United States District Court, E.D. Michigan, Southern Division
John P. Hankins, Plaintiff,
City of Inkster, et al., Defendants.
Steven Whalen, U.S. Magistrate Judge
ORDER ADOPTING REPORT AND RECOMMENDATION ;
OVERRULING PLAINTIFF'S OBJECTION ; AND GRANTING
PLAINTIFF'S MOTION FOR ATTORNEY FEES AND COSTS
J. Tarnow, Senior United States District Judge
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.
filed the Motion for Attorney Fees and Costs  on April
26, 2012. The Court administratively terminated
Plaintiff's motion on March 27, 2013 . The
Magistrate Judge entered an Order Reopening the Case  on
March 7, 2016.
December 8, 2017, the Magistrate Judge issued a Report and
Recommendation (“R&R”)  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
filed an Objection  to the R&R on December 21, 2017.
The R&R and Objection have been fully briefed.
reasons explained in depth below, the Court
ADOPTS the R&R. Plaintiff's
Objection  is OVERRULED.
Plaintiff's Motion for Attorney Fees and Costs  is
Report and Recommendation
R&R summarized the record as follows:
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. 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].
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
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 ...