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Law Firm Is Jointly & Severally Liable For Attorney Fee Sanctions

Posted on Wednesday, December 16, 2020

A trial court properly 1) ordered the defendant in this divorce action to pay the plaintiff’s attorney fees as a sanction and 2) held the defendant’s former legal counsel jointly and severally liable for the attorney fees, the Michigan Court of Appeals has ruled.

In Barbu v Barbu (Docket Nos. 352934 and 352975), the Macomb County Circuit Court awarded the plaintiff $10,697.50 in attorney fees. The trial court also held the defendant’s former legal counsel, the law firm of Neda, Camaj & Fakhouri, PC, jointly and severally liable for the fees. The law firm appealed the ruling.

The Court of Appeals affirmed.

“The trial court’s findings were not clearly erroneous,” the Court of Appeals wrote. “The record supports a finding that appellants filed multiple motions that advanced frivolous positions and that were part of an effort to injure plaintiff by increasing the costs of litigation.”

Judges Mark T. Boonstra, Mark J. Cavanagh and Stephen L. Borrello were on the panel that issued the unpublished opinion.

Background

The parties were married in 2013 and have two children together. The plaintiff has always lived in Michigan and the defendant is from the Republic of Serbia. In 2015, the defendant was deported to Serbia following multiple felony convictions in Michigan.

In 2018, the plaintiff filed this divorce action. After the plaintiff unsuccessfully tried to serve process on the defendant in Serbia through international mail and Federal Express, the trial court granted the plaintiff’s motion for a second summons and an order allowing alternative service on the defendant by scanning and sending the summons and complaint via text message to the defendant’s cell telephone. The defendant was successfully served in this manner. When the defendant failed to respond timely to the complaint, a default was ordered.

Thereafter, the defendant retained the law firm of Neda, Camaj & Fakhouri, PC (the appellants in this case) as his counsel. A motion was filed to dismiss the divorce action on the ground that the defendant was not properly served. The trial court denied the motion to dismiss. The plaintiff then moved for entry of a default judgment of divorce and the defendant moved to set aside the default. Ultimately, the trial court denied the motion to set aside the default and entered a default judgment of divorce on November 5, 2018, reserving the issue of the plaintiff’s request for attorney fees.

An evidentiary hearing was held on January 2, 2019, on the attorney fee issue. The trial court ruled in favor of the plaintiff. The defendant then discharged Neda, Camaj & Fakhouri, PC, and retained new legal counsel. After retaining new counsel, the defendant withdrew all challenges to the attorney fee ruling. On its own behalf, the law firm continued to challenge the attorney fee ruling.

A few months later, the trial court entered an order granting the plaintiff’s motion for attorney fees. The trial court also entered a judgment holding the law firm jointly and severally liable with the defendant for the attorney fee award.

Joint & Several Liability

On appeal, the appellant-law firm first argued the order should be vacated because the trial court never acquired personal jurisdiction over the defendant and, therefore, the case should have been dismissed before the default judgment of divorce was entered.

“Appellants’ argument fails,” the Court of Appeals said. “Defendant, through appellants, waived any challenge to the propriety of service of process on him and to the trial court’s exercise of personal jurisdiction over him. Defendant submitted to the trial court’s authority by filing his October 5, 2018 motion for a mutual restraining order and by agreeing to the October 15, 2018 mutual restraining order that the trial court entered. Defendant thereby availed himself of the trial court’s jurisdiction by seeking relief from the trial court and implicitly consented to the trial court’s exercise of personal jurisdiction over him. Moreover, at the November 5, 2018 hearing, Camaj, on behalf of defendant, expressly waived any challenges to the service of process on defendant and to the trial court’s exercise of personal jurisdiction over him. … Because defendant, through appellants, waived any challenges to service of process and to personal jurisdiction, appellants’ argument that the case should have been dismissed and that the April 12, 2019 order and judgment must be vacated are devoid of merit.”

Next, the law firm asserted that, after the default divorce judgment was entered, the trial court lacked jurisdiction to consider the plaintiff’s motion for attorney fees and, as a result, the April 12, 2019 order and judgment were void.

“Appellants argue that the trial court did not retain jurisdiction to rule on the attorney fee issue after the entry of the default judgment of divorce,” the Court of Appeals noted. “Appellants are mistaken.”

Citing MCR 3.206(D), MCR 1.109(E)(6) and MCL 600.2591, the Court of Appeals pointed out that, when the trial court entered the default judgment of divorce, it “expressly reserved for later” its resolution of the plaintiff’s request for attorney fees. “In short, appellants’ argument is premised on a misunderstanding of the record.”

The law firm further argued that it could not be ordered to pay the plaintiff’s attorney fees under MCL 552.13(1) or MCR 3.206(D). “Appellants’ argument is unavailing,” the Court of Appeals said. “Appellants are correct that they could not be ordered to pay plaintiff’s attorney fees under MCL 552.13(1) or MCR 3.206(D). … But the trial court never said that it was ordering appellants to pay plaintiff’s attorney fees under MCL 552.13(1) or MCR 3.206(D). The court’s attorney fee award was also independently based on MCR 1.109(E)(6) and MCL 600.2591 because defendant asserted frivolous positions in documents signed and filed by appellants on behalf of defendant. … Accordingly, appellants’ argument on this issue fails. Although appellants are correct that they could not be ordered to pay plaintiff’s attorney fees under MCL 552.13(1) or MCR 3.206(D), the trial court never said that it was holding appellants jointly and severally liable under those provisions. The trial court’s award of attorney fees was independently based on MCR 1.109(E)(6) and MCL 600.2591, and under those provisions, the trial court may impose sanctions against a party’s attorney and hold the attorney jointly and severally liable with the party for the sanctions.”

Lastly, the law firm argued the trial court erroneously imposed sanctions under MCR 1.109(E)(6) and MCL 600.2591.

“We disagree,” the Court of Appeals wrote. “The trial court announced its findings on this issue at the conclusion of the January 2, 2019 evidentiary hearing. The court noted that it had authorized substituted service in a manner reasonably calculated to provide defendant with actual notice of the case; such notice was in fact achieved because defendant communicated to plaintiff that he was aware of the divorce action. Defendant’s motion to dismiss the case or quash service of process was meant to harass or injure plaintiff, and the legal position asserted in that motion was devoid of arguable legal merit. It was also frivolous for defendant to keep contesting the court’s jurisdiction after having availed himself of the court’s jurisdiction by seeking a restraining order. … Overall, the court found grounds to award costs and attorney fees as requested by plaintiff and stated that it was awarding the requested costs and fees. Further, in its February 21, 2020 order denying appellants’ motion for reconsideration, the trial court again expressed agreement with plaintiff that defendant’s motion to dismiss or quash service of process was frivolous and comprised part of an effort to increase the cost of litigation for plaintiff.”

In conclusion, the Court of Appeals held that the trial court’s findings were not clearly erroneous. “Overall, the record supports the trial court’s findings regarding frivolousness. Appellants signed documents and asserted arguments and positions that were devoid of arguable legal merit and that were not properly grounded in fact or law. Defendant’s communications to plaintiff support a reasonable inference that there was an effort to injure or harass plaintiff or cause a needless increase in the cost of litigation for plaintiff. The trial court did not clearly err in its findings when imposing sanctions under MCR 1.109(E)(6) and MCL 600.2591.”

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