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Duffy v Grange Ins Co of Michigan; (COA-UNP, 10/29/2013; RB #3323)


Michigan Court of Appeals; Docket #308789; Unpublished  
Judges Beckering, O’Connell, and Shapiro; Unanimous; Per Curiam  
Official Michigan Reporter Citation: Not Applicable; Link to Opinion alt 

Definition of Highway [§3101(2)(b)]
Definition of Motor Vehicle (ORVs and ATVs) [§3101(2)(g)]
Definition of Motor Vehicle (Other Motorized Devices) [§3101(2)(e)]
Entitlement to PIP Benefits: Arising Out Of/Causation Requirement [§3105(1)]
Reasonable Proof Requirement [§3142(2)]

Availability of PIP Benefits in Accidents Involving ORVs and ATVs
Highway (Definition of)  

In this unanimous per curiam unpublished Opinion, the Court of Appeals ruled that, under MCL 500.3142, penalty interest should be awarded only when an insurer does not timely pay benefits after receiving “reasonable proof” of the amount of the insured’s claim. The appeals court held that, in this case, the insurer never received any “reasonable proof” of plaintiff’s damages and, therefore, the insured did not have a right to collect penalty interest on a $1 million-plus jury verdict.

In making its ruling, the Court of Appeals said that: 1) “reasonable proof” of loss requires documentation of the loss, even when an insurer denies a claim for lack of coverage, and 2) an insured is not “excused” from providing proof of loss when an insurer denies a claim before the insured has sufficient time to collect sufficient information regarding proof of loss.

Plaintiff was paralyzed after being thrown off an ATV she was riding on part of a riding trail designated “ORV route,” meaning that part of the trail was open for the operation of motor vehicles. Defendant denied plaintiff’s claim for PIP benefits, alleging the accident did not happen on a “public highway” as defined in the Motor Vehicle Code. The plaintiff filed a claim against defendant seeking coverage. While the case was pending, the Legislature amended the No-Fault Act to exclude off-road vehicles from the definition of motor vehicle, precluding benefits for injuries sustained while riding ATVs. The trial court ruled this amendment applied retroactively to the date of plaintiff’s accident and dismissed plaintiff’s claim for benefits. The Court of Appeals reversed, finding the amendment applied prospectively only, and remanded the case for trial. A jury awarded plaintiff more than $1 million. The trial court also awarded plaintiff penalty interest pursuant to §3142(2) because benefits were not paid within 30 days after the insurer received “reasonable proof” of damages. Defendant’s motions for directed verdict and JNOV were denied, and defendant appealed.

The Court of Appeals reversed the award of penalty interest under §3142(2), noting that “reasonable proof” and not “exact proof” is required for interest to apply. The court said:

“In this case, reasonable minds could not conclude on the basis of the evidence at trial that plaintiff provided defendant before trial with reasonable proof of the amount of loss sustained. … When plaintiff submitted her application for benefits, she did not provide any information regarding her amount of loss to date; instead, she stated that it was ‘unknown.’ There was no evidence at trial that the Duffys provided defendant with bills of plaintiff’s medical expenses before trial. … Moreover, plaintiff’s authorization of defendant to obtain medical and wage information does not constitute proof of the amount of plaintiff’s loss.”

Regarding plaintiff’s argument that “reasonable proof of loss” did not require documentation when an insurer denies a claim for lack of coverage, the court said:

“Not only does plaintiff provide no legal authority for this argument, but our caselaw illustrates that plaintiff’s argument must fail. If proof of loss were unnecessary simply because an insurer denies coverage, a claimant who is denied coverage will always be entitled to penalty interest — this is clearly not the case.”

As for plaintiff’s argument that she should have been excused from providing proof of loss because defendant denied the claim before she had time to gather the information, the Court of Appeals noted there was some “equitable appeal” to this argument. However, the court said the statute clearly requires an insured to inform the insurer of the amount of the loss before penalty interest can be awarded:

“Excusing a claimant from the requirement of providing an insurer with proof of the amount of loss sustained eliminates the statutory parameters for determining the day when interest begins to accrue under MCL 500.3142(2). Here, the jury awarded $100,463.04 in penalty interest, yet we are unable to determine — either from the jury’s verdict or the evidence at trial — from what date(s) penalty interest started to accrue. … Even assuming the jury had evidence of when defendant instructed plaintiff not to submit proof of her loss, the amount of loss that plaintiff had incurred at that time, upon which to calculate interest, is impossible to discern.”

In conclusion, the Court of Appeals reversed the denial of defendant’s motions for directed verdict and JNOV, and vacated the penalty interest award. It affirmed the trial court’s judgment in all other respects.

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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