Opinion ID: 2975232
Heading Depth: 2
Heading Rank: 3

Heading: Amount of attorney fees awarded

Text: In its partial grant of Shields’s petition for attorney fees, the district court awarded fees only for the work Shields’s counsel had performed regarding the claim against State Farm. The court declined to award fees for work performed in relation to Shields’s claim against GEHA, and the court awarded half of the fees sought in relation to the work that overlapped both claims. Shields argues on appeal that the district court erred in so apportioning the fees, contending that it instead should have granted her petition for fees in full, irrespective of the claim to which the work related. The district court, in so apportioning Shields’s attorney fees, relied primarily on the plain language of Mich Comp. Laws § 500.3148, which provides for the availability of attorney fees pursuant to litigation under the MNFIA. Section 500.3148(1) expressly provides for attorney fees only “for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue.” (Emphasis added.) The district court reasoned that, although Shields’s claim against State Farm sought benefits “overdue” within the meaning of the statute, her claim against GEHA simply sought a ruling that GEHA was not entitled to reimbursement out of Shields’s third-party tort recovery for benefits that it had already paid. This claim against GEHA clearly falls outside the statutory text that includes only actions for “insurance benefits which are overdue.” No. 05-2346 Shields v. Gov’t Employees Hosp. Assoc., et al. Page 5 Shields’s primary argument in response asserts that, because State Farm was the “but-for” cause of Shields’s litigation against both insurers, her attorney fees for both claims are properly chargeable to State Farm. This argument at first blush carries some appeal. After all, had State Farm simply agreed to pay Shields instead of unreasonably refusing to do so, Shields would have had no reason to object to GEHA’s claim for reimbursement because the entire transaction would have had no net effect on her recovery. Shields asserts that her claim against GEHA was therefore simply part and parcel of her response to State Farm’s refusal to pay. In other words, “questioning the legitimacy of GEHA’s right to seek repayment” was simply another “avenue[] to protect [Shields]” from her potential loss resulting from State Farm’s action. Intertwined with Shields’s but-for argument is her assertion that the spirit or intent of Michigan’s statutory scheme is designed to protect claimants from bearing the legal costs associated with recalcitrant insurers or squabbles between insurers. Indeed, Michigan courts have held that the MNFIA is to be “liberally construe[d]” in favor of intended beneficiaries. Farmers Ins. Exch. v. AAA of Michigan, 671 N.W.2d 89, 91 (Mich. Ct. App. 2003). Shields also relies heavily on Kalin v. Detroit Automobile Inter-Insurance Exchange, 316 N.W.2d 467 (Mich. Ct. App. 1982). In Kalin, the plaintiff was struck by a vehicle while in the process of entering his own parked delivery truck. Id. at 469-70. The dispute essentially boiled down to whether Kalin’s insurance carrier or that of the driver who struck him would pay for Kalin’s medical expenses. Id. at 472-74. Regarding Kalin’s request for attorney fees, the court ultimately affirmed the trial court’s award of half of Kalin’s attorney fees against each insurer, reasoning that “[a] claimant who is clearly entitled to no-fault benefits should not be forced to hire an attorney merely because the circumstances of his accident create problems of priority among insurers.” Id. at 474. Furthermore, the court explained that “insurance companies can avoid liability for attorney fees by sharing the payment of such a claimant’s no-fault benefits and then settling their differences among themselves.” Id. Shields’s reliance on Kalin, however, is misplaced. The present dispute, unlike Kalin, is not simply a fight between two insurers with Shields on the sidelines. State Farm never challenged the legitimacy of GEHA’s claim against Shields’s recovery. Instead, the only party contesting the legitimacy of GEHA’s claim was Shields herself, and she lost on that argument. Furthermore, Shields ultimately cannot overcome the plain statutory language that provides for attorney fees only in relation to an action for “insurance benefits which are overdue.” Mich. Comp. Laws § 500.3148(1). Shields’s claim against State Farm falls within the statutory fee provision, but her claim that GEHA had no right to reimbursement does not. Alternatively, an “action” under § 500.3148(1) could arguably be construed to encompass both a claim against an insurer for overdue benefits as well as other related claims. The Michigan Supreme Court, however, implicitly adopted a different view in Proudfoot v. State Farm Mutual Insurance Co., 673 N.W.2d 739 (Mich. 2003). In Proudfoot, the claimant had been rendered disabled by an automobile accident and consequently had to retrofit her home to make it wheelchair accessible. Id. at 740. She later submitted an $815.10 architect’s bill to State Farm, her no-fault insurer, for preparing building plans. Id. at 741. State Farm, however, denied the claim as an unreasonable expense under its policy. Proudfoot filed suit in state court before the actual modification work commenced. Id. The Michigan Supreme Court affirmed the lower court’s declaratory judgment that the home modifications were reasonably necessary and therefore should have been covered by State Farm. Id. at 743. Regarding attorney fees, however, the Michigan Supreme Court affirmed the lower court’s grant of fees only with respect to Proudfoot’s claim that State Farm should have covered the $815.10 architect’s fee, because only that claim was “overdue.” Id. at 744. Other related elements No. 05-2346 Shields v. Gov’t Employees Hosp. Assoc., et al. Page 6 of Proudfoot’s action regarding State Farm’s liability for future expenses, the Court held, did not fall within the § 500.3148 definition of allowable fees. Id. The Michigan Supreme Court has thus differentiated between attorney fees attributable to recovering “overdue” benefits under § 500.3148 and those attributable to other aspects of the litigation not covered by that statute. Shields’s attempt to combine the noncompensable work that her counsel performed in relation to the GEHA claim with the compensable work performed in relation to the State Farm claim is inconsistent with Michigan law. Moreover, Shields’s policy arguments notwithstanding, analogous scenarios arise frequently in litigation. A civil rights plaintiff, for instance, who raises a claim under 42 U.S.C. § 1983 for which attorney fees might be available often must determine whether to also raise related state-law claims for which fees are generally not recoverable. Faced with this strategic cost-benefit choice, Shields’s counsel chose to litigate a flawed claim against GEHA in addition to the meritorious claim against State Farm. Michigan law does not support awarding Shields her attorney fees in relation to her failed claim that GEHA was not entitled to reimbursement.