Michigan Court of Appeals; Docket #350884; Unpublished
Judges Boonstra, Borrello, and Rick; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Conduct Establishing Unreasonable Delay or Denial
Penalty Attorney Fees and Other Court Rule Sanctions
Penalty Attorney Fees on Appeal
In this unanimous, unpublished, per curiam decision, the Court of Appeals vacated the trial court’s order granting Plaintiff Emil Ramirez’s motion for no-fault attorney fees following a jury trial in which Ramirez was awarded $55,279.79 in overdue no-fault PIP benefits. The Court of Appeals held, first, that the trial court did not err in ruling that Defendant Home-Owners Insurance Company’s denial of Ramirez’s claims for no-fault PIP benefits was unreasonable for purposes of MCL 500.3148. The Court of Appeals held, second, that Ramirez was not barred by MCR 2.405 from collecting attorney fees—despite the fact that he failed to respond to Defendant’s offer of judgment in the amount of $35,000, filed more than 42 days before trial—because MCL 600.2405(6) provides that attorney fees “ ‘may be taxed and awarded as costs’ when ‘authorized by statute or by court rule.’ ” Thus, even though Ramirez was not entitled to costs and fees under MCR 2.405, the trial court could still award attorney fees under MCL 500.3148. Despite these holdings, the Court of Appeals vacated the trial court’s order, because the trial court failed to consider all the requisite factors for calculating a reasonable attorney fee before granting Ramirez’s motion. Therefore, the Court of Appeals remanded back to the trial court for consideration of those factors.
Emil Ramirez was injured in a motor vehicle accident, after which he suffered from persistent headaches and cognitive issues. Ramirez’s no-fault insurer, Home-Owners, paid Ramirez’s PIP benefits at first, but suspended payments approximately three months after the crash while it claimed to be investigating whether his ongoing symptoms were related to the accident. Home-Owners ordered that Ramirez undergo a defense medical examination two months later, after which the examiner concluded that Ramirez required attendant care and could not work due to his cognitive impairments, but declined to offer an opinion regarding causation. Thus, Home-Owners ordered that Ramirez undergo a second medical examination, approximately 6 months after the first, after which the second examiner opined that Ramirez’s impairments were not related to the subject accident. After this second examination, Home-Owners formally denied Ramirez’s claims, prompting Ramirez to file the underlying first-party action. The case proceeded to trial, approximately three months prior to which Home-Owners filed an offer of judgment in the amount of $35,000. Ramirez did not respond to Home-Owners offer, and the trial court ultimately returned a verdict in Ramirez’s favor, awarding him $55,279.79. Ramirez then filed a motion for attorney fees under MCL 500.3148, which the trial court granted.
On appeal, Home-Owners contested the trial court’s order granting Ramirez’s motion for attorney fees. Home-Owners argued, first, that the trial court erred in ruling that its denial of Ramirez’s claims was unreasonable. More specifically, Home-Owners argued that its denial was justified based on the opinion of the second medical examiner. The Court of Appeals emphasized, however, the fact that Home-Owners suspended payment of Ramirez’s claims before the second medical examination, and the fact that the jury ultimately concluded that the second medical examiner was wrong. Based on this timeline and the jury’s verdict, the Court of Appeals held that the trial court’s award of attorney fees was warranted.
“Defendant contends that there was bona fide factual uncertainty regarding whether PIP benefits were properly owed and that its decision to refuse payment was reasonable because the decision was supported by the independent medical evaluator’s opinions. ‘[A]n insurer may reasonably rely on the medical opinion of its physicians and the [independent medical evaluations (IMEs)] the physicians perform . . . .’ Tinnin v Farmers Ins Exch, 287 Mich App 511, 516; 791 NW2d 747 (2010). No-fault insurers do not have a duty ‘to ‘go beyond’ the medical opinion of their physicians and the IMEs that those physicians perform.’ Moore, 482 Mich at 522. However, as noted by the trial court, in this case, defendant ceased making payments before it had received a medical opinion that supported a conclusion that the benefits were ‘unrelated, unnecessary[,] or unreasonable.’ The record indicates that defendant made the decision to ‘pend’ payments in December 2017. Thereafter, plaintiff attended an independent medical exam, arranged by defendant, with Dr. Donald Boyd in February 2018. Despite Dr. Boyd’s findings that plaintiff was injured and required treatment and attendant care and should not return to work until his testing improved, defendant denied and continued to delay paying bills associated with plaintiff’s injuries. Subsequently, defendant sent plaintiff to a second independent medical examination with Dr. Eduardo Montoya, who ultimately determined that plaintiff’s cognitive impairments did not arise out of the motor vehicle accident. At that point, defendant terminated all benefits. However, both the jury and the trial court concluded that the claims were overdue. Given that defendant failed to make timely payments and thereafter had no intention to pay the claims submitted, we agree with the trial court’s assessment that the benefits were unreasonably denied or delayed. On that basis, we agree with the trial court’s assessment that MCL 500.3148(1) would support an award of attorney fees.”
Home-Owners argued, second, that Ramirez was barred from recovering attorney fees by the “offer of judgment rule,” enshrined in MCR 2.405. For reference, MCR 2.405(D)(2) provides as follows:
(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.
Ramirez did not respond to Home-Owners’ offer, and thus Home-Owners argued that, even though the jury’s verdict was more favorable than the “average offer,” as that term is defined in MCR 2.405(A)(3), Ramirez was precluded from recovering attorney fees under the “offer of judgment rule.” The Court of Appeals disagreed, citing MCL 600.2405, which “specifically provides that attorney fees ‘may be taxed and awarded as costs’ when ‘authorized by statute or by court rule.’ ” Thus, even though Ramirez may not have been entitled to attorney fees under MCR 2.405(A)(3), the trial court could still award him attorney fees under MCL 500.3148.
“Applying those same principles to the instant case, although plaintiff may not have been entitled to costs and fees under the offer of judgment rule, MCR 2.405, MCL 500.3148(1) specifically provides an alternative basis for an award of attorney fees in this no-fault case. See MCL 600.2405(6) (providing that attorney fees ‘may be taxed and awarded as costs’ when ‘authorized by statute or by court rule.’).
. . .
. . . the attorney fees awardable under MCL 500.3138(1) are an alternative basis to recovering actual costs for ‘services necessitated by the failure to stipulate to the entry of judgment’ under MCR 2.405. See Rafferty, 461 Mich at 267-268; McAuley, 457 Mich at 519, 522-523. Additionally, it would defeat the purpose of the no-fault act’s attorney-fee penalty provision, established to ‘ensure prompt payment to the insured,’ Ross, 481 Mich at 11, were this Court to hold that MCR 2.405(D) bars an award of attorney fees under MCL 500.3148(1). See McAuley, 457 Mich at 518 (‘Statutes should be construed so as to prevent absurd results, injustice, or prejudice to the public interest.’); see also Pike v Northern Michigan Univ, 327 Mich App 683, 693; 935 NW2d 86 (2019) (‘[I]s a well-established rule of statutory construction that when two applicable statutory provisions conflict, the one that is more specific to the subject matter prevails over the provision that is only generally applicable.’). Therefore, although plaintiff was barred for recovering attorney fees under MCR 2.405, plaintiff is not barred from recovering attorney fees to which he is entitled to under MCL 500.3148(1). See MCL 600.2405(6). Accordingly, the trial court did not err by concluding that plaintiff was entitled to attorney fees under MCL 500.3148(1).”
Ultimately, the Court of Appeals vacated the trial court’s order granting Ramirez’s motion for attorney fees, however, because the trial court failed to follow the three-step process set forth in Pirgu v United Servs Auto Ass’n, 499 Mich 269 (2016) for calculating a reasonable attorney fee and failed to consider the factors set forth in Wood v Detroit Auto Inser-Ins Exch, 413 Mich 573 (1982) and MRPC 1.5(a). Thus, the Court of Appeals remanded back to the trial court for proper calculation of a reasonable attorney fee in this case.
“In this case, the trial court’s only statement regarding reasonableness of the fees requested was a single sentence within the written opinion that suggested that an application of the Wood factors demonstrated that the attorney fees requested by plaintiff were reasonable. However, there is no indication of how this conclusion was reached and no discussion, brief or otherwise, about how the trial court viewed each factor. Therefore, the record before us is insufficient to facilitate review of this issue and remand is necessary so that the trial court can properly address the relevant factors. See Pirgu, 499 Mich at 282.”