            If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.




                           STATE OF MICHIGAN

                            COURT OF APPEALS



DEBRA K. ANDRESON and DAVID E.                                       UNPUBLISHED
ANDRESON,                                                            December 19, 2019

               Plaintiffs-Appellants,

v                                                                    No. 345864
                                                                     Eaton Circuit Court
PROGRESSIVE MICHIGAN INSURANCE                                       LC No. 2016-000735-CK
COMPANY,

               Defendant-Appellee.


Before: BORRELLO, P.J., and K. F. KELLY and SERVITTO, JJ.

PER CURIAM.

       Appellants appeal as of right the trial court order granting summary disposition in
defendant’s favor. We affirm.

        On October 11, 2013, plaintiff, David Andreson, was driving his vehicle with plaintiff,
Debra Andreson, as a passenger when they were rear-ended at a red light. Plaintiffs suffered
injuries as a result of the accident. At the time of the accident, plaintiffs had an auto insurance
policy issued by defendant on the vehicle with a liability limit of $250,000 per person and
$500,000 per accident. That policy also contained a provision for underinsured motorist
benefits. The driver of the other vehicle had an insurance policy with Farmers Insurance
Company with a policy limit of $50,000 per person and $100,000 per accident and was thus,
underinsured.

        Plaintiffs brought an action against the other driver and settled with her for the $100,000
policy limit contained in her policy. Plaintiffs thereafter brought an action against defendant for
breach of contract, asserting that it denied their request for underinsured motorist benefits. The
matter proceeded to a jury trial, at the conclusion of which the jury found in favor of plaintiffs.
Plaintiffs thereafter moved for offer of judgment sanctions and on December 14, 2016, the trial
court granted plaintiffs’ motion in part and denied it in part. The trial court found that the offers
of judgment were not made in the spirit of gamesmanship, but that plaintiffs were entitled to
reasonable attorney fees and costs in the amount of $128,660.67. On appeal, this Court affirmed



                                                -1-
in most respects, except that we remanded the matter back to the trial court to reduce the jury
verdict to the maximum insurance policy limits. Andreson v Progressive Marathon Ins Co, 322
Mich App 76; 910 NW2d 691 (2017).

        While the appeal in Andreson, supra, was pending, plaintiffs initiated a second action
against defendant. Plaintiffs contended, primarily, that defendant acted in bad faith in the
handling of their claim for underinsured motorist benefits and violated the Uniform Trade
Practices Act (UTPA), and that under the UTPA they were entitled to 12% penalty interest if the
benefits were not paid on a timely basis. Relevant to the instant matter, plaintiffs moved for
partial summary disposition pursuant to MCR 2.116(C)(10) on the allegations that defendant
violated the UTPA and that 12% penalty interest was payable on the judgment entered against it
in the prior case and on the taxable costs and attorney fees (offer of judgment sanctions) awarded
in that case. Defendant also moved for summary disposition, citing MCR 2.116(C)(8) and (10)
and arguing, in part, that plaintiffs were not entitled to interest under the UTPA because they did
not properly plead a claim for such interest, and because the claims for statutory interest were
barred by MCR 2.203(A) and by res judicata. The trial court denied plaintiff’s motion for partial
summary disposition, but awarded plaintiffs 12% penalty interest on the jury verdict. The trial
court denied plaintiff’s request for 12% penalty interest on their award of offer of judgment
sanctions. The trial court further granted summary disposition in defendant’s favor, opining that
plaintiffs’ claim of bad faith was not supported by the record.

       On appeal, plaintiffs first contend that the trial court erred in refusing to award them 12%
penalty interest under the UTPA on their award of offer of judgment sanctions. We disagree.

        We review de novo the interpretation and application of a statute as a question of law.
Eggleston v Bio-Med Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003). Our
goal, in reviewing a statute, is to give effect to the legislature’s intent, focusing first on the
statute’s plain language. Ally Fin Inc v State Treasurer, 502 Mich 484, 493; 918 NW2d 662
(2018). When a statute is unambiguous, “the statute must be enforced as written. No further
judicial construction is required or permitted.” Id. (citation omitted). A statutory term or phrase
“cannot be viewed in isolation, but must be construed in accordance with the surrounding text
and the statutory scheme.” McQueer v Perfect Fence Co, 502 Mich 276, 286; 917 NW2d 584
(2018).

       MCL 500.2006, part of the UTPA, states:

       (1) A person must pay on a timely basis to its insured, a person directly entitled to
       benefits under its insured's insurance contract, or a third party tort claimant the
       benefits provided under the terms of its policy, or, in the alternative, the person
       must pay to its insured, a person directly entitled to benefits under its insured's
       insurance contract, or a third party tort claimant 12% interest, as provided in
       subsection (4), on claims not paid on a timely basis. Failure to pay claims on a
       timely basis or to pay interest on claims as provided in subsection (4) is an unfair
       trade practice unless the claim is reasonably in dispute.

                                              ***


                                                -2-
       (4) If benefits are not paid on a timely basis, the benefits paid bear simple interest
       from a date 60 days after satisfactory proof of loss was received by the insurer at
       the rate of 12% per annum, if the claimant is the insured or a person directly
       entitled to benefits under the insured's insurance contract. If the claimant is a
       third party tort claimant, the benefits paid bear interest from a date 60 days after
       satisfactory proof of loss was received by the insurer at the rate of 12% per annum
       if the liability of the insurer for the claim is not reasonably in dispute, the insurer
       has refused payment in bad faith, and the bad faith was determined by a court of
       law. The interest must be paid in addition to and at the time of payment of the
       loss. If the loss exceeds the limits of insurance coverage available, interest is
       payable based on the limits of insurance coverage rather than the amount of the
       loss. If payment is offered by the insurer but is rejected by the claimant, and the
       claimant does not subsequently recover an amount in excess of the amount
       offered, interest is not due. Interest paid as provided in this section must be offset
       by any award of interest that is payable by the insurer as provided in the award.


        MCL 500.2006(4) specifically provides that if “benefits are not paid on a timely basis, the
benefits paid bear simple interest from a date 60 days after satisfactory proof of loss was
received by the insurer at the rate of 12% per annum, if the claimant is the insured or a person
directly entitled to benefits under the insured's insurance contract.” (emphasis added). By its
explicit language, 12% interest is payable on the insurance “benefits” only. Plaintiffs, however,
assert that offer of judgment sanctions consisting of attorney fees and taxable costs is clearly a
benefit of plaintiffs’ policy with defendant, and that defendant failed to timely pay the awarded
sanctions such that they are entitled to 12% penalty interest on the sanctions award.

        In support of their claim that the penalty interest is payable on the sanction award,
plaintiffs cite to Nickola v MIC Gen Ins Co, 500 Mich 115; 894 NW2d 552 (2017). However, in
Nickola, the Supreme Court succinctly stated that, “[t]he issue presented in this case is whether
an insurer’s untimely payment of underinsured motorist (UIM) benefits is subject to penalty
interest under the Uniform Trade Practices Act.” Id. at 118. Specifically, the Court was called
upon to determine whether a first party tort claimant is entitled to penalty interest under the
UTPA if their claim is “reasonably in dispute.” Id. at 124-125. The Supreme Court, looking at
the plain, unambiguous language of MCL 500.2006(4) held that the “reasonably in dispute”
language applies only to third party tort claimants and that first party claimants were entitled to
penalty interest for the untimely payment of benefits regardless of whether liability of the insurer
for the claim is reasonably in dispute. This case thus has no bearing whatsoever on the matter
before us.

        Not only have plaintiffs failed to provide any support for their position, it is clear that
offer of judgment sanctions are not a “benefit” to which they are entitled under their insurance
contract with defendant. “Benefit” is defined, in part, in Merriam-Webster’s Collegiate
Dictionary (11th ed.) as “a payment or service provided for under an . . . insurance policy.” Thus,
plaintiffs would be entitled under MCL 500.2006(4) to 12% interest on payments or services
provided for under their policy with defendant. As the trial court properly found, a sanction
provided for in the Michigan Court Rules for an offer of judgment is not a “benefit paid” (i.e., a


                                                -3-
service or payment provided for under the insurance policy) as set forth in or contemplated by
MCL 500.2006(4).

       MCR 2.405(D) governs offers of judgment and states, in relevant part:

               Imposition of Costs Following Rejection of Offer.             If an offer is
       rejected, costs are payable as follows:

        (1) If the adjusted verdict is more favorable to the offeror than the average offer,
       the offeree must pay to the offeror the offeror's actual costs incurred in the
       prosecution or defense of the action.

       (2) If the adjusted verdict is more favorable to the offeree than the average offer,
       the offeror must pay to the offeree the offeree's actual costs incurred in the
       prosecution or defense of the action. However, an offeree who has not made a
       counteroffer may not recover actual costs unless the offer was made less than 42
       days before trial.

       (3) The court shall determine the actual costs incurred. The court may, in the
       interest of justice, refuse to award an attorney fee under this rule.

The purpose of MCR 2.405(D) is “to encourage settlement and to deter protracted litigation.”
Luidens v 63rd Dist Court, 219 Mich App 24, 31; 555 NW2d 709 (1996) (citation omitted). The
purpose of the penalty interest statute (MCL 500.2006), on the other hand, is to penalize insurers
for dilatory practices in settling meritorious claims. Dept of Transp v Initial Transp, Inc, 276
Mich App 318, 330–31; 740 NW2d 720 (2007), reversed in part on other grounds, 481 Mich
862; 748 NW2d 239 (2008). The purpose of MCL 500.2006 is “not to compensate a plaintiff for
delay in recovering benefits to which the plaintiff is ultimately determined to be entitled.” Id.
(citation omitted).

        Given the differing purposes of the statutory interest provision in the UTPA and MCR
2.405(D), the definition of “benefit,” and the lack of authority indicating that penalty interest was
intended to apply to offer of judgment sanctions, the trial court did not err in denying plaintiffs
their requested 12% penalty interest on the offer of judgment sanctions that they were awarded.

       Plaintiffs next assert that the trial court erred in granting summary disposition in
defendant’s favor on plaintiffs’ claim of bad faith. We again disagree.

        We review de novo a trial court's decision regarding a motion for summary disposition.
Bernardoni v City of Saginaw, 499 Mich 470, 472; 886 NW2d 109 (2016). “A motion for
summary disposition made under MCR 2.116(C)(10) tests the factual sufficiency of the
complaint.” Id. In deciding a motion under MCR 2.116(C)(10), the court considers all
affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties in the
light most favorable to the party opposing the motion. Id. at 472-473.

       Plaintiffs aver that an insurer has a contractual obligation to act in good faith and when it,
as here, refuses to make or delays in making a no-fault payment, there exists a rebuttable
presumption that the action is unreasonable (i.e., in bad faith). According to plaintiffs, two of

                                                -4-
defendant’s actions evidence bad faith on its part: (1) its violation of the UTPA, and (2) its
failure to pay underinsured motorist benefits until 2 ½ years after the jury verdict in plaintiffs’
favor, and five months after this Court affirmed the trial court. Both arguments lack merit.

        We first note that plaintiffs have failed to support their positions with any binding
authority. The vast majority of the cases relied upon by plaintiffs have no relevance to the issues
before this Court. In Attard v Citizens Ins Co of Am, 237 Mich App 311, 317; 602 NW2d 633
(1999), for example, the Court did state “[w]hen an insurer refuses to make or delays in making
payment, a rebuttable presumption arises that places the burden on the insurer to justify the
refusal or delay.” However, that statement was made with respect to:

       the no-fault act's attorney fee provision, MCL 500.3148(1), which provides that
       an attorney is entitled to a reasonable fee for representing a claimant in an action
       for personal protection insurance benefits that are overdue and that the 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.” When determining whether attorney fees are
       warranted for an insurer's delay to make payments under the no-fault act, a delay
       is not unreasonable if it is based on a legitimate question of statutory construction,
       constitutional law, or factual uncertainty.

McKelvie v Auto Club Ins Ass'n, 203 Mich App 331, 334–35; 512 NW2d 74 (1994), similarly
addresses the award of attorney fees “pursuant to § 3148(1) of the no-fault act.” Lacking any
citation to relevant authority in their favor, plaintiffs’ claims of bad faith necessarily fail. See,
e.g., Wolfe v Wayne-Westland Cmty Sch, 267 Mich App 130, 139; 703 NW2d 480 (2005).

        Moreover, absent an “allegation and proof of tortious conduct existing independent of the
breach, exemplary damages may not be awarded in common-law actions brought for breach of a
commercial contract.” Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 420–21; 295
NW2d 50 (1980) (citation omitted). Michigan does, however, recognize “an insured's claim
against its insurer for bad faith in refusing to settle.” J & J Farmer Leasing, Inc v Citizens Ins
Co of Am, 472 Mich 353, 356, n 3; 696 NW2d 681 (2005). This is because “where the insurer
defends the action it has a substantial measure of control in the conduct of the lawsuit and is in a
position to disregard the interests of the insured and expose him to the risk of a judgment in
excess of policy limits. To protect the insured's interest, the courts have required that the insurer
make reasonable efforts to settle within policy limits.” Stockdale v Jamison, 416 Mich 217, 224;
330 NW2d 389 (1982).

       Here, plaintiffs’ allegations of bad faith do not concern tortious conduct independent of
defendant’s breach of the parties’ insurance contract. And our Courts’ recognition of a claim for
bad faith refusal to settle appears to apply only in situations where the claimant’s insurer is
defending an action and refuses/neglects to settle on behalf of the claimant. See, e.g.,
Frankenmuth Mut Ins Co v Keeley, 433 Mich 525, 534; 447 NW2d 691(1989), on reh 434 Mich
1206; 462 NW2d 750 (1990), and on reh 436 Mich 372; 461 NW2d 666 (1990); J & J Farmer
Leasing, Inc 472 Mich 353. Despite being a doubtful position, for purposes of this appeal only
we will assume there exists the potential that an action could lie for bad faith in failing or


                                                -5-
refusing to settle a claim brought against the insurer by its insured. Plaintiffs have claimed that
defendant acted in bad faith in refusing to accept their counter-offer of settlement.

        The trial court in this matter noted that defendant made an offer of judgment to plaintiffs
for $60,000.00. According to the trial court, defendant’s insurance adjuster testified that
defendant initially, when it made the offer, thought that plaintiffs had injuries that should be
compensated. However, it later received medical records indicating that plaintiff Debra
Andreson’s injuries were or could have been pre-existing conditions. The trial court found that
the issue of injuries and whether they were pre-existing was one of the main issues before the
jury, so that defendant’s position was not unreasonable. The trial court also noted that the matter
went to case evaluation at which three independent individuals recommended a value of $60,000
for plaintiffs’ case. We agree that, where a dispute exists as to the nature and extent of a
plaintiff’s injuries, particularly when based on medical records, a refusal to accept an offer of
settlement rather than proceed to jury trial does not constitute bad faith.

        As indicated by plaintiffs, in Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich
127, 136–37; 393 NW2d 161 (1986), our Supreme Court set forth twelve specific factors that
may be considered when determining whether liability exists for bad faith. However, that case
addressed an instance in which an excess insurer brought an action against a primary insurer for
failing to settle a claim against the insured in good faith. Thus, its relevance to the instant matter
is questionable. Moreover, there is no question of material fact that plaintiffs did not allege, let
alone prove, any of the enumerated twelve factors.

         Plaintiffs claim that defendant acted in bad faith by misleading them with respect to the
collectability of the underlying tortfeaser, the driver of the other vehicle. However, plaintiffs
were represented by counsel in their underlying lawsuit against that driver. There has been no
claim or assertion that plaintiffs spoke to or interacted with defendant after they retained counsel
in the underlying lawsuit. In fact, plaintiff Debra Andreson testified that, after retaining counsel
in November 2013, she never had any personal contact with defendant, other than to cancel her
insurance with them. Debra testified that she had no idea whether her attorneys in the underlying
matter investigated the other driver’s assets before finalizing the settlement with her in May
2015, and that prior to the settlement, she did not contact defendant and ask about any assets.
Plaintiff Debra Andreson affirmatively testified that no one from defendant made any
representations to her regarding the other driver’s assets. Similarly, plaintiff David Andreson
testified that he had no contact with defendant at all after the October 2013 accident; instead, all
communication with defendant was though the attorney they retained in November 2013 to sue
the other driver. That being the case, there is no material question of fact that defendant did not
mislead plaintiffs on the claime, or any other issue.

        Plaintiffs’ assertion that defendant’s failure/refusal to pay underinsured motorist benefits
until 2 ½ years after the jury verdict in plaintiffs’ favor and their violation of the UTPA
evidences a bad faith breach of contract also fails. First, the UTPA self-contains penalties for the
failure to timely pay benefits. Plaintiffs were awarded those penalties. Plaintiffs’ claim that the
UTPA or the payment of penalties thereunder somehow provides an independent action for bad
faith breach of contract for which damages are available would result, in essence, in a double
penalty for the same conduct. Plaintiffs have provided no support for their allegation that this
was an intended result by our Legislature, or that it would be a just and equitable result.

                                                 -6-
        Second, the jury verdict in this case was reduced to a judgment in plaintiffs favor
(including sanctions) on December 14, 2016. Defendant appealed to this Court, and on
November 21, 2017, this Court issued its opinion reducing the jury verdict. Andreson, 322 Mich
App 76. Thereafter, on March 22, 2018, the trial court entered an amended judgment to reflect
this Court’s decision. It appears that defendant paid this amended judgment a short time after it
was entered.1 Defendant thus did not delay in paying the judgment amount and plaintiffs have
provided no evidence that they did so. Plaintiffs have thus presented no evidence that defendant
acted in bad faith.

       Affirmed. Costs are taxable against plaintiffs pursuant to MCR 7.219.



                                                           /s/ Stephen L. Borrello
                                                           /s/ Kirsten Frank Kelly
                                                           /s/ Deborah A. Servitto




1
 Plaintiffs state that no payment was made until five months after this Court’s November 2017
decision, indicating that payment was, in fact, made some time around April 2018.


                                               -7-
