Michigan Court of Appeals; Docket # 324829; Unpublished
Judges Beckering, Owens, and K.F. Kelly; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Judges Beckering, Owens, and K.F. Kelly; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving an uninsured, helmetless motorcyclist who was killed when his motorcycle collided with a vehicle insured by defendant Farm Bureau, the Court of Appeals issued several rulings:
1)summary disposition was properly granted to the motorcyclist’s estate, because there was no question that he owned the motorcycle and he was not precluded from PIP benefits under MCL 500.3113(b);
2)no-fault coverage should not have been precluded by MCL 257.658, because nothing in the language of that statute prevents an uninsured, helmetless motorcycle operator from collecting PIP benefits;
3)while the estate was entitled to penalty interest under MCL 500.3142 because the benefits were overdue, the trial court incorrectly calculated the amount of penalty interest; and
4)the estate was not entitled to attorney fees under MCL 500.3148(1), because Farm Bureau had a reasonable basis for denying PIP benefits.
Plaintiffs’ decedent, Swick, was killed when the uninsured motorcycle he was operating collided with a vehicle insured by defendant Farm Bureau. Swick was not wearing a helmet at the time of the accident. Farm Bureau denied coverage and plaintiffs brought this action for PIP benefits. There was some dispute about whether an effective transfer of title had occurred when Swick purchased the motorcycle, and the trial court granted summary disposition for plaintiffs, finding the statutory requirements for an effective transfer of title had occurred. The trial court further held that, for purposes of calculating penalty interest under §3142, benefits did not become overdue until September 16, 2014. The trial court also denied plaintiffs’ motion for attorney fees under §3148.
On appeal, Farm Bureau claimed summary disposition was improper because there remained a question as to whether Swick owned the motorcycle and whether he was precluded from benefits under §3113(b). Plaintiffs cross-appealed, arguing the trial court erred in calculating penalty interest under §3142 and by denying attorney fees under §3148(1). The Court of Appeals affirmed in part, reversed in part, and remanded.
The Court of Appeals first held that summary disposition was properly granted for plaintiffs because legal title to the motorcycle was effectively transferred. The Court noted that Swick did not maintain the security required by MCL 500.3103, and the parties disputed whether he owned the motorcycle. Because the person who sold Swick the motorcycle testified the incomplete title was authentic, the Court held there was no issue regarding whether the statutory requirements for an effective transfer of title were met and, therefore, Swick was not precluded from benefits under §3113(b).
The Court of Appeals further held that PIP benefits were not precluded by MCL 257.658, which sets forth the circumstances in which a person operating or riding a motorcycle is not required to wear a helmet. The Court said it agreed with the trial court that noting in the plain language of MCL 257.658 or MCL 500.3103 actually precludes an uninsured, helmetless motorcycle operator or rider from collecting PIP benefits. In this regard, the Court pointed to Farm Bureau’s argument:
“Defendant urges this Court to read the no-fault act and the Michigan vehicle code in pari materia and conclude that the Legislature intended to preclude these benefits even if it did not express that intent in MCL 257.658 and MCL 500.3103. But we reject defendant’s argument because … the version of MCL 500.3113(b) in effect at the time of the accident only precluded owners or registrants who had failed to maintain the security for PIP benefits from collecting them. The statute did not preclude such payment for other operators and riders of a motorcycle. … Regardless of the Legislature’s intent to require helmetless operators and riders to purchase security for PIP benefits under MCL 257.658(5)(c), it did not preclude them from collecting PIP benefits if they nevertheless failed to satisfy this requirement. Thus, any evidence that Swick was not wearing a helmet did not create a question of fact regarding his entitlement to PIP benefits, and the trial court properly rejected this defense below.”
The Court of Appeals continued by finding the trial court’s calculation of penalty interest under §3142 was erroneous. The Court noted the latest date that proof of the amount of loss could have been provided was July 16, 2014, and therefore the trial court incorrectly used September 16, 2014, as the date. The Court remanded for a determination of the date that plaintiffs provided proof of the amount of loss and for a recalculation of the proper amount of penalty interest under §3142(2) and (3).The Court of Appeals further found that plaintiffs were not entitled to attorney fees under §3148(1) because Farm Bureau’s initial denial of benefits was reasonable. In this regard, the Court emphasized that when assessing a request for attorney fees, the focus should be on the initial decision by the insurer. The Court concluded:
“Regardless of whether an insurer initially refused to pay and never wavered, or initially refused to pay and later remitted payment, attorney fees are to ensure prompt payment to the insured. … Therefore, only an insurer who unreasonably makes an initial decision to deny prompt payment risks paying attorney fees. The trial court did not clearly err by denying the motion for attorney fees under MCL 500.3148(1).”
Notably, in holding that plaintiff was not entitled to attorney fees, the Court of Appeals did not explain why there would not be an unreasonable denial of benefits in a situation where, despite an insurance company’s initial denial of benefits being reasonable, the insurer later failed to pay the claim after receiving further information that the claim should be paid.
