Lead Opinion
Dеfendant appeals by right the order granting summary disposition to plaintiff and awarding plaintiff attorney fees in this no-fault insurance case. We affirm.
This case arose when Kimberly Sterling was either pushed from or jumped out of a moving motor vehicle, hit the ground, and sustained serious brain injuries. Defendant, Sterling’s no-fault insurer, originally refused to pay plaintiffs claim for no-fault benefits because it asserted that injuries resulting from assaults are exempt from any no-fault coverage. After Sterling’s boyfriеnd was acquitted of assault, defendant agreed to pay the claim with interest, but denied that it owed attorney fees. The trial court ruled that the original denial was unreasonable because even if Sterling had been assaulted, the claim would not be barred: the injuries occurred because Sterling fell out of the moving vehicle while the vehicle was being used for transportation. The trial court later determined that the 25 percent contingent fee to which plaintiff agrеed was fair and granted plaintiff attorney fees consistent with the contingent-fee agreement.
The trial court’s decision to grant or deny attorney fees under the no-fault act presents a mixed question of law and fact. Ross v Auto Club Group,
*694 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 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. [MCL 500.3148(1).]
An insurer’s delay in making payments under the no-fault act is not unreasonable if it is based on a legitimate question of statutory construction, constitutional law, or factual uncertainty. Ross, supra at 11. Whether attorney fees are warranted under the no-fault act depends not on whether coverage is ultimately determined to exist, but on whether the insurer’s initial refusal to pay was unreasonable. If an insurer refuses to pay or delays paying no-fault benefits, the insurer must meet the burden of showing that the refusal or delay is the product of a legitimate question of statutory construction, constitutional law, or factual uncertainty. Id.
Under MCL 500.3105(1), no-fault personal protection insurance (PIP)
In order for an injury to arise out of the use of a motor vehicle as a motor vehicle, and thus be entitled to coverage for purposes of PIP benefits, the injury must be “closely related to the transportational functiоn of automobiles.” McKenzie v Auto Club Ins Ass’n,
Defendant essentially argues that because it initially did not know whether Sterling was assaulted or fell out of the vehicle, it did not unreasonably deny benefits at the outset because PIP benefits are not payable for injuries from assaults. In particular, defendant emphasizes the statement in McKenzie, supra at 222, that the holdings in Thornton v Allstate Ins Co,
Bourne involved a man who was forced by two men at gunpoint to drive to a location where one of the assailants struck him and threw him to the ground. They then drove away in the injured man’s car. Bourne, supra at 196. In both cases the injuries were inflicted by means that did not directly involve the use of a motor vehicle, i.e., the gunshot in Thornton and the physical attack outside the vehicle in Bourne. Rather, the motor vehicle involved in Thornton was simply where the victim was shot, a situation no different from a home’s being the site of a crime. And in Bourne, the assailants used the vehicle to transport the victim to the location of the assault. Thus, the essence of Thornton and Bourne is that where a motor vehicle is merely the location of an assault or a backdrop of an assault, there is insufficient connection between the injuries and the use of a motor vehiсle as a motor vehicle to impose liability for PIP benefits under MCL 500.3105(1). There is, however, no rule precluding PIP benefits for injuries resulting from an assault. The present case is markedly distinguished from Thornton and Bourne because Sterling’s injuries directly resulted from her falling out of the motor vehicle while it was in motion and being used for transportation. Nor has there ever been any suggestion or evidence that she intentionally attempted to harm herself; consequently, Sterling suffered an accidental injury as defined by MCL 500.3105(4).
Defendant next claims that the trial court erred when it set the amount of the reasonable attorney fee awarded under MCL 500.3148(1). Defendant argues that basing it on the contingent-fee agreement between plaintiff and its counsel was an abuse of discretion because the fee calculates to over $1,600 an hour for a case that turned out to be not very difficult. We disagree.
A trial court’s determination of the reasonableness of an attorney-fеe award is reviewed for an abuse of discretion. Wood v Detroit Automobile Inter-Ins Exch,
Because the Legislature did not define or specify a method for determining “a reasonable attorney fee” under MCL 500.3148(1), оur Supreme Court in Wood, supra at 588, adopted a multifactor analysis patterned after rules governing professional conduct that this Court had first used in another context. This Court opined in Liddell v Detroit Automobile Inter-Ins Exch,
“There is no precise formula for computing the reasonableness of an attorney’s fee. However, among the facts to be taken into consideration in determining the reasonableness of a fee include, but are not limited to, the following:*699 (1) the professional standing and experiencе of the attorney; (2) the skill, time and labor involved; (3) the amount in question and the results achieved; (4) the difficulty of the case; (5) the expenses incurred; and (6) the nature and length of the professional relationship with the client. See generally 3 Michigan Law & Practice, Attorneys and Counselors, § 44, p 275 and Disciplinary Rule 2-106(B) of the Code of Professional Responsibility and Ethics.”
The Wood Court observed that although “a trial court should consider the guidelines of Crawley, it is not limited to those factors in making its determinatiоn. Further, the trial court need not detail its findings as to each specific factor considered.” Wood, supra at 588. In addition, “a contingent fee agreement may be considered as one factor in determining the reasonableness of a fee, [although] it is not by itself determinative.” Liddell, supra at 652. The current pertinent rule of professional conduct lists “whether the fee is fixed or contingent” as one of eight factors to consider when determining whether an attorney fee is excessive or rеasonable. MRPC 1.5(a)(8).
This Court in Liddell, supra at 651-652, rejected the claim that a contingent fee is always reasonable. But in Hartman v Associated Truck Lines,
The trial court also correctly ruled that Temple v Kelel Distributing Co, Inc,
Finally, defendant’s claim that the trial court erred when it considered time plaintiffs attorney worked after defendant had paid the claim is without merit. It is true that MCL 500.3148(1) only permits the award of an attorney fee for collecting an overdue benefit, and, once paid, benefits are no longer overdue. McKelvie v Auto Club Ins Ass’n,
We affirm.
Notes
“What are commonly called ‘PIP benefits’ are actually personal protection insurance (PPI) benefits by statute. MCL 500.3142. However, lawyers and others call these benefits PIP benefits to distinguish them from property protection insurance benefits.” Roberts v Farmers Ins Exch,
MCL 213.66(3) provides that “the court shall order reimbursement in whole or in part to the owner by the agency of the owner’s reasonable attorney’s fees, but not in excess of % of the amount by which the ultimate award exceeds the agency’s written offer . . ..”
We acknowledge that our Supreme Court has recently held in a plurality opinion that a trial court, when dеtermining a reasonable attorney fee as part of case-evaluation sanctions under MCR 2.403(0), must first determine a “baseline” fee by multiplying the reasonable hourly rate — the fee customarily charged in the locality for similar legal services — -by the reasonable number of hours necessitated by case-evaluation rejection. Smith v Khouri,
Dissenting Opinion
(|dissenting). I respectfully dissent from the majority’s conclusion that defendant’s delay in making personal protection insurance (PIP) benefit payments to plaintiff was unreasonable.
Kimberly Sterling, defendant’s insured, suffered severe brain injuries when her boyfriend allegedly pushed her from a moving motor vehicle. Defendant denied plaintiffs claim for PIP benefits. It claimed that, because Sterling’s injuries were caused by a criminal assault, her injuries were exempt from no-fault coverage under MCL 500.3105(4). Plaintiff filed the present action, challenging the propriety of defendant’s denial of PIP benefits. After a jury acquitted Sterling’s boyfriend of assault, defendant paid the PIP benefits. Thereafter, plaintiff, claiming that defendant’s delay in paying the PIP benеfits was unreasonable, moved for attorney fees under MCL 500.3148(1). The trial court held that defendant’s delay was unreasonable, and it awarded attorney fees to plaintiff. This appeal ensued.
In my opinion, the controlling issue in the present case is whether the trial court erred in holding that defendant’s initial denial of plaintiffs claim for PIP benefits was unreasonable. Since submission of this case for decision, our Supreme Court has decided Ross v Auto Club Group,
The purpose of the no-fault act’s attorney-fee penalty provision is to ensure prompt payment to the insured. Accordingly, an insurer’s refusal or delay plаces a burden on the insurer to justify its refusal or delay. The insurer can meet this burden by showing that the refusal or delay is the product of a legitimate question of statutory construction, constitutional law, or factual uncertainty.
The trial court correctly set forth this rule of law in determining that plaintiff was entitled to attorney fees. The issue is whether it clearly erred in applying this rule and finding that defendant’s refusal was not based on a legitimate question of statutory construction, constitutional lаw, or factual uncertainty. The determinative factor in our inquiry is not whether the insurer ultimately is held responsible for benefits, but whether its initial refusal to pay was unreasonable. [Id. at 11.]
The Court determined that the defendant’s denial of work-loss benefits was reasonable because the “[defendant [had] relied on a factually similar Court of Appeals decision to adopt a reasonable position on an issue of first impression.” Id. at 15. For this same reason, I would reverse the awаrd of attorney fees in the present case.
If defendant had not paid the PIP benefits after Sterling’s boyfriend was acquitted of assault and we were forced to decide whether defendant was responsible for paying PIP benefits, we would be addressing an issue of first impression. Plaintiffs attorney acknowledged at oral argument that no Michigan case has addressed the issue of no-fault coverage in the factual
I acknowledge that these precedents are distinguishable and, therefore, are not controlling regarding whether defendant would bе ultimately responsible for paying PIP benefits. “However, the inquiry is not whether defendant is responsible for the benefits, but only whether defendant’s refusal to pay them was unreasonable.” Ross, supra at 14. Here, I would conclude that it was reasonable, particularly in light of McKenzie’s apparent blanket statement of exempting from no-fault coverage all injuries resulting from an assault occurring in a motor vehicle, for defendant to maintain that Sterling’s injuries were exempt from no-fault coverage.
I would reverse.