Michigan Supreme Court; Docket No. 110215; Published
Per Curiam; 6-1 (with Justice Kelly Dissenting)
Official Michigan Reporter Citation: 459 Mich 42; Link to Opinion 
STATUTORY INDEXING:
Penalty Attorney Fees on Appeal [§3148]
Requirement That Benefits Were Overdue [§3148(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this per curiam Opinion, Justice Kelly dissenting, the Supreme Court reversed the judgment of the Court of Appeals (Item No. 1940; 223 Mich App 446 [1997]), and held Auto Club not responsible for attorney fees under section 3148 for fees incurred on appeal, where the principal benefits had been paid by Auto Club before it took its initial appeal.
The Supreme Court held that because the first appeal by ACIA did not concern the disputed benefits, and the accompanying expense of plaintiff s appellate counsel was not incurred for the purpose of obtaining those benefits, an award of attorney fees incurred on appeal was not appropriate.
Plaintiff McKelvie sustained severe injuries in a motor vehicle accident in 1985 causing quadriplegia and requiring six (6) months of hospitalization. Thereafter, ACIA disputed certain expenses claimed, including the number of hours of nursing care. This dispute was litigated and a trial resulted in a verdict in favor of McKelvie for $150,000.
The trial court ruled that ACIA's refusal to pay the vast majority of the disputed expenses was unreasonable, and awarded approximately $84,000 in attorney fees. Thereafter, ACIA paid the disputed benefits, but appealed the award of attorney fees.
The Court of Appeals affirmed the award of attorney fees. ACIA then paid the attorney fees that were related to the trial court proceedings, together with interest, but the parties disagreed with regard to whether ACIA should further pay attorney fees incurred on the appeal of the attorney fee award. The trial court denied appellate attorney fees in this particular case, and plaintiff McKelvie appealed.
The Court of Appeals in this second appeal then reversed the trial court and ordered an evidentiary hearing on the issue of appellate fees. In its ruling, the Court of Appeals found it immaterial that the principal benefits claimed had been paid following judgment but before appeal.
This did not change the fact that the defendant's initial unreasonable denial forced plaintiff to file the suit to collect the benefits from which the appeals stemmed. From this second appeal, ACIA applied to the Supreme Court for leave.
The Supreme Court in its ruling herein found that because the defendant had paid the no-fault benefit before taking the first appeal on the attorney fee issue, and because ACIA did not raise on appeal any issue related to its liability for those benefits, the first appeal did not concern the disputed benefits and, therefore, the provisions of section 3148(1) were not satisfied.
Section 3148 provides that an insurer is responsible for the insured's attorney fee as follows:
"An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fees 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."(emphasis added)
In adopting the dissenting opinion of Judge Sawyer in the second appeal, the Supreme Court held that once the benefits have been paid, they can no longer be overdue. In her dissent, Justice Kelly would have affirmed the ruling of the Court of Appeals, noting that plaintiff would never have been in the appellate court had not the insurance company unreasonably withheld benefits in the first place.
