Nickola v. Mic General Insurance Company
312 Mich. App. 374
| Mich. Ct. App. | 2015Background
- In 2004 George and Thelma Nickola were injured by a tortfeasor whose policy paid $20,000 each; their insurer (MIC General/GMAC) provided UIM coverage of $100,000 per person.
- The insureds demanded arbitration for UIM benefits ($80,000 each) but defendant initially refused, claiming arbitration required mutual agreement despite policy language allowing either party to demand arbitration.
- The trial court ordered arbitration in 2006 and reserved ruling on sanctions/fees; the parties named arbitrators but could not agree on a third, producing a six-year delay; George and Thelma later died and their son became personal representative.
- Arbitration occurred in 2013, awarding $80,000 for George and $33,000 for Thelma (inclusive of pre-suit interest as element of damages but excluding other interest/fees); plaintiff then sought attorney fees/sanctions, UTPA penalty interest (MCL 500.2006), and prejudgment interest (MCL 600.6013).
- The trial court denied fees/sanctions and penalty interest, “affirmed” the arbitration award but did not enter judgment or decide prejudgment interest; plaintiff appealed only the denial of fees and interest.
- The Court of Appeals affirmed denial of sanctions and penalty interest, and remanded to allow plaintiff to seek entry of judgment on the arbitration award (at which time prejudgment interest may be raised).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sanctions under MCR 2.114 for defendant’s initial refusal to allow arbitration | Sanctions warranted because defendant asserted frivolously that arbitration required mutual agreement | Defendant’s initial refusal was not a court- rule filing and plaintiff failed to produce fee documentation per the 2006 order | Denied — plaintiff waived the claim by failing to submit required fee proof; MCR 2.114 did not apply to the pre‑litigation arbitration refusal |
| Penalty interest under MCL 500.2006(4) for late UIM payment | UIM claim is a first‑party benefit; therefore 12% penalty interest applies regardless of whether claim was reasonably in dispute | UIM functions like a third‑party tort claim; the “not reasonably in dispute” limitation applies | Denied — UIM claim was tied to an underlying third‑party tort claim, so the “reasonably in dispute” standard applied and benefits were reasonably in dispute |
| Prejudgment interest under MCL 600.6013 from filing to payment | Plaintiff entitled to prejudgment interest from complaint filing date until payment | Defendant argued delays (including plaintiff’s conduct) preclude interest | Not decided on merit — court remanded because arbitration award was not reduced to judgment; plaintiff may raise prejudgment interest when seeking judgment; court may consider delays then |
| Trial‑court’s treatment of arbitration award (entry of judgment) | Requested judgment enforcing arbitrator’s award | Trial court only “affirmed” award and denied other relief | Remand — plaintiff may seek entry of judgment; trial court erred by not entering judgment on the arbitration award |
Key Cases Cited
- Griswold Props, LLC v Lexington Ins Co, 276 Mich App 551 (2007) (distinguishes first‑party claims that automatically trigger penalty interest from other claims)
- McDonald v Farm Bureau Ins Co, 480 Mich 191 (2008) (UIM coverage arises from the insurance contract to cover damages beyond tortfeasor limits)
- Auto Club Ins Ass’n v Hill, 431 Mich 449 (1988) (explains UIM/third‑party relationship between insured and insurer)
- Rory v Continental Ins Co, 473 Mich 457 (2005) (uninsured motorist coverage permits claims against own insurer analogous to third‑party claims)
- Auto‑Owners Ins Co v Ferwerda Enterprises, Inc, 287 Mich App 248 (2010) (when breach is tied to an underlying third‑party tort claim, the “reasonably in dispute” language can bar penalty interest)
- Holloway Const Co v Oakland Co Bd of Rd Comm’rs, 450 Mich 608 (1996) (arbitrator discretion over preaward prejudgment interest)
- Reed Estate v Reed, 293 Mich App 168 (2011) (waiver may be shown by neglecting to act over a long period)
- The Cadle Co v Kentwood, 285 Mich App 240 (2009) (waiver may be shown by conduct indicating intent to relinquish a right)