Michigan Court of Appeals; Docket # 345864; Unpublished
Judges Borrello, Kelly, and Servitto; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Civil Judgments and Interest (MCL 600.6013)
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order denying the plaintiffs, Derek and Debra Andreson, 12% penalty interest on a sanctions award that they received in their prior, related action to recover underinsured motorist benefits from the defendant, Progressive Michigan Insurance Company. The Andresons argued that Progressive handled their claim for underinsured motorist benefits in bad faith, and in violation of the Uniform Trade Practices Act (UTPA), and that they were therefore entitled to 12% penalty interest on the judgment entered against Progressive in the prior action, as well as on the taxable costs and attorney fees awarded to them. The Court of Appeals rejected that argument, and found a “lack of authority indicating that [the 12%] penalty interest was intended to apply to offer of judgment sanctions.”
The Andresons were injured in a motor vehicle collision and settled with the other driver for the policy limits contained in her automobile insurance policy. They then brought an action against their own insurer, Progressive, for breach of contract, asserting that it denied their claim for underinsured motorist benefits. That matter proceeded to a jury trial, at which the Andresons prevailed. The trial court granted the Andresons fees and costs in the amount of $128,660.67, and while the appeal of that action was pending, the Andresons initiated a second action against Progressive, arguing that Progressive acted in bad faith in the handling of the Andresons’s claim for underinsured motorist benefits, and that, under the Uniform Trade Practices Act, they were entitled to 12% penalty interest on the prior judgment and the fees and costs The trial court granted the Andresons’s request for 12% penalty interest on the jury verdict, but denied their request for 12% penalty interest on the judgment sanctions. Moreover, the trial court granted summary disposition in Progressive’s favor on the issue of bad faith, because the Andresons’s claim was not supported by the record.
The Court of Appeals first affirmed the trial court’s refusal to award the Andresons’s 12% penalty interest under the UTPA on their sanctions award. The Court of Appeals determined that the UTPA only provides for 12% interest on insurance “benefits” that are not paid on a timely basis, and that attorney fees and costs do not constitute such benefits.
MCL 500.2006(4) specifically provides that if “benefits are not paid on a timely basis, the benefits paid bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum, if the claimant is the insured or a person directly entitled to benefits under the insured's insurance contract.” (emphasis added). By its explicit language, 12% interest is payable on the insurance “benefits” only. Plaintiffs, however, assert that offer of judgment sanctions consisting of attorney fees and taxable costs is clearly a benefit of plaintiffs’ policy with defendant, and that defendant failed to timely pay the awarded sanctions such that they are entitled to 12% penalty interest on the sanctions award.
The Court of Appeals also determined that the trial court did not err in granting summary disposition for Progressive on the issue of bad faith. The Court found that Progressive could not have misled the Andresons with respect to the collectability of the underlying tortfeasor—as the Andresons alleged—because the Andresons were represented by counsel in their underlying lawsuit and did not actually have any communications, themselves, with Progressive.
Plaintiffs claim that defendant acted in bad faith by misleading them with respect to the collectability of the underlying tortfeaser, the driver of the other vehicle. However, plaintiffs were represented by counsel in their underlying lawsuit against that driver. There has been no claim or assertion that plaintiffs spoke to or interacted with defendant after they retained counsel in the underlying lawsuit. In fact, plaintiff Debra Andreson testified that, after retaining counsel in November 2013, she never had any personal contact with defendant, other than to cancel her insurance with them. Debra testified that she had no idea whether her attorneys in the underlying matter investigated the other driver’s assets before finalizing the settlement with her in May 2015, and that prior to the settlement, she did not contact defendant and ask about any assets. Plaintiff Debra Andreson affirmatively testified that no one from defendant made any representations to her regarding the other driver’s assets. Similarly, plaintiff David Andreson testified that he had no contact with defendant at all after the October 2013 accident; instead, all communication with defendant was though the attorney they retained in November 2013 to sue the other driver. That being the case, there is no material question of fact that defendant did not mislead plaintiffs on the claime, or any other issue.
