Vulpina LLC v. Randy K Dzierzawski ( 2020 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
VULPINA, LLC, UNPUBLISHED
December 29, 2020
Plaintiff-Appellant,
v No. 351472
Oakland Circuit Court
RANDY K. DZIERZAWSKI, RANDY K. LC No. 2011-119630-CK
DZIERZAWSKI REVOCABLE LIVING TRUST
DATED JUNE 16, 1999, and C & D CAPITAL,
LLC,
Defendants-Appellees.
Before: STEPHENS, P.J., and SERVITTO and LETICA, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court’s order taxing $350,000 in attorney fees to
defendants in this debt collection action. We affirm.
I. BACKGROUND
In June 2011, Flagstar Bank filed this action, alleging that defendant C & D Capital
breached a promissory note on a $2 million business loan that defendants, Dzierzawski and the
Dzierzawski trust, had personally guaranteed. In December 2011, Flagstar moved for summary
disposition, providing the loan agreement, promissory note, and the commercial guaranties. All
four documents contained clauses allowing the lender the costs of collecting on a judgment,
including reasonable attorney fees in any collection or bankruptcy proceedings. In February 2012,
the trial court’s predecessor granted summary disposition to Flagstar.
Also, in 2012, Continental Vineyard—a company owned by plaintiff’s sole member,
Gerald Forsythe—filed suit in Illinois against another Dzierzawski-owned company, Vinifera
Wine, LLC, alleging breach of fiduciary duty. In December 2012, plaintiff purchased the
judgment in this case from Flagstar and was substituted as plaintiff in this case. In April 2014,
defendant Dzierzawski filed for bankruptcy and the parties engaged in four years of litigation in
the bankruptcy court and in federal court. Plaintiff recovered most of the remaining judgment’s
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principal in the bankruptcy court. The bankruptcy court declined to adjudicate plaintiff’s attorney
fees claim and lifted the bankruptcy stay on this case.
In February 2019, plaintiff filed a notice of judgment lien in this case, alleging that
defendants still owed over $1 million in interest and attorney fees. Throughout the proceeding,
defendants argued that the majority of the judgment principal had been paid and that plaintiff had
no evidentiary basis to support its interest and attorney fees claim. Defendants argued that neither
the trial court nor the bankruptcy court had ever applied the framework of Smith v Khouri, 481
Mich 519, 530-531; 751 NW2d 472 (2008), to determine a specific award for reasonable attorney
fees in this case. Throughout, plaintiff argued that this case was governed by the postjudgment
costs review procedure of MCR 2.625(K), and argued that Smith only applied to prejudgment
attorney fee determinations and was therefore distinguishable. Plaintiff submitted over 400 pages
of heavily redacted billing statements, alleging that it was owed $1.89 million in attorney fees.
Defendants again argued that plaintiff was not entitled to its actual attorney fees, but only
reasonable attorney fees as determined under Smith.
Following a hearing, the trial court observed that the “acrimonious relationship” between
the parties had resulted in much unnecessary litigation. The trial court stated that plaintiff’s request
for $1.89 million in attorney fees “shock[ed] the court’s conscience” because plaintiff purchased
the judgment for $250,000 and had recovered most of the principal in bankruptcy court. The trial
court entered an order taxing $350,000 in attorney fees to defendants.
This appeal followed.
II. DISCUSSION
On appeal, plaintiff argues that the $350,000 attorney fees award must be vacated because
the trial court failed to conduct a Smith analysis when calculating the award. We disagree.
To preserve a challenge to a trial court’s determination of attorney fees, a party must have
asserted in the trial court the specific legal grounds on which it seeks our review. Ladd v Motor
City Plastics Co, 303 Mich App 83, 104; 842 NW2d 388 (2013). In Ladd, the cross-appellant
argued on appeal that it was entitled to attorney fees under MCR 2.625(E)(2). Id. However, the
cross-appellant had asserted in the trial court that it was entitled to attorney fees under MCR
2.625(A)(2) and MCL 600.2591, but not MCR 2.625(E)(2). Id. We held that the cross-appellant’s
appellate argument regarding MCR 2.625(E)(2) was not properly before us because it had only
preserved a challenge under MCR 2.625(A)(2). Id. (“[T]he specific issue that is otherwise
preserved for appellate review has not been properly presented, and the specific issue that has been
properly presented is unpreserved for appellate review.”).
In this case, plaintiff, like the cross-appellant in Ladd, did not preserve the “specific issue”
it now presents to us. See id. Defendants argued multiple times that the trial court was required
to determine a reasonable attorney fees award under Smith because neither the trial court’s
predecessor nor the bankruptcy court had done so. Each time, plaintiff responded that Smith was
inapplicable to this case because Smith only governs attorney fees determinations at the time an
original judgment is entered. In contrast, plaintiff argued that the issue was governed under MCR
2.625(K). MCR 2.625(K) provides a procedure where a judgment creditor may request “taxable
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costs and fees expended after a judgment has been entered . . . as allowed by MCL 600.2405” and
by which a judgment debtor may request judicial review of the creditor’s request. It does not
provide any substantive law regarding the determination of taxable costs and fees. Indeed, MCL
600.2405(6) provides for recovery of “[a]ny attorney fees authorized by statute or by court rule.”
In contrast, the Smith framework is used to calculate attorney fee awards under a wide
variety of statutes and court rules. See, e.g., Pirgu v United Servs Auto Ass’n, 499 Mich 269, 274-
279; 884 NW2d 257 (2016) (holding that Smith applies to MCL 500.3148(1) under the no-fault
act); Powers v Brown, 328 Mich App 617, 621; 939 NW2d 733 (2019) (holding that Smith applies
to MCL 600.2919a(1) in statutory conversion cases); Kennedy v Robert Lee Auto Sales, 313 Mich
App 277, 279; 882 NW2d 563 (2015) (holding that Smith applies to agreement settling claims
under the Magnuson-Moss Warranty Act and the Michigan Consumer Protection Act). Therefore,
plaintiff’s position in the trial court—that MCR 2.625(K) and the Smith framework are mutually
exclusive—is unsupported, as plaintiff implicitly acknowledges on appeal. Even after the trial
court instituted the procedure of MCR 2.625(K), defendants maintained that plaintiff’s request for
attorney fees should be analyzed for reasonableness under Smith. Plaintiff again responded that a
Smith analysis was unnecessary because “MCR 2.625 inherently does not contain the built[-]in
strictures of a prejudgment attorneys’ fees award.”
Now, on appeal, plaintiff argues that the trial court erred by accepting plaintiff’s argument
that a Smith analysis is unnecessary in a postjudgment context. Plaintiff argues that it preserved
its challenge to the trial court’s omission of a Smith analysis when it discussed Smith in trial court
filings. However, plaintiff fails to mention that each of those filings argued that Smith was
distinguishable, and, therefore, did not control the outcome in this case. “It is fundamental that a
party may not create error in a lower court, and then claim on appeal that the error requires
reversal.” Clohset v No Name Corp, 302 Mich App 550, 566; 840 NW2d 375 (2013); see also
People v Szalma, 487 Mich 708, 726; 790 NW2d 662 (2010) (determining that a party may not
“create[] the very error that it wishes to correct on appeal”). And, a party may not take a position
before the trial court, take an opposite position before this Court, and expect to obtain relief. Blazer
Foods, Inc v Restaurant Properties, Inc, 259 Mich App 241, 252; 673 NW2d 805 (2003).
Plaintiff made a strategic decision to avoid a Smith analysis in hopes of obtaining an award
closer to the actual rates charged by its Chicago-based counsel than to the reasonable Michigan
rates permitted under Smith. Accordingly, plaintiff repeatedly asserted that the trial court could
not apply Smith to determine its attorney fees. Plaintiff, now dissatisfied with the trial court’s
decision, seeks an opportunity to better the outcome by arguing that the trial court erred in failing
to conduct a Smith analysis. We do not tolerate this type of gamesmanship and do not permit
plaintiff to harbor error as an appellate parachute.
Affirmed.
/s/ Cynthia Diane Stephens
/s/ Deborah A. Servitto
/s/ Anica Letica
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