Michigan Court of Appeals; Docket #259987; Unpublished
Judges Saad, Jansen, and White; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion
Exception for Motorcycle Injuries [3114(5)]
12 % Interest Penalty on Overdue Benefits – Nature and Scope [3142(2) (3)]
Interest Penalty Additive to Judgement Interest 
Requirement That Benefits Were Overdue [3148(1)]
Requirement That Benefits Were Unreasonably Delayed or Denied [3148(1)]
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed the trial court holding that defendant Empire Fire and Marine Insurance Company was first in priority for PIP benefits when its insured ran over a motorcyclist who had been thrown from his motorcycle, which had been hit by an unidentified vehicle.
This action arises from an automobile/motorcycle accident, in which the motorcycle operator, Timothy Hughes, was killed. Hughes was thrown from his motorcycle after it was hit by an unidentified vehicle. When Hughes landed on the pavement, he was run over by a vehicle insured by defendant Empire. Defendant State Farm, the Assigned Claims Facility insurer, paid Hughes’ Estate no-fault PIP benefits.
On appeal, defendant Empire asserted it was not first in priority for payment of the no-fault benefits. The Court of Appeals disagreed, finding that under MCL 500.3114(5)(a), the Taurus was “involved in the accident.” In this regard, the court stated:
“Because the evidence showed that Hughes was thrown to the pavement after losing control of his motorcycle due to the red car; that he was then struck and his skull crushed by the Taurus; that the injuries attributable to the Taurus necessarily would have been fatal; and that it cannot be established that while it appears the Taurus inflicted bodily injury, it did not because Hughes was actually dead, the circuit court did not err in determining that the Taurus was a vehicle involved in the accident.”
The court also determined that the Hughes Estate was properly awarded penalty interest because defendant Empire did not properly pay no-fault benefits. The Court of Appeals also affirmed the award of attorney fees, penalty interest and pre-judgment interest. As to the attorney fee award, Empire argued it reasonably refused to pay benefits because there was an issue regarding whether it was liable for the benefits. The court disagreed, noting that when the only question is which of two insurers will pay, it is unreasonable for an insurer to refuse to pay benefits. As to the penalty interest, the award was proper because Empire refused to pay benefits and it was later found to be liable for the benefits. Finally, the court determined that pre-judgment interest was properly awarded, even though the claim was settled. Although settlement before judgment normally waives statutory interest, defendant Empire was not the party who settled plaintiff’s claim. Instead, the court noted, the case proceeded to money judgment against defendant Empire. In this regard, the court stated:
“Here, Empire did not promptly pay no-fault benefits due and the award of penalty interest was proper. It matters not that the claim was presented to Empire by Citizen’s adjuster. . . . MCL 500.3148(1) provides: . . . attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment. . . . Empire argues that there were legitimate issues of factual uncertainty and that its delay in paying benefits was not unreasonable. “However, when the only question is which of two insurers will pay, it is unreasonable for an insurer to refuse payment of benefits.”. . . Finally, Empire contends that plaintiff was not entitled to prejudgment interest from August 1, 2000, the date the lawsuit was filed, until August 9, 2001, the date the claim was settled, because plaintiff was not awarded a money judgment. . . . Settlement before judgment will normally waive statutory interest when no final judgment is entered against the defendant, because, when a plaintiff accepts a settlement, he generally “trade[s] off the loss of interest for the waiting period in exchange for the certainty of the settlement.”. . . [H]owever, Empire was not the party who settled plaintiff’s claim. Instead, the case proceeded to a money judgment against Empire, which included amounts paid by State Farm to which plaintiff Estate was entitled, and which it did not receive until after litigation was commenced, due to Empire’s refusal to pay under its policy.”