Brown v. Home-Owners Insurance
298 Mich. App. 678
| Mich. Ct. App. | 2012Background
- Plaintiff slipped on ice while exiting his vehicle on November 26, 2008; he is a 77-year-old sole shareholder/employee of Brown & Brown, a subchapter S corporation.
- Plaintiff cannot work since the accident and seeks no-fault work-loss benefits under MCL 500.3107(l)(b); defendant insurer pays based on W-2 wages, disputing flow-through income.
- Defendant submitted work-loss calculations using two methods: (a) Ross-based W-2 wages only; (b) including flow-through income from the S corporation.
- Parties stipulated two potential wage-loss figures: $2,630.00 per 30 days and $4,948.00 per 30 days; the court later selects the higher amount for 30-day period.
- Trial court granted plaintiff summary disposition on the issue of including S-corp flow-through income; later awarded penalties and attorney fees to plaintiff.
- Defendant appeals, challenging inclusion of S-corp profits in work-loss calculation and the award of attorney fees and penalty interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether flow-through income from an S corporation may be included in work-loss benefits. | Brown | Home-Owners | Included; profits from the S corporation may be part of work-loss. |
| Whether attorney fees under MCL 500.3148(1) were justified given a legitimate question of interpretation. | Brown | Home-Owners | Reversed in part; no fees awarded due to legitimate statutory interpretation question. |
| Whether penalty interest under MCL 500.3142 is proper given the work-loss calculation | Brown | Home-Owners | Not addressed since partial reversal on fees; otherwise affirmed in part. |
Key Cases Cited
- Ross v Auto Club Group, 481 Mich 1 (2008) (limits wage-loss measure to W-2 wages when sole shareholder; distinguishes profitable vs. unprofitable S corporations)
- Coates v Mich Mut Ins Co, 105 Mich App 290 (1981) (losses from investment returns not recoverable; income from personal effort emphasized)
- Moghis v Citizens Ins Co of America, 187 Mich App 245 (1990) (supports broad view of 'loss of income' beyond wages)
- Adams v Auto Club Ins Ass’n, 154 Mich App 186 (1986) (deduct business expenses to compute lost income; no better position post-accident)
- Moore v Secura Ins, 482 Mich 507 (2008) (two prerequisites for attorney-fee awards in no-fault cases; legitimate interpretation question can justify delay)
- Univ Rehab Alliance, Inc v Farm Bureau Gen Ins Co of Mich, 279 Mich App 691 (2008) (insurer must show unreasonableness based on circumstances at time of decision)
- Attard v Citizens Ins Co of America, 237 Mich App 311 (1999) (rebuttable presumption that insurer’s delay is unreasonable if conditions of no-fault claim exist)