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Moriah Inc v American Auto Ins Co, et al (COA – UNP 1/6/2022; RB #4375)   

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Michigan Court of Appeals; Docket #355837; Unpublished  
Judges Boonstra, Gleicher, and Letica; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING: 
Reasonable Proof Requirement [§3142(2)]
General / Miscellaneous [§3142]
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
General / Miscellaneous [§3148]

TOPICAL INDEXING: 
Attorney Fee Liens
Release and Settlements


SUMMARY: 
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s denial of Plaintiff Moriah Incorporated’s (“Moriah”) motion to enforce an attorney charging lien against $168,735.56 in no-fault PIP benefits paid by Defendant American Automobile Insurance Company (“AAIC”) directly to Moriah during the course of litigation, and for penalty interest and attorney fees under MCLs 500.3142 and 500.3148 on that amount.  Moriah retained legal counsel to pursue more than $400,000 in unpaid PIP benefits from AAIC, and the retainer agreement provided that Moriah’s counsel would be asserting “ ‘a lien . . . upon any and all settlements and/or adjustments resulting from this occurrence.”  During the course of litigation, AAIC paid $168,735.56 worth of previously unpaid PIP benefits directly to Moriah, and Moriah thereafter argued that that amount was subject to its attorney charging lien and that AAIC, therefore, had to pay the attorney fee subject to the lien.  The Court of Appeals disagreed, holding that  AAIC did not have to pay the attorney fee lien, because Moriah was not entitled to assert the lien over that amount, given that Moriah did not provide sufficient notice of the lien to AAIC.  Furthermore, the Court held that Moriah was not entitled to penalty interest or attorney fees on the claims that comprised that amount due to the terms of the release signed by the parties after they reached a settlement, and, alternatively, because Moriah failed to demonstrate that it submitted reasonable proof of the fact and amount of loss to AAIC which would entitle it to such fees and interest.

Gloria Denoyer was injured in a motor vehicle collision and received treatment for her injuries from Moriah, to which she assigned her right to pursue no-fault PIP benefits related to her treatment.  Denoyer’s no-fault insurer, AAIC, denied Moriah’s subsequent claim for PIP benefits, prompting Moriah to retain Christensen Law in bringing a first-party action against AAIC.  The retainer agreement between Moriah and Christensen Law provided that Christensen would receive 25% of the amount recovered.  After the agreement was entered into, Moriah’s counsel sent a letter to AAIC’s claim adjuster, informing her that it would be asserting “ ‘a lien . . . upon any and all settlements and/or judgments resulting from this occurrence.”

Approximately one year after suit was filed, the parties submitted to facilitation, and at some time in the interim, AAIC paid $162,735.56 in PIP benefits directly to Moriah.  Then, at facilitation, the parties agreed to settle Moriah’s claims for $257,597.  A release was executed, releasing AAIC from “ ‘any and all claims, demands, rights or causes of action of whatever kind, nature, or description, whether known or unknown, asserted, or that could have been asserted, for payment of no-fault benefits under Michigan’ No-Fault Insurance Act . . . for all services provided to GLORIA DENOYER through September 30, 2019.’ ”  The release also expressly provided that “ ‘Plaintiff claims an attorney fee on $168,735.56 previously voluntarily paid by AAIC to MORIAH . . . AAIC denies such claim is valid; accordingly, this issue will be decided by the [court] by motion, and the claim for the attorney fee on the prospective motion shall be capped at $50,000 . . .’ ”

Ultimately, Moriah filed a motion to enforce its attorney lien against the $168,735.56 paid directly to it and sought attorney fees and penalty interest on the claims which comprised that amount.  The court denied Moriah’s motion, agreeing with AAIC that, because the $168,735.56 was voluntarily paid—i.e. not a settlement or judgment—and because AAIC was not given sufficient notice of any attorney charging lien, such a lien could not be asserted against that amount.  Furthermore, the trial court agreed with AAIC that its payment of $168,735.56 did not trigger attorney fees and penalty interest under the no-fault act.   

The Court of Appeals affirmed the trial court’s denial of Moriah’s motion, holding, first, that Moriah’s attorney lien could not be asserted against the $168,735.56 because AAIC was never given sufficient notice of the lien.  The letter sent by Moriah’s counsel to AAIC’s claims adjuster merely said “[y]ou may consider this correspondence notice of assertion of a lien on behalf of this office upon any and all settlements and/or judgments resulting from this occurrence.”  The $168,735.56, however, was not part of any settlement or judgment.  Moreover, because Moriah’s complaint merely provided that “ ‘Christensen Law hereby asserts its attorney [sic] on any monies paid that are intended to satisfy any part of Plaintiffs claims,’ ” and did not actually include the word “lien,” the Court declined to impute notice to AAIC.

“Plaintiff cites its complaint, its contingency fee agreement with its counsel, and plaintiff’s counsel’s August 2018 letter to defendant to support the applicability of its lien. Plaintiff contends that its complaint provided actual notice of its attorney’s lien, specifically   16 which read, ‘Christensen Law hereby asserts its attorney [sic] on any monies paid that are intended to satisfy any part of Plaintiffs claims.’ However, this sentence does not mention the word ‘lien,’ and plaintiff admits the word was inadvertently omitted from its pleading. In light of this ambiguity, we decline to impute notice to defendant. Plaintiff’s retainer agreement with plaintiff’s counsel, which does not include the word lien is, at best, notice between plaintiff and plaintiff’s counsel. Further, plaintiff fails to argue or explain the circumstance under which defendant had notice of the terms of plaintiff’s retainer agreement with its counsel. Plaintiff’s counsel’s August 2018 letter to defendant’s claims adjuster did provide direct notice to defendant of the existence of a lien . . . The letter notified defendant of a lien on ‘all settlements and/or judgments resulting from this occurrence.’ However, there was no judgment in this case, and the only settlement between the parties, in August 2020, was for $257,597 and specifically excluded the $168,735.56 at issue in this appeal. Plaintiff’s counsel further argues that the $168,735.56 payments were subject to the attorney charging lien because the money was recovered as a result of his services. That is the subject of a separate dispute between plaintiff’s counsel and his client. As between plaintiff and defendant, the facilitation agreement and the subsequent releases all characterize the payment as voluntary.” 

The Court held, second, that the release executed by the parties operated to bar Moriah from recovering penalty interest or attorney fees on the claims which comprised the $168,735.56 paid directly to Moriah.  Alternatively, the Court held that Moriah failed to demonstrate that it had submitted reasonable proof of the fact and amount of loss to AAIC.  The only evidence submitted by Moriah in support of its claim that AAIC’s initial delay or denial in paying the $168,735.56 was unreasonable was a bill chart, which, by itself, was insufficient to establish unreasonableness.

“Plaintiff’s contention that defendant unreasonably denied or delayed payment is based on the fact that certain bills were paid beyond 30 days and that to plaintiff’s knowledge, no additional information was requested or required for defendant to process payment. Plaintiff created and included in its motion to enforce the charging lien and for interest and attorney fees the following chart . . . Plaintiff’s summary chart is insufficient to establish that defendant’s delay or denial of benefits was unreasonable. In a case where numerous bills were submitted as evidence, plaintiff’s chart fails to identify the specific bills at issue and when reasonable proof was allegedly submitted. Most importantly, the chart is contained within counsel’s brief and is not supported by any affidavit or other admissible document. Even considering the additional spreadsheets or ledgers, plaintiff’s documents do not address the admissible documents from defendant asserting that additional materials were requested to support the claimed expenses. Nothing in plaintiff’s submissions rebuts the fact of the request for additional documentation or supports the reasonableness of those requests, and defendant’s explanation for denial or reduction of benefits. Plaintiff’s additional claim of attorney fees, if not found to have been barred by the parties’ release, is dependent on establishing that defendant’s payment of benefits was overdue and consequently, fails for the same reasons as does plaintiff’s claim for penalty interest.” 


Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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