Michigan Court Of Appeals Holds Attorney Fee Award Not A Money Judgment Subject To Interest Under MCR 2.405

On April 16, 2015, the Michigan Court of Appeals held in a civil case that a post-judgment award of attorney fees is not subject to post-judgment interest under MCL 600.6013. 

In Lech v Huntmore Estates Condo Ass'n, Docket No. 320028, the Michigan Court of Appeals addressed the question of whether a trial court's award of attorney fees is subject to post-judgment interest as a money judgment. In some civil cases, parties who win money judgments are sometimes entitled to interest in addition to the principal amount of the judgment itself.

The Court first recited the facts of the case.

In December 2008, Lech filed a complaint against the developers and Huntmore Estates Condominium Association in which he alleged claims of slander of title, violation of the Michigan condominium act, and tortious interference with a business relationship. On June 10, 2009, the developers filed an offer of judgment for $5000. Lech effectively rejected the offer by failing to respond to it within 21 days.

The trial court later granted summary disposition to the developers and awarded them attorney fees under MCR 2.405 because of Lech’s refusal of the offer of judgment. After Lech appealed, a panel of this Court reversed the trial court’s grant of summary disposition on some of Lech’s claims. Lech v Huntmore Estates Condo Ass’n, unpublished opinion per curiam of the Court of Appeals, issued October 6, 2011 (Docket Nos. 296489 and 297196). The developers appealed to the Michigan Supreme Court, which reversed this Court’s decision, reinstated the trial court’s grant of summary disposition, and remanded for this Court to consider Lech’s sanctions issue. Lech v Huntmore Estates Condo Ass’n, 491 Mich 937; 815 NW2d 127, modified on reconsideration by 493 Mich 921 (2012). On remand, this Court determined that the trial court calculated the offer of judgment sanctions from an incorrect date and remanded to the trial court for a new calculation. Lech v Huntmore Estates Condo Ass’n (On Remand), unpublished opinion per curiam of the Court of Appeals, issued August 6, 2013 (Docket No. 297196).

On remand, the parties stipulated to reduce the trial court’s sanctions award to $36,337.90, but disputed whether the developers were entitled to judgment interest or attorney fees that the developers incurred as a result of the appeals. The trial court relied on Haliw v Sterling Hts, 471 Mich 700; 691 NW2d 753 (2005), in which the Michigan Supreme Court held that actual costs for case evaluation sanctions under MCR 2.403 do not include appellate attorney fees, and determined that the developers were not entitled to appellate attorney fees under MCR 2.405. But the trial court determined that the developers were entitled to statutory judgment interest under MCL 600.6013, and it awarded the developers $5,230.16 in interest . . .

The Court then addressed the issue of whether the trial court erred in granting post-judgment interest on the attorney fee award.

Lech contends that the trial court erred by applying the judgment-interest statute to the sanctions award in this case because a sanction award is not a money judgment in a civil case. We agree.

The developers requested judgment interest under MCL 600.6013. MCL 600.6013(1) provides that “[i]nterest is allowed on a money judgment recovered in a civil action, as provided in this section.” A money judgment in a civil action is a judgment “that orders the payment of a sum of money, as distinguished from an order directing an act to be done or property to be restored or transferred.” In re Forfeiture of $176,598, 465 Mich 382, 386; 633 NW2d 367 (2001). There are several types of civil awards that are not a “money judgment in a civil action,” including money awards in drug forfeiture, divorce judgments, awards of back pay for wrongful discharge, and awards reflecting payment of a forced share in an estate. Id. at 388.

We conclude that a sanctions award is properly characterized as an order directing that an act be done instead of a money judgment in a civil action. Sanctions awards to collect attorney fees and costs are post-judgment proceedings. See Fraser Trebilcock Davis & Dunlap PC v Boyce Trust 2350, 304 Mich App 174, 219; 850 NW2d 537 (2014). A party files and serves its request for costs after entry of the judgment. MCR 2.405(D)(6). Such proceedings, by their very nature, come after any money judgment that might be entered. Accordingly, a sanctions award is not a money judgment in a civil action. Rather, it is an order of the court directing a party to do an act—specifically, to pay the other party’s attorney fees and costs.

In this case, the trial court applied MCL 600.6013 to award the developers $5,230.16 in interest. Because this case concerned a post-judgment proceeding to collect sanctions, we conclude that its decision was improper. We therefore reverse the trial court’s interest award . . .