In this case, when the trial court awarded Integrity and General American attorney fees
related to the preliminary injunction proceedings, it immediately leapt to a consideration of the
reasonableness factors, rather than beginning its inquiry “by determining the fee customarily
charged in the locality for similar legal services,” see Smith, 481 Mich at 530, and it then
attempted to use the reasonableness factors to determine reasonable rates for Integrity’s and
General American’s attorneys in light of their respective experience, reputation, and abilities. In
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other words, the trial court conflated the first step of the test with the last one. Its error in that
respect permeated the remainder of its analysis. Instead of calculating the “baseline figure” by
multiplying the fee customarily charged in the locality for similar legal services by the
reasonable number of hours expended, see Pirgu, 499 Mich at 281, the trial court multiplied the
rate it had established for each attorney by the number of hours it found reasonable. The trial
court also failed to briefly discuss all of the reasonableness factors on the record, and its related
order is silent with regard to those factors. Therefore, it is unclear which of the eight
reasonableness factors the trial court considered, or whether it considered “all” of them. See id.
at 281.
This error extended to the trial court’s later order regarding interpleader costs and fees.
The trial court relied on its previous determination of reasonable hourly rates for the respective
attorneys. This led the trial court to again improperly calculate the “baseline figure.” Further,
after entertaining argument from the parties on whether the reasonableness factors militated in
favor of deviating up or down from that erroneous baseline figure, the trial court failed to briefly
discuss each of the factors on the record. Instead, the trial court simply stated, “I don’t
find . . . any basis for a deviation balancing all of the statements made by counsel. I think that
the number that the Court has before it now with the reduced hours is reasonable and that’s what
will be ordered.” Nor did the trial court discuss the reasonableness factors in its related order.
Therefore, we cannot discern whether the court actually considered the required reasonableness
factors.
On the record before this Court, we cannot determine whether the court abused its
discretion by ruling as it did. See id. at 283 n 50. Therefore, we vacate the trial court’s fee
awards and remand for further consideration of the reasonableness of those awards in light of
this opinion. See id. at 283. We uphold the trial court’s awards of reasonable costs.
We affirm the trial court with regard to the main appeal. In the cross appeal, we affirm
the trial court’s awards of costs, vacate the trial court’s attorney fee awards, and remand for
further proceedings regarding the reasonableness of those fee awards. Having prevailed in both
the main appeal and cross-appeal, Integrity and General American may tax costs.
MCR 7.219(A). 9
9
Integrity and General American ask this Court to direct the trial court on remand to enter an
order awarding them reasonable costs and attorney fees they have incurred in the instant appeal
and cross-appeal under the RSSPA. Because this issue was neither raised in, nor addressed and
decided by, the trial court, we decline to address it. See Allen v Keating, 205 Mich App 560,
564; 517 NW2d 830 (1994) (“[a]ppellate review is limited to issues actually decided by the trial
court”). Cross-appellants may, however, raise the issue in an appropriate motion on remand if
they wish to do so. As stated, Integrity and General American may tax costs related to this
appeal and cross-appeal as prevailing parties. MCR 7.219(A).
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Affirmed in part, vacated in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
/s/ Michael J. Riordan
/s/ Mark T. Boonstra
/s/ Michael F. Gadola
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