Mediation Fees are Taxable Cost

The Michigan Court of Appeals has ruled that mediation fees may be a taxable cost of a lawsuit. In a published decision (meaning the case sets precedent state-wide), the Court determined in Patel v Patel, 324 Mich App 631 (2018) that MCR 2.411(D)(4) permits a court to order a party to pay the mediator’s fee. Michigan law permits various items to be taxed as costs to the losing party, including where a Court Rule permits this, which this provision does: “The mediator’s fee is deemed a cost of the action, and the court may make an appropriate order to enforce the payment of the fee.”

While the Court Rule mediator fee provision seems straightforward on its face, it’s always good to have a Court of Appeals decision construing it. Unfortunately, the Court’s opinion doesn’t offer any reason why this wouldn’t be the case; in other words, we don’t know why the appellant was challenging the court order. Did the he think it was unfair? Was it contrary to the retention agreement with the mediator? Was it mentioned in the parties’ mediation agreement? Typically, parties split the mediator’s fee. In this case, two brothers were aligned against one; the fee might have been divided two or three ways, depending on the parties’ agreement. Presumably the mediation did not result in an agreement, as the parties — three brothers who ended up in litigation after a failed business venture–had a bench trial that resulted in a verdict of no cause of action for the plaintiff-appellant — which is why he was ordered to pay the defendants’ portion of the mediation fee.  The Court of Appeals has confirmed that trial courts have that power, under MCR 2.411(D)(4).

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