EVELYN PROUDFOOT V STATE FARM MUTUAL INSUR CO
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Michigan Supreme Court
Lansing, Michigan 48909
Chief Justice
Maura D. Corrigan
Opinion
Justices
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
FILED DECEMBER 23, 2003
EVELYN PROUDFOOT,
Plaintiff-Appellee,
V
No. 123502
STATE FARM MUTUAL INSURANCE
COMPANY,
Defendant-Appellant.
_______________________________
PER CURIAM
Plaintiff
suffered
in
modifications
a
sought
no-fault
car-pedestrian
to
her
house.
benefits
accident
The
in
circuit
for
order
injuries
to
court
make
granted
judgment for plaintiff and ordered that certain sums be
paid to plaintiff and to the court.
affirmed in part and reversed in part.
The Court of Appeals
We reverse in part
the Court of Appeals decision and remand the case to the
Washtenaw Circuit Court for further proceedings consistent
with this opinion.
In all other respects, we affirm.
I
Plaintiff sustained serious injuries in November 1995,
when she was struck by a car during a visit to Michigan
from her home in England.
Her leg was amputated above the
knee, and, because of complications with her prosthesis,
the
use
of
a
plaintiff’s
carrier
a
wheelchair
husband
letter
became
sent
necessary.
defendant
stating
that,
In
no-fault
on
the
1997,
insurance
basis
of
an
occupational therapy report, significant home modifications
were required and that an architect had been requested to
prepare plans and to estimate the cost.
The
architect
provided
the
plans
to
plaintiff,
who
paid the architect’s bill ($815.101) and forwarded it to
defendant in March 1999.
The estimated cost for the home
modifications, including the value added tax (VAT) of 17.5
percent, was about $250,000.
Defendant had its own expert
evaluate the home, and, on the basis of that evaluation,
defendant
claimed
unreasonable.
It
that
also
plaintiff’s
denied
requests
plaintiff’s
request
were
for
reimbursement of the architect’s bill.
Plaintiff sued for breach of contract and declaratory
relief.
As the result of a mutually accepted mediation
1
The monetary figures have been converted from English
pounds to American dollars.
2
award, Washtenaw Circuit Judge Timothy P. Connors awarded
plaintiff partial judgment on January 28, 2000.2
By its
terms, the partial judgment did not dispose of plaintiff’s
claim for home modifications.
The court held a jury trial on the issues related to
the proposed home modifications.3
on
the
jury
form,
the
jury
Responding to questions
found
that
plaintiff
had
incurred “allowable expenses” in the amount of $815.10 (the
architect’s
bill)
and
that
defendant
had
received
reasonable proof of the expenses on March 2, 1999.
In a
portion of the form entitled “Declaratory Judgment,” the
jury found that the modifications to plaintiff’s home were
reasonably
necessary,
that
the
amount
of
the
allowable
expense was $220,500 (plus the VAT), and that plaintiff had
supplied reasonable proof of those expenses on December 2,
1997.
Plaintiff moved for entry of a judgment that would
award her judgment interest, MCL 600.6013, no-fault penalty
interest,
MCL
500.3142,
and
no-fault
attorney
fees,
MCL
2
Plaintiff was awarded certain wage loss benefits,
attendant care benefits, mileage benefits, the cost of a
modified van purchase, and no-fault interest, judgment
interest, and attorney fees on all the benefits awarded.
3
At the time of trial, the modifications had not yet
been made.
3
500.3148(1).
The
plaintiff
architectural
the
January
5,
2001,
services
judgment
fee
interest on that fee from April 1, 1999.
and
awarded
no-fault
The judgment also
provided:
IT IS FURTHER ORDERED AND ADJUDGED that
Plaintiff recover future home modifications as
awarded by the jury in the amount of $220,500.00
plus value added tax of 17.5% for a total future
home
modification
award
in
the
amount
of
$259,087.50 is awarded [sic], such amount to be
overseen by the Court as the expenses are
incurred under the no fault law.
IT IS FURTHER ORDERED AND ADJUDGED that no
fault interest on the home modification amount of
$259,087.50, from the date reasonable proof was
submitted, with the billing April 1, 1999 at the
rate of 1% per month until paid.
No-fault
costs
of
attorney
fees
$7,597.23
in
were
the
amount
awarded.
of
$69,300.00
and
The
judgment
also
provided:
IT IS FURTHER ORDERED AND ADJUDGED that
prejudgment interest or post judgment interest is
owed from November 27, 1997 at the rate of 12%
per annum compounded annually, on the architect’s
bill, the no fault interest on the architect’s
bill and the future home modifications, the no
fault attorney fees and costs, and the no fault
interest on home modifications until each of said
items are paid.
Defendant appealed, and the Court of Appeals affirmed
in part and reversed in part.
254 Mich App 702; 658 NW2d
838
that
(2003).
The
Court
found
the
trial
court
had
“appropriately ordered defendant to pay the total amount of
4
home
modification
distribution.”
benefits
Id. at 711.
to
the
trial
court
for
It reasoned that declaratory
relief is not exclusive and that a money judgment may be
appropriate when the parties have had notice and a hearing
or
when
future
Automobile
damages
Inter-Ins
are
involved,
Manley
v
Detroit
Exch,
425
Mich
140;
388
NW2d
Appeals
also
held
that
the
grant
216
(1986).
The
Court
of
of
attorney fees was appropriate with regard to defendant’s
failure to pay for both the architectural services and the
overdue home modifications.
It reasoned:
[P]laintiff was forced to seek legal action
to establish defendant’s obligation to pay for
necessary home modifications.
Defendant failed
to provide any assistance to plaintiff.
Absent
independent financial means, plaintiff was unable
to commence or obligate herself for these
modifications. The record reveals a lack of any
realistic finalized plan that defendant was
prepared to implement at the time of trial.
Consequently, the trial court properly decided
that plaintiff was also entitled to attorney fees
because
defendant's
delay
in
proffering
a
finalized
alternative
plan
or
payment
was
unreasonable.
[254 Mich App 715 (emphasis in
original).]
The Court found that defendant’s premise—“that an insured
must be able to pay for or have the economic ability to
obligate oneself for all benefits before they become due”—
would result in economic disparity wherein only
the wealthy or those with a healthy credit line
5
would be able to pursue a dispute with their
insurance company over benefits. [Id. at 716.]
For the same reasons, the Court also found the award of nofault interest to be proper.
Relying
“future
on
MCL
damages”
600.6013(1)
in
MCL
and
600.6301,
the
the
definition
Court
of
of
Appeals
reversed the trial court on the issue of judgment interest
on the future home modifications.
architect’s
fee,
on
the
Judgment interest on the
no-fault
interest,
and
on
the
attorney fees was upheld.
The Court of Appeals dissenter would have held that
the expenses for the home modifications were not overdue
because plaintiff had not incurred the expenses and because
the necessity of the modifications was a bona fide factual
dispute, which was ultimately settled by the jury.
Mich
App
plaintiff
719.
The
would
dissenter
not
need
to
reasoned
pay
the
that
costs
254
although
of
the
modifications out of her own pocket in order to “incur”
them, she would need to “become liable for them; defendant
is not obligated to pay for modifications plaintiff may
never
make.”
Id.
at
720.
The
dissenter
noted
that
plaintiff could “submit claims to defendant as they are
incurred.”
Id.
at
722
(emphasis
in
original).
The
dissenter would have found that the expenses related to the
6
proposed modifications were not overdue, and that defendant
should have been required to pay only the attorney fees and
interest that were associated with the architect’s bill.
Defendant
has
applied
to
this
Court
for
leave
to
appeal.
II
A
Because this case involves questions of law and issues
of statutory interpretation, it is reviewed de novo.
The
primary rule of statutory construction is to effectuate the
intent of the Legislature, and where the statutory language
is
clear
written.
and
unambiguous,
it
is
applied
as
Cruz v State Farm Mut Automobile Ins Co, 466 Mich
588, 594; 648 NW2d 591 (2002).
given
generally
its
ordinary
and
A statute's language is
generally
accepted
meaning.
Putkamer v Transamerica Ins Corp, 454 Mich 626, 631; 563
NW2d 683 (1997), citing Turner v Auto Club Ins Ass'n, 448
Mich 22, 27; 528 NW2d 681 (1995).
B
We agree with the Court of Appeals that plaintiff is
not
entitled
modifications.
to
judgment
interest
on
the
proposed
home
MCL 600.6013(1) provides in part that, “for
complaints filed on or after October 1, 1986, interest is
not allowed on future damages from the date of filing the
7
complaint to the date of entry of the judgment.”
added.)
(Emphasis
MCL 600.6301 defines “future damages” as “damages
arising from personal injury which the trier of fact finds
will accrue after the damage findings are made . . . .”
The award of judgment interest on the architect’s fee, on
the no-fault interest on that fee, and on the attorney fees
that were associated with the award of the architectural
services fee, was appropriate.
C
We also affirm the Court of Appeals holding concerning
the
declaratory
judgment
that
the
modifications
to
plaintiff’s home were reasonably necessary, that the amount
of the allowable expense was $220,500 (plus the VAT), and
that
plaintiff
had
expenses
on
awarding
plaintiff
supplied
December
2,
the
reasonable
1997.
proof
Likewise,
architectural
the
services
of
those
judgment
fee
that
plaintiff has already paid is affirmed.
However,
we
reverse
that
portion
of
the
Court
of
Appeals judgment that ordered defendant to pay the total
amount of future home modification expenses to the trial
court
for
distribution
because
the
have not yet been incurred.
MCL 500.3107 provides in part:
8
expenses
in
question
(1) Except as provided in subsection (2),
personal
protection
insurance
benefits
are
payable for the following:
(a) Allowable expenses consisting of all
reasonable
charges
incurred
for
reasonably
necessary products, services and accommodations
for an injured person’s care, recovery, or
rehabilitation. [Emphasis added.]
MCL
500.3110(4)
insurance
provides
benefits
that
payable
for
“[p]ersonal
accidental
protection
bodily
injury
accrue not when the injury occurs but as the allowable
expense,
work
loss
or
survivors'
loss
is
incurred”
(emphasis added).
To “incur” means “[t]o become liable or subject to,
[especially] because of one’s own actions.”4
may
enter
"a
declaratory
judgment
A trial court
determining
that
an
expense is both necessary and allowable and the amount that
will be allowed[, but s]uch a declaration does not oblige a
no-fault insurer to pay for an expense until it is actually
incurred.”
judgment,
Manley, supra at 157.
plaintiff
had
not
yet
At the time of the
taken
action
to
become
liable for the costs of the proposed home modifications.
4
Webster’s II New College Dictionary (2001).
An
insured could be liable for costs by various means,
including paying for costs out of pocket or signing a
contract for products or services.
Should the insured
present a contract for products or services rather than a
paid bill, the insurance company may, in order to protect
itself, make its check payable to the insured and the
contractor.
9
Because the expenses in question were not yet “incurred,”
the Court of Appeals erred in ordering defendant to pay the
total amount to the trial court.
See Nasser v Auto Club
Ins Ass'n, 435 Mich 33, 50; 457 NW2d 637 (1990).
D
Similarly,
we
reverse
that
portion
of
the
no-fault
interest awarded on the future home modification expenses.
Twelve percent simple interest is payable only on “overdue”
personal protection insurance benefits.
MCL 500.3142(3).
Generally, "benefits are payable as loss accrues.”
500.3142(1).
MCL
MCL 500.3142(2) provides in part that
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.
[Emphasis added.]
Because plaintiff has not sustained a loss associated with
the actual home modifications (other than the architect’s
fee),
the
“overdue,”
future
and
home
interest
modification
is
not
benefits
payable.
are
not
Therefore,
plaintiff was entitled to interest on the architect’s fee
only,
and
the
award
of
no-fault
modification amount is reversed.
10
interest
on
the
home
E
With regard to attorney fees, MCL 500.3148(1) provides
that
[a]n 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. [Emphasis added.]
Thus, attorney fees are payable only on overdue benefits
for which the insurer has unreasonably refused to pay or
unreasonably
delayed
in
paying.
Here,
plaintiff
was
entitled only to those reasonable attorney fees that were
attributable to the $815.10 architect’s fee.
the
modification
expenses
are
not
yet
Claims for
“overdue”
because
they are not yet “incurred.”
IV
Therefore,
we
affirm
the
portion
of
the
Court
of
Appeals judgment denying judgment interest on the future
home
modifications
interest
relating
interest
on
that
and
to
affirming
the
fee,
associated with that fee.
the
architect’s
and
the
award
of
judgment
fee,
the
no-fault
attorney
fees
award
We also affirm the declaratory
portion of the judgment establishing the amount of future
11
home modification benefits, but we vacate the portion of
the
Court
of
Appeals
judgment
that
orders
defendant
to
immediately pay the future home modifications expenses to
the
trial
judgment
court.
We
affirming
the
also
vacate
award
of
that
portion
no-fault
of
the
interest
and
attorney fees on the future home modification expenses.
We
remand this case to the Washtenaw Circuit Court for further
proceedings consistent with this opinion.
We do not retain
jurisdiction.
Maura D. Corrigan
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
12
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