Univ. Rehab. v. Farm Bureau

• Decision Date: 22 July 2008
• Docket Number: Docket No. 272615.
• Citation: 760 N.W.2d 574,279 Mich. App. 691
• Parties: UNIVERSITY REHABILITATION ALLIANCE, INC v. FARM BUREAU INSURANCE COMPANY OF MICHIGAN.
• Court: Court of Appeal of Michigan — District of US

760 N.W.2d 574

279 Mich. App. 691

UNIVERSITY REHABILITATION ALLIANCE, INC v. FARM BUREAU INSURANCE COMPANY OF MICHIGAN.

Docket No. 272615.

Court of Appeals of Michigan.

Submitted November 15, 2007, at Lansing.

Decided July 22, 2008, at 9:10 a.m.

Sinas, Dramis, Brake, Boughton & McIntyre, P.C., Lansing (by George T. Sinas, Timothy J. Donovan, and Steven A. Hicks), for the plaintiff.

Willingham & Coté, P.C., East Lansing (by Toree J. Breen and Matthew K. Payok), for the defendant.

Before: DONOFRIO, P.J., and HOEKSTRA and MARKEY, JJ.

MARKEY, J.

Defendant appeals by right the order granting summary disposition to plaintiff and awarding plaintiff attorney fees in this no-fault insurance case. We affirm.

This case arose when Kimberly Sterling was either pushed from or jumped out of a moving motor vehicle, hit the ground, and sustained serious brain injuries. Defendant, Sterling's no-fault insurer, originally refused to pay plaintiff's claim for no-fault benefits because it asserted that injuries resulting from assaults are exempt from any no-fault coverage. After Sterling's boyfriend was acquitted of assault, defendant agreed to pay the claim with interest, but denied that it owed attorney fees. The trial court ruled that the original denial was unreasonable because even if Sterling had been assaulted, the claim would not be barred: the injuries occurred because Sterling fell out of the moving vehicle while the vehicle was being used for transportation. The trial court later determined that the 25 percent contingent fee to which plaintiff agreed was fair and granted plaintiff attorney fees consistent with the contingent-fee agreement.

The trial court's decision to grant or deny attorney fees under the no-fault act presents a mixed question of law and fact. Ross v. Auto Club Group, 481 Mich. 1, 7, 748 N.W.2d 552 (2008). "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." Id. We review de novo questions of law, but review the trial court's findings of fact for clear error. Id. A finding is clearly erroneous where this Court is left with the definite and firm conviction that a mistake has been made. Id.

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. [MCL 500.3148(1).]

An insurer's delay in making payments under the no-fault act is not unreasonable if it is based on a legitimate question of statutory construction, constitutional law, or factual uncertainty. Ross, supra at 11, 748 N.W.2d 552. Whether attorney fees are warranted under the no-fault depends not on whether coverage is ultimately determined to exist, but on whether the insurer's initial refusal to pay was unreasonable. If an insurer refuses to pay or delays paying no-fault benefits, the insurer must meet the burden of showing that the refusal or delay is the product of a legitimate question of statutory construction, constitutional law, or factual uncertainty. Id.

Under MCL 500.3105(1), no-fault personal protection insurance (PIP)¹ benefits are payable for "accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle." MCL 500.3105(4) provides that bodily injury "is accidental as to a person claiming personal protection insurance benefits unless suffered intentionally by the injured person or caused intentionally by the claimant." Thus, injuries to a person can be "accidental" for purposes of PIP benefits where the injured person is not complicit in causing the injury even if another person intentionally caused the injury. See Detroit Automobile Inter-Ins. Exch. v. Higginbotham, 95 Mich.App. 213, 220, 290 N.W.2d 414 (1980). Here, defendant has never claimed that it initially denied benefits because Sterling intended to injure herself. Instead, it asserted that no-fault benefits are not payable for injuries arising from assaults. This is a crucial fact because, as noted above, the insurer must show that its refusal or delay stemmed from a legitimate question of statutory construction, constitutional law, or factual uncertainty. See, e.g., Schultz v. Auto-Owners Ins. Co., 212 Mich.App. 199, 201, 536 N.W.2d 784 (1995).

In order for an injury to arise out of the use of a motor vehicle as a motor vehicle, and thus be entitled to coverage for purposes of PIP benefits, the injury must be "closely related to the transportational function of automobiles." McKenzie v. Auto Club Ins. Ass'n, 458 Mich. 214, 215, 580 N.W.2d 424 (1998).

Defendant essentially argues that because it initially did not know whether Sterling was assaulted or fell out of the vehicle, it did not unreasonably deny benefits at the outset because PIP benefits are not payable for injuries from assaults. In particular, defendant emphasizes the statement in McKenzie, supra at 222, 580 N.W.2d 424, that the holdings in Thornton v. Allstate Ins. Co., 425 Mich. 643, 660-661, 391 N.W.2d 320 (1986), and Bourne v. Farmers Ins. Exch., 449 Mich. 193, 203, 534 N.W.2d 491 (1995), "support the approach articulated here because assaults occurring in a motor vehicle are not closely related to the transportational function of a motor vehicle." Any argument, however, that this language supports defendant's initial denial of PIP benefits here as reasonable because Sterling claimed that her injuries occurred when she was pushed out of a moving vehicle, i.e., assaulted, requires this language to be read totally out of context. Moreover, the language taken out of context also conflicts with the clear language of the statute, and the circumstances in Thornton and Bourne differ considerably from Sterling's version of events in the present case. Nor do those cases provide the requisite legal support for defendant's position. In particular, Thornton involved a taxi driver who was shot by a passenger who had called his cab in order to rob him. Thornton, supra at 646, 391 N.W.2d 320.

Bourne involved a man who was forced by two men at gunpoint to drive to a location where one of the assailants struck him and threw him to the ground. They then drove away in the injured man's car. Bourne, supra at 196, 534 N.W.2d 491. In both cases the injuries were inflicted by means that did not directly involve the use of a motor vehicle, i.e., the gunshot in Thornton and the physical attack outside the vehicle in Bourne. Rather, the motor vehicle involved in Thornton was simply where the victim was shot, a situation no different from a home's being the site of a crime. And in Bourne, the assailants used the vehicle to transport the victim to the location of the assault. Thus, the essence of Thornton and Bourne is that where a motor vehicle is merely the location of an assault or a backdrop of an assault, there is insufficient connection between the injuries and the use of a motor vehicle as a motor vehicle to impose liability for PIP benefits under MCL 500.3105(1). There is, however, no rule precluding PIP benefits for injuries resulting from an assault. The present case is markedly distinguished from Thornton and Bourne because Sterling's injuries directly resulted from her falling out of the motor vehicle while it was in motion and being used for transportation. Nor has there ever been any suggestion or evidence that she intentionally attempted to harm herself; consequently, Sterling suffered an accidental injury as defined by MCL 500.3105(4).

Moreover, in McKenzie, our Supreme Court stated that, "moving motor vehicles are quite obviously engaged in a transportational function." McKenzie, supra at 221, 580 N.W.2d 424. Sterling's injuries were a direct result of the vehicle's movement, not merely incidental to it. Unlike getting out of a stopped car, getting out of a car while it is being driven is extremely hazardous and likely to result in injury. Whether Sterling was pushed or stepped out, her head trauma was patently the direct result of her getting or being forced out of a moving vehicle, not simply a direct result of being shoved by the driver (if that actually occurred). Thus, even if there had been an assault, Sterling's injuries would still be a direct result of being forced out of a moving vehicle. This means that the vehicle was not merely the location of an assault: The use of the motor vehicle for transportation was closely related to, and indeed was a direct, active cause of, Sterling's injuries. So, regardless of whether she was shoved out or voluntarily got out of the vehicle, there is no evidence that Sterling intended to hurt herself, and her injuries were directly related to the use of the vehicle as a mode of transportation. Defendant's argument that it delayed in paying the benefits because it believed that injuries resulting from assaults were not covered by the no-fault statute is inconsistent with the plain language of the statute, nor is there any caselaw supporting or somehow overruling this plain language. Defendant's justification for delaying payment—ostensibly an attempt to construe the statutory language—does not satisfy the requisite burden of showing that the delay was the product of a legitimate question of statutory construction or either of the other two possible reasons. Consequently, at no time did defendant have a reasonable basis for denying plaintiff PIP benefits under the facts of this case and the plain language of the statute. Accordingly, the trial court did not clearly err by ruling that defendant's initial denial of benefits was unreasonable.

Defendant next claims that the trial court erred when it set the amount of the reasonable attorney fee...