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Hankins v. City of Inkster

United States District Court, E.D. Michigan, Southern Division

May 16, 2018

John P. Hankins, Plaintiff,
City of Inkster, et al., Defendants.

          R. Steven Whalen, U.S. Magistrate Judge


          Arthur J. Tarnow, Senior United States District Judge

         Plaintiff John P. Hankins filed a Complaint [Dkt. 1] against Defendants City of Inkster and Gregory Gaskin on August 27, 2009, alleging discrimination in violation of federal and state law; violation of the Michigan Whistleblower's Protection Act; violation of the Michigan Open Meetings Act; conspiracy; intentional infliction of emotional distress; and hostile work environment. The case settled, and the settlement agreement was placed on the record on February 21, 2012.

         Plaintiff filed the Motion for Attorney Fees and Costs [109] on April 26, 2012. The Court administratively terminated Plaintiff's motion on March 27, 2013 [140]. The Magistrate Judge entered an Order Reopening the Case [153] on March 7, 2016.

         On December 8, 2017, the Magistrate Judge issued a Report and Recommendation (“R&R”) [155] recommending that the Court grant Plaintiff's Motion for Attorney Fees and Costs. Specifically, the Magistrate Judge opined that the attorney fee should be divided between Barry Seifman and Raymond Guzall, with Mr. Guzall receiving 25% plus an additional $24, 000.00, and Mr. Seifman receiving the remainder.

         Plaintiff filed an Objection [156] to the R&R on December 21, 2017. The R&R and Objection have been fully briefed.

         For the reasons explained in depth below, the Court ADOPTS the R&R. Plaintiff's Objection [156] is OVERRULED. Plaintiff's Motion for Attorney Fees and Costs [109] is GRANTED.

         The Report and Recommendation

         The R&R summarized the record as follows:

         I. FACTS

         A. Procedural History

Plaintiff was a police officer employed by the City of Inkster. On August 27, 2009, he filed a civil complaint in this Court that included allegations of employment discrimination and retaliation [Doc. #1]. On April 10, 2010, he filed an amended complaint [Doc. #12]. Attorney Raymond Guzall III signed both the original and the amended complaint on behalf of Seifman & Guzall, P.C., the firm that Mr. Hankins retained to represent him in his case. On February 21, 2012, the case settled.[1] The present dispute over the attorney fee stems from the fact that before the settlement, Mr. Guzall left Seifman & Guzall, P.C., and continued his representation of Mr. Hankins, at Mr. Hankins' request, through his own law firm, Raymond Guzall, P.C.
On April 26, 2012, Plaintiff filed the present Motion for Determination of Attorney Fees [Doc. #109]. On May 2, 2012, the Court ordered the Defendant to remit the funds representing the attorney fees to the Clerk of the Court “for deposit in an interest-bearing escrow account in accordance [with] Local Rule 67.1.” [Doc. #112]. On the same date, the Court granted Barry Seifman's motion to intervene as a third party plaintiff [Doc. #113], and denied Plaintiff Hankins' motion to strike Mr. Seifman's motion to intervene [Doc. #112]. Mr. Seifman filed his third party complaint on May 4, 2012 [Doc. #115].
I held a status conference on October 2, 2012, at which a separate Oakland County lawsuit between Mr. Guzall and Mr. Seifman was discussed. In my Order Regarding Evidentiary Hearing [Doc. #132], I noted that “I would not permit testimony as to Mr. Guzall's allegations of pervasive wrongdoing by Mr. Seifman unrelated to this case, allegations that form the basis of a separate lawsuit pending in the Oakland County Circuit Court.” I added that “[w]e will not try the Oakland County lawsuit de facto in the context of this evidentiary hearing on attorney fees.” On March 26, 2013, I held a settlement conference, but a resolution could not be reached.
On March 27, 2013, the Court administratively terminated this motion and held it in abeyance, permitting the motion to be reopened following the resolution of the Oakland County Circuit Court case [Doc. #140]. The case was reopened on March 7, 2016 [Doc. #153].

         B. Evidentiary Hearing Testimony

John Hankins, the Plaintiff, testified that he signed a retainer agreement with Seifman & Guzall, P.C. around July of 2009 (Tr. 25-26). The agreement provided for a 1/3 contingency fee to be paid to that law firm (Tr. 13). From the beginning, he wanted Mr. Guzall to handle his case (Tr. 40), and sometime before December of 2011 he expressed to Mr. Guzall his dissatisfaction with Mr. Seifman (Tr. 31-32, 34). After Mr. Seifman recommended accepting a settlement offer from the City of Inskter, Mr. Hankins, finding the offer unacceptable, told Mr. Guzall that he did not want Mr. Seifman to represent him (Tr. 22). Before Christmas of 2011, he and Mr. Guzall discussed the possibility that Mr. Guzall would part company with Mr. Seifman and either start his own law firm or join another firm (Tr. 29). Mr. Guzall initiated this conversation (Tr. 30). When Mr. Hankins was informed that Mr. Guzall was starting his own firm, he told Guzall that he wanted to stay with him (Tr. 34-35). This was about two months before the scheduled trial, and Mr. Hankins did not want a new attorney to come in that late in the game (Tr. 41). Mr. Hankins testified that he wanted Mr. Guzall to handle his case regardless of whether he stayed with or left Seifman & Guzall (Tr. 40). He signed a retainer agreement with the newly-formed Law Office of Raymond Guzall, III on February 13, 2012 (Tr. 16-17). The agreement provided for a one-third contingency fee (Tr. 13, 25).
Mr. Hankins testified that he never verbally told Mr. Seifman that he no longer wanted the firm to represent him, but that he mailed a letter to that effect on January 12, 2012 (Tr. 22-24). The case settled in February of 2012, and Mr. Hankins has received all of the settlement money he was entitled to (Tr. 29).
Raymond Guzall testified that he was a shareholder in Seifman & Guzall, P.C. from 2006 until he left the firm on February 6, 2012 (Tr. 42). The first shareholder agreement (Seifman Exhibit #3) gave Mr. Guzall a 5% ownership share. The agreement provided for an annual salary of $100, 000 for Mr. Guzall, and also stated:
“Division of any surplus above salaries may occur when, in the judgment of Barry A. Seifman, adequate funds are available consistent with the respective ownership interests.” (Tr. 54-55).
In addition, the agreement stated:
“In the event there appears in the judgment of Barry A. Seifman, a situation wherein it appears that the owners cannot get along, or Raymond Guzall III seeks to separate from the Company, he shall be paid the sum of Five Dollars ($5.00) for his stock ownership and all files shall remain the property of the Company.”
Over time, the agreement was amended to incrementally increase Mr. Guzall's ownership share, and before he left the firm, Mr. Guzall's ownership had increased to 25% (Tr. 55-59, 66). Mr. Guzall testified that he did not interpret the shareholder agreement as a “fee-splitting agreement, ” although he sometimes got ...

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