Court Opinion

ID: 9690022
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:51:50.961199+00
Date Added: 2024-06-11T18:18:53.288662
License: Public Domain

Levin, J.
(dissenting). I would affirm the decision of the Court of Appeals.
I
The factual predicate for the premise of the majority that there was a significant delay in payment by the defendant insurer is tenuous. It appears that the insurer, Underwriters at Lloyds of London, offered to pay $19,250, the agreed value of the tractor-trailer,1 within the sixty days, prescribed by statute, "after receipt of proof of loss by the insurer.”2
The plaintiff, Benjamin T. Lawrence, declined the offer of $19,250 because the insurer refused to compensate the plaintiff for "down time.” Lawrence sought remuneration for "down time” because of an asserted delay in payment.
Lawrence’s lawyer forwarded, on May 12, 1982, *17a proof of loss, dated May 10, 1982,3 under cover of a letter stating, "[a]t this time, we claim lost wages, mental anguish and other expenses in the amount of $40,000 in addition to the monies claimed under the policy of insurance issued by Lloyds.”
The insurer declined to increase its offer to include "down time,” or the other elements of damage claimed by Lawrence’s lawyer, and promptly so notified Lawrence. After this action was commenced, in April 1985, Lawrence’s then-lawyer acknowledged that the policy of insurance did not provide coverage for "down time.”
It was not until August 28, 1982, that the insurer might be said to have "received” "satisfactory” proof of loss. On that date, the issue regarding the value of the tractor-trailer having been resolved, the insurer forwarded to Lawrence a proof of loss which, in effect, offered to settle for $19,250 on the understanding that Lawrence’s acceptance would, in effect, waive his claim for "down time” and the other asserted claims.4
Because the statute5 provides that a claim shall be deemed to be paid timely if paid within sixty days after receipt of proof of loss by the insurer, payment by the insurer by the latter part of October would have been timely.
It could not properly be said that the insurer acted unreasonably in declining to pay the $19,250 unless Lawrence waived his claim for "down time” *18and the other elements of damage asserted in his lawyer’s letter, under the circumstances that
• Lawrence’s claim for mental anguish was clearly barred by this Court’s decision in Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401; 295 NW2d 50 (1980),6
• there was and is, until today, no decision by either the Court of Appeals or this Court upholding an award of consequential damages for delay by an insurer in payment to an insured7 and
*19• the statute provides for payment of interest at twelve percent if there is a failure to pay within sixty days "after satisfactory proof of loss was received.”8
In all events, in August, 1982, and, sixty days later, October, 1982, Lawrence had no valid claim for lost profits because payment by the latter part of October, 1982, would have been timely under the statute. Lawrence delayed the commencement of this action almost three years, until April 22, 1985. Lawrence did not file a motion for partial summary disposition for an additional three and one-half years, until October 25, 1988, shortly before the trial of the instant action, whereupon judgment was entered for $19,250 in Lawrence’s favor.
It therefore appears that had Lawrence promptly filed this action, and had promptly moved for partial summary disposition, he could have obtained payment of the $19,250 before the end of 1982. Lawrence was not without an effective remedy for any delay in payment after October, 1982, of the agreed-upon loss in the amount of $19,250.
Whatever may be the correct resolution of our conflicting views regarding the recovery of lost profits for delay in payment of an insurance claim, the judgment entered by the circuit court for lost profits over a five and one-half-year period9 is problematic under the circumstances that pay*20ment by the insurer would have been timely as late as the latter part of October, 1982, and Lawrence delayed three years in commencing this action, and another three and one-half years in filing a motion for partial summary disposition.
Both the insurer and Lawrence were arguably at fault. The insurer could have paid the $19,250 without regard to the validity of the claims asserted by Lawrence’s succession of lawyers for mental and emotional stress. But Lawrence, or one or more of his lawyers, was apparently seeking to build up a case, and the legally invalid claims made by them for "mental anguish and other expenses” contradict the assertion that Lawrence’s purpose truly was to obtain prompt payment of $19,250 and no more.
II
The facts of this case underscore that this Court should adhere to the tendency of its decisions in Kewin and Kassab v Michigan Basic Property Ins Ass’n, 441 Mich 433; 491 NW2d 545 (1992), the decision of the Court of Appeals in the instant case, and the result, if not some of the language, in Parmet Homes, Inc v Republic Ins Co, 111 Mich App 140; 314 NW2d 453 (1981), denying recovery for consequential damages for delay by an insurer in payment to an insured of an insurance claim. This is not the case to let the camel get his nose under the tent.
The decision of the United States Court of Appeals for the Sixth Circuit in Salamey v Aetna Casualty & Surety Co, 741 F2d 874 (CA 6, 1984), is not persuasive. Salamey purports to apply Michigan law. It predicts that Michigan would join the "few courts” that have held that an owner of a business may recover lost profits as consequential *21damages for delay in payment of an insurance claim. It makes that prediction on the basis of the Court of Appeals decision in Parmet, where the Court, acknowledging that lost profits might be recovered in some situations, ruled that lost profits could not be recovered as an element of damage for delay in payment of an insurance claim.10
In Salamey, supra, p 876, Aetna defended the action by attempting to show that Salamey "had an economic motive to set the fire by introducing expert testimony that the store was losing money.” I think it most unwise to incorporate into our jurisprudence, through the majority opinion in the instant case, the notion that an insurer runs the risk of becoming responsible for lost profits if it fails to establish, to the satisfaction of the trier of fact, that the insured was the person responsible for the arson loss of a business.11
The majority opinion will be read by insureds and their counsel as justifying an action seeking lost profits whenever there is a loss of commercial property,12 and the insurer has not paid the claim as promptly as a trier of fact might conclude it *22should have. If that takes hold, this Court will be asked to revisit Kewin so that insureds who have not lost commercial property may also recover consequential damages. The majority is entering upon a slippery slope.
hi
The remedy provided by the statute for delay in payment of an insurance claim is interest at twelve percent. I am inclined to the view that the Legislature has provided, as a matter of public policy, the sole remedy therefor.13
Griffin, J., concurred with Levin, J.

 The truck was purchased in November, 1981, for $21,000. The parties ultimately agreed, by August, 1982, that the value of the truck in January, 1982, the date of the loss, was $19,500. There was a $250 deductible for theft.

 The act provides that a claim "shall be deemed to be paid on a timely basis if paid within 60 days after receipt of proof of loss by the insurer,” and that interest at the rate of twelve percent per annum is payable if there is a failure to pay within sixty days "after satisfactory proof of loss was received.” MCL 500.2006(3), (4); MSA 24.12006(3), (4).
The policy of insurance does not contain a provision requiring that payment of the claim be made within a specified time.

 The proof of loss included a claim for contents (personal property such as cassette tapes, a sleeping bag and tools) in the amount of $535. The record indicates that a number of weeks elapsed before Lawrence was satisfied that the policy did not cover contents.

 The insurer refused to pay the $19,250 unless Lawrence signed a proof of loss that did not include a claim for "down time.”

 See n 2.

 In Kewin, this Court set aside jury verdicts that included $75,000 for mental or emotional distress and $50,000 for exemplary damages for delay in payment under policies providing for disability income protection insurance and life insurance. The Court affirmed the awards of $16,500 for breach of the disability insurance contract, and $798.40 for breach of the life insurance policy. Id. at 423.
The Court reviewed the rule set forth in Hadley v Baxendale, 9 Exch 341; 156 Eng Rep 145 (1854), and the discussion in Corbin on Contracts and the Restatement of Contracts of the rule of law there stated respecting damages for breach of contract, and concluded that the application of the rule "in the commercial contract situation generally results in a limitation of damages to the monetary value of the contract had the breaching party fully performed under it.” Kewin, supra, pp 414-415.

 The majority relies on Miholevich v Mid-West Mutual Auto Ins Co, 261 Mich 495; 246 NW 202 (1933). There an automobile insurer promised to satisfy any judgment rendered against the plaintiff, but, as set forth in Kewin, supra, p 417, "wilfully neglected to satisfy it until after the plaintiff had been placed in jail for failure to pay the judgment.”
Miholevich, thus, did not concern a failure by an insurer to pay the insured, but rather a failure to pay a third party. The injury suffered in Miholevich, loss of liberty, is clearly different from the loss, in excess of the statutory twelve percent, of the use of money asserted in Kewin and in the instant case.
This Court in Kewin did not regard Miholevich as precedential supporting the claim for mental distress and exemplary damages asserted in Kewin.
Alderton v Williams, 139 Mich 296; 102 NW 753 (1905), also relied on by the majority, was not an action against an insurance company, but rather an action to recover $5,000 that the plaintiff claimed to have advanced as surety for the defendants in payment of six notes on which the plaintiff and the defendants were joint makers. The *19defendants claimed that after advancing the $5,000, the plaintiff refused to make further advances, and, in consequence, their joint venture failed. The jury found for the defendants, and, on appeal, the plaintiff challenged the instructions. This Court said that the principle underlying cases that limit damages for failure to loan money to the rate of interest are not applicable where the default was "not in making an agreed loan, but in contributing to a joint adventure.” Alderton, supra, p 301. Lawrence and Lloyds of London were not engaged in a "joint adventure.”

 See n 2 for text.

 From some time in 1982 through December, 1987.

 Lorenz Supply Co v American Standard, Inc, 100 Mich App 600; 300 NW2d 335 (1980), adverted to by the Court of Appeals in Parmet and by the Sixth Circuit in Salamey, was an action for breach of a distributorship agreement. Lost profits might, indeed, be an appropriate element of damage in such a case.
In Salamey the insured had business interruption insurance. Lawrence did not.

 In this connection, it is noteworthy that arson was an issue in Kassab.

 The majority concludes that the "plaintiff submitted enough evidence regarding the element of foreseeability to make out a prima facie case for lost profits” on the basis that "[t]he plaintiff introduced the insurance policy, which noted on its face that the truck would be used for commercial purposes, namely, to haul dry freight,” and the testimony of the vice president of the adjustor that he understood that the loss of the vehicle would result in lost profits unless it was replaced. Ante, pp 13-14.
The tendency of the majority opinion would permit recovery whenever the insured is engaged in a commercial enterprise, and it can be demonstrated, as will readily be done in almost every case, that, until *22the fire-damaged structure or the collision or fire-damaged truck or machinery is replaced, there will be loss of profits.

 See Kassab, supra, p 443 (Levin, J., concurring).