In this divorce action, the Michigan Court of Appeals held that the trial court did not abuse its discretion by: 1) awarding the ex-wife attorney fees, 2) including newly vested stock in the total vested stock to be divided between the parties and 3) modifying the spousal support award and divorce judgment to order the ex-husband to purchase a life insurance policy naming the ex-wife as the beneficiary.

However, the Court of Appeals remanded the case for the trial court to state why it denied the ex-wife’s motion for additional attorney fees. 

In Sullivan v Sullivan (Docket Nos. 348309 and 350531), the Livingston County Circuit Court, pursuant to a prior remand order, awarded the defendant ex-wife half the value of the parties’ stock, as well as spousal support and attorney fees. The trial court, however, denied the ex-wife’s motion for reconsideration on the issue of additional attorney fees. Both parties appealed.

The Court of Appeals rejected the plaintiff’s argument that the trial court improperly awarded the defendant attorney fees but also found the trial court failed to state its reasoning for not awarding the defendant additional attorney fees.

“[O]n remand the trial court in this case did not explain on the record the reason for denying the additional attorney fees sought by defendant,” the Court of Appeals said. “Although it was within the trial court’s discretion to grant less than the amount sought by defendant, the trial court failed to create a record for review by this Court and failed to support its decision by findings. We therefore remand that issue for the trial court to state the basis for its decision on defendant’s request for additional attorney fees.”

Judge Michael F. Gadola, Amy Ronayne Krause and Colleen A. O’Brien were on the panel that issued the unpublished opinion.

Attorney Fees

The plaintiff argued on appeal that the trial court erred by awarding the defendant attorney fees of $38,075. The plaintiff claimed the defendant did not demonstrate a basis for the fees or the reasonableness of the fees, and that the trial court failed to make findings when awarding the fees.

The defendant, on the other hand, argued that the plaintiff failed to challenge the reasonableness of the attorney fees in the trial court and, therefore, was precluded from raising that challenge for the first time on appeal. The defendant maintained the trial court properly awarded her attorney fees from June 12, 2018 but should have also awarded her attorney fees from January 12, 2015, to June 12, 2018.

Noting that Michigan follows the “American Rule” when awarding attorney fees, the Court of Appeals explained that, to justify an award of fees under MCR 3.206(D)(2)(b), a trial court must specifically find that a party violated a court order or engaged in misconduct. “When awarding attorney fees, the trial court also is required to determine the reasonableness of the fee requested.”

In this case, the plaintiff claimed the defendant failed to identify the basis for her request for attorney fees. “We disagree,” the Court of Appeals wrote. “This Court … identified that defendant sought attorney fees under then MCR 3.206(C)(2)(b) on the basis that plaintiff had failed to comply with the trial court’s order, and remanded to the trial court for determination of that issue. On remand, the trial court entered an interim order scheduling an evidentiary hearing and describing the scope of the remand, and specifically stating that ‘the Court will review the issue of attorney fees as a result of nondisclosure of assets by Plaintiff.’ The record therefore supports the finding that defendant sought attorney fees under MCR 3.206(D)(2)(b), and that the trial court awarded attorney fees under MCR 3.206(D)(2)(b).”

Next, the plaintiff argued the defendant failed to present evidence that the amount of attorney fees requested was reasonable. “At the evidentiary hearing held on remand, defense counsel testified that he was licensed to practice law in Michigan, and that the exhibits filed demonstrating the amount of attorney fees expended were ‘accurate and honest,’” the Court of Appeals stated. “Because defendant provided information of the hourly rate, number of hours worked, and the purpose of the fees expended, defendant submitted sufficient relevant documentation to support her request for attorney fees.”

In addition, the defendant challenged the reasonableness of the requested fees. “Plaintiff, however, points to no place in the record where he challenged the reasonableness of defense counsel’s hourly rate or the amount of hours expended,” the Court of Appeals wrote. “Although plaintiff’s counsel stated during the evidentiary hearing that he was not stipulating to the reasonableness of the fees, plaintiff did not actually challenge the reasonableness of the fees sought.”

Meanwhile, the defendant argued she was entitled to additional attorney fees that she had incurred from 2015 to 2018 as a result of the plaintiff’s misrepresentations about his vested stock. “As this Court observed when this case was before it in 2018, then MCR 3.206(C)(2) provided that a party in a domestic relations action may request attorney fees incurred because the other party failed to comply with a court order,” the Court of Appeals said. “But although the court rule permits an award of attorney fees it does not require that attorney fees be awarded, even if incurred because of an unjustified refusal to comply with a court order.”

On remand, however, the trial court “did not explain on the record the reason for denying the additional attorney fees sought by defendant,” the Court of Appeals observed. “Although it was within the trial court’s discretion to grant less than the amount sought by defendant, the trial court failed to create a record for review by this Court and failed to support its decision by findings. We therefore remand that issue for the trial court to state the basis for its decision on defendant’s request for additional attorney fees.”

The Court of Appeals concluded: “The trial court did not abuse its discretion by awarding defendant attorney fees. Although the trial court failed to determine on the record the reasonableness of the fees awarded, plaintiff’s failure to challenge the reasonableness of the attorney fees before the trial court renders this issue unpreserved, and we decline to reach it. The trial court also did not abuse its discretion by including the newly-vested Ramco stock in the total vested stock to be divided between the parties. Similarly, the trial court did not abuse its discretion in modifying the award of spousal support, nor by modifying the judgment of divorce to order plaintiff to obtain a life insurance policy naming defendant as the beneficiary to secure the spousal support award. With regard to defendant’s argument that she is entitled to additional attorney fees, however, the trial court failed to state its findings and reasoning on this issue. We remand for the trial court to state its reasoning for its determination of defendant’s assertion that she is entitled to additional attorney fees.”