Young v. Michigan Mut. Ins. Co.

• Decision Date: 22 February 1985
• Docket Number: Docket No. 71259
• Citation: 139 Mich.App. 600,362 N.W.2d 844
• Parties: Gerald E. YOUNG, Plaintiff-Appellant, v. MICHIGAN MUTUAL INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 844

362 N.W.2d 844

139 Mich.App. 600

Gerald E. YOUNG, Plaintiff-Appellant, v. MICHIGAN MUTUAL INSURANCE COMPANY, Defendant-Appellee.

Docket No. 71259.

Court of Appeals of Michigan.

Submitted Oct. 2, 1984.

Decided Dec. 17, 1984.

Released for Publication Feb. 22, 1985.

Timothy J. Taylor, P.C. by Daniel H. Pyscher, Mount Pleasant, for plaintiff-appellant.

Collison, Chasnis & Dogger, P.C. by Mark Grierson, Saginaw, for defendant-appellee.

Before CYNAR, P.J., and KELLY and EVANS, ^* JJ.

CYNAR, Presiding Judge.

Plaintiff was injured in an automobile accident by an uninsured motorist on May 30, 1981. A dispute arose between plaintiff and defendant concerning both the personal protection insurance benefits and benefits payable under the uninsured motorist coverage. Defendant apparently paid some of the personal injury protection benefits and plaintiff instituted an action in district court for those benefits allegedly outstanding. The district court action is still pending. On September 7, 1982, plaintiff demanded arbitration on the uninsured motorist claim pursuant to the terms of the insurance policy. The award was arbitrated and an award was given. Plaintiff also filed an action in Gratiot County Circuit Court alleging that defendant failed and refused to pay, or delayed in paying, plaintiff's insurance benefits, and that such actions constituted a tort under the Uniform Trade Practices Act. A motion for summary judgment under GCR 1963, 117.2(1) and a motion for accelerated judgment under GCR 1963, 116.1(2) were filed by defendant. Both motions were granted by the trial court. Plaintiff filed a delayed application for leave to appeal. Leave was granted by this Court.

Defendant based its motion for accelerated judgment pursuant to GCR 1963, 116.1(2) on the following arbitration clause in the insurance contract which provided:

"If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount of payment which may be owing under this Part, then, upon written demand of either, the matter or matters upon which such person and the company do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this Part."

The dispute between the parties does not fall within the terms of the arbitration clause. Plaintiff's claim does not involve his entitlement to benefits. Plaintiff, as will be discussed below, asserted a tort claim against the insurance company. Plaintiff was not seeking benefits under the contract in circuit court, nor was plaintiff claiming disagreement, in the circuit court action, with the amount of money due under the contract for his injuries. Plaintiff's claim was that there was actionable tortious conduct on the part of the defendant as the result of its handling of the claim. This type of dispute was not within the terms expressed in the arbitration clause. Arbitration is a matter of contract. A party cannot be required to arbitrate an issue unless he has agreed to do so. Kaleva-Norman-Dickson School Dist. No. 6 v. Kaleva-Norman-Dickson School Teacher's Ass'n, 393 Mich. 583, 587, 227 N.W.2d 500 (1975). No construction of the arbitration clause can support the conclusion that this dispute was subject to arbitration, therefore accelerated judgment under GCR 1963, 116.1(2) was improper.

The next issue is whether summary judgment was properly granted pursuant to GCR 1963, 117.2(1). Summary judgment should only be granted when the plaintiff's claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery. Graves v. Wayne County, 124 Mich.App. 36, 333 N.W.2d 740 (1983).

Plaintiff alleged three alternative bases for legal relief in the broadly stated complaint. First, plaintiff alleged that defendant's actions in handling his claim for benefits constituted tortious conduct because they violated § 2006 of the Uniform Trade Practices Act (UTPA), M.C.L. § 500.2006; M.S.A. § 24.12006. Second, plaintiff alleged the same actions constituted tortious conduct because they violated M.C.L. § 500.2026; M.S.A. § 24.12026. Third, plaintiff alleged tortious conduct amounting to bad faith failure to settle the claim resulting in anxiety, outrage and hardship to the plaintiff.

We first consider whether a private party may maintain an action in tort for violation of M.C.L. § 500.2006; M.S.A. § 24.12006. Plaintiff contends that M.C.L. § 500.2006; M.S.A. § 24.12006 creates a cause of action in tort which can be maintained by a private party. We disagree. In Barker v. Underwriters at Lloyd's, London, 564 F.Supp. 352 (E.D.Mich., 1983), the same question was before the district court. The plaintiff alleged that the insurer refused to promptly settle a fire insurance claim. Plaintiff also alleged, as in this case, that M.C.L. § 500.2006; M.S.A. § 24.12006 of the UTPA created an implied cause of action in a private party. The district court rejected that argument.

In Barker, the district court noted, as we do, that the UTPA was an amendment to the Insurance Code of 1956, 1956 P.A. 218; M.C.L. § 500.100 et seq.; M.S.A. § 24.1100 et seq. The UTPA is part and parcel of the Insurance Code. The Insurance Code states:

"Every penalty provided for by this code, if not otherwise provided for, shall be sued for and recovered in the name of the people by the prosecuting attorney of the county in which the insurer or the agent or agents so violating shall be situated; and shall be paid into the treasury of said county; such penalties may also be sued for and recovered in the name of the people, by the attorney general, and, when sued for and collected by him, shall be paid into the state treasury." M.C.L. § 500.230; M.S.A. § 24.1230.

The provision precludes a private party from recovering penalties specified in the code unless otherwise provided. Dasen v. Frankenmuth Mutual Ins. Co., 39 Mich.App. 582, 197 N.W.2d 835 (1972).

This Court has held that a private party may directly recover the interest penalty in an action against the insurer. Fletcher v. Aetna Casualty & Surety Co., 80 Mich.App. 439, 264 N.W.2d 19 (1978), aff'd on other grounds 409 Mich. 1, 294 N.W.2d 141 (1980); Herring v. Golden State Mutual Life Ins. Co., 114 Mich.App. 148, 318 N.W.2d 641 (1982). However, the interest penalty is not what plaintiff sought here. Plaintiff instead contended that a cause of action in tort which can be pursued by a private party has been implicitly created by M.C.L. § 500.2006; M.S.A. § 24.12006. That is the gravamen of his complaint and the position was restated emphatically in his brief on appeal. We do not agree with that position. We believe the position enunciated in Barker, supra, p. 355, is, instead, the correct one:

"The Court finds that plaintiffs may assert a private cause of action to recover the interest penalty in section 2006 of the UTPA since that section provides that the insurer pay the interest penalty to the insured on claims not paid on a timely basis. In the absence of any authority supporting the maintenance of a private cause of action founded upon any other section of the UTPA, the Court concludes that section 230 of the Insurance Code of 1956, M.C.L.A. § 500.230, governs the enforcement of the UTPA and that plaintiff may not assert a private cause of action based on other alleged violations of the UTPA."

Summary judgment was proper on this issue. There is no implied private cause of action in tort for violation of M.C.L. § 500.2006; M.S.A. § 24.12006. This conclusion is further buttressed by our discussion of plaintiff's claim under M.C.L. § 500.2026; M.S.A. § 24.12026.

Plaintiff also claimed that a private cause of action is implied by M.C.L. § 500.2026; M.S.A. § 24.12026. This claim was rejected by the Michigan Supreme Court in Shavers v. Attorney General, 402 Mich. 554, 604, fn. 27; 267 N.W.2d 72 (1978), cert. den. sub nom. ...