Ramirez v. Home-Owners Ins. Co.

• Decision Date: 10 February 2022
• Docket Number: 350884
• Parties: EMIL RAMIREZ, Plaintiff-Appellee, v. HOME-OWNERS INSURANCE COMPANY, Defendant-Appellant, and TERESA M. BOADWAY, Defendant.
• Court: Court of Appeal of Michigan — District of US

EMIL RAMIREZ, Plaintiff-Appellee,
v.
HOME-OWNERS INSURANCE COMPANY, Defendant-Appellant,

and TERESA M. BOADWAY, Defendant.

No. 350884

Court of Appeals of Michigan

February 10, 2022

UNPUBLISHED

Grand Traverse Circuit Court LC No. 2018-034466-NF

Before: Boonstra, P.J., and Borrello and Rick, JJ.

Per Curiam.

Defendant-appellant, Home-Owner's Insurance Company, appeals by right the trial court's order granting plaintiff's motion for taxable costs and no-fault attorney fees, and awarding plaintiff $70, 508.62 in taxable costs, fees, and interest. The same order also denied defendant's motions for remittitur and attorney fees. The order was entered following a jury trial at which the jury awarded plaintiff $55, 279.79 in overdue personal injury protection (PIP) benefits and interest. For the reasons discussed below, we vacate the trial court's order in part and remand the case with instructions that the trial court give further consideration regarding the reasonable factors governing awards of attorney fees.

I. BASIC FACTS

In September 2017, plaintiff was involved in a single-car accident when he lost control of his vehicle on a rainy day and struck a pole. Thereafter, plaintiff suffered from severe headaches, short-term memory loss, difficulty multitasking, and other cognitive issues. Plaintiff sought personal injury protection (PIP) benefits, including wage loss, attendant care, household services, medical care, and other benefits, from defendant, his automobile insurance provider. Defendant

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paid some benefits before suspending payments in December 2017 while investigating whether plaintiff's medical conditions arose from the September 2017 accident. Plaintiff's first independent medical evaluation in February 2018 suggested that plaintiff required attendant care and was unable to return to work without treatment and further testing. However, the evaluator did not reach a conclusion regarding the causation of plaintiff's injuries. Thereafter, defendant required a second independent medical evaluation, and in August 2018 the second evaluator opined that plaintiff's injuries did not arise from the automobile accident. Defendant stopped providing benefits, and plaintiff sought relief from the trial court.

Prior to trial, defendant made an offer of judgment, suggesting a $35, 000 settlement. Plaintiff did not respond. Following a three-day jury trial, the jury awarded $55, 279.79 in overdue PIP benefits and interest. This amount was less than the sum sought by plaintiff. Defendant filed a motion for remittitur and a second motion for attorney fees. Plaintiff also filed a motion for attorney fees and costs. Following a hearing on the matter, the trial court awarded plaintiff the full amount of his attorney fees and taxable costs and denied defendant's motions. Defendant appeals this order.

II. STANDARDS OF REVIEW

Generally, this Court reviews the interpretation of statutes and court rules de novo. Simcor Constr, Inc v Trupp, 322 Mich.App. 508, 513-514; 912 N.W.2d 216 (2018). This Court also reviews the interpretation and application of the offer-of-judgment rule de novo. Id. at 514.

When interpreting unambiguous statutory language, the statute must be enforced as written. No further judicial construction is required or permitted. Our goal is to give effect to the Legislature's intent, focusing first on the statute's plain language. We must examine the statute as a whole reading individual words and phrases in the context of the entire legislative scheme. In doing so, we consider the entire text, in view of its structure and of the physical and logical relation of its many parts. [Ally Fin, Inc v State Treasurer, 502 Mich. 484, 493; 918 N.W.2d 662 (2018) (cleaned up).]

Further, the trial court's factual determination regarding whether an insurance company acted reasonably with regard to paying no-fault benefits "involves a mixed question of law and fact. What constitutes reasonableness is a question of law, but whether the defendant's denial of benefits is reasonable under the particular facts of the case is a question of fact." Moore v Secura Ins, 482 Mich. 507, 516; 759 N.W.2d 833 (2008) (cleaned up). Findings of fact are reviewed for clear error. Id. The trial court clearly errs when this Court is left with a definite and firm conviction that the trial court made a mistake. Id.

Additionally, when attorney fees are authorized, this Court reviews the trial court's award of attorney fees for an abuse of discretion. Pirgu v United Servs Auto Ass'n, 499 Mich. 269, 274; 884 N.W.2d 257 (2016). The court abuses its discretion when its determination of attorney fees falls outside the range of reasonable and principled outcomes, or it errs in its application of the law. Id.

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III. ATTORNEY FEES

Defendant argues that the evidence at trial does not support the trial court's conclusion that defendant wrongfully denied plaintiff's no-fault benefits, thereby rendering plaintiff eligible for attorney fees under MCL 500.3148. Defendant also argues that the trial court's award of attorney fees and costs to plaintiff under MCL 500.3148 was erroneous because plaintiff failed to file a counteroffer to defendant's offer of judgment under MCR 2.405. Defendant asserts that by failing to file a response or counteroffer, plaintiff became ineligible to recover "actual costs," which is defined to include taxable costs and reasonable attorney fees. We disagree.

"[A]ttorney fees generally are not recoverable from the losing party as costs in the absence of an exception set forth in a statute or court rule expressly authorizing such an award." Pirgu, 499 Mich. at 274-275 (cleaned up); see MCL 600.2405(6). "The no-fault act provides for an award of reasonable attorney fees when an insurer unreasonably withholds benefits." Bronson Methodist Hosp v Auto-Owners Ins Co, 295 Mich.App. 431, 456; 814 N.W.2d 670 (2012). At the time of trial, MCL 500.3148(1), as enacted by 1972 PA 294, stated in relevant part:

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 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.

"The purpose of the no-fault act's attorney-fee penalty provision is to ensure prompt payment to the insured." Ross v. Auto Club Group, 481 Mich. 1, 11, 748 N.W. 2d 552 (2008). In Moore, our Supreme Court held that MCL 500.3148(1) "establishes two prerequisites for the award of attorney fees." Moore, 482 Mich. at 517. First, the benefits must be overdue as contemplated by MCL 500.3142(2), which means they were "not paid within 30 days after the insurer receives reasonable proof of the fact and of the amount of loss sustained." Id. (cleaned up). Secondly, the trial court must determine if the insurer" 'unreasonably refused to pay the claim or unreasonably delayed in making proper payment.'" Moore, 482 Mich. at 517, quoting MCL 500.3148(1). "When benefits initially denied or delayed are later determined to be payable, a rebuttable presumption arises that places the burden on the insurer to justify the refusal or delay." Bronson Methodist Hosp, 295 Mich.App. at 457 (cleaned up). "However, a refusal to pay or a delay in payment is not unreasonable if it is based on a legitimate question of statutory construction, constitutional law, or factual uncertainty. The determinative factor is not whether the insurer ultimately is held responsible for benefits, but whether its initial refusal to pay was unreasonable." Id. (cleaned up).

Defendant contends that there was bona fide factual uncertainty regarding whether PIP benefits were properly owed and that its decision to refuse payment was reasonable because the decision was supported by the independent medical evaluator's opinions. "[A]n insurer may reasonably rely on the medical opinion of its physicians and the [independent medical evaluations (IMEs)] the physicians perform . . . ." Tinnin v Farmers Ins Exch, 287 Mich.App. 511, 516; 791 N.W.2d 747 (2010). No-fault insurers do not have a duty "to 'go beyond' the medical opinion of their physicians and the IMEs that those physicians perform." Moore, 482 Mich. at 522. However, as noted by the trial court, in this case, defendant ceased making payments before it had received

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a medical opinion that supported a conclusion that the benefits were "unrelated, unnecessary[, ] or unreasonable." The record indicates that defendant made the decision to "pend" payments in December 2017. Thereafter, plaintiff attended an independent medical exam, arranged by defendant, with Dr. Donald Boyd in February 2018. Despite Dr. Boyd's findings that plaintiff was injured and required treatment and attendant care and should not return to work until his testing improved, defendant denied and continued to delay paying bills associated with plaintiff's injuries. Subsequently, defendant sent plaintiff to a second independent medical examination with Dr. Eduardo Montoya, who ultimately determined that plaintiff's cognitive impairments did not arise out of the motor vehicle accident. At that point, defendant terminated all...