STATE OF MICHIGAN
COURT OF APPEALS
UNIVERSITY REHABILITATION ALLIANCE,
July 22, 2008
Ingham Circuit Court
LC No. 05-000537-NF
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,
Advance Sheets Version
Before: Donofrio, P.J., and Hoekstra and Markey, JJ.
HOEKSTRA, J. (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 plaintiff’s 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 benefits 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 plaintiff’s claim for PIP benefits was unreasonable.
Since submission of this case for decision, our Supreme Court decided Ross v Auto Club Group,
481 Mich 1; 748 NW2d 552 (2008). In Ross, the Court held that the plaintiff, the sole employee
and shareholder of a subchapter S corporation that lost more money than it paid in wages, was
entitled to work-loss benefits under MCL 500.3107(1)(b). Id. at 7-8. Nonetheless, the Court
held that the defendant’s initial refusal to pay the work-loss benefits was not unreasonable and,
therefore, the plaintiff was not entitled to attorney fees under MCL 500.3148(1). Id. at 15. In its
opinion, the Court stated:
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.
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 law, 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 “[d]efendant [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 award 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. Plaintiff’s attorney acknowledged at oral
arguments that no Michigan case has addressed the issue of no-fault coverage in the factual
context presented here, and the majority’s extensive analysis confirms it. Further, in addressing
assaults in motor vehicles occurring in different factual circumstances, the Supreme Court held
that no-fault benefits were not available to the assault victims. See Bourne v Farmers Ins Exch,
449 Mich 193; 534 NW2d 491 (1995); Thornton v Allstate Ins Co, 425 Mich 643; 391 NW2d
320 (1986). In addition, the Court in McKenzie v Auto Club Ins Ass’n, 458 Mich 214, 222; 580
NW2d 424 (1998), stated that “assaults occurring in a motor vehicle are not closely related to the
transportational function of a motor vehicle.”
I acknowledge that these precedents are distinguishable and, therefore, are not controlling
regarding whether defendant would be 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.
/s/ Joel P. Hoekstra