Yaldo v. North Pointe Ins. Co., Docket No. 184105

• Decision Date: 23 July 1996
• Docket Number: Docket No. 184105
• Parties: YALDO, Plaintiff-Appellee, v. NORTH POINTE INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 657

552 N.W.2d 657

217 Mich.App. 617

YALDO, Plaintiff-Appellee, v. NORTH POINTE INSURANCE COMPANY, Defendant-Appellant.

Docket No. 184105.

Court of Appeals of Michigan.

Submitted June 5, 1996, at Detroit.

Decided July 23, 1996, at 9:00 a.m.

Released for Publication Sept. 13, 1996.

Weinbaum & Abbo, P.C. by Peter Abbo, Farmington Hills, and Sommers, Schwartz, Silver & Schwartz, P.C. by Carl B. Downing, Southfield, for plaintiff.

Klemanski and Honeyman, P.C. by John D. Honeyman, Troy, for defendant.

Before MARK J. CAVANAGH, P.J., and HOOD and J.J. McDONALD, ^* JJ.

PER CURIAM.

Defendant appeals as of right the circuit court's order setting judgment interest at twelve percent pursuant to M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5). We affirm.

Plaintiff's complaint against defendant alleged that defendant issued to plaintiff a policy insuring a building and its contents. Plaintiff alleged that on August 28, 1990, a fire occurred at the building, resulting in substantial damage to the premises. Plaintiff submitted proof of loss and a claim for benefits, but defendant refused to pay, thereby breaching the insurance contract.

The trial court entered an order granting partial summary disposition in favor of plaintiff with regard to the issue of liability. Defendant appealed, and this Court affirmed the grant of partial summary disposition in an unpublished order, entered May 2, 1994 (Docket No. 159141). Defendant requested, but was denied, a rehearing. The parties stipulated damages in the amount of $176,750, and agreed that taxable costs and interest would be added and included in the judgment.

Plaintiff then brought a motion in the circuit court to determine the rate of interest to be applied to the judgment. Plaintiff contended that the fire insurance policy was a written instrument and that M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) provides for a twelve percent rate of interest when the judgment is based on a written instrument. Defendant argued that an insurance policy is not a written instrument under the Uniform Commercial Code (UCC) and therefore the rate of interest should be calculated pursuant to M.C.L. § 600.6013(6); M.S.A. § 27A.6013(6). Defendant claimed that M.C.L. § 600.6013(6); M.S.A. § 27A.6013(6) provides that the interest rate for all other civil actions is one percent plus the average interest rate. The trial court entered an order that set the interest rate at twelve percent compounded annually as provided in M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5).

On appeal, defendant challenges the trial court's award of twelve percent interest under M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) rather than the rate in M.C.L. § 600.6013(6); M.S.A. § 27A.6013(6), arguing that the insurance policy was not a "written instrument." We disagree. The determination of which statutory provision applies in a given action is a purely legal question to be resolved by statutory interpretation. Old Orchard By the Bay Associates v. Hamilton Mutual Ins Co, 434 Mich. 244, 251, 454 N.W.2d 73 (1990).

M.C.L. § 600.6013; M.S.A. § 27A.6013, in part, provides:

(5) 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.

(6) 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.

The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Indenbaum v. Michigan Bd. of Medicine (After Remand), 213 Mich.App. 263, 271, 539 N.W.2d 574 (1995); Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). The first criterion in determining intent is the specific language of the statute. Indenbaum, supra. The Legislature is presumed to have intended the meaning it plainly expressed. Id. Courts may not speculate regarding the probable intent of the Legislature beyond the words expressed in the statute. If the plain and ordinary meaning of the language is clear, judicial construction is normally neither necessary nor permitted. Id. If reasonable minds can differ regarding the meaning of a statute, judicial construction is appropriate. Id.

Unless defined in the statute, every word or phrase of a statute should be construed and understood according to the common and approved usage of the language, taking into account the context in which the words are used. M.C.L. § 8.3a; M.S.A. § 2.212(1); In re Public Service Comm's Determination Regarding Coin-Operated Telephones, Direct-Inward Dialing, & Touchtone Service, No. 2, 204 Mich.App. 350, 353, 514 N.W.2d 775 (1994). When, as in this case, words are not defined in the statute, a court may consult dictionary definitions. Dedes v. Asch, 446 Mich. 99, 105, 521 N.W.2d 488 (1994); Indenbaum, supra.

We initially note that defendant's argument that this Court should look to the UCC for the definition of written instrument is without merit. The UCC is not contained in the same statutory chapter, it does not address the same subject matter, and M.C.L. § 600.6013; M.S.A. § 27A.6013 does not make reference to the UCC as a definition guideline.

In any event, Black's Law Dictionary (6th ed), p. 1110, defines "written instrument" as "something reduced to writing as a means of evidence, as the means of giving formal expression to some act or contract." "Written" is defined as "expressed in writing." The Random House College Dictionary, Revised Edition, p. 1251 (1984). Instrument is defined as "a formal legal document, as a contract, deed or grant." Id., p. 691.

On the basis of these definitions, we find that an insurance policy or contract is clearly a written instrument. It is, in essence, a contract, reduced to writing, which evidences the formal agreement between the parties. We also note that in O-So Detroit, Inc. v. Home Ins. Co., 973 F.2d 498, 504-505 (C.A.6, 1992), the Sixth Circuit Court of Appeals examined Michigan law on the subject and interpreted M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) to include insurance policies. We agree with that interpretation and therefore conclude that the trial court properly applied M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) and determined that the proper interest rate was twelve percent.

Defendant further argues that the trial court's ruling renders meaningless the provision of the Uniform Trade Practices Act that provides for twelve percent penalty interest against an insurer who fails to pay a claim on a timely basis. M.C.L. § 500.2006(4); M.S.A. § 24.12006(4). Again, we disagree. M.C.L. § 500.2006(4); M.S.A § 24.12006(4) provides for interest from a date sixty days after satisfactory proof of loss was received by the insurer. Whereas, M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) provides for a twelve percent rate of interest from the date of filing the complaint. The two provisions do not completely overlap and M.C.L. § 500.2006(4); M.S.A. § 24.12006(4) provides for a longer period of interest. Even if the penalty interest is offset by the interest under M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5), the penalty interest will generally be greater because it goes back to an earlier date. See McCahill v. Commercial Union Ins Co, 179 Mich.App. 761, 779-780, 446 N.W.2d 579 (1989). Therefore, although the two provisions provide similar redress, they do not render each other meaningless. ¹

Next, defendant contends that the trial court's interpretation of the judgment interest statute, M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5), violated the Equal Protection Clause of the Michigan Constitution, Const. 1963, art. I, § 2, because the court's interpretation created an irrational classification that imposes a higher penalty upon contract defendants as opposed to tort defendants. Constitutional issues are questions of law. Issues of law are reviewed de novo on appeal. Duggan v. Clare Co. Bd. of Comm'rs, 203 Mich.App. 573, 575, 513 N.W.2d 192 (1994).

The equal protection guarantees of the Michigan Constitution ensure that people under similar circumstances will be treated alike. Hauser v. Reilly, 212 Mich.App. 184, 189, 536 N.W.2d 865 (1995). Equal protection does not require that persons under different circumstances be treated the same. Id. Under traditional equal protection analysis, a statute must be sustained if the classification is rationally related to a legitimate governmental interest. Doe v. Dep't. of Social Services, 439 Mich. 650, 662, ...