LAWLEY v. SIEMONS
ORDER denying 48 Motion for Attorney Fees. Signed by District Judge Lawrence P. Zatkoff. (MVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
CASE NO. 11-12822
HON. LAWRENCE P. ZATKOFF
ALLAN JERRY SIEMONS,
OPINION AND ORDER
AT A SESSION of said Court, held in the United States Courthouse,
in the City of Port Huron, State of Michigan, on January 15, 2014.
PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF
UNITED STATES DISTRICT JUDGE
This matter is before the Court on Defendant’s Motion for Costs and Attorney’s Fees [dkt 48].
Plaintiff filed a response, but Defendant did not file a reply. The Court finds that the facts and legal
arguments are adequately presented in the parties’ papers such that the decision process would not be
significantly aided by oral argument. Therefore, pursuant to E.D. Mich. L.R. 7.1(f)(2), it is hereby
ORDERED that the motion be resolved on the briefs submitted. For the following reasons, Defendant’s
motion is DENIED.
This case arose from Defendant’s alleged breach of an oral contract between Plaintiff and
Defendant. Plaintiff alleged that the oral contract involved Defendant’s promise to pay a portion of the
proceeds Defendant received for redemption of Defendant’s shares of stock in Event Solutions
International, Inc. (“ESI”). Plaintiff claimed that this promise was in exchange for Plaintiff introducing
Defendant to business contacts in 1998 and approving Defendant’s ownership interest in ESI.
Plaintiff filed a complaint against Defendant, seeking 50% of the proceeds Defendant received
for redemption of his shares of stock in ESI. Plaintiff asserted three counts: breach of an express oral
contract (Count I); breach of an implied contract (Count II); and unjust enrichment (Count III).
Defendant filed a motion to dismiss all three counts in Plaintiff’s complaint on September 28,
2011. In its November 30, 2011, Opinion and Order, the Court dismissed Counts I and II because
Defendant’s alleged promise to pay Plaintiff 50% of his stock redemption proceeds was not supported by
sufficient legal consideration. The Court did find, however, when reviewing the complaint in the light
most favorable to Plaintiff, that Plaintiff’s unjust enrichment claim was sufficiently pled to survive
On January 22, 2013, the Court commenced trial on Plaintiff’s remaining claim for unjust
enrichment. Trial continued through January 25, 2013, at which time both parties requested a recess.
Trial resumed, and concluded, on February 5, 2013. Following the bench trial, the Court issued an
Opinion and Order finding that Plaintiff failed to prove by a preponderance of the evidence his theory of
unjust enrichment. See Dkt. # 46.
Defendant now moves the Court for a ruling that Plaintiff’s action was frivolous and for an award
of attorney’s fees and costs.
Defendant’s motion contends that he is entitled to attorney’s fees and costs pursuant to Mich.
Comp. Laws § 600.2591(1). Defendant purportedly believes that Plaintiff had “no reasonable basis” to
file his complaint and, in any event, that the continuance of his position was “devoid of arguable legal
merit.” For the reasons that follow, the Court fails to agree.
I. PROCEDURAL FAILURE
According to local rules within this District, Defendant was required to file a motion for
attorney’s fees and related non-taxable expenses under Fed. R. Civ. P. 54(d)(2) no later than 28 days after
entry of judgment. See E.D. Mich. LR 54.1.2(a). The Court entered judgment in this case in favor of
Defendant on March 13, 2013. Yet, Defendant filed the instant motion on April 11, 2013—more than 28
days after judgment. In other words, Defendant failed to adhere to the time limits imposed by E.D. Mich.
LR 54.1.2(a) and therefore his motion is procedurally defective.
Nevertheless, in the interests of justice the Court will consider the substance of Defendant’s
II. ATTORNEY’S FEES AND COSTS
Under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), a federal court sitting in diversity must
apply state substantive law and federal procedural law. Even more relevant, the Supreme Court has also
observed that “ ‘[i]n an ordinary diversity case where the state law does not run counter to a valid federal
statute, . . . state law denying the right to attorney’s fees or giving a right thereto, which reflects a
substantial policy of the state, should be followed.’” Alyeska Pipeline Co. v. Wilderness Soc’y, 421 U.S.
240, 260 n.1 (1975) (citation omitted).
Defendant argues that Plaintiff’s litigation conduct was frivolous and seeks an award of attorney’s
fees and costs under the general Michigan statute providing for attorney’s fees in frivolous
actions. Mich. Comp. Laws § 600.2591 dictates that a court may award reasonable attorney’s fees to any
party adversely affected by frivolous conduct. The statute defines “frivolous” in pertinent part as: “the
party had no reasonable basis to believe that the facts underlying that party’s legal position were in fact
true;” and “the party’s legal position was devoid of arguable legal merit.” Mich. Comp. Laws §
600.2591(3)(ii) and (iii). The Court finds Defendant’s reliance on this statute misplaced.
First, the statute is inapplicable in federal court. Though attorney’s fee issues in a diversity case
generally hinge on state law, this is only true when the state law at issue is substantive in nature. The state
law here—Mich. Comp. Laws § 600.2591—does not neatly fall within that category. Considering an
Ohio statute similar to Mich. Comp. Laws § 600.2591, the Sixth Circuit explained that the Ohio
attorney’s fee provision “is a general statute that allows for the award of attorney fees based upon the
conduct of the parties and the attorneys in filing and litigating the claim, rather than for success on the
underlying merits of the claim.” First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501,
529 (6th Cir. 2002). There, the court concluded that the statute authorizing an award of attorney’s fees for
frivolous conduct was procedural in nature and, accordingly, Fed. R. Civ. P. 11 “govern[ed] the award of
sanctions for frivolous conduct.” Id. The court further noted a conflict between Fed. R. Civ. P. 11 and
the Ohio statute, in that “Rule 11 contains a twenty-one day safe harbor provision but that Ohio statute
does not.” Id. So, the panel opined, even if the Ohio statute was substantive in nature it conflicted with
Fed. R. Civ. P. 11’s safe harbor provision and, therefore, should not be applied in federal court.1
Similar to the court’s reasoning in Hartford, the Court determines that Mich. Comp. Laws §
600.2591 is procedural in nature and is not based on the success of the underlying claim, but rather
depends on the conduct of the parties and attorneys litigating the claim. And, much like the court held in
Hartford, this Court finds Mich. Comp. Laws § 600.2591 to be inapposite here. Thus, Defendant should
have instead sought his requested relief under Fed. R. Civ. P. 11.
Second, even assuming that Mich. Comp. Laws § 600.2591 applied or that Defendant had
properly moved the Court pursuant to Fed. R. Civ. P. 11, Defendant is not entitled to attorney’s fees under
either § 600.2591 or Rule 11 because Plaintiff’s action was not frivolous. As discussed in previous
The safe harbor aspect of Fed. R. Civ. P. 11 is described as follows: “The motion must be served under Rule 5, but it must not
be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately
corrected within 21 days after service or within another time the court sets.” Fed. R. Civ. P. 11(c)(2). Put another way, Fed. R.
Civ. P. 11 has a safe harbor provision that requires any motion for sanctions to be filed on a party 21 days before the motion is
filed with the court.
opinions, the Court dismissed Counts I and II of Plaintiff’s complaint because “Plaintiff’s assertions that
introducing Defendant to business contacts and approving Defendant’s 30% interest in ESI in 1998 [were
not] valid consideration for an alleged oral promise” to pay Plaintiff half of Defendant’s stock redemption
proceeds. The Court found Defendant’s statements to be merely gratuitous and, if Plaintiff’s actions
constituted consideration at all, they would be deemed past consideration.
arguments otherwise, the Court’s dismissal of Counts I and II does not necessarily mean that such
theories were devoid of arguable legal merit. See Jerico Const., Inc. v. Quadrants, Inc., 257 Mich. App.
22, 36 (2003) (“Not every error in legal analysis constitutes a frivolous position”) (citation omitted). The
Court has thoroughly reviewed the allegations and evidence surrounding Counts I and II in Plaintiff’s
complaint and concludes that the decision to plead such causes of action was not frivolous.
Moreover, any attempt by Defendant to label as frivolous Plaintiff’s decision to ultimately take
Count III—unjust enrichment—to trial is disingenuous at best. Plaintiff’s unjust enrichment claim
survived Defendant’s motion to dismiss. Additionally, Defendant had ample opportunities to file a
motion for summary judgment on that claim but failed to do so. Plaintiff’s inability to prove its case by a
preponderance of evidence—after five days of trial, testimony from four witnesses, and admission of 78
exhibits—does not, in itself, merit a finding that his unjust enrichment claim was frivolous. As such, even
if Mich. Comp. Laws § 600.2591 was otherwise applicable or Fed. R. Civ. P. 11 was relied upon,
Plaintiff’s lawsuit was not “frivolous” as defined by that statute and federal rule.
Accordingly, for the reasons stated above, IT IS HEREBY ORDERED that Defendant’s Motion
for Costs and Attorney’s Fees [dkt 48] is DENIED.
IT IS SO ORDERED.
Date: January 15, 2014
s/Lawrence P. Zatkoff
Hon. Lawrence P. Zatkoff
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