Mika POWERS, doing business as Sweet Rides Auto, Plaintiff/Counterdefendant-Appellee, v. Kelly Ray BROWN, Defendant/Counterplaintiff-Appellant.
Defendant/counterplaintiff, Kelly Ray Brown, appeals as of right the trial court's order awarding him attorney fees in the amount of $17,469.54 after he successfully prevailed on a statutory conversion claim against plaintiff/counterdefendant, Mika Powers, doing business as Sweet Rides Auto. We vacate the trial court order regarding attorney fees and remand for proceedings consistent with this opinion.
Brown purchased a pickup truck from Sweet Rides Auto in 2014. In 2015, after Sweet Rides Auto claimed that defendant had missed a monthly payment, it repossessed the truck, sold it at auction, and applied the sale proceeds to the loan. Sweet Rides Auto filed suit against Brown in an attempt to recover the remaining loan balance from Brown, but Brown counterclaimed that Sweet Rides Auto had wrongfully converted the truck. At a bench trial, the trial court found that Sweet Rides Auto had wrongfully converted the truck and awarded a judgment in favor of Brown in the amount of $10,122, plus attorney fees and costs.
Brown subsequently filed a motion seeking an attorney fee award of $30,347.50 based on his counsel's hourly rate and hours billed. After hearing Brown's motion, the trial court found that the hourly rate and hours billed were reasonable but that the total amount of fees billed was too high in relation to the “best case” outcome that had been possible for Brown at trial. The court concluded that because defense counsel had billed on a contingent basis, an appropriate award was 1/313 of the maximum amount that could be recovered ($52,983). By the trial court's calculation, 1/313 of $52,983 was $17,659.23, so the trial court awarded Brown that amount in attorney fees. The trial court later entered an order awarding reasonable attorney fees to Brown in the amount of $17,469.54.1 Brown now appeals as of right.
II. STANDARD OF REVIEW
We review for an abuse of discretion a trial court's award of attorney fees. Smith v. Khouri, 481 Mich. 519, 526, 751 N.W.2d 472 (2008) (opinion by Taylor, C.J.). “An abuse of discretion occurs when the trial court's decision is outside the range of reasonable and principled outcomes.” Pirgu v. United Servs. Auto. Ass'n, 499 Mich. 269, 274, 884 N.W.2d 257 (2016). “A trial court necessarily abuses its discretion when it makes an error of law.” Id.
On appeal, Brown challenges the amount of the attorney fees awarded and criticizes the trial court for not adhering to Michigan Supreme Court precedent in its attorney fee award.
The trial court awarded Brown attorney fees under MCL 600.2919a(1), which provides, in pertinent part:
A person damaged as a result of either or both of the following may recover 3 times the amount of actual damages sustained, plus costs and reasonable attorney fees:
(a) Another person's stealing or embezzling property or converting property to the other person's own use.
(b) Another person's buying, receiving, possessing, concealing, or aiding in the concealment of stolen, embezzled, or converted property when the person buying, receiving, possessing, concealing, or aiding in the concealment of stolen, embezzled, or converted property knew that the property was stolen, embezzled, or converted. [Emphasis added.]
As an initial matter, we take this opportunity to clarify for the bench and bar of this state that the analysis articulated by our Supreme Court in Smith, more specifically as set forth in Justice Corrigan's concurring opinion 2 and refined in Pirgu, is applicable to an award of attorney fees under MCL 600.2919a. In Pirgu, our Supreme Court was asked to decide “the proper method for calculating a reasonable attorney fee under MCL 500.3148(1)[.]” Pirgu, 499 Mich. at 274, 884 N.W.2d 257.3 As the Pirgu Court observed, “[i]n Smith, we refined the analysis that applies when a fee-shifting statute or rule requires a trial court to determine a reasonable attorney fee.” Id. at 278, 884 N.W.2d 257. Moreover, our Supreme Court cautioned that whether the Smith/Pirgu framework for determining a reasonable attorney fee is applicable will “depend on the plain language of the statute ․ at issue.” Id. The plain language of MCL 600.2919a(1)(a) clearly provides that a person damaged by another person's conversion of their property may recover “reasonable attorney fees.” As our Supreme Court instructed in Pirgu, “[t]he operative language triggering the Smith analysis is the Legislature's instruction that an attorney is entitled to a reasonable fee.” Pirgu, 499 Mich. at 279, 884 N.W.2d 257. Moreover, this Court recently applied the Smith/Pirgu framework when calculating reasonable attorney fees under MCL 15.364,4 a provision of the Whistleblowers' Protection Act, MCL 15.361 et seq. Cadwell v. Highland Park, 324 Mich. App. 642, 656-657, 922 N.W.2d 639 (2018). Returning to the plain language of MCL 600.2919a(1)(a), because it clearly speaks to the ability of a person damaged by another's “converting property to the other person's own use[,]” to recover “reasonable attorney fees,” the Smith/Pirgu framework is applicable in calculating those reasonable attorney fees.
In Smith, our Supreme Court instructed that the analysis begins with the trial court “determining the fee customarily charged in the locality for similar legal services[.]” Smith, 481 Mich. at 530, 751 N.W.2d 472 (opinion by Taylor, C.J.) (quotation marks omitted).5 Next, “[t]his number should be multiplied by the reasonable number of hours expended in the case ․” Id. at 531, 751 N.W.2d 472. “The number produced by this calculation should serve as the starting point for calculating a reasonable attorney fee.” Id. Then, the trial court should consider a number of factors to determine whether an upward or downward adjustment is appropriate. Id. In the context of an attorney fee award under MCL 500.3148(1), our Supreme Court more recently distilled the factors that a trial court is to consider:
(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. [Pirgu, 499 Mich. at 282, 884 N.W.2d 257.]
“These factors are not exclusive, and the trial court may consider any additional relevant factors.” Id. Further, to aid “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. When a trial court fails to follow this method, it errs. Id. Finally, if a trial court “primarily rel[ies] on only one factor—the amount sought and results achieved—and fail[s] to briefly discuss its view of the other factors[,]” the trial court “necessarily” abuses its discretion and remand is required. Id. at 282-283, 884 N.W.2d 257.
In this case, the trial court did not comprehensively apply the Smith/Pirgu framework. While the trial court stated that it found the requested hourly rates and total hours billed to be “reasonable and fair,” it adjusted the award downward, apparently on the basis of the anticipated projected value of the case to Brown, without considering the other factors set forth in Michigan Supreme Court precedent. Thus, the trial court awarded Brown 1/313 of the maximum amount recoverable and failed to consider the additional factors outlined in Pirgu. Id. at 282, 884 N.W.2d 257. While we understand the trial court's concern regarding two of the applicable factors—“the amount in question and the results achieved” and “whether the fee is fixed or contingent,” id. at 280, 884 N.W.2d 257—these are only two of the factors that the trial court should have weighed in its analysis. Id. at 281-282, 884 N.W.2d 257. Because the trial court did not comprehensively review and state its findings with respect to all the factors in the Smith/Pirgu framework, but rather focused on “the amount in question and the results obtained” as well as on the fact that the fees at issue were contingency fees, it abused its discretion in its award of attorney fees and remand is necessary. See id. at 282-283, 884 N.W.2d 257 (recognizing that although the trial court “acknowledged” some of the relevant factors, it abused its discretion by relying mostly on one factor, the amount sought and the results achieved, and by “failing to briefly discuss its view of the other factors.”). On remand, the trial court is instructed to reconsider its attorney fee award as recently instructed by the Michigan Supreme Court in Pirgu:
[W]hen determining the reasonableness of attorney fees awarded ․, a trial court must begin its analysis by determining the reasonable hourly rate customarily charged in the locality for similar services. The trial court must then multiply that rate by the reasonable number of hours expended in the case to arrive at a baseline figure. [Id. at 281, 884 N.W.2d 257 (citation omitted).]
The trial court is then directed to consider the factors enumerated by the Supreme Court in Pirgu. Id. at 281-282, 884 N.W.2d 257. Specifically, the trial court shall briefly discuss its view of each of the factors on the record and justify the relevance and use of any additional factors. Id. at 282, 884 N.W.2d 257.
The trial court order awarding attorney fees to Brown in the amount of $17,469.54 is vacated. We remand to the trial court to allow it to reconsider its award of attorney fees to Brown in conformity with Michigan Supreme Court precedent. We do not retain jurisdiction. Brown, as the prevailing party, may tax costs.
1. While the attorney fee order entered by the trial court in the amount of $17,469.54 contained a discrepancy from the trial court's order from the bench granting defendant $17,659.23 in attorney fees, a “court speaks through written judgments and orders rather than oral statements․” People v. Jones, 203 Mich. App. 74, 82, 512 N.W.2d 26 (1993). Moreover, the difference in the monetary amount is not relevant to our analysis of this issue.
2. Justice Corrigan disagreed with the lead opinion that the “results obtained” and “whether a fee is fixed or contingent” should be excluded from the Court's analysis when determining a reasonable attorney fee under MCR 2.403(O). Smith, 481 Mich. at 538, 543, 751 N.W.2d 472 (Corrigan, J. concurring). The Pirgu Court concluded that these factors should also be included when determining a reasonable fee under MCL 500.3148(1). Pirgu, 499 Mich at 280, 283, 884 N.W.2d 257.
3. MCL 500.3148(1) provides, in pertinent part, that “[a]n attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits that are overdue.” (Emphasis added.)
4. MCL 15.364 provides:A court, in rendering a judgment in an action brought pursuant to this act, shall order, as the court considers appropriate, reinstatement of the employee, the payment of back wages, full reinstatement of fringe benefits and seniority rights, actual damages, or any combination of these remedies. A court may also award the complainant all or a portion of the costs of litigation, including reasonable attorney fees and witness fees, if the court determines that the award is appropriate. [Emphasis added.]
5. Smith involved attorney fees awarded under MCR 2.403(O)(6). Smith, 481 Mich. at 527-528, 751 N.W.2d 472 (opinion by Taylor, C.J.).
K.F. Kelly, P.J., and Fort Hood and Redford, JJ., concurred.
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