Nickola v. Mic General Insurance Company

STATE OF MICHIGAN
COURT OF APPEALS
JOSEPH G. NICKOLA, Personal Representative FOR PUBLICATION
for the Estate of GEORGE and THELMA September 24, 2015
NICKOLA, 9:00 a.m.
Plaintiff-Appellant,
v No. 322565
Genesee Circuit Court
MIC GENERAL INSURANCE COMPANY, d/b/a LC No. 05-081192-NI
GMAC INSURANCE,
Defendant-Appellee.
Before: GADOLA, P.J., and JANSEN and BECKERING, JJ.
PER CURIAM.
In this action against defendant, MIC General Insurance Company, d/b/a GMAC
Insurance, concerning underinsured motorist benefits, plaintiff, Joseph G. Nickola, as personal
representative of the estate of George and Thelma Nickola,1 appeals the June 19, 2014 order
denying plaintiff’s request for attorney fees and interest.2 We affirm in part and remand for
further proceedings.
1
George and Thelma were originally listed as plaintiffs in this action. However, during the
pendency of this case, they passed away, requiring the appointment of plaintiff, their son, as
personal representative. For ease of reference, we will refer to George and Thelma by name, and
will use the term “plaintiff” to refer to Joseph G. Nickola, the personal representative.
2
Although plaintiff’s claim of appeal asserts that this appeal of the June 19, 2014 order is an
appeal as of right, we do not agree. The order did not dispose of all the claims of the parties, see
MCR 7.202(6) (describing final orders); notably, as discussed in more detail below, the order did
not resolve plaintiff’s request for entry of a judgment on the arbitration award. Moreover,
because there is no judgment, the order appealed does not qualify as a postjudgment order
awarding or denying attorney fees and costs under MCR 7.202(6)(a)(iv). However, in the
interest of judicial economy, we exercise our discretion and treat the claim of appeal as an
application for leave to appeal and grant the application. See In re Beatrice Rottenberg Living
Trust, 300 Mich. App. 339, 354; 833 NW2d 384 (2013).
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I. PERTINENT FACTS AND PROCEDURAL HISTORY
This case involves a protracted procedural history. The matter arose out of a motor
vehicle accident that occurred on April 13, 2004. George and Thelma, who were insured by
defendant, were injured3 when an automobile driven by Roy Smith, who was insured by
Progressive Insurance Company, struck their automobile. The maximum available coverage on
Smith’s auto policy with Progressive was $20,000 per individual involved in an accident.
George and Thelma, with defendant’s consent, settled the tort claim, with Progressive paying its
client’s policy limits on or about November 21, 2004. Thereafter, they turned to defendant, their
no-fault insurer, and sought underinsured motorist (UIM) benefits. Defendant’s policy with
George and Thelma provided UIM coverage in the amount of $100,000 per person and $300,000
per accident; George and Thelma each sought $80,000, which represented the $100,000 policy
limit minus the $20,000 already received from Progressive.
Defendant denied the claim for UIM coverage in February 2005, alleging that George and
Thelma could not establish a threshold injury for noneconomic tort recovery under MCL
500.3135. In response to this denial, George and Thelma sent defendant a written demand for
arbitration of their UIM claim, consistent with their auto policy. The UIM coverage provision in
their policy with defendant provided that in the event the insurer and the insureds were unable to
agree as to either: (1) whether an insured was legally entitled to UIM damages; or (2) the amount
of UIM damages:
Either party may make a written demand for arbitration. In this event, each party
will select an arbitrator. The two arbitrators will select a third. If they cannot
agree within 30 days, either may request that selection be made by a judge of a
court having jurisdiction. [Emphasis added.]
Despite the fact that the policy stated that either party could demand arbitration,
defendant responded to the request for arbitration on March 1, 2005, by denying the demand,
stating that it never agreed to arbitrate and that both parties had to agree to arbitration under the
policy before a UIM claim could proceed to arbitration. The reasons for defendant’s denial in
the face of the policy’s arbitration clause are not entirely clear from the record.
Defendant’s denial of the request for arbitration prompted George and Thelma to file a
complaint for declaratory relief on April 8, 2005, in which they asked the trial court to compel
arbitration. In answering the complaint, defendant “neither admit[ted] nor denie[d] the
allegations” raised in the complaint concerning whether one party to its insurance contract with
George and Thelma could unilaterally compel arbitration, but admitted that it had denied George
and Thelma’s written demand for arbitration. However, in a September 20, 2005 response to a
request for admissions, defendant admitted that the arbitration language in the policy stated that
3
As noted, George and Thelma died during the pendency of the instant litigation. According to
the record, neither death was caused by injuries suffered in the motor vehicle accident that
sparked this litigation.
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either party could unilaterally demand arbitration. And in November 2005, defendant stated that
it had “no objection to the matter being submitted to arbitration . . . .”
Because of defendant’s initial denial that arbitration was proper, George and Thelma
moved the trial court for sanctions against defendant. They claimed that any assertion by
defendant that arbitration was not required under the policy was a “frivolous defense.”
Following a hearing on February 14, 2006, the trial court entered an order submitting the matter
to arbitration, but reserved ruling on George and Thelma’s request for sanctions in relation to the
few-month delay prompted by defendant’s initial opposition to arbitration. Before it would rule
on the matter, the court expressly ordered that George and Thelma “shall supply to the Court and
to counsel for Defendant its list of costs and expenses, as well as attorney fees.” At the motion
hearing, George and Thelma’s counsel promised to provide the trial court with this information.
The trial court’s written order, dated March 6, 2006, retained jurisdiction to “enforce compliance
and/or make any other determination, orders and/or judgments necessary to fully adjudicate the
rights of the parties herein.”
The parties named their respective arbitrators soon after the trial court’s written order, but
disagreement over the appointment of a third arbitrator brought the proceedings to a grinding
halt. The chosen arbitrators could not agree to the appointment of a third arbitrator. Neither
party took action on the matter for over six years, until August 13, 2012, when plaintiff moved
the trial court to appoint a third arbitrator.4 It is unclear from the record what caused this lengthy
delay. During this six-year delay, George and Thelma died, leading to the appointment of
plaintiff as personal representative of their respective estates.
The parties finally proceeded to arbitration in October 2013, and the arbitration panel
awarded $80,000 to plaintiff for George’s injuries and $33,000 for Thelma’s injuries. The
awards were to be “inclusive of interest, if any, as an element of damages from the date of injury
to the date of suit, but not inclusive of other interest, fees, or costs that may otherwise be
allowable by the Court.”
On November 25, 2013, plaintiff moved the trial court for: (1) attorney fees and sanctions
because of defendant’s frivolous defense to arbitration; (2) penalty interest under MCL
500.2006, the Michigan Uniform Trade Practices Act (UTPA) for defendant’s failure to
promptly pay UIM benefits; and (3) to enter judgment against defendant on the arbitration
award. The trial court denied the motion in all respects, but stated that it “affirmed” the
arbitration award. With regard to penalty interest, the court found that the UTPA should not
apply to a claim for UIM benefits. Further, even if the UTPA did apply, MCL 500.2006(4)’s
“reasonably in dispute” language insulated defendant from having to pay penalty interest.
Finally, the trial court ruled that the issue of penalty interest should have been heard before the
arbitration panel.
4
On appeal, defendant attempts to pin the entirety of the delay on plaintiff. However, the
arbitration agreement contained in the policy provides that in the event the arbitrators selected by
the parties were unable to agree on a third arbitrator within 30 days, “either may request that
selection be made by a judge of a court having jurisdiction.” (Emphasis added).
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II. SANCTIONS UNDER MCR 2.114
Plaintiff argues that the trial court should have granted sanctions against defendant under
MCR 2.114 for initially asserting in its filings with the court that arbitration could not be
demanded unilaterally under the insurance policy. The trial court’s 2006 order reserved a ruling
on attorney fees but required George and Thelma to produce evidence of their attorney fees
incurred during the delay caused by defendant’s initial refusal to arbitrate. Specifically, the order
stated that “Plaintiff shall supply to the Court and to counsel for Defendant its list of costs and
expenses, as well as attorney fees.” Plaintiff never complied with that order. Indeed, even when
plaintiff made a renewed request for sanctions in 2014, he never complied with the trial court’s
2006 order to provide proof of his attorney fees incurred during the relevant time period.
Plaintiff’s failure to comply with that order, despite having years to do so, is tantamount to
waiver of this issue.5 “The usual manner of waiving a right is by acts which indicate an intention
to relinquish it, or by so neglecting and failing to act as to induce a belief that it was the intention
and purpose to waive.” The Cadle Co v Kentwood, 285 Mich. App. 240, 254-255; 776 NW2d 240
(2009) (citation and quotation marks omitted; emphasis added). Where plaintiff repeatedly
failed to comply with the trial court’s order to provide documentation of his attorney fees for the
pertinent time period, it is difficult to fault the trial court for failing to award those fees as a
sanction under MCR 2.114. Indeed, plaintiff had over eight years to supply the requested fees,
but never did so. See Reed Estate v Reed, 293 Mich. App. 168, 177-178; 810 NW2d 284 (2011)
(waiver may be shown by a course of conduct, including neglecting and failing to act in such a
manner as to induce the belief that the party failing or neglecting to act has the intent to waive).
Plaintiff’s failure to act and neglect of the trial court’s mandate is tantamount to waiver. See The
Cadle Co, 285 Mich. App. at 254-255.
Plaintiff argues that it was “impossible” for him to determine the amount of attorney fees
to which he was allegedly entitled without waiting for arbitration to conclude. This ignores that
the trial court, at the February 14, 2006 motion hearing, asked for the fees to which plaintiff
believed he was entitled at that time. Plaintiff’s counsel expressly promised to provide that
figure. Plaintiff was to submit costs and fees incurred during the time between when defendant
answered the complaint and admitted the mistake. There was never an invitation by the trial
court to include in the amount of fees requested those fees incurred even after the matter went to
arbitration. Any attempt by plaintiff to obtain additional fees ignored the court’s order.
Moreover, the argument ignores the fact that, even when arbitration was over, plaintiff still failed
to provide the trial court with his requested fees.
We also note that plaintiff seeks attorney fees for defendant’s conduct that occurred
before George and Thelma filed their complaint in 2005. That is, plaintiff appears to seek
sanctions under MCR 2.114 for defendant’s conduct in initially denying the UIM claim. Any
argument by plaintiff in this regard is without merit. MCR 2.114(A), applies to “all pleadings,
motions, affidavits, and other papers provided for by” the Court Rules. Defendant’s initial
5
On appeal plaintiff makes no effort to comply with the 2006 order and has yet to produce
evidence of his claimed attorney fees.
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decision to deny arbitration was not a pleading, motion, affidavit, or other paper filed under the
Court Rules. Rather, it was simply a response to plaintiff’s request for arbitration. Nothing
about that response brings it within the ambit of materials that could subject defendant to
sanctions under MCR 2.114.
III. PENALTY INTEREST UNDER THE UTPA
Plaintiff argues that the trial court erred by concluding that defendant was not required to
pay penalty interest under the UTPA for its failure to timely pay UIM benefits. This Court
reviews de novo the trial court’s ruling on a motion for penalty interest pursuant to MCL
500.2006(4). Angott v Chubb Group Ins, 270 Mich. App. 465, 474-475; 717 NW2d 341 (2006).
Resolution of this issue also requires examination and interpretation of MCL 500.2006(4), which
is an issue of law this Court reviews de novo. Id. at 475.
UIM benefits are not statutorily mandated; they are an agreement for benefits voluntarily
entered into between an insured and an insurer. Dawson v Farm Bureau Mut Ins Co, 293 Mich
App 563, 568; 810 NW2d 106 (2011). The UTPA provides a mechanism to help insureds obtain
payment for these and other types of benefits in a timely manner. Griswold Props, LLC v
Lexington Ins Co, 276 Mich. App. 551, 554; 741 NW2d 549 (2007). “MCL 500.2006 provides
for imposition of penalty interest for the late payment of a claim[.]” Id. The statute provides, in
pertinent part:
(1) A person must pay on a timely basis to its insured, an individual or entity
directly entitled to benefits under its insured’s contract of insurance, or a third
party tort claimant the benefits provided under the terms of its policy, or, in the
alternative, the person must pay to its insured, an individual or entity directly
entitled to benefits under its insured’s contract of insurance, or a third party tort
claimant 12% interest, as provided in subsection (4), on claims not paid on a
timely basis. Failure to pay claims on a timely basis or to pay interest on claims
as provided in subsection (4) is an unfair trade practice unless the claim is
reasonably in dispute.
***
(4) If benefits are not paid on a timely basis the benefits paid shall bear simple
interest from a date 60 days after satisfactory proof of loss was received by the
insurer at the rate of 12% per annum, if the claimant is the insured or an
individual or entity directly entitled to benefits under the insured’s contract of
insurance. If the claimant is a third party tort claimant, then the benefits paid
shall bear interest from a date 60 days after satisfactory proof of loss was received
by the insurer at the rate of 12% per annum if the liability of the insurer for the
claim is not reasonably in dispute, the insurer has refused payment in bad faith
and the bad faith was determined by a court of law. [MCL 500.2006(1), (4).]
MCL 500.2006(4), the penalty-interest provision, draws a distinction between a claimant
who is the insured or who is an individual directly entitled to benefits under an insurance
contract (a first-party insured), and a claimant who is a third-party tort claimant. The first
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sentence of § 2006(4) simply states that a first-party insured is entitled to penalty interest if
benefits are not paid within 60 days after the insurer obtains satisfactory proof of loss. Griswold,
276 Mich. App. at 565-566. As explained by this Court in Griswold, “if the claimant is the
insured or an individual or entity directly entitled to benefits under the insured’s contract of
insurance, and benefits are not paid on a timely basis, the claimant is entitled to 12 percent
interest, irrespective of whether the claim is reasonably in dispute.” Id. at 566 (citation and
quotation marks omitted). By comparison, the second sentence of § 2006(4), which applies to
third-party tort claimants, imposes penalty interest on the insurer only if the claim “is not
reasonably in dispute.” Id. at 565-566. Central to plaintiff’s argument on appeal is the notion
that the “not reasonably in dispute” language of § 2006(4) does not apply to claims by a first-
party insured. Defendant, meanwhile, likens plaintiff to a third-party tort claimant in this claim
for UIM benefits, meaning that the “not reasonably in dispute” language of MCL 500.2006(4)
applies.
A brief examination of the facts at issue in Griswold is illustrative in resolving this issue.
In deciding Griswold, this Court convened a special panel to resolve a conflict over the
application of MCL 500.2006(4) and the types of claims to which “reasonably in dispute”
applied. The case involved a consolidation of three cases. See Griswold, 276 Mich. App. at 559-
560. Two cases involved insureds who sought benefits from their respective insurers for water
damage. Id. at 559-560. In the third case, the insured’s building was destroyed by a fire, and the
insured sought benefits from its insurer for the damage caused by the fire. Id. at 560. In other
words, each of the three consolidated cases involved insureds seeking benefits from their own
insurers for losses that were directly covered under the respective policies.
Plaintiff contends that he, as the personal representative for George and Thelma, is
seeking payment of benefits that were owed directly to insureds under an insurance policy. As
noted, UIM benefits arise solely from the policy. See McDonald v Farm Bureau Ins Co, 480
Mich. 191, 194; 747 NW2d 811 (2008) (explaining that “[w]hen an insured is injured by a
tortfeasor motorist whose own policy is insufficient to cover all of the insured’s damages, the
insured can seek coverage from his or her UIM policy for damages that exceed the tortfeasor’s
policy limits.”) (emphasis added). At first glance, plaintiff’s argument—that he is entitled to
penalty interest because he sought benefits that were owed directly to an insured by an insurer
and that the “reasonably in dispute” language of § 2006(4) does not apply—has some appeal in
light of Griswold.
However, the instant case is not as simple as Griswold. As noted, Griswold involved a
consolidation of cases in which each of the insurers was directly liable to their first-party
insureds for covered losses. Here, while plaintiff is seeking UIM benefits that are provided in
the policy, he is doing more than merely making a simple, first-party claim as was involved in
Griswold. In order for plaintiff to succeed on his UIM claim, he has to essentially allege a third-
party tort claim against his own insurer—or, in this case, against the insurer of George and
Thelma, of whom plaintiff is the personal representative. Defendant, the insurer, stands in the
shoes of the alleged tortfeasor and plaintiff seeks benefits from defendant that arose from the
alleged tortfeasor’s liability. See Auto Club Ins Ass’n v Hill, 431 Mich. 449, 464-466; 430 NW2d
636 (1988) (explaining UIM coverage). See also Rory v Continental Ins Co, 473 Mich. 457, 465;
703 NW2d 23 (2005) (explaining that “[u]ninsured motorist insurance” which is substantially
similar to UIM insurance, “permits an injured motorist to obtain coverage from his or her own
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insurance company to the extent that a third-party claim would be permitted against the [ ] at-
fault driver.”). This third-party tort claim is different in nature from a typical claim for first-
party benefits, as it will “often require proof of the nature and extent of the injured person’s
injuries, the injured person’s prognosis over time, and proof that the injuries have had an adverse
effect on the injured person’s ability to lead his or her normal life.” Adam v Bell, __ Mich App
__; __ NW2d __ (Docket No. 319778, issued August 11, 2015) (citation and quotation omitted),
slip op at 4. In addition, such a third-party tort claim is designed to compensate a claimant “for
past and future pain and suffering and other economic and noneconomic losses rather than
compensation for immediate expenses” that are generally associated with a first-party claim. Id.
(citation and quotation omitted). In other words, plaintiff’s UIM claim is tied to a third-party tort
claim for damages that, in many respects, is “fundamentally different” than a typical first-party
claim. See id. (citation and quotation omitted).
In Auto-Owners Ins Co v Ferwerda Enterprises, Inc (On Remand), 287 Mich. App. 248;
797 NW2d 168 (2010), judgment vacated in part on other grounds 488 Mich. 917 (2010),6 this
Court recognized that not all claims for penalty interest under MCL 500.2006(4) fit neatly into
the Griswold analysis. In that case, the insurer sought a declaratory judgment stating that it had
no duty to defend and indemnify its insureds in a third-party tort action based on an exclusion in
the insurance policy. Id. at 252. The insureds filed a counterclaim, alleging breach of contract,
estoppel, and waiver, and they requested penalty interest under MCL 500.2006(4). Id. The trial
court found that there was coverage for the underlying third-party tort claim and awarded penalty
interest under MCL 500.2006(4). Id. at 253-254. On appeal, the insureds defended the trial
court’s award of penalty interest on the ground that the insurer breached its contract by failing to
pay benefits under the insurance policy. Id. at 258. The insureds argued that pursuant to
Griswold, the issue of penalty interest turned only on the failure to pay benefits, and not whether
those benefits were reasonably in dispute. Id. at 259. This Court disagreed with the insureds’
argument that the case involved a simple breach of the insurance policy. Rather, in that case,
“the breach of contract claim [was] specifically tied to the underlying third-party tort claim.” Id.
at 259. This scenario, reasoned the Court, was “a wholly different situation than that found” in
Griswold and other cases that awarded penalty interest for the failure of an insurer to pay first-
party claims. Id. at 259-260. As such, this Court held that the “reasonably in dispute” language
found in the second section of MCL 500.2006(4) applied and precluded an award of penalty
interest because the benefits in that case were reasonably in dispute. Id. at 260.
Applying Ferwerda in the case at bar, the trial court did not err in employing the
“reasonably in dispute” language found in the second sentence of MCL 500.2006(4) and denying
6
In Ferwerda, 287 Mich. App. 248, this Court decided two issues: (1) whether an award of
attorney fees was appropriate; and (2) whether the imposition of penalty interest was warranted.
Our Supreme Court denied leave to appeal with regard to the penalty interest issue, but remanded
with regard to the attorney fee issue. Auto-Owners Ins Co v Ferwerda Enterprises, Inc, __ Mich
__; 784 NW2d 44 (2010). Subsequently, the Court vacated this Court’s ruling as to attorney
fees. Auto-Owners Ins Co v Ferwerda Enterprises, Inc, 488 Mich. 917; 789 NW2d 491 (2010).
Thus, this Court’s holding as to penalty interest remains good law.
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penalty interest to plaintiff. This case does not involve a claim where the insured simply sought
the payment of benefits due directly under an insurance policy. As in Ferwerda, 287 Mich. App.
at 259, the situation in this case “is a wholly different situation than that found” in cases such as
Griswold. Rather, the claim for benefits under UIM coverage was “specifically tied to the
underlying third-party tort claim.” See id. Indeed, in the UIM context, defendant was standing
in the shoes of the alleged tortfeasor. The fact that the claim for UIM benefits was specifically
tied to the underlying third-party tort claim warrants applicability of the “reasonably in dispute”
language found in the second sentence of MCL 500.2006(4). See id. The trial court did not err
in applying this standard to plaintiff’s claim for penalty interest.
Moreover, contrary to plaintiff’s alternative contention on appeal, the claim in this case
was reasonably in dispute. Even assuming plaintiff could establish a threshold injury, plaintiff’s
UIM claim needed to show that the injuries suffered by George and Thelma exceeded the
amount of the settlement with Smith.7 See McDonald, 480 Mich. at 194 (explaining UIM
coverage). Given George and Thelma’s respective ages, preexisting conditions, and the nature of
the injuries alleged in this case, the amount of damages, if any, that they were entitled to beyond
that received from Smith was a matter of reasonable dispute.8 Thus, the trial court did not err by
denying penalty interest under MCL 500.2006(4).
IV. PREJUDGMENT INTEREST
Lastly, plaintiff seeks prejudgment interest under MCL 600.6013 from the date of the
filing of the complaint until payment of the arbitration award. “MCL 600.6013 [ ] entitles a
prevailing party in a civil action to prejudgment interest from the date the complaint was filed to
the entry of judgment.” Beach v State Farm Mut Auto Ins Co, 216 Mich. App. 612, 624; 550
NW2d 580 (1996). “The purpose of this statute is to compensate the prevailing party for loss of
use of the funds awarded as a money judgment and to offset the costs of litigation.” Farmers Ins
Exch v Titan Ins Co, 251 Mich. App. 454, 460; 651 NW2d 428 (2002). Plaintiff seeks interest
under MCL 600.6013(8), which provides:
Except as otherwise provided in subsections (5) and (7) and subject to subsection
(13), for complaints filed on or after January 1, 1987, interest on a money
judgment recovered in a civil action is calculated at 6-month intervals from the
date of filing the complaint at a rate of interest equal to 1% plus the average
interest rate paid at auctions of 5-year United States treasury notes during the 6
months immediately preceding July 1 and January 1, as certified by the state
7
The policy’s UIM coverage provision states that “We [the insurer] will pay under this coverage
only after the limits of liability under any applicable bodily injury liability bonds or policies have
been exhausted by payment of judgments or settlements.”
8
This is not to say that UIM benefits will in all cases be subject to reasonable dispute. For
instance, in a scenario where an accident renders an otherwise healthy insured a quadriplegic and
the tortfeasor’s insurance policy provided only $20,000 in recovery, there could likely be no
dispute that the insured was entitled to UIM coverage.
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treasurer, and compounded annually, according to this section. Interest under this
subsection is calculated on the entire amount of the money judgment, including
attorney fees and other costs. In an action for medical malpractice, interest under
this subsection on costs or attorney fees awarded under a statute or court rule is
not calculated for any period before the entry of the judgment. The amount of
interest attributable to that part of the money judgment from which attorney fees
are paid is retained by the plaintiff, and not paid to the plaintiff's attorney.
Plaintiff is seeking prejudgment interest from the date of its complaint in April 2005 until
the date of payment. Plaintiff never raised the issue of prejudgment interest before the trial
court. In addition, it does not appear from the record that the arbitration award was ever reduced
to a judgment, or that the arbitration award has been paid. Under the Michigan Arbitration Act,9
circuit courts have jurisdiction to enforce and render judgment on an arbitration award. MCL
600.5025. Here, despite the fact that plaintiff’s motion expressly sought entry of a judgment on
the arbitration award, the trial court did not honor that request. Instead, the court simply
“affirmed” the arbitration award, and to that extent, the trial court erred. Because it does not
appear that the arbitration award was ever reduced to a judgment, and this case has not otherwise
been dismissed, plaintiff remains entitled to obtain a judgment on the award. And, when seeking
that judgment, because the issue of prejudgment interest was never decided, plaintiff can raise
the issue of prejudgment interest at that time. As such, we decline to address the prejudgment
interest issue, without prejudice to plaintiff raising it when he moves for entry of a judgment
enforcing the arbitration award. Indeed, at this point, neither the arbitration panel10 nor the trial
9
Effective July 1, 2013, the Legislature repealed the Michigan Arbitration Act and replaced it
with the Uniform Arbitration Act, MCL 691.1681 et seq. See Fette v Peters Constr Co, __ Mich
App __; __ NW2d __ (Docket No. 320803, issued May 21, 2015), slip op at 4. The Uniform
Arbitration Act “does not affect an action or proceeding commenced or right accrued before this
act takes effect.” MCL 691.1713. See also Fette, __ Mich App at __, slip op at 4. Because
George and Thelma filed a complaint for arbitration in 2005, the Uniform Arbitration Act does
not apply, and the Michigan Arbitration Act governs. See id.
10
In this regard, we note that ordinarily, preaward, prejudgment interest would be deemed to
have been submitted to the arbitration panel. See Holloway Const Co v Oakland Co Bd of Rd
Comm’rs, 450 Mich. 608, 618; 543 NW2d 923 (1996) (“The decision whether to award
preaward, prejudgment interest as an element of damages is reserved as a matter of the
arbitrator’s discretion.”). In this case, there was nothing in the arbitration agreement reserving
the issue of preaward, prejudgment interest. However, the arbitration award expressly stated that
the arbitration panel awarded interest as an element of damages from the time of the injury to the
time the complaint was filed, but it was not deciding matters pertaining to “other interest.”
Prejudgment interest after the filing of the complaint fits into the broad category of “other
interest.” Thus, the arbitration panel expressly declined to address the prejudgment interest
plaintiff is now seeking. The record contains no indication as to why the arbitration panel did
not consider any “other interest,” nor is there any indication that the parties objected to the
arbitration panel’s decision in this regard.
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court has decided the issue of plaintiff’s entitlement to statutory prejudgment interest under MCL
600.6013.
Lastly, on the issue of prejudgment interest, we note that defendant contends that plaintiff
should not be entitled to any prejudgment interest because of his—and George and Thelma’s—
delays in this case. “[A] court may disallow prejudgment interest for periods of delay where the
delay was not the fault of, or caused by, the debtor.” Eley v Turner, 193 Mich. App. 244, 247;
483 NW2d 421 (1992). Here, however, it is not apparent that the entirety of the delays in this
case can be assigned to plaintiff. With regard to the six-year delay caused by disagreement over
the third arbitrator, defendant is incorrect in stating that the arbitration agreement required the
insured, and only the insured, to petition the circuit court to select a third arbitrator in the event
of disagreement. Rather, the agreement as contained in the policy states “either may request that
selection” of a third mediator “be made by a judge of a court having jurisdiction.” (Emphasis
added). If plaintiff raises the issue of prejudgment interest at the time he seeks a judgment on the
arbitration award, the delays in this case can be a consideration for the trial court, but should not
at the outset deny plaintiff any claim to prejudgment interest under MCL 600.6013.
Affirmed in part and remanded to the trial court for further proceedings not inconsistent
with this opinion. We do not retain jurisdiction.
/s/ Michael F. Gadola
/s/ Kathleen Jansen
/s/ Jane M. Beckering
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