Court Opinion

ID: 4302664
Source: CourtListenerOpinion
Date Created: 2018-08-10 09:07:41.450245+00
Date Added: 2024-06-11T14:27:28.985047
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

MICHAEL ALAN SCHWARTZ,                                              UNPUBLISHED
                                                                    August 9, 2018
               Plaintiff-Appellant,

v                                                                   No. 338291
                                                                    Oakland Circuit Court
                                                                    Family Division
SARA OLTARZ-SCHWARTZ,                                               LC No. 2013-810233-DO

               Defendant-Appellee.

Before: RIORDAN, P.J., and K. F. KELLY and BOONSTRA, JJ.

PER CURIAM.

        In this divorce action, plaintiff appeals by right the order of the trial court, entered on
remand from this Court,1 directing him to pay attorney fees and costs incurred by defendant as a
result of plaintiff’s unreasonable conduct. We affirm.

                   I. PERTINENT FACTS AND PROCEDURAL HISTORY

        The circumstances of the parties’ marital breakdown were summarized by this Court in
its previous opinion arising from these divorce proceedings:

              Plaintiff and defendant, both attorneys, were married on December 8,
       1973. The marriage produced two children who were adults at the time of the
       divorce.

               In the early 2000s, plaintiff lost approximately $1 million in investments
       when the stock market crashed. The parties agreed at trial that the initial collapse
       of their marriage coincided with the loss. However, they also provided extensive
       testimony regarding their respective perspectives on the subsequent breakdown of
       their relationship, including the fact that the couple stopped sharing a marital
       relationship at least 10 years prior to trial. At some point, plaintiff began

1
  See Schwartz v Oltarz-Schwartz, unpublished per curiam opinion of the Court of Appeals,
issued September 22, 2016 (Docket Nos. 324555, 330031, and 330213).

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         engaging in a long-term affair with Julie Mareski, whom he secretly supported
         financially for several years prior to the divorce.[2]

       In the earlier appeal, this Court held that the trial court had properly awarded attorney
fees to defendant based on two instances of plaintiff’s misconduct. First, during discovery,
defendant issued a single request for admission to plaintiff, asking him to admit

         [t]hat you have in the past, for a number of years, provided for the support, or
         otherwise provided gratuitous financial benefits to another person, other than your
         immediate family, namely a person with the initials “J.M.” to include, but not be
         limited to phone services, auto lease responsibility, insurance, living expenses,
         gifts of jewelry, cosmetics, and intimate clothing, veterinary bills, by way of
         example and not limitation.

On September 24, 2013, plaintiff admitted that he provided support and financial benefits to
Mareski, but qualified his admission with the following statement: “The source of most of said
support and/or financial benefits was derived either from a loan which was made to the Plaintiff
or from an inheritance which he received from his mother upon her death.” After a three-day
bench trial, the trial court determined that plaintiff had been supporting Mareski since at least
2004, years before he received a loan from his former employer and the inheritance from his
mother. Consequently, it awarded attorney fees to defendant for this misconduct, as well as for
an additional instance of misconduct related to plaintiff’s payment of the mortgage for the
parties’ marital home. The trial court ultimately ordered plaintiff to pay defendant $68,452.60 in
attorney fees.

         This Court affirmed the award under the common-law exception permitting recovery of
fees a party is forced to incur as a result of the other party’s misconduct during the course of
litigation. However, because the record did not demonstrate the necessary link between
plaintiff’s misconduct and the amount of attorney fees awarded, this Court remanded the matter
to the trial court for a determination of the fees actually incurred as a result of plaintiff’s
unreasonable conduct.

        On remand, defendant filed a brief concerning attorney fees and attached a copy of
defense counsel’s billing statements, on which defense counsel, James P. Cunningham, had
placed check marks next to each entry pertaining to the two issues for which attorney fees had
been awarded. Cunningham also testified at an evidentiary hearing about his calculation of the
fees sought by defendant. After Cunningham briefly outlined his services by reading some of the
descriptions of relevant, marked entries and occasionally commenting on the reason certain types
of services were required, plaintiff’s attorney cross-examined Cunningham at length about his
billing descriptions. Although Cunningham was not always able to remember specific details
concerning some of the billing entries, he explained his general reasons for performing certain
types of work. Cunningham testified that, because plaintiff had asserted that he had primarily

2
    See Schwartz, unpub op at 1.

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supported Mareski from a loan or inheritance rather than from the marital estate, he conducted
extensive discovery regarding plaintiff’s finances. He issued subpoenas to plaintiff’s banks and
credit card companies because he could not rely on plaintiff to provide complete information. A
subpoena was also issued to plaintiff’s life insurance carrier to determine whether the policy
named Mareski or defendant as the beneficiary. Several billing entries referred to depositions,
and only plaintiff, defendant, and Mareski were deposed. According to Cunningham, divorce
cases do not always require party depositions, even when the case is likely to go to trial. He
stated that he would not have deposed the parties but for the “two issues” for which defendant
was seeking attorney fees.

        After the evidentiary hearing, the trial court issued a lengthy opinion and order setting
forth specific findings with respect to each billing entry for which defendant sought payment of
attorney fees. To summarize the trial court’s individual findings, with regard to the misconduct
involving plaintiff’s support of Mareski, the trial court disallowed all billing entries that occurred
before plaintiff responded to the request for admission. The trial court also disallowed billing
entries for work performed by paralegals as being outside the scope of this Court’s remand order,
as well as billing entries in which, though occurring after the request for admission, Cunningham
“could not identify the relationship between this entry and the remanded matters.” It allowed
charges that it found demonstrated “a sufficient connection to plaintiff’s unreasonable conduct,”
specifically the necessity that Cunningham “audit Plaintiff’s financial choices and deduce the
information Plaintiff concealed.” It also allowed charges related to the depositions, based on
Cunningham’s testimony that they would not have been necessary but for plaintiff’s actions.
The trial court also reduced certain charges by one-half, to reflect the fact that, although the
charge may have been incurred regardless of plaintiff’s misconduct, the misconduct required that
extra time be expended on the matter. With respect to plaintiff’s misconduct concerning the
mortgage, the trial court allowed charges where the billing entry specifically related to the
mortgage issue. After addressing whether each entry was related to the misconduct identified by
this Court, the trial court stated that Cunningham was a highly credible witness. It also found
that

               [t]he extensive discovery, subpoenas, motions, and Ms. Mareski’s
       involvement occurred in great part because of Plaintiff’s misconduct. Had
       Plaintiff’s answer to the Request for Admission[] provided the necessary financial
       information to [Cunningham], the disclosure would have obviated Defendant’s
       expenditure of additional attorney fees.

Based on the foregoing, the trial court found that defendant was entitled to recover fees incurred
for “95.67 hours ($30,449.50) related to Plaintiff’s unreasonable conduct regarding the Request
for Admission, [and] 26.15 hours ($8,986.25) related to the mortgage issue . . . .” This appeal
followed. On appeal, plaintiff only challenges the award of attorney fees related to his
misconduct concerning his support of Mareski; he does not challenge award of attorney fees for
entries related to the mortgage.

                                  II. STANDARD OF REVIEW

               We review for an abuse of discretion a trial court’s award of attorney fees
       in a divorce action. An abuse of discretion occurs when the result falls outside the

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       range of principled outcomes. However, findings of fact on which the trial court
       bases an award of attorney fees are reviewed for clear error. “A finding is clearly
       erroneous if we are left with a definite and firm conviction that a mistake has been
       made.” [Richards v Richards, 310 Mich. App. 683, 699-700; 874 NW2d 704
       (2015) (quotation marks and citations omitted).]

                                         III. ANALYSIS

        Plaintiff argues that the trial court erred by entering an order for attorney fees without
adequately explaining the factual basis for its conclusions and despite defendant’s failure to
establish a causal connection between plaintiff’s misconduct during discovery and the fees
awarded. We disagree.

         It is well-settled that attorney fees are generally not recoverable as of right in divorce
cases—fees may only be awarded when authorized by statute, court rule, contract, or common-
law exception. Reed, 265 Mich. App. at 164. At issue in this case is the common-law exception
permitting recovery of attorney fees on the basis of misconduct. Id. at 165. Under this
exception, “an award of legal fees is authorized where the party requesting payment of the fees
has been forced to incur them as a result of the other party’s unreasonable conduct in the course
of the litigation.” Id., quoting Stackhouse v Stackhouse, 193 Mich. App. 437, 445; 484 NW2d 723
(1992) (quotation marks omitted). To award fees on the basis of misconduct, the trial court must
determine that misconduct, in fact, occurred and that the misconduct caused the party seeking
fees to incur the fees awarded. Reed, 265 Mich. App. at 165. The party requesting fees bears the
burden of proving that the fees were incurred and that the fees requested are reasonable. Id. at
165-166.

        A party may not merely present a billing statement for approval under this exception;
rather, he or she must demonstrate by documentation and testimony what charges can be
attributed to the other party’s misconduct. See Augustine v Allstate Ins Co, 292 Mich. App. 408,
414; 807 NW2d 77 (2011) (rejecting an award of attorney fees based on testimony from the
plaintiff’s attorneys that was “replete with speculation, conjecture, and a denial of knowledge”);
Adair v Michigan (On Third Remand), 298 Mich. App. 383, 388; 827 NW2d 740 (2012), rev’d in
part on other grounds 494 Mich. 852 (2013) (partially rejecting an award of attorney fees when
the plaintiff’s attorneys could not recall which particular billing entries related to the claim for
which the fees had been awarded).

        Here, we conclude that the trial court did not clearly err in finding that certain of the
charges submitted by defendant were supported by Cunningham’s testimony and other record
evidence. Richards, 310 Mich. App. at 699-700. By way of example, the trial court awarded
attorney fees incurred with respect to defendant’s motion for substitute service of a subpoena
directing Mareski to appear for a deposition. Cunningham’s February 4, 2014 billing entry
explicitly referred to the motion by name, and he related other billing entries to work performed
in connection with the same motion during his testimony at the evidentiary hearing. In addition,
Cunningham further testified that the motion was necessary because Mareski was avoiding
service, and her testimony was required to demonstrate the falsity of plaintiff’s assertion
concerning the extent of his support.

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         To be sure, Cunningham’s recollection, and the billing description, did not always rise to
the level of detail described above. But Cunningham did recall many specifics—for example, he
testified that entries related to subpoenas were related to plaintiff’s discovery response because
“there was very little other discovery that had to be done,” notwithstanding his inability to recall
each specific subpoena. And, as noted, the trial court did evaluate each entry individually,
accepting some, rejecting others as having “too tenuous” a connection to plaintiff’s misconduct
or because Cunningham could not recall specifics, and reducing the amount for some charges to
reflect that not all of the time spent was occasioned by plaintiff’s misconduct. It is clear that
Cunningham’s testimony reflected more than speculation, Augustine, 292 Mich. App. at 422, and
that the proofs were adequate to allow the court to determine the number of hours reasonably
expended due to plaintiff’s misconduct, Adair, 298 Mich. App. at 395. In light of the billing
entries and Cunningham’s testimony, and the trial court’s detailed review of each entry, we
conclude that the trial court did not clearly err by finding that the services reflected in the billing
entries it approved were incurred as a result of plaintiff’s misconduct during discovery.
Richards, 310 Mich. App. at 699-700.3

       Affirmed.

                                                               /s/ Michael J. Riordan
                                                               /s/ Kirsten Frank Kelly
                                                               /s/ Mark T. Boonstra

3
  Because our remand was limited to “a determination of the expenses resulting from plaintiff’s
conduct,” see Schwartz, unpub op at 15, we do not review the trial court’s findings concerning
the reasonableness of the fees awarded under the other factors found in Smith v Khouri, 481
Mich. 519, 529-530; 751 NW2d 472 (2008).

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