Two bills are being fast-tracked through a Michigan lame-duck legislative session that would fundamentally alter the State’s legal system regarding awarding attorney fees to a prevailing party.
Specifically, the two bills were introduced on November 8, 2018, and are:
- SB 1182 Civil procedure; costs and fees; attorney fees; require the award to the prevailing party. Amends 1961 PA 236 9MCL 600.101 – 600.9947) by adding sec. 2443; and
- SB 1183 Civil procedure; costs and fees; attorney fee awards in frivolous civil actions; modify. Amends secs. 2442 & 2591 of 1961 PA 236 9MCL 600.2445 & 600.2591) & adds sec. 2446.
The State Bar Board of Commissioners is expected to discuss the proposals on December 4, 2018.
To greatly simplify what these two bills would accomplish, they would move Michigan’s legal system from the “American Rule” to something closer to the “English Rule.”
Under the “American Rule,” litigants are generally required to pay their attorney fees, unless a statute, contractual provision, or other source provides for the shifting of attorney fees to the losing party. In contrast, the “English Rule” defaults to the party who loses a court case must pay the other parties legal costs.
Thoughts on the proposed legislation.
As an attorney whose defended many clients in questionable lawsuits, including suits later to be deemed frivolous, the concepts embodied in these bills deserve serious consideration. I say this while presently litigating two cases that are dangerously close to crossing the file line regarding being frivolous.
In one case in Federal District Court involving trade secret misappropriation and related claims, the Plaintiff admitted in responses to Request to Admit and through its corporate representative’s deposition that the alleged trade secrets identified in the complaint (a quote and proposal provided to a potential customer) were not trade secrets. But these admissions came after three amended complaints (each iteration making the same fraudulent trade secret assertion) and about a year after Plaintiff filed the initial complaint. A pending Motion for Summary Judgment explains why these false assertions should be the basis for awarding Defendants’ attorney’s fees, which the Judge will have considerable discretion in deciding the issue.
In another case pending in Oakland County Circuit Court, the adverse party counterclaimed against my client in a breach of contract action. At court-ordered case evaluation, my client received a very favorable award on his claim, which he accepted. The counterclaims, which sought many tens of thousands of dollars, however, received an award of “$1” (that’s right, one dollar). Under Michigan’s case evaluation system, an award of zero dollars means the action is frivolous and entitles a party to recover attorney fees. This case too will be the subject of a motion for judgment because the adverse party insist upon continuing the litigation.
However, even with these examples of arguably frivolous lawsuits, the bills, as drafted, are likely not the answer and the issues deserve a more reasoned analysis than a lame-duck session of politicians deciding a fast-tracked issue.
We will continue to monitor these bills. You can follow this link if you would like to submit comments or contact our law firm about doing so.