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WOODROW ALLEN BYERS V STATE FARM MUTUAL AUTOMOBILE INS CO
State: Michigan
Court: Court of Appeals
Docket No: 285755
Case Date: 10/29/2009
Preview:STATE OF MICHIGAN COURT OF APPEALS

WOODROW ALLEN BYERS, Plaintiff-Appellee/Cross-Appellant, v STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant/CrossAppellee.

UNPUBLISHED October 29, 2009

No. 285755 Kent Circuit Court LC No. 06-0056644-CK

Before: Murray, P.J., and Markey and Borrello, JJ. PER CURIAM. Defendant appeals as of right the trial court's orders granting plaintiff's motion for partial summary disposition and motion in limine as well as the jury's award of future benefits to plaintiff under the Michigan no-fault act, MCL 500.3101 et seq. Plaintiff cross appeals the court's order awarding attorney fees under MCR 2.403 and MCL 500.3148(1). To the extent attorney fees were awarded under MCR 2.403, we reverse, but in all other respects we affirm the lower court. I. Background This case arises out of no-fault benefit claims for injuries plaintiff sustained when the vehicle defendant's insured was driving struck plaintiff's motorcycle on June 10, 2005. At the time of the accident, plaintiff worked as an apprehension officer, more commonly known as a bounty hunter, for AA Bail Bonds. (An apprehension officer re-arrests individuals who fail to appear in court in violation of their bond agreement.) Doreen Byers, plaintiff's wife, owns and runs AA Bail Bonds and also works as the primary bond writer; plaintiff has no ownership interest in the company. AA Bail Bonds was formed in 2004. Following the accident, plaintiff began receiving benefit payments from defendant for wage loss and replacement services. Although plaintiff was entitled to a maximum replacement services benefit of $140 per week, plaintiff and defendant agreed to reduce this payment to $80 per week so that plaintiff and Doreen would not have to fill out the replacement benefit forms. A dispute later arose concerning the duration of this alleged oral agreement, with plaintiff and Doreen claiming the payment would extend through the statutory three-year period following the accident and defendant's claim representative, Patricia Griffin, asserting that the agreement was -1-

only valid for 60 to 90 days. Plaintiff sporadically submitted replacement benefit forms until June 23, 2006. Defendant only paid a portion of the claims submitted. Regarding plaintiff's wage loss benefits, defendant obtained wage records from AA Bail Bonds and determined plaintiff's daily wage loss benefit to be $95.19 per day. Notably, since the accident, plaintiff's injuries have precluded him from working as an apprehension officer. However, plaintiff occasionally wrote bonds before the accident and has written a "handful" since the accident. Additionally, plaintiff has routinely accompanied his wife since the accident during the course of her job. Because of this, a dispute arose regarding whether plaintiff was entitled to work loss benefit payments, with defendant asserting that plaintiff was able to return to work as a bondsman, but with Doreen explaining that plaintiff was only employed as an apprehension officer and that his apprehension work was subcontracted to another officer. On June 8, 2006, plaintiff filed suit alleging that defendant had failed to pay expenses for wage loss, replacement services, and any other allowable expense under the Michigan no-fault act, MCL 500.3101 et seq. Plaintiff also requested attorney fees under MCL 500.3148. Nearly five months later, on November 28, 2006, plaintiff underwent knee surgery. Plaintiff submitted a $9,459.87 bill for the surgery, for which defendant made partial payments of $1,176.27 and $3,025.77 on March 12, 2007, and November 15, 2007, respectively, before paying the balance of the bill sometime in late November 2007. On November 30, 2007, the last business day before trial, plaintiff moved for summary disposition, seeking penalty interest of 12 percent for defendant's "overdue" payments for his knee surgery under MCL 500.3142(2) and (3)1 as well as attorney fees under MCL 500.3148(1). According to plaintiff, defendant waited until "the eve of trial" to pay the balance of these and nearly all other medical expenses on account of the pending litigation.2 Additionally, plaintiff filed a motion in limine on January 2, 2008,3 to preclude defendant from presenting evidence: (1) that plaintiff owns or runs AA Bail Bonds; (2) of Doreen Byers or AA Bail Bonds's tax records; (3) of any business records or argument that AA Bail Bonds business has improved since plaintiff's accident; (4) that plaintiff can perform other work for AA Bail Bonds; or (5) that subcontract labor has anything to do with the payment of plaintiff's lost wages because such evidence would be irrelevant to the issue of wage loss. The court heard oral argument on both motions on January 11, 2008. Regarding the motion in limine, the court granted plaintiff's request in its entirety on relevancy grounds with

MCL 500.3142(2) provides in part that "benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained." MCL 500.3142(3) provides for a simple interest penalty of 12 percent per annum for "overdue" payments. According to defendant, the balance of the bill was not paid until November 15, 2007, due to investigations to determine whether the knee injury was related to the accident. In any event, defendant noted that plaintiff's medical bills, up to this point, were not part of the litigation as plaintiff had previously admitted in his answers to interrogatories and deposition.
3 2

1

The court adjourned trial to February 18, 2008.

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the exception of category (4) pertaining to whether plaintiff could perform other work for AA Bail Bonds. The court also granted the motion for summary disposition because defendant was "disingenuous" in paying overdue benefits just before trial. As the court explained in its opinion and order: This [c]ourt finds that it is disingenuous on behalf of the Defendant insurance company State Farm Mutual to be involved in litigation regarding NoFault benefits and then pay "overdue" benefits just prior to trial. It appears to the Court that this is clearly a move by the Defendant insurance company to avoid paying attorney fees and to position themselves better at the trial of this matter. If this matter was tried and the unpaid medical bills were not raised as elements of damage by the Plaintiff in the trial of this case, the [c]ourt is certain that later when those same bills after trial would be submitted to the insurance company, the insurance company would deny and argue that they should have been raised at the trial. Pursuant to the court's order, plaintiff submitted a proposed order for $61,000 in attorney fees for "overdue" medical expenses. Defendant objected to the proposed order and another hearing was held. During the hearing, the court clarified that defendant was not ordered "to pay every single thing that was submitted to them" and reiterated that plaintiff was entitled to attorney fees on the amounts defendant had already paid. At the conclusion of the hearing, the court directed the parties to "sit down in a conference room out there and talk" and to return if they were unable to reach an agreement. The record provides no information regarding any subsequent agreements or pre-trial orders on this matter. The case proceeded to trial, and the jury returned a verdict in favor of plaintiff. The verdict form permitted a damages award for the full three years following the accident although only two and half years had elapsed, but did not delineate past and future damages. In sum, the jury awarded $62,246.96, which included damages for work loss ($52,162.55), replacement services ($4,300), and interest owed on "overdue" benefits ($5,784.91). Plaintiff subsequently submitted a proposed judgment including, inter alia, an award of nearly $150,000 in attorney fees under MCL 500.3148(1) and case evaluation sanctions.4 Defendant challenged the proposed judgment arguing that: (1) neither the pleadings nor the jury's verdict specified which benefits that were "overdue" or when reasonable proof was supplied to defendant; (2) there was an issue of fact concerning whether any denial of benefits was unreasonable; and (3) it was impossible to award future "overdue" benefits where the verdict did not delineate past or future benefits. Defendant also contended that an award of case evaluation sanctions would unfairly punish defendant for going to trial because the court's ruling on plaintiff's motion for summary disposition, motion in limine, and the jury's award of future benefits changed the complexion of the case. The court rejected defendant's arguments, but noted that it would not allow "double dipping" for awards under both MCL 500.3148(1) and case

4

Defendant rejected the case evaluation award of $40,000 to plaintiff on May 17, 2007.

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evaluation sanctions, which would be addressed at an evidentiary hearing. The court subsequently entered judgment on the verdict noting that the issue of prejudgment and postjudgment interest was preserved. At the evidentiary hearing on attorney fees, the court found that defendant's denial of benefits was unreasonable. Notable to the court was that Griffin misunderstood plaintiff's occupation as an apprehension officer and defendant did not obtain an independent medical examination. Regarding the reasonableness of the requested fees, the court reduced the requested award to $70,300, taking into account the complexity of the trial and the experience of the attorneys. The instant appeals ensued. III. Analysis A. Partial Summary Disposition Defendant first challenges the trial court's granting of partial summary disposition to plaintiff, resulting in the awarding of payments for "overdue" medical benefits and attorney fees. This argument is without merit. This Court reviews de novo an appeal from an order granting a motion for summary disposition. Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). A motion for summary disposition pursuant to MCR 2.116(C)(10) should be granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999). A genuine issue of material fact exists when reasonable minds could differ after drawing reasonable inferences from the record. West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). In reviewing this issue, the Court must consider the pleadings, affidavits, depositions, admissions, and other documentary evidence and construe them in the light most favorable to the nonmoving party. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). The nonmoving party must present more than mere allegations to establish a genuine issue of material fact for resolution at trial. Rice v Auto Club Ins Ass'n, 252 Mich App 25, 31; 651 NW2d 188 (2002). Additionally, an award of attorney fees under the no-fault act presents a mixed question of law and fact. Univ Rehabilitation Alliance v Farm Bureau Gen Ins Co, 279 Mich App 691, 693; 760 NW2d 574 (2008). What constitutes reasonableness is a question of law reviewed de novo, however, the unreasonable denial of benefits under the particular facts of a case is a question of fact reviewed for clear error. Id. "A decision is clearly erroneous when the reviewing court is left with a definite and firm conviction that a mistake has been made." Ross v Auto Club Group, 481 Mich 1, 7; 748 NW2d 552 (2008) (quotation marks and citation omitted). Under the Michigan no-fault act, if an insurer fails to pay personal protection insurance (PIP) benefits5 within 30 days after receiving reasonable proof of the fact and of the amount of

5

The Michigan no-fault act permits PIP benefits for accidental injury arising from, inter alia, the operation of motor vehicle. MCL 500.3105(4). The applicability of the no-fault act is not in dispute.

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the loss sustained, the benefits are "overdue" and the insurer must pay a penalty of 12 percent simple interest per annum. MCL 500.3142(2) and (3). The no-fault act also allows reasonable attorney fees for overdue benefits "`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.'" Attard v Citizens Ins Co, 237 Mich App 311, 317; 602 NW2d 633 (1999), quoting MCL 500.3148(1). "When an insurer refuses to make or delays in making payment, a rebuttable presumption arises that places the burden on the insurer to justify the refusal or delay." Id. The relevant inquiry "is not whether coverage is ultimately determined to exist, but whether the insurer's initial refusal to pay was reasonable." Shanafelt v Allstate Ins Co, 217 Mich App 625, 635; 552 NW2d 671 (1996). An insured's refusal to pay is not unreasonable if it is based on factual uncertainty. Univ Rehabilitation Alliance, supra at 694. Here, according to defendant's "Explanation and Review" of benefits, medical bills relating primarily to plaintiff's knee surgery were submitted to defendant on November 28, 2006. As these bills were not paid until November 2007, they were "overdue." While defendant points out that certain portions of these bills were in dispute given that they did not surface until more than a year after the motorcycle accident and it was unclear whether the knee injury was in fact related to the accident, defendant has failed to present any evidence supporting that assertion, thus failing to sustain their burden in opposing a motion for summary disposition. Rice, supra at 31; Maiden, supra at 121. Thus, defendant failed to show that factual uncertainty justified the delay in payments. Attard, supra at 317. Defendant also contends that summary disposition was improper because for two reasons it was not on notice that medical expenses were part of the litigation: (1) plaintiff's complaint sought only work loss and replacement services benefits and (2) plaintiff indicated in both his interrogatory answers and deposition that medical benefits were not part of the lawsuit. Regarding the sufficiency of the complaint, "the primary function of a pleading in Michigan is to give notice of the nature of the claim or defense sufficient to permit the opposite party to take a responsive position." Stanke v State Farm Mut Automobile Ins Co, 200 Mich App 307, 317; 503 NW2d 758 (1993), citing 1 Martin, Dean & Webster, Michigan Court Rules Practice, p 186. As such, a complaint must contain "[a] statement of facts . . . with the specific allegations necessary reasonably to inform the adverse party of the nature of the claims the adverse party is called on to defend . . . ." MCR 2.111(B)(1). Thus, because a complaint need only cite "the nature of the claims," a new theory of liability need only fit "within the scope of the general factual allegations previously pleaded in support of another claim" to meet the pleading requirements of MCR 2.111(B)(1). Smith v Stolberg, 231 Mich App 256, 259-260; 586 NW2d 103 (1998) (internal quotation marks omitted) (allegations in the complaint that the defendant intentionally pushed the plaintiff were sufficient to maintain an action for assault and battery even though the complaint only claimed negligence). In this case, the complaint alleges that plaintiff suffered injuries in a motorcycle accident and sought damages for benefits under the no-fault act. Although the complaint specifically requests payment for wage loss and substituted service, the complaint expressly indicates that plaintiff's expenses are not limited to wage loss and substituted service, but also include "[a]ny other allowable expenses under the Michigan No-Fault Act." The complaint also seeks penalty interest and attorney fees for "overdue" benefits. Notably, MCL 500.3107 provides as allowable PIP benefits "all reasonable charges incurred for reasonably necessary products, services and -5-

accommodations for an injured person's care, recovery, or rehabilitation." In light of this, we conclude that the complaint sufficiently gave defendant notice of the nature of the claims such that seeking penalty interest and attorney fees for "overdue" medical benefits was appropriate. With respect to plaintiff's interrogatory answers and deposition, plaintiff notes that his assertions that medical bills were not a part of this lawsuit were true at the time they were answered. And indeed, while plaintiff's knee surgery occurred November 18, 2006, defendant's "Explanation[s] of Review" of the claims were dated from March 12, 2007, to November 15, 2007. This is significant as plaintiff had already answered his interrogatories on September 26, 2006, and was not deposed until February 7, 2007. Thus, plaintiff's answers during discovery
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