Michigan Supreme Court
Lansing, Michigan 48909
Chief Justice Justices
Opinion
Maura D. Corrigan 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 sought no-fault benefits for injuries
suffered in a car-pedestrian accident in order to make
modifications to her house. The circuit court granted
judgment for plaintiff and ordered that certain sums be
paid to plaintiff and to the court. The Court of Appeals
affirmed in part and reversed in part. 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 wheelchair became necessary. In 1997,
plaintiff’s husband sent defendant no-fault insurance
carrier a letter stating that, on the 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 that plaintiff’s requests were
unreasonable. It also denied plaintiff’s request 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 Responding to questions
on the jury form, the jury 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 January 5, 2001, judgment awarded
plaintiff the architectural services fee and no-fault
interest on that fee from April 1, 1999. 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 attorney fees in the amount of $69,300.00 and
costs of $7,597.23 were awarded. 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 (2003). The Court found that the trial court had
“appropriately ordered defendant to pay the total amount of
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home modification benefits to the trial court for
distribution.” Id. at 711. 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 damages are involved, Manley v Detroit
Automobile Inter-Ins Exch, 425 Mich 140; 388 NW2d 216
(1986).
The Court of Appeals also held that the grant 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
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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 no-
fault interest to be proper.
Relying on MCL 600.6013(1) and the definition of
“future damages” in MCL 600.6301, the Court of Appeals
reversed the trial court on the issue of judgment interest
on the future home modifications. Judgment interest on the
architect’s fee, 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. 254
Mich App 719. The dissenter reasoned that although
plaintiff would not need to pay the costs 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 and unambiguous, it is generally applied as
written. Cruz v State Farm Mut Automobile Ins Co, 466 Mich
588, 594; 648 NW2d 591 (2002). A statute's language is
given its ordinary and 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 to judgment interest on the proposed home
modifications. 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
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complaint to the date of entry of the judgment.” (Emphasis
added.) 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 supplied reasonable proof of those
expenses on December 2, 1997. Likewise, the judgment
awarding plaintiff the architectural services 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 expenses in question
have not yet been incurred.
MCL 500.3107 provides in part:
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(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) provides that “[p]ersonal protection
insurance benefits payable for accidental 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 A trial court
may enter "a declaratory judgment 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.” Manley, supra at 157. At the time of the
judgment, plaintiff had not yet 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.” MCL
500.3142(1). 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 future home modification benefits are not
“overdue,” and interest is not payable. Therefore,
plaintiff was entitled to interest on the architect’s fee
only, and the award of no-fault interest on the home
modification amount is reversed.
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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. Claims for
the modification expenses are not yet “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 and affirming the award of judgment
interest relating to the architect’s fee, the no-fault
interest on that fee, and the attorney fees award
associated with that fee. We also affirm the declaratory
portion of the judgment establishing the amount of future
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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 court. We also vacate that portion of the
judgment affirming the award of no-fault 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
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