Court Opinion

ID: 9522477
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:26:38.056866+00
Date Added: 2024-06-11T13:02:57.924847
License: Public Domain

M. J. Talbot, J.
(concurring.) I concur. Quite simply, no Michigan authority exists that would permit the recovery of attorney fees by a plaintiff for a bad-faith breach of an insurance contract. Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401; 295 NW2d 50 (1980), reaffirmed the general principle that damages from a breach of a commercial contract are limited to the monetary value of the contract. While Kewin does allow for recovery of damages beyond the contract where there is proof of tortious conduct independent of the breach or where contemplated by the parties at the time of the contract, the law in Michigan is still very clear: damages outside the contract are extraordinary and conditional upon these two very narrow instances. Neither of these circumstances exists in this case.
Furthermore, when there is a mere breach of contract, whether in good faith or not, there is no independent tortious action and, hence, no basis for exemplary damages. Every contract is accompanied by a common-law duty to use ordinary care in the performance of that contract. Nelson v Northwestern Savings & Loan Ass’n, 146 Mich *433App 505; 381 NW2d 757 (1985). That duty, however, is not independent of the contract. It is not a duty imposed by law upon all that gives rise to a tort action. It is a duty arising out of that contract only and owed only to the contracting parties. Therefore, a tort action with exemplary or consequential damages cannot lie. Kewin, supra at 422.
Finally, the Legislature has established a statutory scheme whereby the insurer that fails to make prompt payment of a valid claim does not do so with impunity. The twelve percent award provided for by MCL 500.2006(4); MSA 24.12006(4) appears to be the penalty that the Legislature saw fit to impose upon an insurance company in a situation such as this. It is noteworthy that the Legislature specifically included a provision in the no-fault act that provides for the payment of the insured’s attorney fees for an unreasonable failure to pay a claim. MCL 500.3148(1); MSA 24.13148. The portion of the Insurance Code covering fire insurance contracts, however, does not contain a similar provision for recovery of attorney fees for failure to make payment on a valid fire insurance claim.