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e-Journal Summary
Opinion Date: 02/14/2013
e-Journal Date: 03/07/2013
Full Text Opinion

Practice Area(s):   Insurance

Issues: Insurance coverage dispute; "Duty to defend"; Radenbaugh v. Farm Bureau Gen. Ins. Co. of MI; "Law of the case" doctrine; Ashker v. Ford Motor Co.; Kidder v. Ptacin; Grievance Adm'r v. Lopatin; Damages for defense preparation time of defendant-MDCK's employees and its principals; Whether these expenses were subject to the $250 daily limit under the policy; Capitol Reproduction, Inc. v. Hartford Ins. Co. (6th Cir.); Stryker Corp. v. XL Ins. Am. (6th Cir.); Admissibility of a summary of the principals' time spent assisting the defense of the underlying arbitration proceeding; "Hearsay"; The "business records" exception (MRE 803(6)); Lopez v. General Motors Corp.; Jury instructions; MI Civ JI 142.31; $150 policy rate cap for attorney fees; Whether the cap was unenforceable because of a "conflict of interest"; Atlanta Int'l Ins. Co. v. Bell; Northern Ins. Co. v. Allied Mut. Ins. Co. (9th Cir.); Aetna Cas. & Sur. Co. v. Dow Chem. Co. (ED MI); "Duress" claim; Farm Credit Servs. of MI's Heartland, PCA v. Weldon; Motion in limine as to "lost profits" damages claim; Applicability of Allstate Ins. Co. v. Freeman; Distinguishing Lawrence v. Will Darrah & Assocs., Inc. and Wendt v. Auto Owners Ins. Co.; Penalty interest pursuant to the Unfair Trade Practices Act (UTPA); MCL 500.2006; Auto-Owners Ins. Co. v. Ferwerda Enters., Inc.; Isagholian v. Transamerica Ins. Corp.; Angott v. Chubb Group Ins.; Yaldo v. North Pointe Ins. Co.; Society of St. Vincent De Paul in Archdiocese of Detroit v. Mt. Hawsley Ins. Co. (ED MI); Pre-judgment interest; MCL 600.6013(7); Amerisure Ins. Co. v. Graff Chevrolet, Inc.
Court: Michigan Court of Appeals (Unpublished)
Case Name: Hastings Mut. Ins. Co. v. Mosher Dolan Cataldo & Kelly, Inc.
e-Journal Number: 53943
Judge(s): Per Curiam – K.F. Kelly and M.J. Kelly; Not participating – Saad

The court held, inter alia, that the defendant-insured (MDCK) was entitled to damages for the employee time spent preparing for the defense of the underlying arbitration case, but that those expenses were subject to the $250 daily limit under the policy. The court also ruled that the trial court erred in allowing the jury to award damages to MDCK on the theory that its partners testified as experts and were entitled to compensation as expert witnesses. Further, the trial court erred in denying MDCK penalty interest under MCL 500.2006. Thus, the court affirmed in part and reversed in part the judgment awarding MDCK $746,048.72, plus pre-judgment and post-judgment interest, on its counterclaim against the plaintiff-insurer (Hastings) for breach of contract. The court remanded for recalculation of MDCK's damages in accordance with the $250 daily limitation and for an award of 12% penalty interest under the UTPA. This insurance coverage dispute arose from MDCK's construction of a custom-built home for the plaintiffs in the underlying case. The court concluded that in a prior appeal in this case, it implicitly held that the duty to defend extended to the occurrence-based claims in the underlying case because they did not fall within the policy exclusions. Thus, the trial court properly denied Hastings's motions for summary disposition, a directed verdict, and JNOV on this basis. Hastings also argued, inter alia, that the trial court erred in allowing MDCK to recover damages of over $300 an hour for each partner and lesser amounts for other MDCK employees for the time they spent preparing the arbitration defense. The court noted that at least "some of the employees hours spent in defense preparation were utilized at Hastings's request to assist in the investigation or defense of the arbitration proceeding." The policy "clearly and unambiguously provides that it will pay for 'expenses incurred by the insured . . . to assist in the investigation or defense.'" While MDCK relied on Capitol Reproduction to argue that Hastings could not enforce the policy limits, the court concluded that case did not support MDCK's position as to the $250 daily limit. Further, the Sixth Circuit recently noted, in Stryker, that Capitol Reproduction is no longer an accurate statement of Michigan law. The court also found no support in the policy or in the case law for MDCK's claim that Hastings was liable to compensate its partners on the same terms as independently retained experts. As to penalty interest under the UTPA, the court noted that "Hastings ceased paying MDCK's claimed benefits in 2004 and continued to withhold benefits throughout these protracted proceedings. The statute clearly provides for penalty interest in this context, and Hastings's arguments to the contrary are unavailing."

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