Estate of Swick v. Farm Bureau Insurance Company ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
ESTATE OF JACK SWICK, BLAKE A. SWICK, UNPUBLISHED
MARIANA K. SWICK, and JACK A. SWICK, April 26, 2016
Plaintiffs-Appellees/Cross-
Appellants,
v No. 324829
Oakland Circuit Court
FARM BUREAU INSURANCE COMPANY, LC No. 2013-136265-NF
Defendant-Appellant/Cross-
Appellee.
Before: BECKERING, P.J., and OWENS and K. F. KELLY, JJ.
PER CURIAM.
Defendant, Farm Bureau Insurance Company, appeals as of right a judgment for
plaintiffs, Estate of Jack Swick and the children of Swick (Blake A. Swick, Mariana K. Swick,
and Jack A. Swick), in this action for no-fault benefits following the death of Swick while riding
an uninsured motorcycle that was involved in an accident with a motor vehicle insured by
defendant. Defendant challenges the trial court’s order granting summary disposition to
plaintiffs under MCR 2.116(C)(10). Plaintiffs cross-appeal, arguing that the trial court erred in
calculating no-fault penalty interest under MCL 500.3142 and in denying no-fault attorney fees
under MCL 500.3148(1). We affirm in part, reverse in part, and remand for further proceedings.
I. MOTORCYCLE OWNERSHIP
Defendant argues that summary disposition was improper because a question of fact
existed regarding whether Swick owned the motorcycle he was operating and was precluded
from no-fault benefits under MCL 500.3113(b). We disagree.
A trial court’s decision on a motion for summary disposition is reviewed de novo.
Johnson v Recca, 492 Mich 169, 173; 821 NW2d 520 (2012).
In evaluating a motion for summary disposition brought under Subrule (C)(10), a
reviewing court considers affidavits, pleadings, depositions, admissions, and other
evidence submitted by the parties in the light most favorable to the party opposing
the motion. Summary disposition is properly granted if the proffered evidence
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fails to establish a genuine issue regarding any material fact and the moving party
is entitled to judgment as a matter of law. [Klein v HP Pelzer Auto Sys, Inc, 306
Mich App 67, 75; 854 NW2d 521 (2014) (internal citations omitted).]
At the time of Swick’s accident, MCL 500.3113 precluded personal protection insurance
(PIP) benefits in the following circumstances:
A person is not entitled to be paid personal protection insurance benefits
for accidental bodily injury if at the time of the accident any of the following
circumstances existed:
(a) The person was using a motor vehicle or motorcycle which he or she
had taken unlawfully, unless the person reasonably believed that he or she was
entitled to take and use the vehicle.
(b) The person was the owner or registrant of a motor vehicle or
motorcycle involved in the accident with respect to which the security required by
section 3101 or 3103 was not in effect.
(c) The person was not a resident of this state, was an occupant of a motor
vehicle or motorcycle not registered in this state, and was not insured by an
insurer which has filed a certification in compliance with section 3163.
[Emphasis added.]
The exclusion in MCL 500.3113(b) is at issue in this case. That exclusion references the security
required by MCL 500.3103(1), which provides:
An owner or registrant of a motorcycle shall provide security against loss
resulting from liability imposed by law for property damage, bodily injury, or
death suffered by a person arising out of the ownership, maintenance, or use of
that motorcycle. The security shall conform with the requirements of section
3009(1).
It is undisputed that Swick did not maintain the security required by MCL 500.3103.
Also, it is undisputed that Swick was not the “registrant” of the motorcycle involved in the
accident. The parties instead dispute whether Swick was an “owner” of the motorcycle under the
no-fault act. See former MCL 500.3113(b) (excluding PIP benefits for the “owner” or
“registrant” of a motorcycle who fails to obtain the requisite security). At the time of the
accident in 2012, MCL 500.3101(2)(h) limited the definition of “owner” of a motorcycle to “[a]
person who holds the legal title to a vehicle . . . . ” MCL 500.3101(2)(h)(ii).1 See also Auto-
Owners Ins Co v Hoadley, 201 Mich App 555, 561; 506 NW2d 595 (1993) (“The Legislature
1
We note that, after the accident, the definition of “owner” in MCL 500.3101 was amended by
2014 PA 492 and it was moved to MCL 500.3101(2)(k). The parties do not contend that the
amended definition is relevant to this appeal, nor do we find it applicable.
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provided a specific definition of the word ‘owner’ and specifically chose which portions of that
definition were to apply to motor vehicles only and which portions of the definition were to
apply to all vehicles, including motorcycles.” ). As plaintiffs argue on appeal, the concept of
legal title is defined in the motor vehicle code, specifically MCL 257.233(8) and (9), which
provide:
(8) The owner shall indorse on the certificate of title as required by the
secretary of state an assignment of the title with warranty of title in the form
printed on the certificate with a statement of all security interests in the vehicle or
in accessories on the vehicle and deliver or cause the certificate to be mailed or
delivered to the purchaser or transferee at the time of the delivery to the purchaser
or transferee of the vehicle. The certificate shall show the payment or satisfaction
of any security interest as shown on the original title.[2]
(9) Upon the delivery of a motor vehicle and the transfer, sale, or
assignment of the title or interest in a motor vehicle by a person, including a
dealer, the effective date of the transfer of title or interest in the vehicle is the date
of signature on either the application for title or the assignment of the certificate
of title by the purchaser, transferee, or assignee.
With MCL 257.233 as a backdrop, this Court has expressly held that “[l]egal title to
a motorcycle passes when the transferor delivers the motorcycle and a properly assigned
certificate of title to the transferee.” Auto Club Ins Ass’n v Sarate, 236 Mich App 432, 436; 600
NW2d 695 (1999), citing MCL 257.233. Further, our caselaw supports plaintiffs’ argument that,
without formal transfer of title according to these statutory requirements, ownership does not
transfer. See, e.g., Basgall v Kovach, 156 Mich App 323, 327; 401 NW2d 638 (1986), and
Messer v Averill, 28 Mich App 62, 66; 183 NW2d 802 (1970).
In this case, Swick took possession of the certificate of title and the motorcycle several
months before the accident, but the certificate of title demonstrated that he did not sign the
document as the purchaser. MCL 257.233(9). The document not only excludes Swick’s
signature, but also excludes other information about the purchaser, the sale (date and price), and
an odometer reading, which are required by MCL 257.233a(1). Robert Deller, the person who
sold the motorcycle for his father, testified that the incomplete certificate of title was authentic.3
Accordingly, there was no genuine issue of material fact regarding whether the statutory
requirements for an effective transfer of title occurred. Absent a genuine issue of material fact
2
We note that 2014 PA 290 amended MCL 257.233(8) after the relevant events in this case
transpired; however, that amendment has no bearing on our analysis, and we refer to the version
of the statute that was in effect at the time of the transaction at issue.
3
Any confusion Robert initially expressed about whether Swick signed the assignment of title
does not create a question of fact. Even Robert acknowledged that he could not remember
whether Swick signed the assignment of title, and that he may have been remembering Swick
signing the receipt instead of the title.
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that legal title of the motorcycle was not effectively transferred to Swick, he was not precluded
from no-fault benefits under MCL 500.3113(b), and the trial court did not err by granting
plaintiffs’ motion for summary disposition on this basis.4
II. PRECLUSION OF PIP BENEFITS
Next, defendant argues that PIP benefits should have nevertheless been precluded by
MCL 257.658. We disagree.
“When a statute’s language is clear and unambiguous, we must apply the terms of the
statute to the circumstances of the particular case . . . and we will not read words into the plain
language of the statute.” PIC Maintenance, Inc v Dep’t of Treasury, 293 Mich App 403, 410-
411; 809 NW2d 669 (2011). The Legislature is presumed to be aware of and legislate in
harmony with existing laws when enacting new laws. Walen v Dep’t of Corrections, 443 Mich
240, 248; 505 NW2d 519 (1993). The omission of a provision from one part of a statute that is
included in another part of a statute must be construed as intentional. That is, we “cannot
assume that the Legislature inadvertently omitted from one statute the language that it placed in
another statute, and then, on the basis of that assumption, apply what is not there.” Farrington v
Total Petroleum, Inc, 442 Mich 201, 210; 501 NW2d 76 (1993). Two statutes that relate to the
same subject or share a common purpose are in pari materia and must be read together. People
v Webb, 458 Mich 265, 274; 580 NW2d 884 (1998). The goal of the in pari materia rule is to
give effect to the legislative purpose found in the harmonious statutes. Id.MCL 257.658 describes the circumstances under which a person operating or riding on a
motorcycle is not required to wear a crash helmet:
(5) The following conditions apply to a person 21 years of age or older
operating or riding on a motorcycle, as applicable:
(a) A person who is operating a motorcycle is not required to wear a crash
helmet on his or her head if he or she has had a motorcycle endorsement on his or
her operator’s or chauffeur’s license for not less than 2 years or the person passes
a motorcycle safety course conducted under section 811a or 811b and satisfies the
requirements of subdivision (c).
4
We are not persuaded that, under these facts, either the non-binding unpublished decision cited
by defendant, see MCR 7.215(C)(1), or Botsford Gen Hosp v Citizens Ins Co, 195 Mich App
127, 133; 489 NW2d 137 (1992), where the ownership of a motor vehicle was at issue, not
whether legal title of a motorcycle was effectively transferred (i.e., application of former MCL
500.3101(2)(h)(i) and (iii), rather than MCL 500.3101(2)(h)(ii)), required the jury to decide this
question. In addition, because defendant presented the same arguments in its motion for
reconsideration, the trial court did not abuse its discretion by denying that motion. MCR
2.119(F)(3).
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(b) A person who is riding on a motorcycle is not required to wear a crash
helmet on his or her head if the person or the operator of the motorcycle satisfies
the requirements of subdivision (c).
(c) A person who is operating a motorcycle and a person who is riding on
a motorcycle are not required to wear crash helmets on their heads if the operator
of the motorcycle or the rider has in effect security for the first-party medical
benefits payable in the event that he or she is involved in a motorcycle accident,
as provided in section 3103 of the insurance code of 1956, 1956 PA 218, MCL
500.3103, in 1 of the following amounts, as applicable:
(i) A motorcycle operator without a rider, not less than $20,000.00.
(ii) A motorcycle operator with a rider, not less than $20,000.00 per
person per occurrence. However, if the rider has security in an amount not less
than $20,000.00, then the operator is only required to have security in the amount
of not less than $20,000.00.
Again, MCL 500.3103(1) describes the security required for an owner or registrant of a
motorcycle. MCL 500.3103(2) describes the security for payment of PIP benefits that an insurer
shall offer to the owner or registrant of a motorcycle:
Each insurer transacting insurance in this state which affords coverage for
a motorcycle as described in subsection (1) also shall offer, to an owner or
registrant of a motorcycle, security for the payment of first-party medical benefits
only, in increments of $5,000.00, payable in the event the owner or registrant is
involved in a motorcycle accident. An insurer providing first-party medical
benefits may offer, at appropriate premium rates, deductibles, provisions for the
coordination of these benefits, and provisions for the subtraction of other benefits
provided or required to be provided under the laws of any state or the federal
government, subject to the prior approval of the commissioner. These deductibles
and provisions shall apply only to benefits payable to the person named in the
policy, the spouse of the insured, and any relative of either domiciled in the same
household.
Although the plain language of MCL 500.3103 does not require an “owner or registrant”
of a motorcycle to purchase coverage for PIP benefits, any operator or rider who chooses not to
wear a crash helmet must have in effect security for these benefits under MCL 257.658(5)(c). As
the trial court found, however, nothing in the plain language of these statutes actually precludes
an uninsured, helmetless operator or rider from collecting PIP benefits.5 Defendant urges this
Court to read the no-fault act and the Michigan vehicle code in pari materia and conclude that
5
In fact, the only penalty for the failure to wear a crash helmet appears in MCL 257.625(1),
which makes the failure to wear a crash helmet a “civil infraction”; the statute makes no mention
at all of PIP benefits.
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the Legislature intended to preclude these benefits even if it did not express that intent in MCL
257.658 and MCL 500.3103. But we reject defendant’s argument because, as discussed earlier,
the version of MCL 500.3113(b) in effect at the time of the accident only precluded owners or
registrants who had failed to maintain the security for PIP benefits from collecting them. The
statute did not preclude such payment for other operators and riders of a motorcycle. Again, our
Legislature’s omissions are presumed to be intentional. Farrington, 443 Mich at 248.
Regardless of the Legislature’s intent to require helmetless operators and riders to purchase
security for PIP benefits under MCL 257.658(5)(c), it did not preclude them from collecting PIP
benefits if they nevertheless failed to satisfy this requirement. Thus, any evidence that Swick
was not wearing a helmet did not create a question of fact regarding his entitlement to PIP
benefits, and the trial court properly rejected this defense below.6
III. NO-FAULT INTEREST AND ATTORNEY FEES
Plaintiffs argue on cross-appeal that the trial court clearly erred by finding that benefits
were not overdue until October 16, 2014, 30 days after its order denying defendant’s motion for
reconsideration, for purposes of the penalty interest calculation under MCL 500.3142. Plaintiffs
also argue that the trial court erred by denying its motion for attorney fees pursuant to MCL
500.3148(1). We agree regarding the penalty interest, but disagree regarding the attorney fees.
This Court reviews for clear error a trial court’s decision to award or deny penalty
interest under MCL 500.3142, and to award or deny attorney fees under MCL 500.3148(1). See
Roberts v Farmers Ins Exch, 275 Mich App 58, 66; 737 NW2d 332 (2007). Clear error exists “if
the reviewing court has a definite and firm conviction that a mistake has been committed[.]” In
re BZ, 264 Mich App 286, 296-297; 690 NW2d 505 (2004). “The question of what constitutes
reasonableness is one of law that we review de novo. But whether the denial of no-fault benefits
was reasonable under the facts of the case is a question of fact that we review for clear error.”
Perkins v Auto-Owners Ins Co, 301 Mich App 658, 668; 837 NW2d 32 (2013).
A. INTEREST
MCL 500.3142(2) provides that “[p]ersonal protection insurance benefits are overdue if
not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount
of loss sustained.” “An overdue payment bears simple interest at the rate of 12% per annum.”
MCL 500.3142(3).
The purpose of MCL 500.3142 “is to promptly and adequately compensate persons who
were injured in a motor vehicle mishap.” Nash v Detroit Auto Inter-Ins Exch, 120 Mich App
568, 572; 327 NW2d 521 (1982). “The 12 percent interest provision is intended to penalize the
recalcitrant insurer rather than compensate the claimant.” Attard v Citizens Ins Co of America,
237 Mich App 311, 320; 602 NW2d 633 (1999) (citation and emphasis omitted). A carrier who
6
In light of this conclusion, we decline to address whether the trial court correctly ruled in the
alternative that this defense regarding Swick’s failure to wear a helmet was an affirmative
defense that was waived by defendant’s failure to raise it in its responsive pleading.
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rejects a claim does so at its own risk. Nash, 120 Mich App at 572. “To recover interest, a
plaintiff is not required to prove that the defendant acted arbitrarily or unreasonably delayed in
payment of benefits.” Regents of Univ of Mich v State Farm Mut Ins Co, 250 Mich App 719,
735; 650 NW2d 129 (2002). MCL 500.3142 “only requires that the insured present the insurer
with reasonable proof of loss. If the insurer does not pay the claim within 30 days after receiving
this proof, it becomes liable for interest.” Fortier v Aetna Cas & Surety Co, 131 Mich App 784,
793; 346 NW2d 874 (1984).
The trial court did not provide any explanation for its decision that reasonable proof of
the fact and the amount of loss sustained was not provided to defendant until its motion for
reconsideration was denied on September 16, 2014. And nothing in the record supports this
conclusion. Rather, the parties do not dispute that a loss occurred—specifically, that Swick was
killed. Plaintiffs allege that proof of the amount of lost income, as well as funeral and burial
expenses, was submitted to defendant on January 27, 2014, and proof of the cost of replacement
services was provided on April 28, 2014. These documents bear dates and costs consistent with
plaintiffs’ arguments and were attached to plaintiffs’ motion for penalty interest. In response to
the motion, defendant did not dispute that it received these documents at the times plaintiffs
claimed they were provided. Aside from arguing that it had good cause to deny the claim
because there was a question of fact whether Swick was precluded from benefits because he
owned the motorcycle and was not wearing a helmet,7 defendant’s only argument regarding
proof of the amount of loss, which was not addressed by the trial court, was that the submission
of Swick’s pay stubs was insufficient under MCL 500.3108 because Swick might not have been
using all of his income to support his children. Defendant argued that it did not receive
reasonable proof of the amount of loss until the mother of Swick’s children, Teresa Sturgeon,
was deposed on July 16, 2014, about Swick’s support of the children. Even assuming
defendant’s argument is correct, it follows that the latest date that proof of the amount of loss
could have been provided was July 16, 2014. Therefore, the trial court’s finding that proof of the
fact and the amount of loss sustained was not provided until September 16, 2014 is clearly
erroneous. Accordingly, we reverse the portion of the trial court’s judgment stating that PIP
benefits did not become overdue until October 16, 2014, and remand for a determination of the
date that plaintiffs provided proof of the amount of loss and, in line with that determination,
recalculation of an appropriate amount of no-fault penalty interest under MCL 500.3142(2) and
(3), consistent with this opinion.8
7
Defendant’s arguments regarding its good cause for denying the claim are irrelevant to the
penalty interest determination. See Davis v Citizens Ins Co of America, 195 Mich App 323, 328;
489 NW2d 214 (1992) (“Penalty interest must be assessed against a no-fault insurer if the insurer
refused to pay benefits and is later determined to be liable, irrespective of the insurer’s good faith
in not promptly paying the benefits”). See also Regents of U of M, 250 Mich App at 735 (“To
recover interest, a plaintiff is not required to prove that the defendant acted arbitrarily or
unreasonably delayed in payment of benefits”).
8
On remand, the trial court should consider whether the proof of lost income based only on the
pay stubs was reasonable considering Williams v AAA Mich, 250 Mich App 249, 267; 646 NW2d
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B. ATTORNEY FEES
MCL 500.3148(1) provides:
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.
In other words, the no-fault act establishes two prerequisites for an award of attorney fees under
the act:
First, the benefits must be overdue, meaning “not paid within 30 days after [the]
insurer receives reasonable proof of the fact and of the amount of loss sustained.”
MCL 500.3142(2). Second, in postjudgment proceedings, the trial court must
find that the insurer “unreasonably refused to pay the claim or unreasonably
delayed in making proper payment.” MCL 500.3148(1). [Moore v Secura Ins,
482 Mich 507, 517; 759 NW2d 833 (2008).]
See also Brown v Home-Owners Ins Co, 298 Mich App 678, 690; 828 NW2d 400 (2012).
In Ross v Auto Club Group, 481 Mich 1, 11; 748 NW2d 552 (2008), our Supreme Court
explained the purpose of attorney fees under the no-fault act:
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
places 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.
[Citations omitted.]
In Detroit Med Ctr v Titan Ins Co, 284 Mich App 490, 491; 775 NW2d 151 (2009), the
plaintiff hospital provided care for the driver of an uninsured vehicle after she was injured in an
accident. The trial court granted the plaintiff’s motion for summary disposition against the
insurer who had denied the claim, reasoning that the driver was an owner precluded from
benefits under MCL 500.3113. Id. The facts discerned from interviews of the driver and her
boyfriend revealed that the boyfriend had title to the vehicle and stored it at his home, but
canceled its insurance and was only using another car. Id. at 491-492. The driver used the
vehicle (primarily for grocery shopping) approximately seven times over the course of about a
month, she had to get permission and the keys from her boyfriend to use the vehicle (permission
may never have been denied), and she fueled the vehicle, but the boyfriend was otherwise
476 (2002) (the statute requires reasonable, not exact, proof, and if a defendant desires to
challenge or investigate the proof provided, it should conduct an investigation within the 30-day
grace period).
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responsible for maintenance. Id. at 492. Even though the trial court ultimately concluded that
the driver was not an owner of the vehicle, the trial court denied attorney fees for the plaintiff
under MCL 500.3148. Id. at 494-495. This Court concluded that the trial court’s decision did
not amount to clear error because ownership was reasonably in dispute at the time of the initial
denial. Id.
Again, under the first prerequisite for no-fault attorney fees, the benefits are overdue 30
days after defendant received reasonable proof of the fact and of the amount of loss sustained.
On remand, the trial court must determine when the benefits became overdue. But regardless of
this date, the trial court did not clearly err in finding that when defendant initially refused to pay,
its decision was not unreasonable. Just as in Detroit Med Ctr, defendant could justify its refusal
by showing that it was the product of legitimate factual uncertainty regarding ownership. The
police report prepared at the time of the accident in 2012 includes a statement from Swick’s
girlfriend that Swick bought the motorcycle, but plaintiffs submitted the Secretary of State
documentation to defendant in August 2013 that Swick never registered the motorcycle.
Although plaintiffs possessed the certificate of title, they had not produced it at the time of the
initial denial to establish that Swick did not own the motorcycle. They also had not yet produced
the certificate of title when they subsequently provided proof of the amount of loss, which they
claim occurred in January and April of 2014. Given these factual disparities, we are not left with
a definite and firm conviction that the trial court made a mistake in concluding that there was a
bona fide factual disparity at the time of the denial of benefits.
Without any citation to authority, plaintiffs argue that even if the initial refusal was
reasonable, defendants have now unreasonably delayed in making the payment after the trial
court ruled, as a matter of law, that they were entitled to benefits. But the decision whether to
award no-fault attorney fees is not based on the ultimate determination whether a plaintiff is
entitled to benefits, which may be unfavorable to the insurer. Instead, the question is whether the
insurer reasonably denied benefits at the time of its initial decision. See Brown, 298 Mich App
at 691 (“[t]he trier of fact’s ultimate decision that the insurer owed benefits to the claimant does
not alone establish the unreasonableness of the insurer’s initial decision . . . [r]ather, the court
must examine the circumstances as they existed at the time the insurer made the decision, and
decide whether that decision was reasonable at that time”), and Univ Rehab Alliance, Inc v Farm
Bureau Gen Ins Co of Mich, 279 Mich App 691, 694-695; 760 NW2d 574 (2008) (“[w]hether
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”). See
also Ross, 481 Mich at 11, and Moore, 482 Mich at 525 (“an insurer’s initial refusal to pay
benefits under Michigan’s no-fault insurance statutes can be deemed reasonable even though it is
later determined that the insurer was required to pay those benefits.”). Plaintiffs’ reliance on the
language in MCL 500.3148(1) that the court can find that the insurer either “unreasonably
refused to pay the claim or unreasonably delayed in making proper payment” does not change
the fact that the initial decision is critical to this analysis. Regardless of whether an insurer
initially refused to pay and never wavered, or initially refused to pay and later remitted payment,
attorney fees are to ensure prompt payment to the insured. Ross, 481 Mich at 11. Therefore,
only an insurer who unreasonably makes an initial decision to deny prompt payment risks paying
attorney fees. The trial court did not clearly err by denying the motion for attorney fees under
MCL 500.3148(1).
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IV. CONCLUSION
In sum, we affirm the trial court’s order granting plaintiffs’ motion for summary
disposition, and affirm the trial court’s denial of no-fault attorney fees, but reverse the portion of
the judgment regarding penalty interest and remand for proceedings pertaining to penalty interest
consistent with this opinion. We do not retain jurisdiction.
/s/ Jane M. Beckering
/s/ Donald S. Owens
/s/ Kirsten Frank Kelly
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