Michigan Supreme Court; Docket No. 65839; Published
Opinion by J. Fitzgerald; Unanimous
Official Michigan Reporter Citation: 413 Mich 573; Link to Opinion
12% Interest Penalty on Overdue Benefits – Nature And Scope [§3142(2), (3)]
Interest Penalty Additive to Judgment Interest [§3142]
Requirement that Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Calculating Attorney Fees Not Based on Contingent Fee [§3148]
In this unanimous Opinion by Justice Fitzgerald, the Supreme Court rendered several important holdings regarding issues related to attorney fees, interest, and defaults in first party cases. First, the Court held that where a no-fault carrier has been defaulted, the insurer is no longer permitted to contest the plaintiff's right to recover no-fault benefits or attorney fees under the statute. However, the insurer retains the right to a trial on the question of the amount of the first party benefits and the amount of attorney fees to be awarded.
Second, once the trial court has accepted plaintiff’s contention mat the refusal or delay in the payment of benefits was unreasonable, then the Court should proceed to award an attorney fee under §3148 based upon the "controlling criterion" of reasonableness. In this regard, the Court adopted the six guidelines for determining reasonableness as set forth in the non-no-fault case of Crawley v Schick and adopted by the Court of Appeals in the no-fault case of Liddell v DAIIE (item number 380). The Court noted that these guidelines are not meant to be rigidly applied and commented,
"While a trial court should consider the guidelines of Crawley, it is not limited to those factors in making its determination. Further, the trial court need not detail its findings as to each specific factor considered. The award will be upheld unless it appears upon appellate review that the trial court's finding on the 'reasonableness' issue was an abuse of discretion."
Third, the Court finally laid to rest the question of whether or not a successful no-fault claimant could recover double interest under §3142 of the statute and under the RJA. In holding that such double interest recovery was permissible, the Court stated, "We hold that the provisions are not mutually exclusive and that the interest awards were proper." Therefore, a successful claimant can recover 12 percent interest on overdue benefits under §3142 and an additional 12 percent on the entire judgment under the provisions of the RJA.