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Nickola v. MIC General Ins. Co.

Court of Appeals of Michigan

September 24, 2015

JOSEPH G. NICKOLA, Personal Representative of the Estates of GEORGE and THELMA NICKOLA, Plaintiff-Appellant,
v.
MIC GENERAL INSURANCE COMPANY, doing business as GMAC INSURANCE, Defendant-Appellee

          Genesee Circuit Court. LC No. 05-081192-NI.

         For JOSEPH G. NICKOLA, PERSONAL REPRESENTATIVE, Plaintiff-Appellant: MARK R. BENDURE, DETROIT, MI.

         For MIC GENERAL INSURANCE COMPANY, Defendant-Appellee: MARK E. PHILLIPS, NATHAN PEPLINSKI, TROY, MI.

         Before: GADOLA, P.J., and JANSEN and BECKERING, JJ.

          OPINION

          [312 Mich.App. 377] Per Curiam.

         In this action against defendant, MIC General Insurance Company, doing business as GMAC Insurance, concerning underinsured-motorist benefits, plaintiff, Joseph G. Nickola, as personal representative of the estates 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.

         [312 Mich.App. 378] 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 injured[3] 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 if the insurer and the insureds were unable to agree about (1) whether an insured was legally entitled to UIM damages or (2) the amount of UIM damages,

[312 Mich.App. 379] [ e ] ither 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 had 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 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." [312 Mich.App. 380] 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 about whom to appoint as the third arbitrator. Neither party took action on the matter for more than 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.

          [312 Mich.App. 381] 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 ...


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