SHAPIRO, J.
This insurance-coverage dispute stems from a fire on March 18, 2003, that completely destroyed a farmhouse owned by the Kathleen McNeel Revocable Living Trust (the Trust). Defendant appeals as of right the trial court's order granting plaintiffs the $69,500 jury award, interest of $37,259.78 pursuant to MCL 500.2006, and case-evaluation sanctions of $19,818.34, and plaintiffs cross-appeal. We affirm the part of the judgment based on the jury's verdict, but reverse the part of the judgment regarding attorney fees and remand for entry of an order consistent with this opinion.
The property at issue, located at 10981 W. River Road, Remus, Michigan (the Bundy farmhouse), was purchased by Kathleen McNeel in the 1970s and transferred to the Trust in 1993. Defendant issued an insurance policy to Kathleen McNeel, with the Trust as an additional insured, covering three dwellings and their contents, including the Bundy farmhouse, which policy was in effect when the Bundy farmhouse was destroyed by arson
In a letter dated May 22, 2003, Macdonald stated: "In response to your letter of May 12, 2003 we are continuing our investigation into this matter. As soon as we have completed this investigation we will be in contact with you to discuss your client's claim further." On the same date, Macdonald sent another letter, noting that the sworn proof of loss was incomplete and that the insured had to remedy this error within 15 days. The letter stated in bold print, "
On June 16, 2003, Shipper wrote to Macdonald stating:
On June 26, 2003, Macdonald wrote to Shipper and stated, "After careful review of this matter along with additional investigation, we feel that we are justified in our denial of the above claim." The letter stated that it was "Farm Bureau's position" that the dwelling had been unoccupied for 18 months, as substantiated by relatives of the insured and a neighbor.
The following day, June 27, 2003, Shipper wrote to Jason Babka, Macdonald's claims supervisor. The letter confirmed that Shipper had "contact[ed Babka] to try to correct a wrongful denial of the Insured's claim" and that Shipper had "agreed to provide certain information which reflects on the meaning of vacancy and unoccupancy." The letter enclosed excerpts from two insurance texts and concluded, "Please review and advise."
On June 30, 2003, Babka wrote back to Shipper. The letter quoted from the definitions of unoccupied in a third source, Fire, Casualty and Surety Bulletins (FC & S), and concluded, "Based on the definitions provided, our investigation, and the policy language under the increase in hazard, we must again respectfully deny the claim for fire damage to 10981 W. River Rd. in Remus, Michigan of March 18, 2003."
On July 21, 2003, Shipper faxed a letter to Babka requesting page citations for the cited text and stating that "[y]ou have denied the Insured's claim based on an FC & S reference." On the same date, Babka sent a response stating that the claim was not denied on the basis of an FC & S
On September 24, 2003, Shipper wrote another letter to Babka, which stated:
The record does not contain a response, but on October 10, 2003, Shipper and Babka did meet. According to an affidavit signed by Shipper, at the meeting Babka
Defendant filed a responsive affidavit signed by Babka. It stated, "Farm Bureau never contradicted its initial denial of Plaintiff's [sic] claim, that Farm Bureau's position never changed from the initial denial and that I never conveyed to Mr. Shipper otherwise."
Following up from the meeting, Shipper sent a letter and facsimile on October 14, 2003, attaching utility bills and property tax receipts that he asserted, along with the contractor's remodeling estimates, "are indicative of an intent to continue to operate and occupy the property." Babka responded with a letter of the same date stating:
Plaintiffs filed their complaint against defendant in the Mecosta Circuit Court
At trial, defendant abandoned the issue of when the formal denial occurred; defendant presented no evidence on the issue and did not request that the jury make a determination. The jury returned a verdict for plaintiffs, concluding that the farmhouse had not been vacant at least 60 consecutive days before the loss and that it "was occupied at least six consecutive months prior to the loss date...." It awarded $3,000 for furnishings, $7,000 for other personal property, and $15,000 for lost rents. The trial court issued a judgment on the verdict for $69,500, reflecting the $50,000 policy limit on the building, the $10,000 policy limit on lost rents, $3,000 for landlord furnishings, the $2,500 policy limits for other personal property, and $4,000 for the stipulated debris removal.
Plaintiffs moved for case-evaluation sanctions, interest, and costs. With regard to the interest claim, defendant acknowledged this Court's decision in Griswold Props., LLC v. Lexington Ins. Co., 276 Mich.App. 551, 554, 741 N.W.2d 549 (2007), but objected to the interest claim on the basis of the prior caselaw in Arco Indus. Corp. v. American Motorists Ins. Co. (On Second Remand, On Rehearing), 233 Mich.App. 143, 594 N.W.2d 74 (1998). The trial court concluded that defendant's denial was reasonable, but also concluded that Griswold applied retroactively and awarded 12 percent interest on the $54,500 of the award. On the attorney-fee issue, the trial court ultimately issued an opinion that granted plaintiffs 43 hours at $150 an hour in attorney fees. It assessed 12 percent interest on the $54,500 retroactively beginning on July 13, 2003, with the remainder of the award subject to interest accrued from the date of the complaint. Defendant appealed, and plaintiffs cross-appealed.
Defendant first argues that the trial court erred by denying its motion for summary disposition because plaintiff's suit was untimely even with the extension under MCL 500.2833(1)(q). Plaintiffs contend that defendant has waived its right to claim that the complaint was untimely by failing to raise the issue at trial, but that even if the issue was preserved, there was evidence of a genuine issue of material fact regarding when defendant "formally denie[d]" plaintiffs' claim, making the trial court's denial of summary disposition appropriate.
We review de novo motions for summary disposition, taking the facts in the light most favorable to the nonmoving party. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). We review the record and the documentary evidence, but do not make findings of fact or weigh credibility. Taylor v. Lenawee Co. Bd. of Rd. Comm'rs, 216 Mich.App. 435, 437, 549 N.W.2d 80 (1996).
We agree with plaintiffs that defendant waived its affirmative statute-of-limitations defense at trial. Defendant did not seek a jury finding regarding when the formal denial occurred and failed to present any evidence at trial that the denial occurred anytime other than October 14, 2003. The defense made a tactical decision not to argue this issue to the jury and focused solely on whether the policy provided
Given the language of the letters, we agree with plaintiffs that the April 2003 denial was withdrawn by the May 22, 2003, letters stating that "[t]his is not a denial of your claim" and that "we are continuing our investigation into this matter." (Bold print omitted.) However, we conclude that a second formal denial did occur later. On June 26, 2003, Macdonald wrote to Shipper and stated that "we feel that we are justified in our denial of the above claim." In his letter to Babka, Shipper acknowledged the denial by stating that he was attempting to "correct a wrongful denial...." The subsequent correspondence back and forth between the parties continued to mention a denial: "we must again respectfully deny the claim"; "[y]ou have denied the Insured's claim"; "[t]he claim was denied"; "I have reviewed Farm Bureau's claim denial with the Insured"; and "[y]ou may or may not decide to continue to deny the claim...."
However, we do not believe that the trial court erred by determining that there was a question of fact given Shipper's affidavit stating that he wrote Babka on September 24, 2003, requesting a meeting and that the two of them met on October 10, 2003. According to Shipper's affidavit, "Babka indicated he would consider the claim in light of the requested documents, once submitted, and would only make a decision as to whether or not the claim would be denied
The trial court properly concluded that this evidence created a question of material fact about when the formal denial occurred. Although it is reasonable to construe Babka's letter on October 14, 2003, and his affidavit responding to the Shipper affidavit as evidence of an unbroken denial since June 2003, Shipper's affidavit presents evidence that creates a different inference—that defendant again withdrew its formal denial while it reinvestigated the claim. This inference is even more reasonable considering defendant's prior course of conduct, having once before withdrawn a denial of the claim. Taking this evidence in the light most favorable to plaintiffs, Dressel, 468 Mich. at 561, 664 N.W.2d 151, Shipper's affidavit and defendant's previous withdrawal of its formal denial provided sufficient evidence to create a question of fact regarding whether Babka's alleged comments at the meeting with Shipper constituted another withdrawal of the denial, with a subsequent denial on October 14, 2003. The trial court properly left it up to a jury to determine whether Babka made the comments attributed to him in Shipper's affidavit and whether those comments constituted a withdrawal of defendant's previous formal denial followed by a new formal denial. Accordingly, we conclude that the trial court properly denied defendant's motion for summary disposition. This question was properly held for a jury determination, and defendant elected to waive that determination.
Defendant next argues that the trial court's jury instruction regarding occupancy was erroneous and that the following instruction should have been given: "One must consistently or habitually live there as a customary and usual dwelling place or place of abode or place of habitation. Mere supervision and periodic checking or overnight visitations or storage or furniture is not enough to satisfy an occupancy." However, this definition was never presented to the trial court. Indeed, the definitions requested by defendant were entirely different. Defendant's trial brief defined "unoccupied" as "
MCR 2.516(C) provides, "A party may assign as error the giving of or the failure to give an instruction only if the party objects on the record before the jury retires to consider the verdict . . ., stating specifically the matter to which the party objects and the grounds for the objection." Here, the entire objection was "we're going to go with the one jury instruction with respect to occupancy. However, both of us have some misgivings about it and each of us wants to preserve our right to, I guess, contest it after the fact depending on who wins." Because the rule requires the objecting party to specifically state the grounds for the objection on the record, and the record in this case lacks any statement of grounds for the objection, this issue is unpreserved. Accordingly, our review is for plain error affecting defendant's substantial rights. Hilgendorf v. St. John Hosp. & Med. Ctr. Corp., 245 Mich.App. 670, 700, 630 N.W.2d 356 (2001).
The trial court instructed the jury:
Defendant argues on appeal that the definition of "unoccupied" is improper. Because "unoccupied" is a term used in the insurance policy, the question is one of contract interpretation.
"[I]n reviewing an insurance policy dispute we must look to the language of the insurance policy and interpret the terms therein in accordance with Michigan's well-established principles of contract construction." Henderson v. State Farm Fire & Cas. Co., 460 Mich. 348, 353-354, 596 N.W.2d 190 (1999).
The contract provision at issue provides that there is no coverage "[w]hile a described building, whether intended for occupancy by owner or tenant, is vacant beyond a period of sixty consecutive days or is unoccupied beyond a period of six consecutive months." The parties agree that "unoccupied" is not defined in the policy. When terms are undefined, it is appropriate for this Court to consult a dictionary for the common definition. Halloran v. Bhan, 470 Mich. 572, 578, 683 N.W.2d 129 (2004).
Using these definitions, we conclude that the trial court's jury instruction was proper. The trial court said that "unoccupied" meant that the building had contents but "is not being lived in...." It gave the appropriate duration from the contract provision of "six consecutive months." Thus, the instruction informed the jury that it had to determine whether the Bundy farmhouse had not been lived in for more than six consecutive months. We find
Defendant argues that this Court's opinion in Vushaj v. Farm Bureau Gen. Ins. Co. of Mich., 284 Mich.App. 513, 773 N.W.2d 758 (2009), is controlling on this issue. We disagree. First, defendant's contention that Vushaj "should have been incorporated into a proper jury instruction" defies logic because it ignores the fact that Vushaj was not decided until after this appeal had already begun. More important, the policy language at issue in Vushaj is markedly different and distinguishable. The Vushaj policy precluded coverage if the house was "vacant or unoccupied beyond a period of 30 consecutive days." Id. at 519, 773 N.W.2d 758. The present policy exempted coverage when the house "is vacant beyond a period of sixty consecutive days or is unoccupied beyond a period of six consecutive months." Thus, the present policy clearly separates the terms "vacant" and "unoccupied" into different clauses with distinct time requirements. Such a structure leads to the conclusion that the two terms have different meanings.
See also Garner, A Dictionary of Modern Legal Usage (2d ed.) ("[V]acant; unoccupied. These words are often used in the context of insurance policies on buildings. They are not synonymous: vacant means without inanimate objects, while unoccupied means without human occupants."). The necessity that "vacant" and "unoccupied" have different meanings within the instant policy is enhanced by the fact that each term has its own time limit: vacant for 60 days; unoccupied for six consecutive months. Vushaj simply had a single period that applied to either term.
Furthermore, it is the definition of "unoccupied," not "occupied," that is at issue. This difference is more than academic. Defendant asserts that "[t]he plain meaning of the contract requires that someone be living in the house as a legal abode for six months before the loss." Whether intentionally wrong or simply inartfully worded, this is a misinterpretation of the policy language. There is no requirement that the farmhouse be lived in "for six months before the loss." Rather, the house must be unoccupied "beyond" (that is, for more than) six consecutive months before a loss for the exclusion to take effect. The house could have been unoccupied for six months, but as long as it became occupied on the next day, the exclusion would never be operative because the house was not unoccupied for more than six months. As the policy is currently phrased, even a single day of occupancy will restart the counter on the six consecutive months. This requirement further distinguishes Vushaj, because application of Vushaj's definition of "unoccupied" ("`not routinely characterized by the presence of human beings'") Vushaj, 284 Mich.App. at 516, 773 N.W.2d 758, quoting Black's Law Dictionary (8th ed.), would impermissibly render nugatory the instant policy's requirement that the there be a "consecutive" period of no occupancy. See Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459, 468, 663 N.W.2d 447 (2003) ("[C]ourts must also give effect to every word, phrase, and clause in a contract and avoid an interpretation that would render
Finally, defendant contends that there was insufficient evidence to create a jury question about occupancy. However, defendant's argument presupposes that the definition given by the trial court was erroneous. Defendant has not argued on appeal that there was insufficient evidence under the definition stated in the jury instructions. Accordingly, our determination that there was no error in the definition given by the trial court has disposed of this issue.
Defendant's final claim on appeal is that the trial court erred by concluding that this Court's decision in Griswold, 276 Mich.App. 551, 741 N.W.2d 549, applied retroactively. In Griswold, this Court held that "a first-party insured is entitled to 12 percent penalty interest if a claim is not timely paid, irrespective of whether the claim is reasonably in dispute." Id. at 554, 741 N.W.2d 549. Defendant argues that this rule should be applied prospectively only because it overruled clear and settled caselaw.
Whether a ruling applies retroactively is a question of law that this Court reviews de novo. People v. Maxson, 482 Mich. 385, 387, 759 N.W.2d 817 (2008). "[T]he general rule is that judicial decisions are to be given complete retroactive effect. We have often limited the application of decisions which have overruled prior law or reconstrued statutes. Complete prospective application has generally been limited to decisions which overrule clear and uncontradicted case law." Hyde v. Univ. of Mich. Bd. of Regents, 426 Mich. 223, 240, 393 N.W.2d 847 (1986) (citations omitted).
Rules determined in opinions that apply retroactively apply to all cases "still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule[s]." Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 97, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993). Rules determined in opinions that apply prospectively only, on the other hand, not only do not apply to cases still open on direct review, but do not even apply to the parties in the cases in which the rules are declared. See Pohutski v. City of Allen Park, 465 Mich. 675, 699, 641 N.W.2d 219 (2002). With this understanding, it is clear that this Court has already concluded that Griswold did not apply prospectively only because it applied its holding to the three cases consolidated in Griswold and ruled that the plaintiffs in all three cases were entitled to penalty interest, irrespective of whether the claims were reasonably in dispute. Griswold, 276 Mich.App. at 566-567, 741 N.W.2d 549. However, because there are no published opinions specifically holding that Griswold is fully retroactive,
Moreover, even assuming that Griswold represented a new rule, as opposed to a clarification of a previously ambiguous state of the law, the three-factor test set forth in Paul v. Wayne Co. Dep't of Pub. Serv., 271 Mich.App. 617, 722 N.W.2d 922 (2006), does not weigh in favor of prospective application.
There are multiple purposes served by the new rule. First, it clarified an ambiguous state of the law. Second, it was intended to give meaning to the statutory language, which appears designed to deter, and limit the length of, denials of justified claims. The "timely payment" purpose weighs heavily in favor of retroactive application because prospective application removes the incentive of limiting any further delay of payment with regard to justified claims already in litigation when Griswold was decided.
The second factor is the extent of reliance on the old rule. It is true that the insurance industry relied heavily on the Arco decision to delay payment in claims that were reasonably in dispute. However, when an insurance company truly has a complete defense, i.e., it is ultimately determined that there is no coverage, the company is relieved from any requirement to pay interest. Additionally, given the ambiguous state of the law, it is unclear how reasonable the reliance on Arco was, given that it contradicted the Supreme Court's precedent in Yaldo. Thus, this factor does not seem to weigh heavily in either direction.
The third factor, the effect of retroactive application on the administration of justice, weighs in favor of retroactive application. Given the limited number of cases to which this issue applies, applying the Griswold decision retroactively will have little effect on the courts and their caseloads.
Given that (1) the Griswold Court retroactively applied its decision to the three consolidated cases before it and at least one subsequent panel of this Court determined it to be retroactive, (2) the law that was overturned can hardly be considered "clear and uncontradicted," and (3) the factors for prospective-only application weigh in favor of retroactive application, we conclude that the trial court properly ruled that Griswold was to be applied retroactively and, therefore, was applicable to this case.
Plaintiffs argue in their cross-appeal that the trial court erroneously and
Plaintiffs' counsel originally provided to the trial court a two-page typed time sheet memorializing 115.4 hours that he had spent working on the case after the case evaluation. Defendant objected, indicating that its counsel "spent only 90.2 hours" for the same period and, after objecting to several entries, stated that "[g]iven these reductions, the total amount of attorney time that could reasonably be awarded would be approximately 90 hours." Defendant also requested an evidentiary hearing "and a more exact accounting" of the time indicated on the billing statement.
During the hearing for case-evaluation sanctions, plaintiffs' counsel justified his time, indicating that he had worked on the case for only five hours from the case evaluation until 10 days before the trial, when it became clear that it was going to go to trial. He further indicated that the case filled three bankers boxes because it was document-intensive and argued against defendant's assertion that it was a simple case:
Defendant's counsel argued that he still believed that plaintiffs' counsel was only entitled to $9,000 (90 hours times a rate of $100 an hour) and requested an evidentiary hearing. He maintained that it was "a simple case to try, not difficult at all in my mind" and that damages had been agreed to so that the jury only had to decide whether the farmhouse was vacant or unoccupied.
At the evidentiary hearing on attorney fees, plaintiffs' counsel testified regarding his billing records. He testified that he filled out his handwritten record of time spent at the same time that the work was performed. He also justified each of the items about which he was questioned and testified that he had worked the hours listed. The trial court took issue with the time plaintiffs' counsel indicated for the trial. According to the time records, plaintiffs' counsel billed 46 hours for the trial and trial preparation for July 23 through 26. The trial court used 45 hours as the figure and determined that the time for the trial, including the jury's deliberations, was 17.5 hours. Plaintiffs' counsel indicated that there had been a great deal of trial preparation, but the trial court appeared flippant and told plaintiffs' counsel that the issue whether the house was occupied or unoccupied did not require much time because the trial court "figured that out in about five minutes." Plaintiffs' counsel then argued that it was clear that defendant's counsel had spent approximately as much time on the case as he had. The trial court rejected this argument
The trial court issued its opinion and order, which held, in relevant part:
Plaintiffs argue that the basis for the reduction was erroneous and unreasonable.
In determining a reasonable attorney fee, there is no set formula, but multiple factors to consider. In re Temple Marital Trust, 278 Mich.App. 122, 138, 748 N.W.2d 265 (2008). These factors include:
Here, although the trial court discussed some other factors at the hearing, in its opinion, the trial court relied on a single factor—how much time it believed plaintiffs' counsel had actually spent on the case. However, given the testimony at the hearing and the information on plaintiffs' counsel's time sheet, the trial court's calculation was erroneous. The time sheet indicated, and plaintiffs' counsel testified at the hearing, consistently with the time sheet, that he did more than the trial on the days listed for the trial—he also did preparation for the next day of trial. Accordingly, the trial court's determination of a 46 percent overbilling was inconsistent with the record, making its reduction based on this calculation erroneous.
Further, the contention of defendant and the trial court that the sole matter in dispute was the definitions of "occupancy" and "vacancy" was erroneous because it ignored several outstanding issues that could have come up at trial, for which plaintiffs' counsel needed to be prepared. There was an outstanding factual question about when defendant could be deemed to have formally denied the claim in order to trigger the statutory one-year deadline. That defendant ultimately failed to address this issue at trial is irrelevant. Plaintiffs still had to prepare to fight this issue and present evidence and testimony relevant to it because they had no way to know before the trial that defendant was not going to address it.
Both defendant and the trial court made much of the fact that plaintiffs' counsel had not itemized his time in six-minute increments or used time slips, but instead kept a running handwritten record indicating clumps of time spent. Plaintiffs' counsel testified that he filled out his handwritten record contemporaneously with when the work was completed and that it was not more detailed because he had a contingent-fee arrangement with his clients. We conclude that under Michigan law, the billing records submitted by plaintiffs' counsel were sufficient. Indeed, this Court has held that descriptions such as "trial prep" and "trial" in billing records are self-explanatory:
In sum, plaintiffs' counsel's billing records were legally sufficient, his testimony
We therefore reverse the trial court's assessment of attorney fees and remand the issue back to the trial court. On remand, the trial court should examine the appropriate factors listed earlier in this opinion in view of the evidence obtained at the previous hearing. However, given the repeated representations of defendant's counsel that 90 hours was reasonable (indeed, he spent that many hours working on the case after the case evaluation), we hold that the minimum to which plaintiffs are entitled is $13,500 (the trial court's rate of $150 an hour times 90 hours).
Affirmed in part, reversed in part, and remanded for additional proceedings consistent with this opinion. Plaintiffs are entitled to costs under MCR 7.219. We do not retain jurisdiction.
M.J. KELLY, P.J., concurred.
K.F. KELLY, J., (dissenting).
I respectfully dissent. In my view, plaintiffs' claim is time-barred under MCL 500.2833(1)(q), and the trial court erred by denying defendant's motion for summary disposition. Further, the majority's conclusion that a question of fact exists regarding when the formal denial occurred is erroneous because (1) it fails to apply the plain language of MCL 500.2833(1)(q), (2) it applies the long-discredited judicial tolling doctrine, and (3) it implicitly applies the doctrine of equitable estoppel in the absence of facts supporting its application. I would reverse.
Plaintiffs' property was destroyed by fire on March 18, 2003. Defendant's policy provided coverage to the property and its contents. Plaintiffs promptly notified defendant of the loss.
On April 17, 2003, by certified mail, defendant's senior claims representative, Kathy Macdonald, wrote to plaintiffs' adjuster, Stewart Shipper of Associated Adjusters, Inc., denying coverage for the claim, stating, in relevant part:
On May 22, 2003, Macdonald wrote to Shipper, stating: "In response to your letter of May 12, 2003 we are continuing our investigation into this matter. As soon as we have completed this investigation we will be in contact with you to discuss your client's claim further." Also on May 22, 2003, by certified mail, defendant rejected plaintiffs' "Sworn Statement in Proof of Loss"
After additional investigation, defendant wrote to Shipper on June 26, 2003, and denied plaintiffs' claim:
The following day, Shipper requested further reconsideration of defendant's denial of plaintiffs' claim, continuing to contend that it was "wrongful." This request did not raise any factual dispute about the fire or its cause, but was based solely on the interpretation of the policy terms "vacant" and "unoccupied." Of particular note, Shipper's letter specifically recognized defendant's denial of the claim.
Three days later, on June 30, 2003, defendant reaffirmed its earlier denial of plaintiffs' claim:
On July 21, 2003, Shipper once again acknowledged defendant's denial "based on an FC & S
On October 14, 2003, defendant again wrote Shipper that it would continue to deny plaintiffs' claim.
Plaintiffs filed their complaint against defendant on October 5, 2004. In April 2005, defendant moved for summary disposition for failure to file within one year from the date of defendant's denial of the claim. Plaintiffs argued that no formal denial of the claim pursuant to MCL 500.2833(1)(q) had occurred before October 14, 2003, and that the complaint had therefore been timely filed. Plaintiffs further argued that defendant waived any right it had to rely on purported denials before that date because of defendant's inconsistent conduct.
The trial court denied the motion, concluding that there was a genuine issue of material fact regarding when the denial occurred.
"Whether a period of limitations applies to preclude a party's pursuit of an action constitutes a question of law that we review de novo." Detroit v. 19675 Hasse, 258 Mich.App. 438, 444, 671 N.W.2d 150 (2003). We also review de novo a trial court's ruling on a motion for summary disposition. Benefiel v. Auto-Owners Ins. Co., 277 Mich.App. 412, 414, 745 N.W.2d 174 (2007). In reviewing a motion under MCR 2.116(C)(7), we must accept the plaintiff's well-pleaded allegations as true, and we must "look to the pleadings, affidavits, or other documentary evidence to see if there is a genuine issue of material fact." Huron Tool & Engineering Co. v. Precision Consulting Servs., Inc., 209 Mich.App. 365, 376-377, 532 N.W.2d 541 (1995). If no question of fact exists, whether the plaintiff's claim is barred by a statute of limitations is a question for the court. Id. at 377, 532 N.W.2d 541. "However, if a material factual dispute exists such that factual development could provide a basis for recovery, summary disposition is inappropriate." Id. Further, this case also presents a question of statutory construction, which this Court reviews de novo. People v. Williams, 475 Mich. 245, 250, 716 N.W.2d 208 (2006).
Defendant argues that the trial court erred by denying its motion for summary disposition. I agree. In my view, when the plain language of MCL 500.2833(1)(q) is applied to the facts of this case, the necessary conclusion is that plaintiffs' claim was untimely filed as a matter of law
Because it is my view that the majority fails to apply the language of MCL 500.2833(1)(q), an explanation of its meaning is necessary to understand the rule that must be applied to the facts of this matter. The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Neal v. Wilkes, 470 Mich. 661, 665, 685 N.W.2d 648 (2004). "If the statutory language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written." USAA Ins. Co. v. Houston Gen. Ins. Co., 220 Mich.App. 386, 389, 559 N.W.2d 98 (1996). Nothing will be read into a clear statute that is not within the manifest intent of the Legislature as derived from the language of the statute itself. Roberts v. Mecosta Co. Gen. Hosp., 466 Mich. 57, 63, 642 N.W.2d 663 (2002), citing Omne Fin., Inc. v. Shacks, Inc., 460 Mich. 305, 311, 596 N.W.2d 591 (1999).
MCL 500.2833(1)(q) provides:
In other words, it is the rule in Michigan, under the clear language of this provision, that fire insurance policies provide a "mandatory limitation period [for filing a lawsuit] of at least one year, with tolling, unless a longer period is specifically set forth in the insurance policy." Randolph v. State Farm Fire & Cas. Co., 229 Mich.App. 102, 106-107, 580 N.W.2d 903 (1998). Consistently with common sense, the statute makes the centerpiece for determining when the limitations period begins to run the point at which an insurer has formally denied liability. It is not surprising that the receipt of a formal denial will "unequivocally impress[ ] upon the insured that the extraordinary step of pursuing relief in court must be taken," Lewis v. Detroit Auto. Inter-Ins. Exch., 426 Mich. 93, 101, 393 N.W.2d 167 (1986), and the statute, accordingly, embodies this concept.
Because the focus of the present dispute is when the insurer formally denied liability, the relevant phrase of the statute for purposes of this litigation is "until the insurer formally denies liability." "Until" means "[u]p to the time of" and "[b]efore a specified time."
Our appellate courts have already parsed the meaning of the term "formal denial." "A denial of liability need not be in writing to be formal, but it must be explicit." Mt. Carmel Mercy Hosp. v. Allstate Ins. Co., 194 Mich.App. 580, 587, 487 N.W.2d 849 (1992) (citation omitted). Although the best formal notice is a writing, notice may be sufficiently direct to qualify as formal without being put into writing. Mousa v. State Auto Ins. Cos., 185 Mich.App. 293, 295, 460 N.W.2d 310 (1990). Accordingly, under this state's jurisprudence, a "formal denial" must be explicit and direct.
Here, it is undisputed that the loss occurred on March 18, 2003. It is undisputed that defendant received the proof of loss on March 19, 2003. And, as the majority agrees, it cannot be disputed that defendant formally denied liability on June 26, 2003.
Yet despite this formal denial, plaintiffs continually attempted to have defendant reopen their case rather than filing suit. Defendant, however, continued to refer back to its previous formal denial. In its written statements, defendant made the following explicit reassertions of its denial:
Importantly, after each reiteration of defendant's decision to deny plaintiffs' claim, Shipper specifically and unequivocally acknowledged that defendant had earlier denied the claim. He repeatedly recognized the June 26, 2003, denial as early as June 27, 2003, and as late as September 24, 2003, and even wrote to defendant: "[I]n the face of your denial, I must soon recommend an attorney for the further handling of this matter." Clearly, plaintiffs knew at this point that "the extraordinary step of pursuing relief in court must be taken." Lewis, 426 Mich. at 101, 393 N.W.2d 167.
Thus, it is undisputed on the record that plaintiffs failed to file suit within one year of defendant's June 26, 2003, formal denial of liability. Consequently, their claim is time-barred, and summary disposition should have been granted in defendant's favor. The trial court had before it all the written documentation affecting the instant claim and, thus, the question presented was merely a question of law. "[W]here written documents are unambiguous and unequivocal, their construction is for the Court to decide as a matter of law." Mt. Carmel, 194 Mich.App. at 588, 487 N.W.2d 849 (emphasis added);
The majority, however, contends that a question of fact exists about when defendant formally denied plaintiffs' claim because further discussions ensued between the parties regarding the claim after the June 26, 2003, denial letter. The majority relies on the affidavit of Shipper, who attested that defendant's agent allegedly agreed to meet with him in September 2003 and "indicated he would consider the claim in light of the requested documents... and would only make a decision as to whether or not the claim would be denied after he had done so." At the outset, assuming without conceding that the affidavit is even relevant, it must be noted that the statements of the claim adjuster are unsubstantiated in the record, are internally inconsistent, are merely self-serving allegations, and are even contradicted by Shipper's own contemporaneous writings to defendant. There simply is no substantiating evidence in the record that defendant indicated in September 2003 that it formally rescinded its denial
Further, even if the affidavit created a factual dispute in regard to the parties' correspondence, which it does not, it would nonetheless be irrelevant given that defendant formally denied plaintiffs' claim in
In support of its position that a question of fact is presented, the majority invokes the doctrine of judicial tolling, thereby enabling litigants to evade the limitations period of MCL 500.2833(1)(q).
Finally, although it is unclear from the majority's analysis, it appears that it may also be invoking the doctrine of equitable estoppel to justify its desire to toll the limitations period. By doing so, the majority is simply interpreting plaintiffs' actions after the June 26, 2003, denial letter in a way that alleviates the effect of the formal denial of liability. "[E]quitable estoppel is a judicially created exception to the general rule that statutes of limitation run without interruption. It is essentially a doctrine of waiver that extends the applicable period for filing a lawsuit by precluding the defendant from raising the statute of limitations as a bar." Cincinnati Ins. Co. v. Citizens Ins. Co., 454 Mich. 263, 270, 562 N.W.2d 648 (1997). "Equitable estoppel arises where one party has knowingly concealed or falsely represented a material fact, while inducing another's reasonable reliance on that misapprehension, under circumstances where the relying party would suffer prejudice if the representing or concealing party were subsequently to assume a contrary position." Adams v. Detroit, 232 Mich.App. 701, 708, 591 N.W.2d 67 (1998). It requires proof of "conduct clearly designed to induce `the plaintiff to refrain from bringing action within the period fixed by statute.'" Lothian v. Detroit, 414 Mich. 160, 177, 324 N.W.2d 9 (1982), quoting Renackowsky v. Detroit Bd. of Water Comm'rs, 122 Mich. 613, 616, 81 N.W. 581 (1900). To invoke the doctrine, the plaintiff must establish three elements: "(1) a false representation or concealment of a material fact, (2) an expectation that the other party will rely on the misconduct, and (3) knowledge of the actual facts on the part of the representing or concealing party." Cincinnati Ins. Co., 454 Mich. at 270, 562 N.W.2d 648. Thus, in the context of insurance claims, the plaintiff must show that the defendant concealed a cause of action, misrepresented the time in which an action must be brought, or induced the plaintiff to refrain from bringing an action. Compton v. Mich. Millers Mut. Ins. Co., 150 Mich.App. 454, 458, 389 N.W.2d 111 (1986). None of these necessary elements are present here and, thus, the doctrine of estoppel is inapplicable.
To conclude, there is and was no question of material fact that defendant formally denied plaintiffs' claim on June 26, 2003. There is and was no question that defendant did not intend to pay on plaintiffs' claim. Under the plain and unambiguous language of MCL 500.2833(1)(q), an insured must bring his or her claim within one year after the insurer formally denies liability. The trial court erred by denying defendant's motion for summary disposition when there was no dispute on the record that plaintiffs' claim had been formally denied in June 2003 and plaintiffs had not filed their complaint until well after June 2004. The majority's decision compounds this error by reinvigorating the doctrine of judicial tolling that our Supreme Court has explicitly rejected and that will now only serve to invite uncertainty for future litigants.
For these reasons, I dissent and would reverse the judgment of the trial court.
Defense counsel argued in his opening statement that Babka "kept this claim open. . . for review for a period of April, 2003, to October of 2003" and later reiterated that Babka "kept it open for six months" because he "wanted to be fair." During trial, Macdonald testified that it was her understanding that the claim was kept open until October of 2003. Babka testified that the reserve on the claim was not closed until October 29, 2003, and that when that was done, the denial was a done deal and he was not going back on the denial. Finally, in defendant's closing argument, counsel stated that Babka spent five months, i.e. through October, going over things with Shipper and that after that time "those two agreed to disagree."
We do not conclude that these statements constituted judicial admissions. See Ortega v. Lenderink, 382 Mich. 218, 222-223, 169 N.W.2d 470 (1969). However, we do question whether the defense would have taken this position at trial if the jury had in fact been permitted to decide the date of formal denial.
This Court held that the "language of denial in the letter was unambiguous" and that the letter constituted a formal denial "as a matter of law." Id. at 588, 487 N.W.2d 849 (emphasis added).