Why Even A ‘Bad Guy’ Won’t Have to Pay Your Attorneys’ Fees

more+
less-

I've been a trial lawyer for 32 years.  And if I had a dollar for every time I heard a litigant vow to collect actual attorneys' fees from an adversary -- because the bad guy's claim was "frivolous" -- then I'd have a pocket full of money. On the other hand, if I had a thousand dollars for every time the winner actually won attorneys' fees from the loser, then I would be broke.

Awards of actual attorneys' fees for filing bad faith lawsuits are few and far between.  We regularly hear criticism of frivolous lawsuits, but actual attorneys' fees are seldom awarded to those forced to spend hard-earned money defending themselves.

A recent example of the courts steering clear of actual attorney fee awards appeared in a decision known as Department of Natural Resources v. Rexair, Inc.   The case involved an appeal from an Ingham County Circuit Court decision awarding a successful defendant over $3.8 million in legal fees. 

In Natural Resources, the plaintiff filed a motion to enforce a judgment, then changed its mind and decided to withdraw its motion. The Trial Court did not grant the plaintiff's request.  Instead, it entered an order that not only ended the lawsuit but also required the plaintiff to pay the defendant's actual attorneys' fees.  3.8 million dollars in actual attorneys' fees later, the defeated plaintiff appealed. 

The Opinion reversing the Trial Court's award of actual attorneys' fees included noteworthy broad-brush pronouncements concerning attorney fee awards. 

In Michigan, actual attorneys' fees are seldom awarded to successful litigants unless a specific statute or court rule allows such an award. 

For example, the appellate Judges noted that, in Michigan, actual attorneys' fees are seldom awarded to successful litigants unless a specific statute or court rule allows such an award.  While such statutes exist in both Michigan and Federal law, they are few and far between. 

The Court also pointed out that, while Michigan has a specific Court Rule allowing the award of actual attorneys' fees as a sanction for frivolous claims, the occasions when actual attorneys' fees are actually awarded are very rare. 

Finally, the Court of Appeals noted that -- even when courts award actual attorneys' fees -- their awards are subject to a Michigan Rule of Professional Conduct barring the award of excessive fees.

The bottom line is that while there are specific Michigan state and federal statutes -- such as civil rights statutes -- allowing the award of actual attorneys' fees, civil litigants who vow to defeat their opponent and also win an award of actual attorneys' fees would do well to make very sure that there is clear authority for that result.

Perhaps this is why, in three-plus decades of representing both plaintiffs and defendants in Michigan and other states, I have seldom seen courts award actual attorney fee sanctions based upon the simple argument that a claim or defense was "frivolous."  I'm not saying that it isn't done.  I’m saying that it is seldom done. 

Why the aversion to actual attorney fees awards at a time when we regularly hear commentary about a legal system that has allegedly "run amok?"  Keeping in mind my time spent sympathizing with clients who have said, "I can't believe that I'm getting sued over this. . .," I offer two thoughts.

It's tough to read the heart of a litigant, even one who appears to have been a "knucklehead" in filing a lawsuit.

Initially, there is the thought that a truly "frivolous" lawsuit would be one filed so clearly in bad faith as to leave no doubt that it was instituted as part of an obvious, mean-spirited, and improper attempt to harass or damage an adversary.  That happens from time to time, but it doesn’t really happen very often.  Lawsuits get filed in most cases because of genuine disagreements between parties.  Most courts find it very difficult to determine when a litigant has clearly crossed the line between filing an ill-advised lawsuit and filing a bad faith lawsuit. 

It's tough to read the heart of a litigant, even one who appears to have been a "knucklehead" in filing a lawsuit.  I suspect that this difficulty causes judges to be very hesitant in deeming court cases to be so "frivolous" as to make it fair that one side pay the other side's actual attorneys' fees. 

Courts and judges are asked to be objective and to see both sides of disputes.  That characteristic likely makes it very difficult to be so certain of a knucklehead's heart as to decide to sanction him.

Closely related is the idea that, for all of its flaws, our judicial system is preferable to other methods of solving disputes. 

We go to court instead of shooting each other.  We go to court instead of taking money from each other by force.  We go to court so that independent judges and juries can resolve disputes instead of forcing parties to go nose-to-nose, potentially bringing about much less desirable outcomes. 

As frustrating as being hauled into court can be, the tendency of courts to not penalize parties for using the courts might be viewed as a small price to pay for a dispute resolution system that is far preferable to more damaging alternatives.

 

Topics:  Attorney's Fees, Bad Faith, Corporate Counsel, Frivolous Lawsuits

Published In: Business Torts Updates, Civil Procedure Updates, Civil Remedies Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Varnum LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »