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STATE OF MICHIGAN COURT OF APPEALS

DARLENE M. STARIHA, Plaintiff-Appellant, v CHRYSLER GROUP, L.L.C., f/k/a DAIMLERCHRYSLER CORPORATION, Defendant-Appellee.

UNPUBLISHED June 28, 2012

No. 301238 Oakland Circuit court LC No. 2008-094601 - NZ

Before: WHITBECK, P.J., and JANSEN and K. F. KELLY, JJ. PER CURIAM. Plaintiff, Darlene M. Stariha, appeals as of right from a trial court order assessing attorney fees against defendant, Chrysler Group, L.L.C., f/k/a DaimlerChrysler Corporation, in the amount of $2,000. We affirm. I. BASIC FACTS This action arises out of plaintiff's claim that a vehicle she leased from defendant was defective. On September 17, 2008, plaintiff brought an action against defendant under the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq and the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq. Plaintiff and defendant attempted to settle the case through a series of offers and rejections. On November 10, 2008, defendant sent a letter to plaintiff's counsel, Dani Liblang, stating that defendant was considering repurchasing the vehicle or offering a replacement. On December 3, 2008, defendant emailed Liblang with a formalized offer to repurchase the vehicle for $19,842.31, which would go to Chrysler Financial to satisfy the remaining lease payments, and to reimburse plaintiff in the amount of $4,776.17. The $4,776.17 reflected 12 payments of $302.06 (payments plaintiff had made on the lease), plus $967 (the down payment plaintiff had paid), minus $1,815.55 (mileage offset), plus $2,000 (attorney fees). Approximately a month passed with no response from Liblang. Defendant sent an email on January 2, 2009, indicating that if plaintiff did not reply by January 6, 2008, the offer would be revoked. Defendant also stated that if litigation resulted, defendant would object to paying attorney fees accrued after December 3, 2008. On January 22, 2009, with still no reply, defendant sent a letter to Liblang, informing her that further silence would constitute a rejection of the offer, defendant would oppose any attorney fees after December 3, 2008, and if plaintiff ultimately received a settlement -1-

less favorable than the one offered, defendant would seek attorney fees. extended the closing date of the offer until January 23, 2009.

Defendant also

On January 23, 2009, Liblang sent an email to defendant, stating that while plaintiff was willing to accept the offer to repurchase the vehicle, the issue of attorney fees would prevent the issue from settling. Liblang claimed that when forced to file a lawsuit, her fees were $3,500. She concluded the email by stating, "please do not misunderstand our intentions [as] Plaintiff will accept the portion of your offer regarding a repurchase of the vehicle[,] however, regarding the amount of attorney fees we cannot accept less than $3,500" and if that defendant did not agree, "I suggest we continue with the repurchase part of the offer and permit the Court to decide the issues of Fees and Costs." Defendant replied to Liblang's email, stating that partial acceptance of the offer would constitute a rejection of the offer. On February 2, 2009, defendant sent another email to Liblang, formally rejecting plaintiff's counteroffer to increase the attorney fee to $3,500. Defendant stated that it was willing to increase the original offer of attorney fees to $2,250. Plaintiff rejected this offer, due to the inadequacy of attorney fees. On October 30, 2009, defendant sent another letter to Liblang, stating that defendant was still interested in settling the case. At this point, plaintiff had returned the vehicle because her lease had expired. Defendant's settlement offer was for $11,745.56, representing the total lease payments plaintiff made, with no offset for use. Defendant also stated that it would not offer more than $2,250 in attorney fees and that while the offer was "not contingent upon [the] acceptance of the attorney fee," if plaintiff filed a fee petition, defendant would defend against such an action and "move for an award of attorney fees for having to defend this case unnecessarily." On November 10, 2009, Liblang sent an email to defendant stating that the offer of $11,745.56 was accepted, but that plaintiff intended to "submit the issue of statutory attorney fees and costs to the court for decision." On January 26, 2010, plaintiff filed a motion to enforce the settlement agreement and to assess statutory costs and attorney fees pursuant to the MMWA and the MCPA. Defendant responded that the only reason defendant had not issued a settlement check was because the amount of attorney fees was unsettled. Defendant also alleged that Liblang purposely prolonged settlement negotiations in order to increase attorney fees. On January 27, 2010, defendant filed a motion for attorney fees and sanctions pursuant to MCR 2.114, arguing that Liblang had prolonged the case for the sole purpose of increasing attorney fees. Defendant claimed that since plaintiff unreasonably rejected the offer, discovery was needlessly conducted solely on the issue of attorney fees. On February 3, 2010, the trial court denied defendant's motion for sanctions under MCR 2.114(d). The trial court also ordered that an evidentiary hearing be held regarding the issue of attorney fees. Before the evidentiary hearing occurred, an issue arose concerning plaintiff testifying at the hearing. Plaintiff had testified at a deposition, stating that she had never seen defendant's initial offer. Plaintiff moved to quash the subpoena, claiming that the information defendant was -2-

seeking was confidential communications between Liblang and plaintiff, and thus, was protected by attorney-client privilege . The trial court denied plaintiff's motion, reasoning that it would be impossible to discern whether attorney fees were reasonable if the issue of whether Liblang informed plaintiff of the initial offer was not explored. The evidentiary hearing took place over four different days from April to July 2010. Plaintiff testified that she was not aware of when the initial offer was made, but that she thought she became aware that a settlement offer had been made in January of 2009. Plaintiff did not remember if she knew whether the initial offer included two components, namely, the offer for the vehicle and the offer for attorney fees. Plaintiff did not know that the initial offer was rejected on the basis of inadequate attorney fees; however, plaintiff knew about the initial offer and was satisfied that it was within her counsel's discretion to reject it. Liblang testified that she "absolutely" conveyed all settlement offers to plaintiff, plaintiff rejected the initial offer, and that the ultimate settlement was better for plaintiff because there was no mileage offset. Extensive additional testimony was taken regarding the Liblang's reputation and expertise and the method for arriving at her fees. The trial court assessed Liblang's attorney fees at $2,000. The trial court stated: To observe that this Evidentiary Hearing was exhaustive is an understatement of the first order. The parties raised a comprehensive array of perplexing issues, including the propriety of certain evidence with regard to the determination of the reasonable hourly fee, the propriety of a flat fee, the propriety of the paralegal fees, the propriety of the scope of work undertaken under the circumstances, the applicability of various attorney fee surveys, and a host of other matters. Yet, nearly all of these intriguing issues have been rendered moot by the Plaintiff's counsel's failure to appropriately inform her client of a good faith settlement offer made by the Defendant early in the proceedings. This failure to convey the offer appropriately led to rejection of the offer, which in turn, led to the needless incurring of substantial attorney fees in litigating the case. To allow the Plaintiff to recover attorney fees which would never have been incurred but for her failure to meet the basic obligations as counsel would be a grave injustice and turn the system of fee recoveries topsy-turvy. Such fees are anything but reasonable. The finding of fact leading to this conclusion was that: [Liblang] did not fully convey the terms of the offer to her client. [Liblang] did not share the offer letter with her client, and instead recommended against accepting the offer solely on [Liblang's] belief that the attorney fees were insufficient. Despite that being the sole reason why she recommended against accepting the offer to her client, [Liblang] did not reveal or otherwise explain that reasoning to the client. Because the real reason for rejecting the offer was hidden from the client, the Plaintiff rejected the offer. In other words, the Plaintiff would have accepted the offer had she fully understood its terms but rejected it based solely on the advice of her counsel who concealed the real reason she was advising against its acceptance. -3-

Plaintiff filed a motion for reconsideration, arguing that the trial court erroneously concluded that plaintiff was not fully informed of the initial offer. Plaintiff also attached her affidavit, stating that she was aware of the initial offer, was fully informed about the issue of attorney fees, and rejected the offer because $2,000 would not cover her attorney's actual costs. The trial court denied plaintiff's motion: For all of its bluster, the 14 page brief misses the fundamental point of the Court's ruling: but for Liblang's misconduct, the client would have accepted a $2000 attorney fee award. Accordingly, all attorney fees incurred thereafter were not reasonably incurred. None of the remedial purposes of the various state and federal statutes proffered by the Plaintiff require this Court to order the Defendant to pay for fees and expenses unreasonably incurred because of Liblang's failure to fully inform her client of the full terms of the settlement offer. That would be rewarding inappropriate behavior

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Michigan Law