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

CITY OF BAD AXE, CITY OF BAD AXE 

DEPARTMENT OF PUBLIC WORKS, CITY OF 

BAD AXE WASTEWATER TREATMENT 

FACILITY,

Plaintiffs-Appellees,

UNPUBLISHED

January 14, 2020

v No. 345810

Huron Circuit Court

PAMAR ENTERPRISES, INC., and SECURA 

SUPREME INSURANCE COMPANY,

LC No. 16-105392-CK

Defendants-Appellants.

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

PER CURIAM.

Defendants appeal as of right the order granting summary disposition in favor of 

plaintiffs and the judgment comprised of attorney fees and costs in this duty to defend and 

indemnification action. We affirm. 

I. BASIC FACTS

This action arises from defendant’s, Pamar Enterprises, Inc. (Pamar), successful bid to 

contract with the Michigan Department of Transportation (MDOT) for reconstruction of 

highway M-53 and sewer work located in the city of Bad Axe (plaintiff city). The MDOT 

proposal advised that the successful bidder was responsible for securing insurance in accordance 

with its specifications and the policy additionally had to provide coverage for both the county 

and plaintiff city. Defendant Pamar secured a general commercial liability policy through 

defendant, Secura Supreme Insurance Company (Secura). After defendant Pamar commenced 

work, a significant rain event occurred, and rainwater accessed the sanitary system in the project 

area where defendant Pamar performed its work. Consequently, there was damage to the 

property of city residents. The city residents filed suit against defendant Pamar, and it named 

plaintiff city as a non-party at fault. Consequently, the city residents amended their complaint to 

raise a claim against plaintiff city pursuant to the governmental tort liability act (GTLA), MCL 
-2-

691.1401 et seq. When plaintiff city requested that defendants provide a defense, they declined 

to do so, concluding that the city residents sought to hold plaintiff city responsible for its own 

acts of negligence regarding its maintenance of the sewer system. Plaintiffs filed suit to compel 

defendants to provide a defense and indemnity as well as reimbursement of expended attorney 

fees. The trial court granted plaintiffs’ motion for summary disposition, concluding that 

defendant Secura was required to provide a defense and ordered payment of attorney fees. After 

defendants moved for a determination regarding a reasonable attorney fee, the trial court 

conducted oral argument, reviewed the bills and the supplied economic information before ruling 

that plaintiffs were entitled to reasonable attorney fees and costs. From this ruling, defendants 

appeal. 

II. APPLICABLE LAW

A trial court’s decision to grant or deny summary disposition is reviewed de novo. Ter 

Beek v City of Wyoming, 495 Mich 1, 8; 846 NW2d 531 (2014). The construction and 

application of an insurance policy presents a question of law that is reviewed de novo. Pioneer 

State Mut Ins Co v Dells, 301 Mich App 368, 376-377; 836 NW2d 257 (2013). The rules 

governing contract construction apply to an insurance policy. Fuller v Geico Indemnity Co, 309 

Mich App 495, 498; 872 NW2d 504 (2015). To determine the policy terms, the entire document 

must be read with the goal of enforcing the parties’ intent. Id. “Clear and unambiguous 

provisions of an insurance policy must be enforced according to their plain meaning.” Id. 

“The duty to defend and the duty to indemnify are distinct and separable duties.” Mich 

Ed Employees Mut Ins Co v Turow, 242 Mich App 112, 116-117; 617 NW2d 725 (2000). The 

duty to defend is broader than the duty to indemnify. Busch v Holmes, 256 Mich App 4, 9; 662 

NW2d 64 (2003). The duty to defend arises only from the language of the insurance contract. 

Mich Ed Employees Mut Ins Co, 242 Mich App at 117. An insurer has the duty to defend an 

insured if the allegations raised against the insured even arguably fall within the terms of the 

policy. Matouk v Mich Muni League Liability & Prop Pool, 320 Mich App 402, 409; 907 NW2d 

853 (2017). 

With regard to insurance contracts, this Court delineated the following rules addressing 

the duty to defend:

The duty of an insurance company to defend its insured arises solely from 

the language of the insurance contract. The insurer’s duty to defend is determined 

by the allegations in the complaint against the insured. An insurer has a duty to 

defend, despite theories of liability asserted against any insured which are not 

covered under the policy, if there are any theories of recovery that fall within the 

policy. This duty is not limited to meritorious suits and may even extend to 

actions which are groundless, false, or fraudulent, so long as the allegations 

against the insured even arguably come within the policy coverage. [Farmers & 

Merchants Mut Fire Ins Co v LeMire, 173 Mich App 819, 824; 434 NW2d 253 

(1988) (citations omitted).]

The trial court’s decision to award attorney fees and the determination regarding the 

reasonableness of the fees is reviewed for an abuse of discretion. Teran v Rittley, 313 Mich App 
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197, 208; 882 NW2d 181 (2015). An abuse of discretion occurs when the court selects an 

outcome outside the range of reasonable and principled outcomes. Id. When the trial court

renders factual findings underlying the attorney fee award, those findings are reviewed for clear 

error. Id. This Court’s review of unpreserved claims is limited to plain error affecting 

substantial rights. Bennett v Russell, 322 Mich App 638, 642-643; 613 NW2d 364 (2018).

III. DUTY TO DEFEND

We conclude that the trial court properly granted summary disposition in favor of 

plaintiffs in light of the language of the amended complaint. The documentary evidence 

establishes that MDOT and plaintiff city entered into a contract on January 30, 2013, for 

reconstruction work on Highway M-53 within the city limits that would be designated as a state 

trunkline highway. As a result of that contract, MDOT solicited bids in accordance with the 

2012 Standard Specifications for Construction. In addition to advising the bidder that the 

construction specifications would govern the agreement, the proposal also contained the 

following paragraph:

Unless the bidder gives MDOT advance written notice, MDOT may correspond 

directly with the Insurance agencies concerning questions and problems with the 

Insurance certificates, bonds and related materials. It is the obligation of the 

bidder to monitor the filing of the Insurance certificates, bonds, and related 

materials with MDOT and the bidder is responsible for any failure to provide 

MDOT with the required materials, on a timely basis and in proper form. 

The proposal also advised of the following “Notice to Bidders”: 

Insurance

The contractor shall provide for and in behalf of the State, the Commission, the 

Department and its officials, agents, and employees, and all agencies and their 

employees, specifically named below, or as stated on the Insurance Requirements 

(Form 1304A, dated 05/2006), an Owner’s Protective Public Liability 

Insurance or the alternative option described in section 107.10 of the 2012 

Standard Specifications for Construction, Indemnification, Damage Liability 

and Insurance.

The agencies are the:

Michigan Department of Transportation,

Huron County

Huron County Road Commission

City of Bad Axe [Emphasis in original.]

The MDOT 2012 Standard Specifications for Construction, section 107.10, state in pertinent 

part:
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A. Indemnification. The Contractor must hold harmless, indemnify, and defend 

in litigation the State, the Commission, the Department, and their agents and 

employees against claims for damage to public or private property and for injuries 

to persons arising out of the performance of the work until the Contractor 

achieves satisfactory final inspection in accordance with subsection 109.07.C.1. 

The Contractor will not be responsible for claims that result from the sole 

negligence or willful acts or omissions of said indemnitee. 

* * *

C. Bodily Injury and Property Damage. The Contractor must carry adequate 

insurance, satisfactory to the Department, to afford protection against claims for 

damage to public or private property and injuries to persons arising out of the 

performance of the work until the Contractor achieves satisfactory final inspection 

in accordance with subsection 109.07.C.1. If required by the contract, the 

Contractor must also carry adequate insurance to protect the owner of premises on 

or near which construction operations are to be performed. Copies of completed 

certificates of insurance must be submitted to the Department in accordance with 

subsection 102.15.

* * *

4. Owners Protective Liability. The Contractor must ensure that the insurer 

extends bodily injury and property damage protection including general 

supervision of work performed, to the State, the Commission, the Department, 

and their agents and employees and as indicated by the identity of the contracting 

parties, to participating political subdivisions and public corporations. The 

minimum limit will be $1,000,000. 

In lieu of the Owners Protective Liability, the Contractor must add to their Bodily 

Injury and Property Damage Policy:

a. Additional Insured. The Bodily Injury and Property Damage Policy must 

name as additional insured the State, the Department, and the Commission and all 

agents and employees thereof and, where indicated by the identity of the 

contracting parties, the protection must be extended to all participating political 

subdivisions and public corporations. [Emphasis in original.]

Thus, it is apparent from the above specifications that MDOT required the successful bidder to 

provide insurance to all agents of the contract (and plaintiff city was expressly delineated in the 

notice) as well as all participating political subdivisions and public corporations. 

MDOT and defendant Pamar signed a contract for the M-53 state trunkline project on 

April 1, 2013. Defendant Pamar also obtained commercial general liability insurance from 

defendant Secura as required by MDOT. The policy contained the following pertinent 

provisions:
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1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as 

damages because of “bodily injury” or “property damage” to which this insurance 

applies. We will have the right and duty to defend the insured against any “suit” 

seeking those damages. However, we will have no duty to defend the insured 

against any “suit” seeking damages for “bodily injury” or “property damage” to 

which this insurance does not apply. We may, at our discretion, investigate any 

“occurrence” and settle any claim or “suit” that may result. 

The policy also had an endorsement that modified the policy. It set forth, in pertinent part:

A. Additional Insured When Required By Written Construction Contract

1. Operations Performed For An Additional Insured

WHO IS AN INSURED is amended to include as an additional insured any 

person or organization for whom you are performing operations when you and 

such person or organization have agreed in a written contract or written agreement 

prior to a loss, that such person or organization be added as an additional insured 

on your policy. Such person or organization is an additional insured only with 

respect to liability for “bodily injury”, “property damage” or “personal and 

advertising injury” caused, in whole or in part, by:

a. Your acts or omissions; or

b. The acts or omissions of those acting on your behalf;

In the performance of your ongoing operations for an additional insured. 

In light of the above, it is apparent that defendant Pamar obtained a general commercial 

policy of insurance through defendant Secura because it was a requirement of its contractual 

agreement with MDOT to be awarded the bid for the reconstruction of M-53 located in plaintiff 

city. The notice to bidders further advised that insurance had to be secured for MDOT, the 

county, and the city. Although the policy contained an “additional insured” endorsement, the 

plain language of the “additional insured” provision modified the “WHO IS AN INSURED” 

language of the policy. Therefore, defendants’ argument, that there was a distinction between an 

insured and an additional insured, lacks merit. 

Having concluded that defendant Pamar was required to obtain insurance for plaintiff city 

and that the policy obtained from defendant Secura had a duty to defend, the issue becomes 

whether the underlying complaint raises a theory of liability against an insured that falls within 

the policy coverage. Defendants alleged that a review of the amended complaint revealed that 

city residents sought to hold plaintiffs responsible for their own acts of negligence. However, 

caselaw provides that a contracting party has the duty to defend if the allegations in an 

underlying lawsuit arguably fall within the terms of the contract. Citizens Ins Co, 279 Mich App 

at 74. Although defendants cite to the fact that the amended complaint contains separate 

allegations against plaintiffs, defendants ignore the factual portion of the complaint that delineate 
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the actions by defendant Pamar that purportedly caused the city residents’ damages and the 

alterations that it made to the area during construction which allowed the rainwater to overwhelm 

the sewer system. The amended complaint fact section provides, in relevant part:

29. On or about April 1, 2013, Defendant Pamar contracted with the Michigan 

Department of Transportation to perform, among other things, asphalt 

reconstruction, concrete curb, gutter, sidewalk, ramps and driveways, storm and 

sanitary sewer, watermain, traffic signal, and pavement markings on M-53 from 

Outer Drive easterly to M-142 (the “Project”) in the City of Bad Axe, Huron 

County, State of Michigan. Exhibit A.

30. On or about April 8, 2013, Defendant Pamar closed the work area and 

commenced the Project.

31. By July 6, 2014, Defendant Pamar had performed demolition work and 

removed the concrete/asphalt road material from the Project area, reducing it to 

the dirt/stone base.

32. The removal of the road material from the Project area created a bathtub like 

area where the base was significantly lower than the surface level sides.

33. Also, by July 6, 2013, Defendant Pamar cut the openings for the sanitary 

system flush with the new dirt/stone ground level.

34. Defendant Pamar did not take steps to ensure that the sanitary sewer entrance 

[was] properly covered so as to not be accessed by water or other materials.

35. On July 6, 2013, the City of Bad Axe, in and around the Project, received 

large amounts of rainfall.

36. On July 8, 2013, the City of Bad Axe received additional rainfall.

37. On both July 6, 2013 and July 8, 2013, rainwater accessed the sanitary system 

in the Project area because of the changes made to the work zone by Defendant 

Pamar. 

38. The water that entered the sanitary system through the Project area exposed 

by Defendant Pamar flooded the sanitary system and resulted in each Plaintiff 

having water and/or sewage water flood their homes.

39. Upon information and belief and based on the Notice of Non-Party Fault filed 

by Defendant Pamar, Bad Axe failed to respond to the systematic problems and 

insufficiencies of its sanitary sewer system. 

40. Upon information and belief, the systematic problems and insufficiencies of 

the Bad Axe sanitary sewer system were the cause or a contributing cause to the 

backup of water and/or sewage into Plaintiffs’ homes. 
-7-

The first count of the city residents’ amended complaint raised a claim of negligence against 

defendant Pamar. The following allegations were raised against defendant Pamar:

42. Defendant Pamar owed a duty to the Plaintiffs and the public in general to 

complete the Project in a professional manner, while not causing harm to 

Plaintiffs or the public. 

43. Defendant Pamar owed a duty to the public in general and these Plaintiffs in 

particular to complete the Project utilizing due care and reasonably prudent 

construction techniques.

44. Defendant Pamar breached the duty owed to Plaintiffs.

45. Defendant Pamar’s breach of its duty of care included, but is not limited to, 

the following acts or commissions, to wit:

a. Creating a trenched area that could fill full of water and overwhelm the 

sanitary system;

b. Leaving the site without proper monitoring or otherwise securing the site;

c. Cutting down and opening the man hole or drain pipes so that they could be 

infiltrated by rain; or

d. Not making a proper plan or even any plan to protect the sanitary system from 

being overwhelmed in the event of rain.

46. As a direct and proximate cause of Defendant Pamar’s breach of its duty, 

Plaintiffs’ sustained damage, including but not limited to, the introduction of raw 

sewage into their houses, the loss and destruction of property, both real and 

personal, humiliation, emotional loss and pain and suffering. 

47. The loss was reasonably foreseeable. 

It is apparent from the allegations by the city residents in the underlying amended complaint that 

they claimed defendant Pamar’s alteration to the sewage system during construction caused the 

rain event to overwhelm the system and damage to their property. In turn, defendant Pamar filed 

a notice of non-party at fault naming plaintiff city. This caused the city residents to raise a claim 

of liability against plaintiff city in its amended complaint. Irrespective of the fact that a separate 

and distinct claim was raised against plaintiff city, the allegations in the amended complaint 

attribute their damages to the actions of defendant Pamar in its construction work by its 

alterations to the area. In light of defendant Pamar’s claim that plaintiffs’ sewage system was 

deficiently maintained, the city residents’ amended complaint included allegations that plaintiffs’ 

maintenance of the system was the cause or a contributing cause. 

Again, a contracting party has the duty to defend if the allegations in an underlying 

lawsuit arguably fall within the terms of the contract. Citizens Ins Co, 279 Mich App at 74. The 

allegations in the complaint first attribute the city residents property damage to defendant 
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Pamar’s negligence and, after defendant Pamar placed the blame on plaintiffs, the city residents 

amended their complaint to continue to allege that defendant Pamar was responsible or that both 

defendant Pamar and plaintiffs were responsible. Thus, the addition of plaintiffs did not alter the 

fact that the underlying lawsuit arguably falls within the terms of the policy because it contests 

defendant’s actions and involvement in causing the property damage. Further, the caselaw 

directs to an examination of the complaint to determine if the allegations arguably fall within the 

terms of the policy. The caselaw does not conclude that a separate claim against a separate entity 

bars policy coverage. Further, “[i]n considering the gravamen of plaintiff’s complaint, we 

examine the entire claim, looking beyond procedural labels to determine the exact nature of the 

claim.” Altobelli v Hartmann, 499 Mich 284, 303; 884 NW2d 537 (2016). Defendants reliance 

on the filing of a separate claim against plaintiffs pursuant to the GTLA act is without merit 

because the courts must examine the entirety of the claim without being bound by the labels 

used. 

In summary, city residents in the underlying complaint placed primary blame on 

defendant Pamar and when it raised plaintiffs as non-parties at fault, the city residents added 

claims against plaintiffs seemingly in the alternative to ensure recovery against a party in whole 

or partly responsible. However, the addition of plaintiffs to the underlying lawsuit did not alter 

the conclusion that policy coverage was invoked for the performance of the work. Moreover, 

plaintiff city was an additional insured to the policy. Accordingly, the trial court did not err in 

granting summary disposition in favor of plaintiffs and concluding that there was a duty to 

defend by defendant Secura. 

IV. ATTORNEY FEES AND COSTS

Furthermore, the trial court did not abuse its discretion in its award of attorney fees and 

costs to plaintiffs. The general rule is that attorney fees are not recoverable as an element of 

costs or damages unless an express legal exception exists. Fleet Business Credit, LLC v Krapohl 

Ford Lincoln Mercury Co, 274 Mich App 584, 589; 735 NW2d 644 (2007). An exception is 

presented when attorney fees are governed by the contract executed between the parties. Id. 

That is, the courts will enforce a contractual provision for payment of attorney fees which are 

considered damages. Id. An additional exception to the general rule occurs when a party seeks 

to recover attorney fees as damages for having to expend money to defend because of the 

wrongful acts of another. Persichini v William Beaumont Hosp, 238 Mich App 626, 639 n 7; 

607 NW2d 100 (1999). 

Generally, an evidentiary hearing should be held when a party challenges the 

reasonableness of the attorney fees requested. Kernen v Homestead Dev Co, 252 Mich App 689, 

691; 653 NW2d 634 (2002). “However, if the parties created a sufficient record to review the 

issue, an evidentiary hearing is not required.” Id. “A trial court’s decision that an evidentiary 

hearing is not warranted is reviewed for an abuse of discretion.” Id. 

The party requesting attorney fees bears the burden of proving the reasonableness of the 

fees. Vittiglio v Vittiglio, 297 Mich App 391, 409; 824 NW2d 591 (2012). The following factors 

should be analyzed to determine the reasonableness of an attorney fee, but are not exclusive:
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(1) the experience, reputation, and ability of the lawyer or lawyers 

performing the services, 

(2) the difficulty of the case, i.e., the novelty and difficulty of the 

questions involved, and the skill requisite to perform the legal service properly,

(3) the amount in question and the results obtained,

(4) the expenses incurred,

(5) the nature and length of the professional relationship with the client,

(6) the likelihood, if apparent to the client, that acceptance of the particular 

employment will preclude other employment by the lawyer,

(7) the time limitations imposed by the client or by the circumstances, and

(8) whether the fee is fixed or contingent. [Pirgu v United Servs Auto 

Ass’n, 499 Mich 269, 281-282; 884 NW2d 257 (2016).]

The trial court does not abuse its discretion by including in the reasonable attorney fee the partial 

reimbursement of expenses incurred which may include the expenses of staff and other overhead 

as well as a reasonable profit. Teran, 313 Mich App at 210. 

In its order determining attorney fees and costs, the trial court delineated the burden of 

proof, the factors to determine reasonableness, the rules of professional conduct, and the possible 

need for an evidentiary hearing before holding as follows:

The City of Bad Axe believes that $185.00/hr., the rate it actually charged, 

is appropriate. Secura believes that the fee customarily charged in this area is 

appropriate. Said fee is between $120.00/hr. and $140.00/hr. and is the rate its 

client actually pays for legal service based on statements made by Secura at the 

evidentiary [sic] hearing.

According to the 2014 Economics of Law Practice publication, the median 

hourly rate for an attorney with 35 plus years of practice is $250.00/hr. The 

median hourly rate for that attorney in a firm in excess of 50 attorneys is 

$375.00/hr. The median hourly rate for civil litigation attorneys in the Bay 

City/Midland/Saginaw area is $198.00/hr.

Considering the evidence presented, there is insufficient evidence in the 

record to support Secura’s claim that $120.00/hr. and $140.00/hr. is a fee 

customarily charged. Considering the 2014 Economics of Law Practice 

Publication, this Court finds that the fee customarily charged in this area for 

similar legal service is $198.00/hr. However, according to the billing records 

submitted to this court, the City of Bad Axe was charged $185.00/hr. It stands to 

reason that $185.00/hr. is reasonable as it is less than the fee customarily charged 
-10-

in this area for similar legal service. Therefore, this Court finds that $185.00/hr. 

is the starting point to consider as the reasonable hourly rate. 

* * *

To date, the City of Bad Axe has expended 622 . . . billable hours pursuant 

to the detailed billings records submitted along with Ms. Hudson’s Affidavit. The 

City of Bad Axe claims that the number of hours expended is reasonable. Secura 

argues that the number of hours expended is excessive. Secura’s Exhibit D . . . 

lists its objections totaling $71,058.15. In part, Secura believes that “many of the 

hours that were billed by Plaintiff’s [sic] counsel were for activities such as 

driving at the full hourly rate” as well as counsel summarizing depositions at the 

attorney hourly rate. . . . 

After considering Secura’s Objections pertaining to the number of billable 

hours and reviewing the submitted billing records, this Court finds that the City of 

Bad Axe has met its burden that 622 hours is reasonable including travel time and 

summarization of depositions. Therefore, this Court finds that the starting point 

for calculating a reasonable attorney fee the legal fees is $115,052.00. 

The trial court next noted that plaintiffs’ lead counsel, Heidi Hudson, had been a member of the 

bar since 1981 and had experience in this litigation, the claims involved extensive skill and labor 

and a “significant result” was achieved in light of the dismissal of the claims against plaintiff 

city, and the expenses of $9,725.94 were reasonable because they were incurred. The trial court 

rejected defendants’ objection to $5,887.65 of the costs because they “do not appear to be 

duplicative, repetitive, unnecessary or excessive; including the travel time expenses.” Thus, the 

court awarded attorney fees of $115,052.00 and costs of $9,725.94. 

As an initial matter, we note that defendants failed to request an evidentiary hearing in 

the lower court, but merely objected to over $70,000 in requested fees by classifying the fees as 

excessive, unnecessary, secretarial, non-specific, duplicative, and overhead. Further, at the 

motion hearing on the attorney fees and costs motion, defense counsel agreed to proceed with 

oral argument on the motion and did not request an evidentiary hearing. A party may not harbor 

error as an appellate parachute by deeming treatment of an issue as proper in the trial court and 

raise the issue on appeal. Auto-Owners Ins Co v Compass Healthcare, PLC, 326 Mich App 595, 

613; 928 NW2d 726 (2018). 

Further, a review of defendants’ argument on appeal reveal that they classify the attorney 

fees and costs as excessive, but fail to provide a rationale underlying the challenge. A party may 

not simply announce a position or claim error and leave it to the appellate court to discover and 

rationalize the basis for the claims or unravel and elaborate the arguments. Innovation Ventures, 

LLC v Liquid Mfg, LLC, 499 Mich 91, 518-519; 885 NW2d 861 (2016). For example, 

defendants objected to the entries for research and preparation of the dispositive motion. Yet, 

they failed to delineate why the hours expended (approximately 11) for that motion were 

excessive. In light of the fact that the trial court addressed the factors to determine the 

reasonableness of attorney fees, rendered factual findings, and did not find defendants’ 

objections had merit, the award of attorney fees did not constitute an abuse of discretion. 
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Additionally, if defendant Secura could have secured a defense at a lower rate or negotiated the

exclusion of travel fees, it should have accepted the defense of plaintiffs in the underlying 

litigation pursuant to a reservation of rights. Defendant Secura’s disagreement with the charges 

by plaintiffs’ counsel did not render them unreasonable. 

Affirmed. Plaintiffs, as the prevailing parties, may tax costs. 

/s/ Kirsten Frank Kelly 

/s/ Stephen L. Borrello 

/s/ Deborah A. Servitto