C Hark Orchids Lp v. William Buie ( 2023 )

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
HARK ORCHIDS LP, UNPUBLISHED
May 4, 2023
Plaintiff-Appellant,
v No. 361175
Kalamazoo Circuit Court
WILLIAM BUIE and CONKLIN BENHAM, PC, LC No. 2020-000263-NM
Defendants-Appellees.
Before: SHAPIRO, P.J., and REDFORD and YATES, JJ.
SHAPIRO, P.J. (concurring).
I agree with the majority that this case is controlled by Mieras v DeBona, 204 Mich App
703; 516 NW2d 154 (1994), rev’d on other grounds 452 Mich 278; 55 NW2d 202 (1996). Because
that case is binding precedent I am compelled to concur. However, I disagree with its holding and
would support a request for a conflict panel pursuant to MCR 7.215(J).
Plaintiff company’s employee was injured at work and she filed a worker’s compensation
claim, which plaintiff disputed. Defendants represented plaintiff in the worker’s compensation
claim. During settlement discussions, the employee’s counsel advised defendants that the
employee also planned to file a civil suit against plaintiff. The employee’s attorney advised
defendants that she would be willing to settle the worker’s compensation claim for $75,000 or
would settle that claim as well as her planned civil claim, i.e., a global settlement, for $125,000,
later reduced to $100,000.1 Defendants did not inform plaintiff of the global settlement offers.
Plaintiff alleges that the failure to communicate that offer constituted legal malpractice and that
plaintiff is entitled to damages, including the sums it paid to different counsel to successfully
defend against the later-filed civil case.
Plaintiff seeks those attorney fees as part of its damages in its malpractice suit. Defendants
rely on the “American Rule” barring an award of the prevailing party’s attorney fees against the
non-prevailing party. Plaintiff does not argue that we should alter or eliminate this fundamental
1
The worker’s compensation claim was eventually settled for $35,823.84.
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rule, pointing out that it does not seek to recover as compensable damages the attorney fees
expended in prosecuting the instant malpractice case. Instead, it seeks to recover the cost of
defending the civil suit brought by its employee, which plaintiff argues would have been avoided
by settlement had counsel conveyed the employee’s willingness to enter into a global settlement.
The relevant law in Michigan is not exactly clear. The majority relies on G & D Co v
Durand Milling Co, Inc, 67 Mich App 253; 240 NW2d 765 (1976), which held that “where the
present defendant has by his wrongful conduct, be it tort or breach of contract, caused the present
plaintiff to defend or prosecute [p]revious legal proceedings, the law . . . allows the plaintiff to
recover all the expense, including attorney fees, reasonably incurred by him in the [p]rior
litigation.” Id. at 257 (quotation marks and citation omitted). The opinion goes on to state that
[t]he rule enabling recovery of attorneys’ fees is designed to prevent the injustice
of a situation where a blameless party must prosecute or defendant action in which
the true party at fault cannot be brought into the litigation and made to indemnify
the blameless party. The rule was created to aid the party who must litigate two
actions to vindicate his rights[.] [Id. at 258.]
However, as defendants point out, there is other language in G & D Co stating “the attorneys’ fee
rule is intended to be applied where the party at fault is guilty of malicious, fraudulent or similar
wrongful conduct, not of simple negligence as is alleged here.” Id. at 259-260. While the case
was not decided on this basis,2 this standard has been followed in other cases.3
As noted, the case most significant to our decision is Mieras, 204 Mich App 703, a legal
malpractice action in which the plaintiffs sought recovery of attorney fees they incurred in an
earlier will contest that was allegedly the result of the attorney’s negligent drafting of the will.
Relying on G & D Co, the entirety of this Court’s discussion of the issue was as follows:
Generally, awards of costs or attorney fees are not allowed unless expressly
authorized by statute or court rule. However, a party may recover as damages the
costs, including attorney fees, expended in a prior lawsuit he was forced to defend
or prosecute because of a third party’s wrongdoing. Bonner v Chicago Title Ins
Co, 194 Mich App 462; 487 NW2d 807 (1992). The wrongdoer must be guilty of
2
The G & D Co majority concluded that the sought attorney fees arose out of the pending, rather
than prior, litigation. G & D Co, 67 Mich App at 258.
3
In his dissent, Judge KELLY pointed out that while some cases have required a showing of fraud,
“there is also authority to the contrary,” citing Dassance v Nienhuis, 57 Mich App 422; 225 NW2d
789 (1975) (“any costs of litigation including attorneys’ fees, incurred by plaintiffs in commencing
and prosecuting the [prior] action . . . are recoverable as an element of damages[.]”), and State
Farm v Allen, 50 Mich App 71; 212 NW2d 821 (1973) (“reasonable attorneys’ fees incurred in
prior litigation with ‘a third party—not with the defendant’ may be recoverable.”). G & D Co, 67
Mich App at 261-264 (KELLY, J., dissenting). Neither of these cases indicated that fraud was a
requirement to fall within this exception to the American Rule.
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malicious, fraudulent or similar wrongful conduct, rather than negligence. G & D
Co v Durand Milling Co, Inc, 67 Mich App 253, 259-260; 240 NW2d 765 (1976).
Plaintiffs have alleged only negligence, not fraud or malice in defendant’s
execution of his legal services . . . . As a consequence, their claim for the costs of
defending against [the] will challenge fails. [Mieras, 204 Mich App at 710.]
There was no discussion of whether the requirement of fraud or similar wrongful conduct was
applicable to the legal malpractice context.4
The majority points out that the only published case that actually binds us is Mieras and
given the dates of the other cases, this cannot be disputed. However, I question the rationale of
requiring a showing of fraud or malice to collect what are plainly consequential damages of the
defendant’s negligence in a different case, and other than talismanic references to the American
rule, I do not discern a reasoned basis for that requirement. Indeed, other courts have recognized
that the attorney fees from the underlying action merely represent a component of the plaintiff’s
damages in legal malpractice cases, rather than the recovery of attorney fees as such. See Quad
City Bank & Trust v Elderkin & Pirnie, PLC, 870 NW2d 249, 259-260 (Iowa App, 2015) (holding
that attorney fees from the underlying action are recoverable in malpractice cases because the
“[t]he goal of malpractice actions is to put the plaintiff back into the position it would have been
had the lawyer not been negligent.”); RAS Group, Inc v Rent-A-Center East, Inc, 335 SW3d 630,
642 (Tex App, 2010) (“In a legal malpractice case, the plaintiff’s damages may include the
attorney’s fees paid to the defendant-attorney in the underlying case. Also, when the defendant’s
tort requires a party to protect its own interests by bringing or defending an action against a third
party, the plaintiff may recover from the defendant the attorney’s fees incurred in the action against
the third party.”) (citation omitted); Sindell v Gibson, Dunn & Cruther, 54 Cal App 4th 1457,
1471; 63 Cal Rptr 2d 594 (1997) (“The theory of recovery is that the attorney fees are recoverable
as damages resulting from a tort in the same way that medical fees would be part of the damages
in a personal injury action. In such cases there is no recovery of attorney fees qua attorney fees.”)
(quotation marks, citation, and emphasis omitted).
4
Requiring a showing of fraud or other wrongdoing to recover attorney fees against a third party
makes sense in “a situation where a blameless party must prosecute or defend an action in which
the true party at fault cannot be brought into the litigation and made to indemnify the blameless
party.” G & D Co, 67 Mich App at 258. This is consistent with the right to common-law
indemnification, which “is based on the equitable theory that where the wrongful act of one party
results in another party’s being held liable, the latter party is entitled to restitution for any losses.”
Botsford Continuing Care Corp v Intelistaf Healthcare, Inc, 292 Mich App 51, 62; 807 NW2d 354(2011). However, in a legal malpractice action, the plaintiff is not seeking indemnification from
the attorney on the basis that the attorney was the “true party at fault” whose wrongful conduct
caused the plaintiff to be liable in the underlying action. Rather, the plaintiff is merely attempting
to recover damages for the attorney’s negligent representation in the prior action.
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For these reasons, I would request a conflict panel pursuant to MCR 7.215(J). Since my
colleagues do not agree, Mieras remains binding authority absent action by the Michigan Supreme
Court and so I concur.
/s/ Douglas B. Shapiro
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