Yaldo v. North Pointe Ins. Co., Docket No. 107032
| Citation | 457 Mich. 341,578 N.W.2d 274 |
| Decision Date | 19 May 1998 |
| Docket Number | No. 7,Docket No. 107032,7 |
| Parties | Isam YALDO, Plaintiff-Appellee, v. NORTH POINTE INSURANCE COMPANY, Defendant-Appellant. Calendar |
| Court | Supreme Court of Michigan |
Sommers, Schwartz, Silver & Schwartz, P.C. by Carl B. Downing, Southfield, and Weinbaum & Abbo, P.C. by Peter Abbo, Farmington Hills, for plaintiff-appellee.
Klemanski & Honeyman, P.C. by John D. Honeyman, Troy, for defendant-appellant.
Kallas & Henk, P.C. by Constantine N. Kallas, Bloomfield Hills, amicus curiae, for Michigan Association of Insurance Companies.
In this case, we are asked to determine the applicable rate of interest on a judgment for plaintiff because of defendant's failure to pay plaintiff's claim under an insurance contract. We hold that the lower courts properly found that subsection 5 not subsection 6 of M.C.L. § 600.6013; M.S.A. § 27A.6013 is controlling. Therefore, we affirm the award of twelve percent interest to plaintiff.
In 1988, plaintiff sold his business, the New Inkster Market, to Kanouno Enterprises, Inc. Kanouno signed a land contract and executed a promissory note and security agreement. An insurance policy was issued, identifying the buyer as the named insured and designating plaintiff under a lender's loss payable clause. In 1990, Kanouno defaulted on the land contact. Approximately one month later, the market burned.
Plaintiff filed a claim with defendant under the lender's loss payable clause. When defendant refused to pay, plaintiff filed suit. The Wayne Circuit Court entered judgment in plaintiff's favor in 1992 in the amount of $176,750.
Following unsuccessful appeals by defendant, plaintiff brought a motion to determine the rate of interest on the judgment. Plaintiff contended that the proper rate was twelve percent, compounded annually, as provided by M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5). Defendant countered by asserting that the proper rate of interest ranged between six and seven percent pursuant to M.C.L. § 600.6013(6); M.S.A. § 27A.6013(6).
The trial court agreed with plaintiff and awarded interest at the rate of twelve percent compounded annually as provided in M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5). The Court of Appeals affirmed the trial court's order. 217 Mich.App. 617, 552 N.W.2d 657 (1996). We granted defendant's application for leave to appeal. 455 Mich. 867, 568 N.W. 2d 87 (1997).
The issue before us is whether subsection 5 or subsection 6 of M.C.L. § 600.6013; M.S.A. § 27A.6013 applies for the purpose of computing interest on the judgment. Because we are making a statutory interpretation, we review the issue de novo as a question of law. Cardinal Mooney High School v. Michigan High School Athletic Ass'n, 437 Mich. 75, 80, 467 N.W.2d 21 (1991).
Subsection 5 provides:
For complaints filed on or after January 1, 1987, if a judgment is rendered on a written instrument, interest shall be calculated from the date of filing the complaint to the date of satisfaction of the judgment at the rate of 12% per year compounded annually, unless the instrument has a higher rate of interest. In that case interest shall be calculated at the rate specified in the instrument if the rate was legal at the time the instrument was executed. The rate shall not exceed 13% per year compounded annually after the date judgment is entered. [M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) (emphasis added).]
On the other hand, subsection 6 provides:
Except as otherwise provided in subsection (5) and subject to subsection (11), for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action shall be calculated at 6-month intervals from the date of filing the complaint at a rate of interest that is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, pursuant to this section. Interest under this subsection shall be calculated on the entire amount of the money judgment, including attorney fees and other costs. However, the amount of interest attributable to that part of the money judgment from which attorney fees are paid shall be retained by the plaintiff, and not paid to the plaintiff's attorney. [M.C.L. § 600.6013(6); M.S.A. § 27A.6013(6).]
Therefore, if an insurance policy is a "written instrument," subsection 5 is applicable, and plaintiff is entitled to twelve percent interest compounded annually. If an insurance policy is not a "written instrument," then subsection 6 is applicable, and plaintiff is entitled to a lower rate of interest.
Defendant argues that "written instrument" must be defined as a writing that expressly contains a rate of interest, such as a negotiable instrument. Allegedly, defendant's definition alone gives meaning to the language of subsection 5 that states: "unless the instrument has a higher rate of interest." Plaintiff counters by arguing that all written contracts, including insurance policies, fall within the definition of "written instrument." The subsection 5 language referred to by defendant applies only in the event that the written instrument in question contains a rate of interest, and it is higher than twelve percent.
In order to reach a conclusion, we must determine whether the Legislature intended to include insurance policies within the definition of "written instrument." The primary goal of judicial interpretation of statutes is to give effect to the intent of the Legislature. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). In determining legislative intent, we look first at the words of the statute. If the language is clear and unambiguous, judicial construction in not normally permitted. If reasonable minds can differ regarding its meaning, then judicial construction is appropriate. Indenbaum v. Michigan Bd. of Medicine (After Remand), 213 Mich.App. 263, 539 N.W.2d 574 (1995). The Legislature is presumed to have intended the meaning it plainly expressed. Id.
We note that the Legislature did not define the term "written instrument" when it enacted M.C.L. § 600.6013; M.S.A. § 27A.6013. Nevertheless, we find the expression clear and unambiguous. An insurance policy is a written instrument. We refuse to rewrite the language of the statute effectively to limit "written instrument" to "negotiable instrument." The expression "negotiable instrument" is well known and is used throughout the Uniform Commercial Code. Had the Legislature intended to restrict the applicability of subsection 5 to negotiable instruments or instruments containing a rate of interest, it could easily have used such terminology. Moreover, the language in subsection 5 cited by defendant merely recognizes that parties may write into their contracts their own terms relating to interest. If the parties choose to set no rate or to set a rate within legal limits higher than twelve percent, they are free to do it.
We note that Michigan Courts have interchanged the term "written instrument" with "written contract" and "insurance contract." For example, in Bowen v. Prudential Ins. Co. of America, 1 this Court stated: "A policy of insurance is the formal, written instrument in which a contract of insurance is embodied...." 2 Because Michigan Courts have a history of referring to insurance policies as written instruments, we are not prepared to change the clear and unambiguous term in subsection 5. 3
Defendant argues that including insurance policies under the definition of "written instrument" would nullify M.C.L. § 500.2006(4); M.S.A. § 24.12006(4) of the Uniform Trade Practices Act. It provides:
When benefits are not paid on a timely basis the benefits paid shall bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum, if the claimant is the insured or an individual or entity directly entitled to benefits under the insured's contract of insurance. Where the claimant is a third party tort claimant, then the benefits paid shall bear interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum if the liability of the insurer for the claim is not reasonably in dispute and the insurer has refused payment in bad faith, such bad faith having been determined by a court of law.... Interest paid pursuant to this section shall be offset by any award of interest that is payable by the insurer pursuant to the award.
We do not agree with defendant that our interpretation of M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) nullifies this provision. We acknowledge that, under some circumstances, there will be an overlap in the statutes. However, M.C.L. § 500.2006(4); M.S.A. § 24.12006(4) allows an insured to recover twelve percent interest from its insurer where no complaint has been filed to force payment. It applies when the insurance company is dilatory in making timely payments to the insured. Its purpose is to punish the insurance company. See McCahill v. Commercial Union Ins. Co., 179 Mich.App. 761, 446 N.W.2d 579 (1989). Merely because, under some circumstances, the two statutes overlap, does not mean that we must change the clear and unambiguous language of M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5). 4
Defendant asserts that the Court of Appeals erred when it stated that, even if subsection 5 did not apply, twelve percent could have been awarded pursuant to M.C.L. § 500.2006(4); M.S.A. § 24.12006(4). Under the Uniform Trade Practices Act, defendant reasons, twelve percent interest can be awarded only when the claim is not reasonably in dispute.
We find that defendant misreads the Uniform Trade Practices Act. Clearly, plaintiff could have filed a claim under M.C.L. § 500.2006(4); M.S.A. § 24.12006(4). With respect to collection...
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