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 SEIFMAN'S MOTION FOR
DISBURSEMENT OF FUNDS HELD IN AN INTEREST BEARING
ACCOUNT [ 170]
J. TARNOW SENIOR UNITED STATES DISTRICT JUDGE
John Hankins filed a Complaint against Defendants City of
Inkster and Gregory Gaskin on August 27, 2009. [Dkt. # 1].
The case settled, and the settlement agreement was placed on
the record on February 21, 2012. During the pendency of the
case, Plaintiff's attorney, Raymond Guzall, left his
firm. Following the settlement, Guzall and his former
partner, Barry Seifman, began litigating the division of the
attorneys fees. The Report and Recommendation before the
Court arises from this dispute.
and Procedural Background
filed a Motion for Attorney Fees and Costs  on April 26,
2012. The Court administratively terminated Plaintiff's
motion on March 27, 2013 , so Guzall and Seifman could
litigate their case in state court. The case was reopened 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 and divide the fees between Guzall and Seifman.
Guzall filed an Objection  to the R&R on December
21, 2017. The Court overruled that Objection and adopted the
R&R in its May 16, 2018 Order . Guzall appealed on
May 31, 2018, and the Sixth Circuit affirmed the Court's
ruling in a March 22, 2019 Opinion .
Sixth Circuit summarized the Magistrate Judge's
determination and the district court's review as follows.
The magistrate judge held a hearing but limited admissible
evidence and argument to six issues: (1) the Firm's
shareholder agreement between Seifman and Guzall; (2) when
Guzall quit the Firm and when he told Seifman; (3) when and
how Hankins told Seifman and Guzall he was firing the Firm;
(4) when and how Hankins retained Guzall; (5) when and how
Guzall took the Hankins file from the Firm; and (6) the hours
Guzall and Seifman each spent on the case, their hourly
rates, and whether Seifman was entitled to compensation in
quantum meruit. The magistrate judge expressly and
emphatically barred evidence, argument, or discussion
regarding misconduct, specifically Guzall's accusations
against Seifman: “We will not try the [Michigan state
court] lawsuit de facto in the context of this evidentiary
hearing on attorney fees.” Three witnesses testified at
the hearing (Hankins, Guzall, and Seifman), and the
magistrate judge admitted several documents, including the
shareholder agreement. It was established that, at the time
he left, Guzall was a 25% shareholder in the Firm. Guzall
insisted the shareholder agreement was not a fee splitting
agreement whereas Seifman insisted that it was.
The magistrate judge issued a Report and Recommendation,
which the district court, after thoroughly addressing and
overruling Guzall's objections to it, adopted as its
final judgment. The district court determined that
Guzall's individual work on the case was reasonably
quantified at 80 hours, at $300 per hour, for direct
compensation of $24, 000. The court did not award Seifman any
direct compensation for work on the case. Further, the court
determined that the shareholder agreement was effectively a
fee-splitting agreement, and the Hankins case was a corporate
asset subject to that contractual agreement, but which Guzall
had taken from the Firm. Therefore, the court held that
Guzall was entitled to 25% of the Hankins contingency fee and
the Firm (Seifman) to 75%. The court rejected Guzall's
claims that Seifman breached the agreement and committed
illegal acts, criticizing those claims as “improper
attempts to circumvent the findings and conclusions of the
Michigan state courts” and concluding that Guzall
“previously agreed to dispose of those claims in the
[Michigan state court] case.” Guzall had agreed that
the district court- rather than the state court-would decide
the contingency-fee issue and the district court explained
that resolving attorney fee disputes is part of the overall
litigation. Thus, its admission of Seifman into the suit and
its judgment on that issue were not improper. Finally, the
court rejected Guzall's claims that he was denied a fair
opportunity to present evidence, as he was invited to and did
present evidence at the hearing.
Hankins v. City of Inkster, et al, 768 Fed.Appx.
304, 305-06 (6th Cir. 2019).
28, 2019, the Sixth Circuit declined to rehear the case en
banc. Guzall then filed a petition for a writ of certiorari
with the United States Supreme Court, but the Supreme Court
denied the petition on December 5, 2019 .
the Sixth Circuit's decision, Seifman filed a Motion for
Disbursement of Funds Held in an Interest Bearing Account
. He sought his share of the (then) $578, 571.00 held in
escrow. The Court referred  that motion to the
Magistrate Judge on August 1, 2019. The Magistrate Judge then
issued a Report and Recommendation (“R&R”)
 in accordance with 28 U.S.C. § 636(b)(1)(b). The
R&R advised the Court to grant Seifman's motion and
disburse the funds in accordance with its previous order.
Guzall has since objected to this R&R, and the objection
is fully briefed.
Magistrate Judge advises the Court to grant Seifman's
motion to withdraw his funds from the escrow account, on the
grounds that the Court had properly and ...