Michigan Court of Appeals; Docket #233826; Unpublished
Judges Fitzgerald, Holbrook, Jr. and Cavanagh; unanimous; per curiam
Official Michigan Reporter Citation: Not Applicable, Link to Opinion 
STATUTORY INDEXING:
12% Interest Penalty on Overdue Benefits – Nature and Scope [3142(2) (3)]
Conduct Establishing Unreasonable Delay or Denial [3148]
TOPICAL INDEXING:
Revised Judicature Act – Miscellaneous Provisions
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals found that penalty interest was properly awarded against Auto Owners Insurance Company from the date of the filing of the plaintiff’s complaint for no-fault PIP benefits, and rejected Auto Owners’ argument that penalty interest should only accrue from the date of the jury’s verdict in a case where there was a dispute concerning whether the insurance policy was in effect at the time of the accident.
This case is a continuation of the litigation found at Morales v Auto Owners Insurance Company, 458 Mich 288; 582 NW2d 776 (1998).
In the prior litigation, the parties agreed that the medical expenses and services submitted were reasonable in amount, but Auto Owners contested whether there was insurance coverage at the time of the accident. The jury concluded that the defendant was estopped from cancelling the applicable insurance policy. The trial court granted penalty interest under section 3142 and actual attorney fees under section 3148.
Auto Owners contended on appeal that the trial court erred by awarding penalty interest under section 3142(3) from the date of the original complaint, and argued that penalty interest should accrue only from the date of the jury’s verdict, which is when it learned that it was liable for the loss. Defendant Auto Owners’ argument was premised on its view that the insurance policy had lapsed but that a new contract of insurance was created by the jury’s verdict estopping defendant from denying coverage. Citing from the Supreme Court decision in Morales, supra, the Court of Appeals stated that application of the doctrine of equitable estoppel does not create a new contract of insurance, but rather merely prevents an insurer from enforcing a single provision in the already existing contract. Consequently, the trial court’s award of penalty interest from the date of the original complaint was proper.
With regard to prejudgment interest under MCL 600.6013, which accrued during the four years that the case was on appeal, the Court of Appeals held that prejudgment interest does not continue to accrue during the appellate process.
Finally, the Court of Appeals held that the determination that defendant was also liable for attorney fees under section 3148 was based on its conclusion that defendant’s challenge to the payment of penalty interest was made without legal basis. The Court of Appeals found no clear error in this determination.
