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“FIXED BY THE COURT”

In Barton-Spencer v. Farm Bureau Life Ins Co of Michigan, ____ Mich ____ (2014) (Case Nos. 153655 and 153656, April 14, 2017), the Michigan Supreme Court recently held that by signing a contract providing for attorney fees and costs “as may be fixed by the court”, the parties agreed to have the amount of reasonable attorney fees and costs decided by the judge and not a jury.

The plaintiff in Barton-Spencer was an independent insurance agent for Farm Bureau Insurance and signed an agent agreement that provided:

Attorneys Fees and Costs. If the Companies are successful in any suit or proceeding against the Agent brought to enforce any provision of this agreement, or brought to establish damages sustained by the Companies as a result of the Agent’s violation of any provision of this Agreement, the Agent agrees to reimburse the Companies’ attorney fees and costs as may be fixed by the court in which such suit or proceeding is brought.

Farm Bureau eventually terminated the agent agreement alleging the plaintiff had made misrepresentations to 11 insurance clients regarding the tax consequences of moving funds into a specific type of insurance policy. Farm Bureau canceled those policies and refunded the premiums to the 11 clients.

The plaintiff sued Farm Bureau alleging breach of contract due to unpaid commissions, violation of the Michigan Consumer Protection Act and age discrimination. The plaintiff demanded a jury trial on “all issues in this cause unless expressly waived.” Farm Bureau filed a counterclaim to recover commissions paid to the plaintiff on the 11 cancelled policies and sought to recover its attorney fees and costs under the agent agreement. Farm Bureau also requested a jury trial “with respect to all issues to which trial before a jury is applicable.“ The jury found the plaintiff was entitled to recover certain unpaid commissions. The jury additionally found for Farm Bureau on its counterclaim to recover the commissions paid to the plaintiff on the 11 cancelled policies.

Farm Bureau filed a post-judgment motion seeking contractual attorney fees. The plaintiff argued the request should have been submitted to the jury and that he had a constitutional right to a jury trial on the issue of the reasonableness of the attorney fees. The trial court granted the motion and awarded attorney fees and costs to Farm Bureau. The plaintiff appealed.

The Court of Appeals reversed, rejecting Farm Bureau’s argument that the “fixed by the court” language required the issue to be decided by a judge rather than a jury. Rather, the Court of Appeals found the plaintiff had a constitutional right to a jury trial on the issue and that he had not expressly waived that right under the language in the agent agreement. The Michigan Supreme Court reversed the Court of Appeals and reinstituted the trial court’s award of attorney fees and costs.

The Supreme Court noted that “[t]he relevant question now presented to the Court is whether, by agreeing that attorney fees and costs would be “fixed by the court,” the parties agreed that attorney fees would be fixed by a judge rather than a jury.” (Opinion at p.7.) The Court held this is exactly what the agent agreement required. The Court noted that in both “ordinary parlance” and legal opinions, the word “court” refers to judges. Id. As such, the Court held:

The phrase “fixed by the court” is not ambiguous. When the parties agreed to this provision, they agreed that the amount of attorney fees and costs would be fixed by a judge rather than by a jury. [Opinion at p.8.]

The Court therefore reversed the Court of Appeals and reinstated the trial court’s award of attorney fees and costs.

Do you or your client have a contract providing for attorney fees and costs to be “fixed by the court”? If so, under Barton-Spencer the amount of those attorney fees and costs is to be decided by a judge and not a jury. The fix is in.


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