Kristina Guthrie v. Auto-Owners Insurance Company
332199
| Mich. Ct. App. | Jul 25, 2017Background
- In 1996 Guthrie, then 14, was catastrophically injured in an auto accident and is entitled to no-fault PIP benefits for housing modifications.
- Auto-Owners previously funded modifications to a prior home; after foreclosure Guthrie moved to an unsuitable mobile home and sought a new/modified home.
- In 2014 Guthrie bought a house and submitted a signed written estimate/contract from contractor Bath For All (BFA) for $289,000 to renovate the home; Auto-Owners refused to pay.
- Guthrie sued for overdue PIP benefits, attorney fees (MCL 500.3148), and penalty interest (MCL 500.3142); parties partially settled on benefits for $289,349.17 but reserved fees and interest for trial.
- After a bench trial the trial court awarded Guthrie $80,625 in attorney fees and $51,768.93 in interest; Auto-Owners appealed and Guthrie cross‑appealed for more fees/interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Guthrie "incurred" an expense under MCL 500.3107 by signing BFA estimate | Signing the signed estimate constituted a contract and thus incurred the full renovation expense | The document was only an "estimate," no performance occurred, no bills or work done, so no incurred expense | Court: Estimate plus signatures created a contract = expense was incurred |
| Whether expense was reasonable and necessary | Renovation was recommended by OT; price not challenged at trial; therefore reasonable and necessary | Renovation impossible due to occupancy/inspection issues; price excessive | Court: Evidence supported the trial court that modifications were reasonably necessary and price not shown unreasonable |
| Whether insurer’s refusal was unreasonable (attorney fees under MCL 500.3148) | Auto-Owners unreasonably delayed/refused; did little investigation after receiving signed estimate | Denial was reasonable because document was an estimate, not a bill; insurer had questions | Court: Auto-Owners’ conduct was unreasonable (failed to investigate, awaited litigation), so fees are warranted |
| Whether penalty interest under MCL 500.3142 and scope/date of recoverable fees | Interest and fees should run from earlier dates and include trial time and broader pre‑estimate conduct | Interest and fees should be limited (e.g., deposit amount or stop date at partial settlement) | Court: Penalty interest and fees allowed; affirmed interest based on date of fully executed estimate (Sept. 12, 2014); remanded to add attorney fees for time counsel spent at trial; other expanded-date/amount claims rejected due to counsel's trial positions or lack of incurred expense |
Key Cases Cited
- Admire v. Auto-Owners Ins. Co., 494 Mich. 10 (Sup. Ct.) (addressed insurer obligations under no-fault housing/benefits principles cited by parties)
- Proudfoot v. State Farm Mut. Ins. Co., 469 Mich. 476 (2003) (definition of "incur" — signing a contract can create liability for costs)
- Ross v. Auto Club Group, 481 Mich. 1 (2008) (standard for when insurer’s refusal/delay is "unreasonable" for fee awards)
- Hamilton v. AAA Mich., 248 Mich. App. 535 (2001) (three-part test for insurer liability: expense incurred, reasonably necessary, reasonable amount)
- Nasser v. Auto Club Ins. Ass'n, 435 Mich. 33 (1990) (reasonableness and necessity of expenses generally factual questions)
- Williams v. AAA Mich., 250 Mich. App. 249 (2002) (penalty interest assessed where insurer refused to pay benefits later determined payable)
- Bloemsma v. Auto Club Ins. Ass'n, 190 Mich. App. 686 (1991) (attorney fees under MCL 500.3148 available through trial)
- Kloian v. Domino’s Pizza, LLC, 273 Mich. App. 449 (2006) (contract formation: offer, acceptance, objective meeting of the minds)
- Innovation Ventures v. Liquid Mfg., 499 Mich. 491 (contract elements including mutuality of agreement)