Michigan Supreme Court; Docket No. 145188; Published
On Order of the Court; Peremptory Order
Official Michigan Reporter Citation; ___ Mich ___ (2013); Link to Order 
Link to COA Summary
STATUTORY INDEXING:
Bona Fide Factual Uncertainty/Statutory Construction Defense[§3148(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this peremptory Order regarding penalty interest and statutory attorney fees, the Supreme Court peremptorily REVERSED in part in lieu of granting leave to appeal the Court of Appeals decision with respect to the lower court’s award statutory attorney fees under MCL 500.3148 because the Court found that a legitimate factual uncertainty existed regarding whether [the claimant] suffered "accidental bodily injury" pursuant to MCL 500.3105(1) and (4). The Court DENIED leave to appeal “in all other respects.”
Plaintiff United Services Automobile Association brought this declaratory action seeking a determination of USAA’s liability to pay no-fault PIP benefits for injuries sustained by Rana Reyes after she intentionally exited her boyfriend's moving vehicle during a relationship dispute. The Court of Appeals described the facts surrounding the accident as follows:
"In the early morning hours of November 16, 2008, Rana Reyes was severely injured when she intentionally exited a moving vehicle driven by Gabriel Tagg, after becoming emotional because Tagg did not reply in kind when Reyes told him that she loved him. Tagg and Reyes had been in a dating relationship for the preceding six months, although there was evidence that Tagg had taken measures to denounce that relationship a few days previous. During the evening and night of November 15, 2008, Tagg and Reyes joined friends at a local establishment to celebrate Reyes's birthday. The couple engaged in intimacy in Tagg's vehicle before entering the bar. Once inside the bar, Reyes began drinking alcohol. She consumed a substantial amount of alcohol over the course of the evening, and, on more than one occasion, Reyes told Tagg that she loved him. Tagg did not reply in kind. Reyes became "drunkenly emotional" on more than one occasion as a result and had to be calmed by her sister, Leah Rimbey, who advised Reyes that it was apparent that Tagg was interested in her. Then, as Tagg and Reyes were returning to Tagg's residence, Reyes confronted Tagg about his failure to reciprocate her expressions of love for him. Tagg again declined to tell Reyes that he loved her;. Reyes became emotional and began saying that she needed to "get out of' the vehicle. Tagg did not feel it was safe to let Reyes out of the vehicle in her intoxicated state, because they were "in the middle of nowhere." Instead, he attempted to calm Reyes and he advised her that she "just need[ed] to go home and sleep this off." As they were travelling along the roadway, at a speed of 35 to 45 miles per hour, Reyes again said "I need to get out of here," opened the door and exited the moving vehicle. Reyes was struck by the rear passenger tire, suffering a significant closed head injury."
Following the accident, Reyes received treatment from Spectrum, for which Spectrum received conditional payment, in part, from Reyes's health insurer. USAA initially refused to pay no-fault benefits after concluding that Reyes’s injuries were self-inflicted. USAA reached this initial conclusion for various reasons. Shortly after treatment began, Spectrum noted in its Care Assessment Report that Ms. Reyes "may have intentionally tried to hurt herself." The traffic crash report and local newspapers also reported that "Reyes likely jumped from a moving vehicle during a dispute with her boyfriend." Gabriel Tagg further revealed that Reyes had told him previously that she was a "cutter." Tagg further revealed in a phone interview to USAA that prior to the accident, Reyes stated to him that she "needed to exit the vehicle." USAA later hired an investigator and went on to conclude that Reyes’s injuries were not the result of “accidental bodily-injury.” Shortly thereafter, USAA filed this declaratory action seeking a determination of its liability to provide PIP benefits for Reyes. However, after conducting formal discovery, USAA concluded that Reyes’s claim was in fact warranted and tendered payment to Spectrum in full for the medical services that it had provided to Reyes. This amount included unpaid amounts that Spectrum billed to Reyes’s health insurer for which Spectrum only received partial payments. Reyes remained liable for these amounts until payment was received in full by USAA.
Defendant Spectrum went on to seek penalty interest under MCL 500.3142 --- which the trial court awarded for all outstanding amounts, including the amounts that remained unpaid for services that were paid for in part by Reyes’s health insurer. Defendant Rimbey went on to seek a statutory award of attorney fees under MCL 500.3148, which the trial court also granted after finding that USAA’s denial of the claim was “unreasonable” because no evidence was presented to support a finding that Reyes actually intended to injure herself, but rather she intended only to exit the vehicle --- such that there existed no legitimate factual uncertainty warranting USAA’s denial of the claim. USAA appealed the trial court’s rulings, and the Court of Appeals affirmed as to both rulings. In affirming the trial court’s award of penalty interest, the court that USAA's good faith refusal to initially pay a claim is irrelevant for purposes of awarding penalty interest, and that receipt of the partial conditional payments did not relieve the claimant of the liability for the remaining amounts owed to Spectrum such that the outstanding amounts constituted an incurred expense for which USAA was liable. In affirming the attorney-fee award, the Court of Appeals conducted a review of “the trial court's opinion and the record evidence presented” and was not left with a “definite and firm conviction” that a mistake was made below when the trial court concluded that USAA’s refusal to initially pay the claim was unreasonable after finding that there existed no legitimate question of factual uncertainty warranting USAA’s denial of the claim.
On application for lave to appeal to the Michigan Supreme Court, the Court peremptorily REVERSED, in part in lieu of Granting leave to appeal, the portion of the Court of Appeals decision that affirmed the trial court’s award of attorney-fees. In this regard, the Court stated:
". . . the application for leave to appeal the April 19, 2012 judgment of the Court of Appeals is considered and, pursuant to MCR 7.302(H)(1), in lieu of granting leave to appeal, we REVERSE in part the judgment of the Court of Appeals. The trial court clearly erred in awarding the defendants attorney fees pursuant to MCL 500.3148(1), because the plaintiff’s initial refusal to pay benefits under the no-fault act was based on a legitimate question of factual uncertainty as to whether Rana Reyes suffered “accidental bodily injury” pursuant to MCL 500.3105(1) and (4). Ross v Auto Club Group, 481 Mich 1, 11 (2008)."
However, the Court DENIED leave to appeal “in all other respects” having not been not persuaded that “the remaining question presented should be reviewed by [the] Court."
