If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

DEBRA K. ANDRESON and DAVID E. 

ANDRESON,

Plaintiffs-Appellants,

UNPUBLISHED

December 19, 2019

v No. 345864

Eaton Circuit Court

PROGRESSIVE MICHIGAN INSURANCE 

COMPANY,

LC No. 2016-000735-CK

Defendant-Appellee.

Before: BORRELLO, P.J., and K. F. KELLY and SERVITTO, JJ.

PER CURIAM.

Appellants appeal as of right the trial court order granting summary disposition in 

defendant’s favor. We affirm.

On October 11, 2013, plaintiff, David Andreson, was driving his vehicle with plaintiff,

Debra Andreson, as a passenger when they were rear-ended at a red light. Plaintiffs suffered 

injuries as a result of the accident. At the time of the accident, plaintiffs had an auto insurance 

policy issued by defendant on the vehicle with a liability limit of $250,000 per person and 

$500,000 per accident. That policy also contained a provision for underinsured motorist 

benefits. The driver of the other vehicle had an insurance policy with Farmers Insurance 

Company with a policy limit of $50,000 per person and $100,000 per accident and was thus,

underinsured.

Plaintiffs brought an action against the other driver and settled with her for the $100,000

policy limit contained in her policy. Plaintiffs thereafter brought an action against defendant for 

breach of contract, asserting that it denied their request for underinsured motorist benefits. The 

matter proceeded to a jury trial, at the conclusion of which the jury found in favor of plaintiffs. 

Plaintiffs thereafter moved for offer of judgment sanctions and on December 14, 2016, the trial 

court granted plaintiffs’ motion in part and denied it in part. The trial court found that the offers 

of judgment were not made in the spirit of gamesmanship, but that plaintiffs were entitled to 

reasonable attorney fees and costs in the amount of $128,660.67. On appeal, this Court affirmed 
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in most respects, except that we remanded the matter back to the trial court to reduce the jury 

verdict to the maximum insurance policy limits. Andreson v Progressive Marathon Ins Co, 322 

Mich App 76; 910 NW2d 691 (2017).

While the appeal in Andreson, supra, was pending, plaintiffs initiated a second action 

against defendant. Plaintiffs contended, primarily, that defendant acted in bad faith in the 

handling of their claim for underinsured motorist benefits and violated the Uniform Trade 

Practices Act (UTPA), and that under the UTPA they were entitled to 12% penalty interest if the 

benefits were not paid on a timely basis. Relevant to the instant matter, plaintiffs moved for 

partial summary disposition pursuant to MCR 2.116(C)(10) on the allegations that defendant

violated the UTPA and that 12% penalty interest was payable on the judgment entered against it 

in the prior case and on the taxable costs and attorney fees (offer of judgment sanctions) awarded

in that case. Defendant also moved for summary disposition, citing MCR 2.116(C)(8) and (10) 

and arguing, in part, that plaintiffs were not entitled to interest under the UTPA because they did 

not properly plead a claim for such interest, and because the claims for statutory interest were 

barred by MCR 2.203(A) and by res judicata. The trial court denied plaintiff’s motion for partial 

summary disposition, but awarded plaintiffs 12% penalty interest on the jury verdict. The trial 

court denied plaintiff’s request for 12% penalty interest on their award of offer of judgment 

sanctions. The trial court further granted summary disposition in defendant’s favor, opining that 

plaintiffs’ claim of bad faith was not supported by the record.

On appeal, plaintiffs first contend that the trial court erred in refusing to award them 12% 

penalty interest under the UTPA on their award of offer of judgment sanctions. We disagree.

We review de novo the interpretation and application of a statute as a question of law.

Eggleston v Bio-Med Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003). Our 

goal, in reviewing a statute, is to give effect to the legislature’s intent, focusing first on the 

statute’s plain language. Ally Fin Inc v State Treasurer, 502 Mich 484, 493; 918 NW2d 662 

(2018). When a statute is unambiguous, “the statute must be enforced as written. No further 

judicial construction is required or permitted.” Id. (citation omitted). A statutory term or phrase 

“cannot be viewed in isolation, but must be construed in accordance with the surrounding text 

and the statutory scheme.” McQueer v Perfect Fence Co, 502 Mich 276, 286; 917 NW2d 584 

(2018).

MCL 500.2006, part of the UTPA, states:

(1) A person must pay on a timely basis to its insured, a person directly entitled to 

benefits under its insured's insurance contract, or a third party tort claimant the 

benefits provided under the terms of its policy, or, in the alternative, the person 

must pay to its insured, a person directly entitled to benefits under its insured's 

insurance contract, or a third party tort claimant 12% interest, as provided in 

subsection (4), on claims not paid on a timely basis. Failure to pay claims on a 

timely basis or to pay interest on claims as provided in subsection (4) is an unfair 

trade practice unless the claim is reasonably in dispute.

* * *
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(4) If benefits are not paid on a timely basis, the benefits paid 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 a person directly 

entitled to benefits under the insured's insurance contract. If the claimant is a 

third party tort claimant, the benefits paid 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, the insurer 

has refused payment in bad faith, and the bad faith was determined by a court of 

law. The interest must be paid in addition to and at the time of payment of the 

loss. If the loss exceeds the limits of insurance coverage available, interest is 

payable based on the limits of insurance coverage rather than the amount of the 

loss. If payment is offered by the insurer but is rejected by the claimant, and the 

claimant does not subsequently recover an amount in excess of the amount 

offered, interest is not due. Interest paid as provided in this section must be offset 

by any award of interest that is payable by the insurer as provided in the award.

MCL 500.2006(4) specifically provides that if “benefits are not paid on a timely basis, the 

benefits paid 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 a person 

directly entitled to benefits under the insured's insurance contract.” (emphasis added). By its 

explicit language, 12% interest is payable on the insurance “benefits” only. Plaintiffs, however, 

assert that offer of judgment sanctions consisting of attorney fees and taxable costs is clearly a 

benefit of plaintiffs’ policy with defendant, and that defendant failed to timely pay the awarded 

sanctions such that they are entitled to 12% penalty interest on the sanctions award. 

In support of their claim that the penalty interest is payable on the sanction award, 

plaintiffs cite to Nickola v MIC Gen Ins Co, 500 Mich 115; 894 NW2d 552 (2017). However, in 

Nickola, the Supreme Court succinctly stated that, “[t]he issue presented in this case is whether 

an insurer’s untimely payment of underinsured motorist (UIM) benefits is subject to penalty 

interest under the Uniform Trade Practices Act.” Id. at 118. Specifically, the Court was called 

upon to determine whether a first party tort claimant is entitled to penalty interest under the 

UTPA if their claim is “reasonably in dispute.” Id. at 124-125. The Supreme Court, looking at 

the plain, unambiguous language of MCL 500.2006(4) held that the “reasonably in dispute” 

language applies only to third party tort claimants and that first party claimants were entitled to 

penalty interest for the untimely payment of benefits regardless of whether liability of the insurer 

for the claim is reasonably in dispute. This case thus has no bearing whatsoever on the matter 

before us.

Not only have plaintiffs failed to provide any support for their position, it is clear that 

offer of judgment sanctions are not a “benefit” to which they are entitled under their insurance 

contract with defendant. “Benefit” is defined, in part, in Merriam-Webster’s Collegiate 

Dictionary (11th ed.) as “a payment or service provided for under an . . . insurance policy.” Thus, 

plaintiffs would be entitled under MCL 500.2006(4) to 12% interest on payments or services 

provided for under their policy with defendant. As the trial court properly found, a sanction 

provided for in the Michigan Court Rules for an offer of judgment is not a “benefit paid” (i.e., a 
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service or payment provided for under the insurance policy) as set forth in or contemplated by 

MCL 500.2006(4). 

MCR 2.405(D) governs offers of judgment and states, in relevant part:

Imposition of Costs Following Rejection of Offer. If an offer is 

rejected, costs are payable as follows:

(1) If the adjusted verdict is more favorable to the offeror than the average offer, 

the offeree must pay to the offeror the offeror's actual costs incurred in the 

prosecution or defense of the action.

(2) If the adjusted verdict is more favorable to the offeree than the average offer, 

the offeror must pay to the offeree the offeree's actual costs incurred in the 

prosecution or defense of the action. However, an offeree who has not made a 

counteroffer may not recover actual costs unless the offer was made less than 42 

days before trial.

(3) The court shall determine the actual costs incurred. The court may, in the 

interest of justice, refuse to award an attorney fee under this rule.

The purpose of MCR 2.405(D) is “to encourage settlement and to deter protracted litigation.” 

Luidens v 63rd Dist Court, 219 Mich App 24, 31; 555 NW2d 709 (1996) (citation omitted). The 

purpose of the penalty interest statute (MCL 500.2006), on the other hand, is to penalize insurers 

for dilatory practices in settling meritorious claims. Dept of Transp v Initial Transp, Inc, 276 

Mich App 318, 330–31; 740 NW2d 720 (2007), reversed in part on other grounds, 481 Mich 

862; 748 NW2d 239 (2008). The purpose of MCL 500.2006 is “not to compensate a plaintiff for 

delay in recovering benefits to which the plaintiff is ultimately determined to be entitled.” Id. 

(citation omitted).

Given the differing purposes of the statutory interest provision in the UTPA and MCR 

2.405(D), the definition of “benefit,” and the lack of authority indicating that penalty interest was 

intended to apply to offer of judgment sanctions, the trial court did not err in denying plaintiffs 

their requested 12% penalty interest on the offer of judgment sanctions that they were awarded.

Plaintiffs next assert that the trial court erred in granting summary disposition in 

defendant’s favor on plaintiffs’ claim of bad faith. We again disagree. 

We review de novo a trial court's decision regarding a motion for summary disposition. 

Bernardoni v City of Saginaw, 499 Mich 470, 472; 886 NW2d 109 (2016). “A motion for 

summary disposition made under MCR 2.116(C)(10) tests the factual sufficiency of the 

complaint.” Id. In deciding a motion under MCR 2.116(C)(10), the court considers all 

affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties in the 

light most favorable to the party opposing the motion. Id. at 472-473. 

Plaintiffs aver that an insurer has a contractual obligation to act in good faith and when it, 

as here, refuses to make or delays in making a no-fault payment, there exists a rebuttable 

presumption that the action is unreasonable (i.e., in bad faith). According to plaintiffs, two of 
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defendant’s actions evidence bad faith on its part: (1) its violation of the UTPA, and (2) its 

failure to pay underinsured motorist benefits until 2 1⁄2 years after the jury verdict in plaintiffs’ 

favor, and five months after this Court affirmed the trial court. Both arguments lack merit.

We first note that plaintiffs have failed to support their positions with any binding 

authority. The vast majority of the cases relied upon by plaintiffs have no relevance to the issues 

before this Court. In Attard v Citizens Ins Co of Am, 237 Mich App 311, 317; 602 NW2d 633 

(1999), for example, the Court did state “[w]hen an insurer refuses to make or delays in making 

payment, a rebuttable presumption arises that places the burden on the insurer to justify the 

refusal or delay.” However, that statement was made with respect to:

the no-fault act's attorney fee provision, MCL 500.3148(1), which provides that 

an attorney is entitled to a reasonable fee for representing a claimant in an action 

for personal protection insurance benefits that are overdue and that the 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.” When determining whether attorney fees are 

warranted for an insurer's delay to make payments under the no-fault act, a delay 

is not unreasonable if it is based on a legitimate question of statutory construction, 

constitutional law, or factual uncertainty.

McKelvie v Auto Club Ins Ass'n, 203 Mich App 331, 334–35; 512 NW2d 74 (1994), similarly 

addresses the award of attorney fees “pursuant to § 3148(1) of the no-fault act.” Lacking any 

citation to relevant authority in their favor, plaintiffs’ claims of bad faith necessarily fail. See, 

e.g., Wolfe v Wayne-Westland Cmty Sch, 267 Mich App 130, 139; 703 NW2d 480 (2005).

Moreover, absent an “allegation and proof of tortious conduct existing independent of the 

breach, exemplary damages may not be awarded in common-law actions brought for breach of a 

commercial contract.” Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 420–21; 295 

NW2d 50 (1980) (citation omitted). Michigan does, however, recognize “an insured's claim 

against its insurer for bad faith in refusing to settle.” J & J Farmer Leasing, Inc v Citizens Ins 

Co of Am, 472 Mich 353, 356, n 3; 696 NW2d 681 (2005). This is because “where the insurer 

defends the action it has a substantial measure of control in the conduct of the lawsuit and is in a 

position to disregard the interests of the insured and expose him to the risk of a judgment in 

excess of policy limits. To protect the insured's interest, the courts have required that the insurer 

make reasonable efforts to settle within policy limits.” Stockdale v Jamison, 416 Mich 217, 224; 

330 NW2d 389 (1982).

Here, plaintiffs’ allegations of bad faith do not concern tortious conduct independent of 

defendant’s breach of the parties’ insurance contract. And our Courts’ recognition of a claim for 

bad faith refusal to settle appears to apply only in situations where the claimant’s insurer is 

defending an action and refuses/neglects to settle on behalf of the claimant. See, e.g., 

Frankenmuth Mut Ins Co v Keeley, 433 Mich 525, 534; 447 NW2d 691(1989), on reh 434 Mich 

1206; 462 NW2d 750 (1990), and on reh 436 Mich 372; 461 NW2d 666 (1990); J & J Farmer 

Leasing, Inc 472 Mich 353. Despite being a doubtful position, for purposes of this appeal only 

we will assume there exists the potential that an action could lie for bad faith in failing or 
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refusing to settle a claim brought against the insurer by its insured. Plaintiffs have claimed that 

defendant acted in bad faith in refusing to accept their counter-offer of settlement.

The trial court in this matter noted that defendant made an offer of judgment to plaintiffs 

for $60,000.00. According to the trial court, defendant’s insurance adjuster testified that 

defendant initially, when it made the offer, thought that plaintiffs had injuries that should be 

compensated. However, it later received medical records indicating that plaintiff Debra 

Andreson’s injuries were or could have been pre-existing conditions. The trial court found that 

the issue of injuries and whether they were pre-existing was one of the main issues before the 

jury, so that defendant’s position was not unreasonable. The trial court also noted that the matter 

went to case evaluation at which three independent individuals recommended a value of $60,000 

for plaintiffs’ case. We agree that, where a dispute exists as to the nature and extent of a 

plaintiff’s injuries, particularly when based on medical records, a refusal to accept an offer of 

settlement rather than proceed to jury trial does not constitute bad faith.

As indicated by plaintiffs, in Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich

127, 136–37; 393 NW2d 161 (1986), our Supreme Court set forth twelve specific factors that 

may be considered when determining whether liability exists for bad faith. However, that case 

addressed an instance in which an excess insurer brought an action against a primary insurer for 

failing to settle a claim against the insured in good faith. Thus, its relevance to the instant matter 

is questionable. Moreover, there is no question of material fact that plaintiffs did not allege, let 

alone prove, any of the enumerated twelve factors. 

Plaintiffs claim that defendant acted in bad faith by misleading them with respect to the 

collectability of the underlying tortfeaser, the driver of the other vehicle. However, plaintiffs 

were represented by counsel in their underlying lawsuit against that driver. There has been no 

claim or assertion that plaintiffs spoke to or interacted with defendant after they retained counsel 

in the underlying lawsuit. In fact, plaintiff Debra Andreson testified that, after retaining counsel 

in November 2013, she never had any personal contact with defendant, other than to cancel her 

insurance with them. Debra testified that she had no idea whether her attorneys in the underlying 

matter investigated the other driver’s assets before finalizing the settlement with her in May 

2015, and that prior to the settlement, she did not contact defendant and ask about any assets. 

Plaintiff Debra Andreson affirmatively testified that no one from defendant made any 

representations to her regarding the other driver’s assets. Similarly, plaintiff David Andreson

testified that he had no contact with defendant at all after the October 2013 accident; instead, all 

communication with defendant was though the attorney they retained in November 2013 to sue 

the other driver. That being the case, there is no material question of fact that defendant did not 

mislead plaintiffs on the claime, or any other issue.

Plaintiffs’ assertion that defendant’s failure/refusal to pay underinsured motorist benefits 

until 2 1⁄2 years after the jury verdict in plaintiffs’ favor and their violation of the UTPA 

evidences a bad faith breach of contract also fails. First, the UTPA self-contains penalties for the 

failure to timely pay benefits. Plaintiffs were awarded those penalties. Plaintiffs’ claim that the 

UTPA or the payment of penalties thereunder somehow provides an independent action for bad 

faith breach of contract for which damages are available would result, in essence, in a double 

penalty for the same conduct. Plaintiffs have provided no support for their allegation that this 

was an intended result by our Legislature, or that it would be a just and equitable result. 
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Second, the jury verdict in this case was reduced to a judgment in plaintiffs favor

(including sanctions) on December 14, 2016. Defendant appealed to this Court, and on 

November 21, 2017, this Court issued its opinion reducing the jury verdict. Andreson, 322 Mich 

App 76. Thereafter, on March 22, 2018, the trial court entered an amended judgment to reflect 

this Court’s decision. It appears that defendant paid this amended judgment a short time after it 

was entered.1 Defendant thus did not delay in paying the judgment amount and plaintiffs have 

provided no evidence that they did so. Plaintiffs have thus presented no evidence that defendant

acted in bad faith.

Affirmed. Costs are taxable against plaintiffs pursuant to MCR 7.219. 

/s/ Stephen L. Borrello 

/s/ Kirsten Frank Kelly 

/s/ Deborah A. Servitto 

 1 Plaintiffs state that no payment was made until five months after this Court’s November 2017 

decision, indicating that payment was, in fact, made some time around April 2018.