McAuley v. General Motors Corp.

578 N.W.2d 282, 457 Mich. 513

• Court: Michigan Supreme Court
• Decided: June 2, 1998
• Docket: 106915, Calendar No. 13
• Status: Published

Opinions

Cavanagh, J.

In this case, we are presented with the question whether a prevailing party is entitled to recover a second award of attorney fees under the mediation rule, MCR 2.403(0),¹ where he has already been compensated for his reasonable attorney fees pursuant to a statutory provision. The Court of Appeals held that multiple awards in excess of a reasonable attorney fee are permissible where independent purposes are served by the provisions authorizing such awards. We agree; however, we find that the Court did not intend double recovery under the circumstances of this case when it enacted MCR 2.403. Therefore, we reverse the decision of the Court of Appeals.

I

The Michigan Employment Security Commission² and General Motors Corporation had an agreement under which the MESC administered standardized aptitude tests to unemployed persons and referred those individuals who scored over fifty percent to GMC. When plaintiff was tested, he scored poorly on the manual dexterity portion of the test because of nerve damage in his hand and was not referred to GMC. This setback proved to be only temporary, because plaintiff obtained a job at GMC a short time later. There is no dispute that he is fully capable of doing the work.

Plaintiff then filed suit against GMC and the MESC under the Handicappers’ Civil Rights Act, MCL 37.1101 et seq:, MSA 3.550(101) et seq.,3 alleging that the use of the standardized test as the determining factor for making referrals discriminated against handicapped persons because it evaluated skills that were unrelated to the individual’s ability to perform the requirements of the job. A mediation evaluation of $12,500 in plaintiff’s favor and against both defendants jointly and severally was rejected by all parties.

Following a trial on the matter, the jury returned a verdict of no cause of action against GMC,⁴ but found the mesc liable for damages in the amount of $15,000. Plaintiff was also awarded $25,281.25 in attorney fees, as permitted by MCL 37.1606(3); MSA 3.550(606)(3) to a prevailing plaintiff under the Handicappers’ Civil Rights Act. The award was substantially reduced from the $64,746.25 plaintiff sought because the trial court ruled that the mesc should not have to pay fees for attorney services incurred in the pursuit of plaintiff’s claim against GMC or for duplicative work that was necessitated by substitution of plaintiff’s counsel.

After a judgment for a total of $40,281.25 was entered, plaintiff moved for mediation sanctions pursuant to MCR 2.403(0). The MESC argued in part that plaintiff should not be entitled to recover double attorney fees. The trial court denied the motion because it concluded that plaintiff had already been fully compensated and that “[t]o compound the award further would be punitive.”

The Court of Appeals reversed in an unpublished per curiam opinion,⁵ relying on its previous decision in Howard v Canteen Corp, 192 Mich App 427; 481 NW2d 718 (1992). The panel held that attorney fees may be awarded under both the Handicappers’ Civil Rights Act and the court rule regarding mediation sanctions, even if the awards amount to a double recovery, because each provision serves an independent policy. While acknowledging that a court has discretion with regard to whether attorney fees should be awarded under the Handicappers’ Civil Rights Act, the Court of Appeals stated that the trial court had no discretion to refuse to award attorney fees under MCR 2.403 because the court rule provides that an award of attorney fees as mediation sanctions is mandatory if the criteria are met. We granted leave to appeal.⁶

n

As a preliminary matter, we note that the rules governing the construction of statutes apply with equal force to the interpretation of court rules. Smith v Henry Ford Hosp, 219 Mich App 555, 558; 557 NW2d 154 (1996). When we are called upon to construe a court rule and a statute that relate to the same substantive issue, we must read both “according to the plain language of each, giving effect to the meaning of the words as they ought to have been understood by those who adopted them.” Buscaino v Rhodes, 385 Mich 474, 481; 189 NW2d 202 (1971). Every word or phrase of a statute or court rule should be given its commonly accepted meaning; however, where a word or phrase is expressly defined, courts must apply it in accordance with that definition. MCL 8.3a; MSA 2.212(1); Western Michigan Univ Bd of Control v Michigan, 455 Mich 531, 539; 565 NW2d 828 (1997); Tryc v Michigan Veterans’ Facility, 451 Mich 129, 136; 545 NW2d 642 (1996). Statutes should be construed so as to prevent absurd results, injustice, or prejudice to the public interest. Franges v General Motors Corp, 404 Mich 590, 612; 274 NW2d 392 (1979). The interpretation and application of court rules and statutes present a question of law that is reviewed de novo. Cardinal Mooney High School v Michigan High School Athletic Ass’n, 437 Mich 75, 80; 467 NW2d 21 (1991); Szymanski v Brown, 221 Mich App 423, 433; 562 NW2d 212 (1997).

m

The meso contends that the Court of Appeals erred in holding that plaintiff could recover duplicative attorney fees under the mediation rule after he had already been fully reimbursed for his reasonable attorney fees in connection with his claim against the agency. We agree. The language of the statute and the court rule demonstrate that those provisions were intended to reheve prevailing parties or plaintiffs of the reasonable costs of all or part of the litigation. There is no support in either provision for the conclusion that attorney fees may be imposed as a penalty or that a party may recover an amount in excess of a reasonable attorney fee as determined by the trial court.

As a background to our discussion, we begin by noting that Michigan follows what is commonly termed the “American rule” with regard to payment of attorney fees. Popma v Auto Club Ins Ass’n, 446 Mich 460, 474; 521 NW2d 831 (1994). Under this rule, attorney fees generally are not recoverable from the losing party as costs in the absence of an exception set forth in a statute or court rule expressly authorizing such an award. Id.; see also MCL 600.2405(6); MSA 27A.2405(6) and 20 Am Jur 2d, Costs, § 57, p 52.⁷

It is weh established that generally only compensatory damages are available in Michigan and that punifive sanctions may not be imposed.⁸ See Hayes-Albion Corp v Kuberski, 421 Mich 170, 187; 364 NW2d 609 (1984), Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 419; 295 NW2d 50 (1980), Hicks v Ottewell, 174 Mich App 750, 755; 436 NW2d 453 (1989), and In re Disaster at Detroit Metropolitan Airport on August 16, 1987, 750 F Supp 793, 805 (ED Mich, 1989). Because the purpose of compensatory damages is to make the injured party whole for the losses actually suffered, the amount of recovery for such damages is inherently limited by the amount of the loss; the party may not make a profit or obtain more than one recovery. Stilson v Gibbs, 53 Mich 280, 284; 18 NW 815 (1884); 22 Am Jur 2d, Damages, § 27, pp 54-56; 4 Restatement Torts, 2d, §§ 903, 906, 908, pp 453, 460, 464. That an award of attorney fees is typically compensatory in nature is illustrated by the well-established body of law holding that a litigant representing himself may not recover attorney fees as an element of costs or damages under either a statute or a court rule because no attorney fees were incurred. See, e.g., Kay v Ehrler, 499 US 432, 437-438; 111 S Ct 1435; 113 L Ed 2d 486 (1991), Watkins v Manchester, 220 Mich App 337, 343-344; 559 NW2d 81 (1996), and Laracey v Financial Institutions Bureau, 163 Mich App 437, 444-445; 414 NW2d 909 (1987); see also Brown v Blanchard, 40 Mich 61 (1879). Thus, in order for a party to recover attorney fees under the mediation rule, he must show that he has incurred such fees. Watkins, supra at 343-344. Obviously, if the prevailing party has already been fully reimbursed for reasonable attorney fees through the operation of a statutory provision, in this case the attorney fee provision of the HCRA, there are no “actual costs” remaining to be reimbursed under the court rule. On the other hand, if the applicable statute limits the recovery of attorney fees to something less than a reasonable attorney fee and there are actual costs remaining, an additional award may be appropriate in some cases. For example, in Dep’t of Transportation v Dyl, 177 Mich App 33, 35; 441 NW2d 18 (1989), the Uniform Condemnation Procedures Act limited recovery of attorney fees to one-third of the amount by which the award exceeded the agency’s written offer. The plaintiff in that case contended that he was also entitled to sanctions under MCR 2.405(D), which provides, similar to MCR 2.403(0), that a plaintiff may recover the “actual costs” made necessary by the other party’s rejection of an offer of judgment. To the extent that the statutory remedy may have only partially compensated the plaintiff for the reasonable attorney fees that would ordinarily be recoverable under MCR 2.405, an additional award under the court rule would be appropriate in the amount by which the attorney fees recoverable under the statute were less than the amount recoverable under the court rule. Conversely, if a party moved for partial attorney fees pursuant to the court rules regarding mediation or offer of judgment first, and later filed a motion for attorney fees pursuant to statute, a supplemental award may be appropriate, in the trial court’s discretion, for the portion of the attorney fees attributable to litigation expenses incurred before mediation or before the offer of judgment was rejected.

Although MCR 2.403(O)(l) states that the party rejecting mediation and later receiving an unfavorable verdict “must pay the opposing party’s actual costs” incurred as a consequence of that rejection, this language only requires that the rejecting party pay the portion of the prevailing party’s reasonable attorney fees attributable to the rejection of the mediation evaluation.⁹ In this case, that occurred with the rendering of the verdict, which included reasonable attorney fees for the entire costs of plaintiff’s pursuit of his claim against the mesc. Thus, at the time the motion for costs under MCR 2.403(0) was being considered, there was no authority in the language of the rule for the trial court to enter an order compelling the rejecting party to pay attorney fees a second time.

However, we also agree with the prior decisions of the Court of Appeals that hold that where the purposes of the court rules and statutes providing for an award of attorney fees serve independent policies, recovery under both may be appropriate. See, e.g., Howard, supra, and Kondratek v Auto Club Ins Ass’n, 163 Mich App 634; 414 NW2d 903 (1987). While we neither indorse nor condone the result reached in those cases, we acknowledge that independent policies and purposes may serve to allow a party double recovery.¹⁰

However, even adopting the principle regarding independent policies and purposes, we hold that this Court, in enacting MCR 2.403 did not intend double recovery under the circumstances of this case. Specifically, if the prevailing party has already been fully reimbursed for reasonable attorney fees through the operation of the attorney fee provision of the hcra, there are no “actual costs” remaining to be reimbursed under the court rule.

Although one of the aims of the mediation rule is to discourage needless litigation,¹¹ the rule is not intended to punish litigants for asserting their right to a trial on the merits. The Court of Appeals erred when it reversed the trial court’s decision not to award extra attorney fees under MCR 2.403(0) in excess of plaintiff’s reasonable attorney fees, or in other words, in excess of plaintiff’s “actual costs” as defined by the court rule. Plaintiff had already been reimbursed for his reasonable attorney fees in connection with the portion of the litigation attributable to his claim against the mesc pursuant to MCL 37.1606(3); MSA 3.550(606)(3); consequently, he had no remaining “actual costs” for which he could claim compensation under the mediation rule.

Plaintiff argues that even if reimbursement is the measure of his recovery, he has not been adequately compensated for his expenditures because the award of $25,281.25 under the Handicappers’ Civil Rights Act fell far short of compensating him for his total reasonable legal expenses, which were in excess of $64,000. While, in common usage, the term “actual costs” may in one sense be taken to mean the amount actually expended, MCR 2.403(O)(6)(b) expressly defines “actual costs” as court costs plus “a reasonable attorney fee based on a reasonable hourly or daily rate as determined by the trial judge for services necessitated by the rejection of the mediation evaluation.” As we have noted, where a statute or court rule provides its own definition of a term, the term must be applied in conformity with that definition. Western Michigan Univ Bd of Control, supra at 539; Tryc, supra at 136. Thus, parties are limited by the court rule’s definition of “actual costs” to recovery of a reasonable fee as determined by the trial court, regardless of the fee amount a party may contractually agree to with his attorney or the total amount he may spend on litigation. See, e.g., In re Condemnation of Private Property for Highway Purposes, 209 Mich App 336, 342; 530 NW2d 183 (1995) (“Reasonableness cannot be shown merely by reference to the . . . contract”). If the amount paid were sufficient proof of reasonableness, “there would be little or no reason for vesting the trial court with discretion to set the amount of an attorney fee award.” City of Flint v Patel, 198 Mich App 153, 160; 497 NW2d 542 (1993). Similarly, MCL 37.1606(3); MSA 3.550(606)(3) authorizes a court to award only a reasonable attorney fee. This is, in fact, what plaintiff recovered.

The trial court correctly concluded that the MESC could be held liable only for attorney fees plaintiff incurred in connection with the portion of the litigation that was related to his claim against the agency. Among the factors the court must consider when determining what constitutes a reasonable attorney fee are the results achieved in the case and the nature of the expenses. Wood v DAIIE, 413 Mich 573, 588; 321 NW2d 653 (1982); In re Condemnation of Private Property, supra at 341-342. In this case, the trial court appropriately deducted portions of plaintiffs legal expenditures attributable to his unsuccessful claim against the other defendant in this case, gmc, and for duplicative work made necessary by substitution of plaintiff’s counsel. Because these types of expenses are properly excluded when determining what constitutes a reasonable attorney fee, it would, by necessary implication, be unreasonable to include them in an attorney fee assessment against the MESC.

rv

In conclusion, the mandatory language of MCR 2.403(0), which requires the rejecting party to compensate the prevailing party for the “actual costs” of the portion of the litigation made necessary by the rejection of the mediation evaluation, refers to the obligation of the rejecting party to reimburse the prevailing party for reasonable attorney fees in an amount determined by the trial court in its discretion; once this occurs and the prevailing party has been made whole, the requirement of the court rule is satisfied and no farther compensation is warranted or required. Consequently, we reverse the Court of Appeals decision and reinstate the judgment of the trial court.

Mallett, C.J., and Brickley, Boyle, and Kelly, JJ., concurred with Cavanagh, J.

1 MCR 2.403(O)(l) provides, in pertinent part, as follows: “If a party has rejected [a mediation] 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 mediation evaluation.” “Actual costs” are defined in MCR 2.403(O)(6) as those costs taxable in civil actions and a reasonable attorney fee as determined by the trial court.

2 The mesc is now known as the Unemployment Agency.

3 The trial court granted the mesc’s motion for summary disposition with regard to counts n and hi of the complaint, which stated causes of action based on federal law.

4 After the jury found in its favor, gmc also moved for $57,074 in attorney fees and costs against plaintiff pursuant to MCR 2.403(0) and MCR 2.405. However, the motion was withdrawn by stipulation when plaintiff agreed not to appeal the verdict with regard to gmc.

5 Issued July 9, 1996 (Docket No. 184869).

6 456 Mich 865 (1997).

7 Attorney fees may also be awarded where provided by contract of the parties, Zeeland Farm Services, Inc v JBL Enterprises, Inc, 219 Mich App 190, 195; 555 NW2d 733 (1996), or under a limited number of common-law exceptions to the American rule recognized in Michigan. See In re Thomas Estate, 211 Mich App 594, 602; 536 NW2d 579 (1995); Popma, supra at 475. However, we are presented with neither of those situations in this case.

8 We are aware of statutory exceptions to this general rule that specifically provide for punitive damages, e.g., MCL 15.240(7); MSA 4.1801(10)(7), MCL 600.2911(2)(b); MSA 27A.2911(2)(b), MCL 750.539h(c); MSA 28.807(8)(c).

9 In addition to “those costs taxable in any civil action . . . MCR 2.403(O)(6), see n 1.

10 The dissent erroneously claims that this paragraph is “dicta.” We disagree. There are two points being made here. First, we agree with the Court of Appeals that duplicative recovery may be allowed in some circumstances. Second, however, duplicative recovery was not intended in this case, as is noted below.

11 In Dep’t of Transportation v Dyl, supra at 38-39, the Court of Appeals opined that the purpose of the court rule in motivating parties to settle would be negated unless a separate and additional attorney fee award could be recovered. However, this is not the case. While it is true that our holding means no duplicative attorney fees will be awarded, the fact is that in cases of this type (where the underlying statute awards fees), this is not an elimination of that type of incentive, but rather it is merely a relative reduction. This does not, then, serve to significantly thwart the purposes of the mediation rule.