Court Opinion

ID: 9410392
Source: CourtListenerOpinion
Date Created: 2023-07-21 05:07:10.664682+00
Date Added: 2024-06-11T17:20:57.407668
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

FAIZ MUSED-A ALI,                                                    UNPUBLISHED
                                                                     July 20, 2023
               Plaintiff-Appellee-Cross-Appellant,

v                                                                    No. 360900
                                                                     Macomb Circuit Court
MEEMIC INSURANCE COMPANY,                                            LC No. 2018-003512-NF

               Defendant-Appellant-Cross-Appellee.

Before: PATEL, P.J., and BOONSTRA and RICK, JJ.

PER CURIAM.

       In the main appeal, defendant appeals by right the trial court’s March 16, 2022 opinion and
order denying its motion for case evaluation sanctions. In the cross-appeal, plaintiff challenges
the portions of the trial court’s November 23, 2021 opinion and order denying his request for
attorney fees. We vacate and remand for further proceedings in the main appeal; we affirm in the
cross-appeal.

                   I. PERTINENT FACTS AND PROCEDURAL HISTORY

        The appeals in this case arise from post-verdict proceedings in a no-fault personal injury
action. Plaintiff was injured in a motor vehicle accident in 2017; defendant was his no-fault insurer
at the time. In 2018, plaintiff filed suit against defendant, seeking payment of personal injury
protection (PIP) benefits and uninsured/under-insured motorist (UIM) benefits to which plaintiff
alleged he was entitled under his policy with defendant. Plaintiff’s UIM claim was later dismissed
by stipulation.

        The matter underwent case evaluation in 2019. The parties agree that the case evaluation
panel awarded plaintiff $45,000 for his claims, and that both parties rejected the award. After
several unsuccessful facilitations, plaintiff’s case proceeded to a jury trial on June 11, 2021. On
June 22, 2021, the jury returned a special verdict finding that (1) plaintiff was injured in a motor
vehicle accident, (2) plaintiff did not commit fraud in claiming benefits from defendant, (3)
plaintiff had incurred allowable medical expenses of $14,358.42, (4) defendant’s payment of those
expenses was overdue and (5) plaintiff was entitled to penalty interest of $3,146.03.

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        In August 2021, plaintiff moved the trial court for entry of judgment as well as attorney
fees and penalty interest under the no-fault act, arguing in relevant part that the jury verdict
established that defendant had unreasonably delayed payment of no-fault benefits. The trial court
granted plaintiff’s request for entry of judgment and judgment interest, but denied plaintiff’s
request for an award of attorney fees, penalty interest, and costs under the no-fault act.1 It directed
plaintiff to “prepare a judgment consistent with this decision.”

        Although the trial court granted plaintiff’s request for entry of judgment, and directed
plaintiff to prepare a judgment, it was defendant that ultimately filed a proposed judgment in
January 2022, which the trial court then signed and entered. Consistent with the jury verdict, the
judgment awarded plaintiff $14,358.42 in allowable expenses, $3,146.03 in penalty interest under
MCL 500.3142, plus statutory interest. Defendant subsequently moved the trial court for case
evaluation sanctions under MCR 2.403(O). The trial court denied defendant’s motion, holding
that the amended version of MCR 2.403, which had become effective on January 1, 2022, applied
to defendant’s claim and that case evaluation sanctions therefore were not available.

       These appeals followed.

                                        II. MAIN APPEAL

        In the main appeal, defendant argues that the trial court erred by denying its motion for
case evaluation sanctions. Specifically, defendant argues that the trial court should have held that
the previous version of MCR 2.403 applied to defendant’s claim for sanctions. We agree. We
review de novo a trial court’s interpretation of court rules. Reitmeyer v Schultz Equipment & Parts
Co, Inc, 237 Mich App 332, 336; 602 NW2d 596 (1999). We review for an abuse of discretion a
trial court’s decision regarding whether application of a new court rule would “work injustice”
under MCR 1.102. Id.

     MCR 2.403 governs the case evaluation procedure. Prior to its amendment in 2022,
MCR 2.403(O) provided in relevant part:

       If a party has rejected an evaluation and the action proceeds to verdict, that party
       must pay the opposing party's actual costs unless the verdict is more favorable to
       the rejecting party than the case evaluation. However, if the opposing party has
       also rejected the evaluation, a party is entitled to costs only if the verdict is more
       favorable to that party than the case evaluation. [MCR 2.403(O)(1), prior to
       amendment effective January 1, 2022.]

Substantial amendments to MCR 2.403 went into effect on January 1, 2022. Relevant to this
appeal, the amendment removed subsection (O) in its entirety; what were commonly known as
“case evaluation sanctions” are no longer available under the current version of the rule.

1
 Notwithstanding the apparent denial of penalty interest in the trial court’s November 23, 2021
opinion and order, the subsequently-entered judgment included an award of penalty interest in
accordance with the jury verdict.

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       MCR 1.102 provides:

       These rules take effect on March 1, 1985. They govern all proceedings in actions
       brought on or after that date, and all further proceedings in actions then pending.
       A court may permit a pending action to proceed under the former rules if it finds
       that the application of these rules to that action would not be feasible or would work
       injustice.

Therefore, the general rule when a court rule is amended is to “apply the newly adopted court rules
to pending actions unless there is a reason to continue applying the old rules.” Reitmeyer, 237
Mich App at 337 (quotation marks and citation omitted). “However, an injustice is not present
merely because a different result would be reached under the new rules. Rather, a new court rule
would ‘work injustice’ where a party acts, or fails to act, in reliance on the prior rules and the
party’s action or inaction has consequences under the new rules that were not present under the
old rule.” Id. (citations omitted). This Court noted in Reitmeyer that “MCR 1.102 focuses on
‘injustice’ in the context of whether changes in rules in the midstream of the legal process have
operated unfairly on one of the parties.” Id. at 340. However, “the exception for ‘injustice’ must
not be read too broadly, such that it encompasses nearly every case where the new and old court
rules would affect a case differently.” Id. at 339. Therefore the “injustice” exception to
MCR 1.102 “must be applied narrowly and with restraint.” Id. at 603.

         We conclude, keeping in mind the requirement of restraint and the necessity of not reading
the “injustice” exception to MCR 1.102 too broadly, that the trial court erred by concluding that
the current version of MCR 2.403 applied to defendant’s claim for case evaluation sanctions. The
record shows that the entire case was essentially completed while the prior version of
MCR 2.403(O) was in effect. Both parties conducted the entire litigation, including case
evaluation, numerous facilitations, and a six-day jury trial, under the previous version of the rule
that permitted case-evaluation sanctions. Indeed, the case evaluation—and the parties’ rejection
of the resulting award—occurred more than two years before the new rule came into effect. The
jury rendered its verdict nearly six months before the new rule came into effect, and the trial court
ordered plaintiff to prepare a judgment for entry approximately five weeks before the effective
date of MCR 2.403’s amendment. Yet, plaintiff never submitted a proposed judgment in its favor,
ultimately requiring defendant to enter a proposed judgment against itself in order to proceed with
its claim for case evaluation sanctions.2 Essentially, while defendant was waiting for plaintiff to
comply with the trial court’s order directing him to prepare a judgment (to be entered in plaintiff’s
favor), the court rule changed. Long before that change was adopted, both parties accepted the
risk of case-evaluation sanctions by agreeing to a jury trial, and made their strategic decisions prior
to and during litigation under the rubric of the prior version of the rule. Under these circumstances,
it would have “operated unfairly” for either of the parties to be denied case-evaluation sanctions
merely because the ministerial act of entering a judgment on the verdict had not occurred before
the rule change. Reitmeyer, 237 Mich App at 340. That is particularly true when, as here, there

2
 The previous version of MCR 2.403 required that “[a] request for costs under this subrule must
be filed and served with 28 days after the entry of the judgment . . . .” MCR 2.403(O)(8), prior to
amendment effective January 1, 2022 (emphasis added).

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were delays in the entry of a judgment and in complying with the trial court’s directive to plaintiff
(in advance of the change in the court rule) to submit a proposed judgment. Therefore, under these
particular circumstances, we conclude that the trial court abused its discretion by holding that the
current version of MCR 2.403(O) applied to defendant’s claim. Id. at 337. We vacate the trial
court’s March 16, 2023 opinion and order and remand for consideration of defendant’s claim for
case-evaluation sanctions under the prior version of MCR 2.403.

                                       III. CROSS-APPEAL

        In his cross-appeal, plaintiff argues that the trial court erred by denying his motion for
attorney fees.3 We disagree. We review de novo questions of fact, but review factual findings for
clear error. Moore v Secura Ins, 482 Mich 507, 516; 759 NW2d 833 (2008). “What constitutes
reasonableness is a question of law, but whether the defendant's denial of benefits is reasonable
under the particular facts of the case is a question of fact.” Id. (citation omitted). A decision is
clearly erroneous if the reviewing court is left with a definite and firm conviction that a mistake
has been made. Id. We review for an abuse of discretion a trial court’s award of attorney fees and
costs. Id.

        MCL 500.3148(1) provides in relevant part that “an attorney is entitled to a reasonable fee
for advising and representing a claimant in an action for personal or property protection insurance
benefits that are overdue. The attorney’s fee is a charge against the insurer in addition to the
benefits recovered, if the court finds[4] that the insurer unreasonably refused to pay the claim or
unreasonably delayed in making proper payment.”

       MCL 500.3142—which relates to penalty interest—provides in relevant part:

               (2) Subject to subsection (3), personal protection insurance benefits are
       overdue if not paid within 30 days after an insurer receives reasonable proof of the
       fact and of the amount of loss sustained. Subject to subsection (3), if reasonable
       proof is not supplied as to the entire claim, the amount supported by reasonable
       proof is overdue if not paid within 30 days after the proof is received by the insurer.
       Subject to subsection (3), any part of the remainder of the claim that is later
       supported by reasonable proof is overdue if not paid within 30 days after the proof
       is received by the insurer. . . . [MCL 500.3142(2).]

3
  Plaintiff also appears to argue that the trial court erred by denying his motion for penalty interest.
But plaintiff fails to acknowledge that, although the trial court’s November 23, 2021 opinion and
order indeed reflected a denial of penalty interest, the trial court’s subsequently-entered judgment
included an award of penalty interest in accordance with the jury verdict.
4
  Based on the plain language of MCL 500.3148(1), whether an insurer has “unreasonably refused
to pay the claim or unreasonably delayed in making proper payment” under that provision is a
question of law for the court. See also, MCJI 35.03, Comment (“The attorney fee thus is a question
not for the jury but for the Court.”).

                                                  -4-
                                               * * *

               (4) An overdue payment bears simple interest at the rate of 12% per annum.

Interpreting MCL 500.3148(1) and MCL 500.3142(2) together, our Supreme Court has held:

       Under the plain language of the statute, the claimant shoulders the initial burden to
       supply reasonable proof of her entire claim, or reasonable proof for some portion
       thereof. When the claimant provides such evidence, the insurer then must evaluate
       that evidence as well as evidence supplied by the insurer’s doctor before making a
       reasonable decision regarding whether to provide the benefits sought. [Moore, 482
       Mich at 523.]

“[I]nsurers who receive a claim for PIP benefits prior to expiration of the limitations period must
act diligently when investigating, responding to, and resolving the claim[.]” Griffin v Trumbull
Ins Co, ___ Mich ___, ___; ___ NW2d ___ (2022) (Docket No. 162419); slip op at 12. “[A] delay
is not unreasonable if it is based on a legitimate question of statutory construction, constitutional
law, or factual uncertainty.” Attard v Citizens Ins Co of America, 237 Mich App 311, 316-317;
602 NW2d 633 (1999). “When 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.”
Id.

        In this case, the trial court denied plaintiff’s request for an award of attorney fees under
MCL 500.3148. In doing so, the trial court noted that plaintiff’s claims for replacement services
and attendant care were dismissed prior to trial, and that plaintiff withdrew his claim for work loss
benefits on the first day of trial. The trial court also noted that plaintiff had not provided proof of
allowable medical expenses to defendant prior to filing suit, and that the jury had only awarded
plaintiff a “mere fraction” of what he had claimed for medical expenses. Therefore, the trial court
reasoned, defendant had not unreasonably denied or delayed payment of plaintiff’s claims.

        The record supports the trial court’s factual findings. Most of plaintiff’s claims for PIP
benefits were stricken prior to trial, and plaintiff has not appealed those claims. Moreover,
plaintiff’s counsel admitted at the hearing on defendant’s motion that a bill from Detroit Receiving
Hospital was not submitted to defendant prior to the filing of a lawsuit. Further, the jury awarded
plaintiff only a fraction of the over $100,000 dollars in medical expenses he was seeking, the
majority of which were billed by a physical therapy provider. In other words, the jury found that
most of plaintiff’s claimed medical expenses were not allowable expenses under the no-fault act
for which defendant was liable.

        Additionally, defendant provided evidence that the decision to deny further payment of
benefits was based on the results of a medical examination performed in 2019. The medical
examiner concluded that plaintiff had suffered only mild injuries that did not require extensive
treatment. Although plaintiff disagreed with that assessment, it demonstrates that a bona fide
factual uncertainty existed regarding the extent of plaintiff’s injuries and the necessity for
extensive physical therapy. See Roberts v Farmers Ins Exch, 275 Mich App 58, 70; 737 NW2d
332 (2007); see also Tinnin v Farmers Ins Exch, 287 Mich App 511, 516; 781 NW2d 747 (2010)

                                                 -5-
(noting that a reasonable delay can be established by showing that “bona fide questions whether a
particular medical procedure is reasonably necessary” existed).

       Plaintiff makes much of the fact that the jury found that the allowable expenses it did award
were overdue, and that the jury found that plaintiff had not fraudulently represented his claims to
defendant. However, the mere fact that benefit payments are overdue, while it entitles an insured
to penalty interest, does not automatically entitle an insured to attorney fees; the delay in payment
must still be found to have been unreasonable. See MCL 500.3148; 500.3142 (2); Moore, 482
Mich at 523. Moreover, the absence of fraud on the behalf of the insured does not in itself
demonstrate that an insurer unreasonably denied or delayed payment—as noted, a bona fide factual
uncertainty existed regarding the extent of plaintiff’s claims, the vast majority of which were either
dismissed before trial or rejected by the jury. In light of the fact that the vast bulk of plaintiff’s
claims were either dismissed before trial or not awarded by the jury verdict, and the existence of a
bona-fide factual uncertainty, we conclude that the trial court did not abuse its discretion by
refusing to award attorney fees, despite that fact that the jury did find a small portion of plaintiff’s
claimed expenses to be allowable and overdue (and thus subject to penalty interest). Moore, 482
Mich at 525 (stating that “an insurer's initial refusal to pay benefits under Michigan's no-fault
insurance statutes can be deemed reasonable even though it is later determined that the insurer was
required to pay those benefits.”).

        Relatedly, while plaintiff makes repeated reference to “penalty interest” on appeal, it is
unclear to this Court what penalty interest he seeks to have awarded, in light of the fact that,
consistent with the jury verdict, the judgment entered by the trial court already awarded him
penalty interest on the medical expenses the jury found to be allowable and overdue. Further,
although plaintiff made reference to penalty interest in his motion before the trial court, his motion
appears to have only sought attorney fees and judgment interest, not additional penalty interest. In
any event, as plaintiff has already been awarded penalty interest on all claims that were found to
be overdue, there is no further relief this Court can grant in that regard.

       We affirm the trial court’s November 23, 2021 opinion and order in plaintiff’s cross-appeal.

                                        IV. CONCLUSION

        In defendant’s main appeal, we vacate the trial court’s March 16, 2023 opinion and order
and remand for consideration of defendant’s claim for case-evaluation sanctions under the prior
version of MCR 2.403. We affirm the trial court’s November 23, 2021 opinion and order in
plaintiff’s cross-appeal. We do not retain jurisdiction. Defendant, having prevailed in full, may
tax costs. MCR 7.219(A)(1).

                                                               /s/ Sima G. Patel
                                                               /s/ Mark T. Boonstra
                                                               /s/ Michelle M. Rick

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