Bach v. State Farm Mutual Automobile Insurance
357 N.W.2d 325
Mich. Ct. App.
1984
Check Treatment
Allen, J.

Defendant Economy Fire & Casualty Company appeals as of right from the trial court’s award to plaintiff of 12% penalty interest under MCL 500.3142; MSA 24.13142 and "overdue” attorney fees under MCL 500.3148(1); MSA 24.13148(1). We affirm.

On July 3, 1978, Katherine Zwitzer was struck by an automobile while she was crossing the street *130 in Benton Harbor, Michigan. She suffered severe injuries, from which she died some time later. At the time of her injury, Ms. Zwitzer was a Florida resident whose residency was established through a prolonged stay with her son-in-law who lived in Florida. However, Ms. Zwitzer had recently returned to Michigan to visit her son in Benton Harbor.

Defendant Economy insured the driver of the automobile which struck Ms. Zwitzer. Defendant State Farm Mutual Automobile Insurance Company carried the policies insuring the son-in-law with whom Ms. Zwitzer resided in Florida and insuring the son she was visiting in Benton Harbor. Both insurers denied coverage, although neither denied that no-fault benefits were due. Instead, both argued that the benefits due were owed by the other.

As a result, plaintiff filed a complaint against both insurers and in April, 1980, State Farm was dismissed on motions for summary judgment filed by State Farm and plaintiff. Subsequently, this Court decided Mills v Auto-Owners Ins Co, 102 Mich App 105; 300 NW2d 757 (1980), and on the basis of that opinion State Farm was brought back into the case. On July 24, 1981, summary judgment was granted in favor of Economy. State Farm filed a claim of appeal and the matter was briefed and argued in the Court of Appeals. On June 28, 1982, the Supreme Court reversed the Court of Appeals decision in Mills v Auto-Owners Ins Co, 413 Mich 567; 321 NW2d 651 (1982). On September 17, 1982, on the authority of the Supreme Court’s decision in Mills, this Court remanded the matter to the trial court for entry of an order "directing the payment of appropriate no-fault benefits by Economy”.

*131 Following remand, further proceedings were held in April, 1983, and, on August 11, 1983, the trial court entered an order of summary judgment directing Economy to pay $26,473.28 in no-fault benefits, plus interest. In addition the trial court ordered:

"It is further ordered that defendant Economy Fire & Casualty Company shall pay to the plaintiff no-fault interest running from January 16, 1979, through June 1, 1983, in the amount of sixteen thousand four hundred sixty-four ($16,464.00) dollars;

"It is further ordered that defendant Economy Fire & Casualty Company shall pay reasonable attorney fees for the plaintiff.”

A hearing was held on August 19, 1983, regarding the amount of the attorney fees. Pursuant to that hearing, on September 9, 1983, the court entered an order for determination of attorney fees providing for a total of $13,096.

Economy appeals the award of penalty interest pursuant to the no-fault act and the award of attorney fees.

On Appeal Economy argues that this Court’s decision in Sharpe v DAIIE, 126 Mich App 144; 337 NW2d 12 (1983), lays down the rule that no-fault penalty interest cannot be imposed upon a no-fault insurer who relies upon then-existing law, and since, at the time Economy declined to pay, this Court’s opinion in Mills v Auto-Owners, supra, was the law, Economy should not be liable for punitive interest or punitive attorney fees as having "unreasonably refused to pay the claim”. In short, Economy contends that it should not be punished because the Supreme Court subsequently reversed the then-existing law.

Plaintiff argues that Sharpe is distinguishable *132 and that the more apposite case is Nash v DAIIE, 120 Mich App 568; 327 NW2d 521 (1982), lv den 417 Mich 1088 (1983), which holds that it is irrelevant, under the statute regarding penalty interest, whether denial is in good faith. If there is a failure to pay benefits and it is later determined benefits are due, penalty interest must be assessed. As to attorney fees, a trial court’s finding of unreasonableness will be reversed only if the finding is clearly erroneous, and, since the only dispute in the instant case was which of two insurers would pay, it was patently unfair to force a severely injured patient to wait six years for payment of benefits. Thus, the trial court’s finding of unreasonableness was not clearly erroneous.

We agree with plaintiff that, in the instant situation, the more apposite case is Nash. In Sharpe, the then-existing case law suggested that some reduction in the monies owed could be made by the insurer. That amount was deducted from the benefits paid by the carrier in Sharpe. But, in the case before us, it was unquestioned that plaintiff’s decedent was entitled to all of the benefits. The only question was which of two insurers was legally responsible. To make plaintiff wait until that question was decided would violate the whole purpose of the statutes governing penalty interest, MCL 500.3142; MSA 24.13142, and "overdue” attorney fees, MCL 500.3148(1); MSA 24.13148(1).

Further, with regard to the attorney fee provision at issue, we find language in Liddell v DAIIE, 102 Mich App 636; 302 NW2d 260 (1981), lv den 411 Mich 1079 (1981), controlling:

" 'Sec. 3148. (1) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fee shall be *133 a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.’

"While the terms 'unreasonably refused’ and 'unreasonably delayed’ are not further defined, the case law indicates that a delay is not unreasonable where it is the product of a legitimate question of statutory construction, constitutional law, or even a bona fide factual uncertainty. See Davidson v Johnson, 76 Mich App 497, 504; 257 NW2d 139 (1977), on reh 79 Mich App 660, 666-667; 262 NW2d 887 (1977); Richards v American Fellowship Mutual Ins Co, 84 Mich App 629, 635; 270 NW2d 670 (1978); Lewis v Detroit Automobile Inter-Ins Exchange, 90 Mich App 251, 257; 282 NW2d 794 (1979).

"The trial court’s finding of unreasonableness on the part of the insurance company will be disturbed on appeal only if that finding is clearly erroneous. GCR 1963, 517.1; Motorists Mutual Ins Co v Howard, 21 Mich App 146, 149; 175 NW2d 351 (1970).”

Because the facts and circumstances prevailing in the instant case do not abide the possibility that the trial court’s decision was "clearly erroneous”, we find no error in the trial court’s assessment of attorney fees.

Affirmed.