Court Opinion

ID: 9963730
Source: CourtListenerOpinion
Date Created: 2024-04-26 05:06:09.560047+00
Date Added: 2024-06-11T08:24:58.128946
License: Public Domain

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

REBECCA E. CHEW, formerly known as                                   UNPUBLISHED
REBECCA E. LOPEZ,                                                    April 25, 2024

               Plaintiff-Appellee,

v                                                                    No. 366641
                                                                     Clinton Circuit Court
JOSEPH P. LOPEZ,                                                     LC No. 21-030034-DO

               Defendant-Appellant.

Before: M. J. KELLY, P.J., and JANSEN and MURRAY, JJ.

PER CURIAM.

        Defendant appeals as of right the trial court’s order granting defendant attorney fees and
costs and denying him interest in this divorce action from plaintiff. Defendant argues that the trial
court abused its discretion in its attorney fee award without following the proper framework, and
that he should have been granted interest on delayed property settlement payments in equity. We
vacate the trial court’s award of attorney fees, and remand for an appropriate determination, and
affirm the denial of postjudgment interest.

                 I. BACKGROUND FACTS AND PROCEDURAL HISTORY

        The parties were married in June 1990, and lived together until May 1, 2021. They had
adult children at the time that plaintiff filed for divorce on June 18, 2021, alleging a breakdown in
the marriage. The parties reached a full settlement regarding the division of marital property
during mediation, and entered a consent judgment of divorce on May 31, 2022. Plaintiff was
awarded all interest in her business, Better Health Therapy Center. The consent judgment required
plaintiff to pay defendant a property settlement of $95,000 within 90 days of entry of the order. It
also provided that the parties would be entitled to attorney fees if they had to seek enforcement of
the consent judgment.

        When plaintiff failed to make the lump-sum payment by September 1, 2022, defendant
moved to enforce the consent judgment, appoint a receiver, and for attorney fees and interest.
Plaintiff moved for relief from judgment, asserting she was unable to make the lump-sum payment

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without obtaining financing, which she was denied from three banks because of a delinquent credit
card in defendant’s name. She sought court approval of a payment plan to pay defendant $1,500
each month until she obtained financing or paid in full. During discovery, defendant learned that
plaintiff had a sufficient amount in her business account to pay the property settlement, and the
court granted his ex parte motion to freeze the account. At a hearing held on December 13, 2022,
the court ordered plaintiff to pay defendant $75,000 by December 16, 2022, after which the court
would lift the freeze on her account, and to make the $1,500 monthly payment to defendant by
January 3, 2023, February 1, 2023, and March 1, 2023. The parties were also directed to file
supplemental briefs on the issues of damages, interest, and attorney fees.

        Defendant argued that he was entitled to postjudgment interest in equity, $4,367 in
damages because he lost a prepaid scuba trip and incurred late fees on paying off his vehicle from
plaintiff’s failure to pay the property settlement on time, and that he was entitled to $13,764 in
attorney fees for all of the postjudgment work. Plaintiff responded that defendant was not entitled
to interest and his request for attorney fees was not reasonable. The evidentiary hearing began on
March 2, 2023, with Melissa Leckie testifying as a stipulated expert in family law. She testified
that for an attorney with the same years of experience as defense counsel, the appropriate hourly
rate was $250 per hour, and that she would have charged 10 hours of work on this postjudgment
matter. Both parties testified, and the only exhibits admitted at trial were the denial letters from
three banks when plaintiff sought financing. At the end of the hearing, plaintiff was ordered to
pay defendant the remaining balance on the property settlement, $8,569.04, by March 10, 2023,
which she paid in full.

        The court found plaintiff’s motion for relief moot because she paid the remaining balance
of the property settlement, so a payment plan was no longer needed. Similarly, defendant’s request
to appoint a receiver was moot. The court denied defendant’s request for damages, as well as his
motion for interest because there was no evidence presented at the hearing about interest. The
court found an award of attorney fees to defendant appropriate under the enforcement provision of
the consent judgment and MCR 3.206(D)(2)(b) (where a party fails to comply with a court order
despite the ability to do so). However, the only evidence at trial established that a $250 hourly
rate for 10 hours of work was reasonable, so the court awarded defendant $2,500 in attorney fees
plus a $20 filing fee. Defendant now appeals.

                                      II. ATTORNEY FEES

       Defendant argues that the trial court abused its discretion in finding $2,500 in attorney fees
was reasonable without following the applicable framework. We agree.

        This Court reviews a trial court’s award of attorney fees and costs for an abuse of
discretion. Pirgu v United Servs Auto Ass’n, 499 Mich 269, 274; 884 NW2d 257 (2016). A trial
court abuses its discretion when its decision is outside the range of reasonable and principled
outcomes. Id.

        Attorney fees are generally not recoverable as an element of costs or damages absent an
express legal exception. Fleet Business Credit v Krapohl Ford Lincoln Mercury Co, 274 Mich
App 584, 589; 735 NW2d 644 (2007). Exceptions are narrowly construed, and one exception
exists where attorney fees are provided by contract of the parties. Id. “[A] contractual clause

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providing that in the event of a dispute the prevailing party is entitled to recover attorney fees is
valid.” Id. Here, the provision of attorney fees was expressly provided in paragraph 58 of the
parties’ consent judgment of divorce:

               58.     IT IS FURTHER ORDERED in the event either party is called
       upon to seek enforcement of any of the terms of this Consent Judgment of Divorce
       or is required to retain counsel to secure the implementation of the terms of this
       Consent Judgment of Divorce or if either party defaults in the performance of any
       obligations set forth in this Consent Judgment of Divorce, the prevailing party shall
       be entitled to an award of all expenses, including reasonable and actual attorney
       fees and costs, incurred in connection with any enforcement proceedings.

“Consent judgments of divorce are contracts and treated as such.” Andrusz v Andrusz, 320 Mich
App 445, 452; 904 NW2d 636 (2017).

       In Smith v Khouri, 481 Mich 519, 529-530; 751 NW2d 472 (2008), our Supreme Court
recognized that trial courts historically weighed the factors in Wood v Detroit Auto Inter-Ins
Exchange, 413 Mich 573; 321 NW2d 653 (1982), and MRPC 1.5(a) to determine a reasonable
attorney fee, and provided the following framework:

       We hold that a trial court should begin its analysis by determining the fee
       customarily charged in the locality for similar legal services, i.e., factor 3 under
       MRPC 1.5(a). In determining this number, the court should use reliable surveys or
       other credible evidence of the legal market. This number should be multiplied by
       the reasonable number of hours expanded in the case (factor 1 under MRPC 1.5(a)
       and factor 2 under Wood). The number produced by this calculation should serve
       as the starting point for calculating a reasonable attorney fee. We believe that
       having the trial court consider these two factors first will lead to greater consistency
       in awards. Thereafter, the court should consider the remaining Wood/MRPC
       factors to determine whether an up or down adjustment is appropriate. And, in
       order to aid appellate review, a trial court should briefly discuss its view of the
       remaining factors. [Smith, 481 Mich at 530-531.]

       In Pirgu, 499 Mich at 281, the Supreme Court reiterated that after the trial court finds the
baseline figure, the court “must consider all of the remaining Wood and MRPC 1.5(a) factors to
determine whether an up or down adjustment is appropriate.” (First emphasis added; second
emphasis original). The Pirgu Court streamlined the list of nonexclusive factors as follows:

       (1) the experience, reputation, and ability of the lawyer or lawyers performing the
       services,

       (2) the difficulty of the case, i.e., the novelty and difficulty of the questions
       involved, and the skill requisite to perform the legal service properly,

       (3) the amount in question and the results obtained,

       (4) the expenses incurred,

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       (5) the nature and length of the professional relationship with the client,

       (6) the likelihood, if apparent to the client, that acceptance of the particular
       employment will preclude other employment by the lawyer,

       (7) the time limitations imposed by the client or by the circumstances, and

       (8) whether the fee is fixed or contingent. [Id. at 281-282.]

The trial court can consider any additional relevant factors, and “should briefly discuss its view of
each of the factors above on the record and justify the relevance and use of any additional factors.”
Id. (emphasis added). In Pirgu, the court held that the trial court erred by “failing to briefly discuss
its view of [all of] the factors,” and therefore, abused its discretion. Id. at 282-283. The Court
vacated the fee award, and remanded to the trial court for reconsideration. Id. at 283.

        Here, the trial court found an award of attorney fees was appropriate under the consent
judgment provision and MCR 3.206(D)(2)(b), which provides that a party who requests attorney
fees and expenses must allege sufficient facts that “the attorney fees and expenses were incurred
because the other party refused to comply with a previous court order, despite having the ability
to comply . . . .” The court found there was noncompliance by plaintiff to an extent as she failed
to pay by the due date because of lack of financing, but then paid from the business account once
the ex parte order to freeze was lifted. The court further stated that the only evidence regarding
attorney fees was Leckie’s testimony that an attorney with the years of experience defendant’s
attorney had should charge $250 per hour, and the typical number of hours for a postjudgment
motion to enforce was 10 hours. Thus, the trial court ordered plaintiff to pay $2,500 in attorney
fees to defendant plus a $20 filing fee.

         Although the trial court followed the first part of Smith by finding the baseline figure—
multiplying the $250 hourly rate by 10 hours of work—the trial court then failed to consider any
of the factors from Pirgu. The Pirgu Court held that the trial court “must” consider these factors,
and failure to do so and provide a record constitutes an abuse of discretion. Id. at 282-283.
Therefore, the trial court abused its discretion in failing to consider these factors and make a record
of its findings. The attorney fee award is vacated, and this matter is remanded to the trial court to
make a proper record under the appropriate framework.

                                III. POSTJUDGMENT INTEREST

       The trial court did not abuse its discretion in denying defendant’s motion for interest on
the unpaid property settlement award.

        The trial court’s decision whether to award postjudgment interest in equity is also reviewed
for an abuse of discretion. Reigle v Reigle, 189 Mich App 386, 393-394; 474 NW2d 297 (1991).
As stated above, a trial court abuses its discretion when its decision is outside the range of
reasonable and principled outcomes. Pirgu, 499 Mich at 274.

      MCL 600.6013(1) applies to money judgments recovered in a civil action. Defendant
conceded in his supplemental brief filed in the trial court that this statute does not apply to divorce
judgments. Indeed, this Court has held that “ ‘Michigan caselaw clearly establishes that the statute

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governing interest on money judgments, MCL 600.6013, does not apply to judgments of divorce.’
” Olson v Olson, 273 Mich App 347, 351; 729 NW2d 908 (2006), quoting Reigle, 189 Mich App
at 392. “ ‘Interest on such awards is granted solely pursuant to the equitable powers of the court.’
” Olson, 273 Mich App at 351, quoting Reigle, 189 Mich App at 392-393. Thus, defendant argues
on appeal that he was entitled to interest in equity.

        An award of interest on a judgment entered in a domestic relations case may be appropriate
under the trial court’s discretionary equitable powers. Olson, 273 Mich App at 354, citing
Lawrence v Lawrence, 150 Mich App 29, 34; 388 NW2d 291 (1986), and Ashbrenner v
Ashbrenner, 156 Mich App 373, 376; 401 NW2d 373 (1986). “An equitable award of interest in
a divorce action is not intended to serve the purpose of compensating a party for lost use of funds.
Rather, an award of interest for overdue payment in a property settlement prevents the delinquent
party from realizing a windfall and assures prompt compliance with court orders.” Olson, 273
Mich App at 354-355, citing Reigle, 189 Mich App at 394 (quotation marks omitted).

         The trial court denied defendant’s request for interest on plaintiff’s delayed payment of the
property settlement because there was no evidence presented at the evidentiary hearing regarding
interest at all. Indeed, when defense counsel asked defendant what interest rate he thought should
be applied, plaintiff’s counsel objected, and the trial court sustained, reasoning that defendant
lacked the knowledge to answer that question. Defendant’s arguments on appeal amount to
nothing more than asserting that he lost the timely use of the funds from the property settlement
when plaintiff did not pay by the due date, which is not a proper purpose for the award of interest
in a divorce action. Olson, 273 Mich App at 354. He argues that he suffered financially by losing
money for a prepaid trip as well as late fees for paying off his truck. Defendant’s request for
compensation for these damages was denied by the trial court. Moreover, defendant presented no
evidence that plaintiff realized a windfall from the delayed payment of the property settlement.
Although plaintiff initially claimed she could not make the payment without financing, and then it
was discovered that she had enough funds in her business account, defendant has been paid the
property settlement in full, and produced no evidence that plaintiff received a windfall from her
delayed payments. As neither purpose for equitable interest was met, the trial court did not abuse
its discretion in denying defendant’s request for postjudgment interest on the property settlement.

                                        IV. CONCLUSION

        We vacate the trial court’s award of attorney fees and remand to the trial court for a
determination of reasonable attorney fees under the proper framework. We affirm the trial court’s
denial of an award of interest to defendant. We retain jurisdiction.

                                                              /s/ Michael J. Kelly
                                                              /s/ Kathleen Jansen

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                              Court of Appeals, State of Michigan

                                                ORDER
                                                                               Michael J. Kelly
 REBECCA E CHEW V JOSEPH P LOPEZ                                                  Presiding Judge

 Docket No.     366641                                                         Kathleen Jansen

 LC No.         21-030034-DO                                                   Christopher M. Murray
                                                                                  Judges

               Pursuant to the opinion issued concurrently with this order, this case is REMANDED for
further proceedings consistent with the opinion of this Court. We retain jurisdiction.

                Proceedings on remand in this matter shall commence within 42 days of the Clerk’s
certification of this order, and they shall be given priority on remand until they are concluded. As stated
in the accompanying opinion, we vacate the trial court's award of attorney fees, and remand to the trial
court for a determination of reasonable attorney fees under the proper framework. The proceedings on
remand are limited to this issue.

               The parties shall promptly file with this Court a copy of all papers filed on remand. Within
seven days after entry, appellant shall file with this Court copies of all orders entered on remand.

               The transcript of all proceedings on remand shall be prepared and filed within 21 days after
completion of the proceedings.

                                                           /s/ Michael J. Kelly
                                                             Presiding Judge

                                 April 25, 2024