Michigan doesn’t permit an motion by a policyholder in opposition to a wrongful performing insurer’s failure to behave in good religion. This has lengthy been the legislation in Michigan, as famous within the fireplace injury case of Casey v Auto-Owners Insurance Company.1
The Casey court docket acknowledged:
We conclude that modification was futile as a result of the Caseys merely sought so as to add a wide range of theories that had no factual or authorized foundation, and that had primarily already been dismissed by the trial court docket. A plaintiff can’t keep an motion in tort for nonperformance of a contract. There should be a separate and distinct responsibility imposed by legislation. An alleged bad-faith breach of an insurance coverage contract doesn’t state an unbiased tort declare. Here, all of the Caseys’ proposed claims stem from an alleged bad-faith breach of contract; due to this fact, these counts are futile as they fail to state an motion unbiased from their breach of contract declare. Further, in breach of contract instances, the overall rule is that exemplary damages aren’t recoverable absent allegation and proof of tortious conduct that’s ‘independent of the breach.’ This is as a result of ‘the plaintiff is adequately compensated’ for a breach of contract ‘when damages are awarded by reference only to the terms of the contract.’ The Caseys’ criticism doesn’t state a tort declare unbiased from their breach of contract declare. Thus, they aren’t entitled to exemplary damages.
The title of an article within the Michigan Bar Journal, Michigan Recognizes Claims For Bad-Faith Insurance Practices But The Burden is High and There Are Many Limitations,2 appears to suggest that Michigan acknowledges first-party dangerous religion instances. It doesn’t. Michigan legislation acknowledges that some distant tort treatments could also be introduced, however even these are tough to show. The article appropriately famous that:
[T]he legislature enacted the Uniform Trade Practices Act, which defines, prohibits, and penalizes insurance coverage firm conduct that quantities to dangerous religion. And though insureds might get well penalty curiosity beneath the act, the Michigan Court of Appeals discovered it didn’t create a separate non-public explanation for motion in opposition to insurers.
The article additionally identified a follow pointer when coping with a bad-acting insurer in Michigan:
Other methods make use of bad-faith conduct with out bringing an unbiased declare. Take, for instance, Isagholian v Transamerica Insurance Company which concerned a plaintiff who sued his owners insurance coverage firm for breach of contract and a separate declare for ‘bad-faith dealings.’ The declare for bad-faith dealings was not actionable, however the Court permitted the jury to listen to proof of the insurer’s conduct, stating ‘[t]he good faith of both parties was integral to this action.’ Although the insured didn’t increase the damages out there to him, he strengthened the declare that went to the jury.
The backside line is that Michigan doesn’t acknowledge a basic dangerous religion motion involving a first-party insurance coverage contract. It additionally doesn’t permit for the restoration of attorneys charges by the prevailing policyholder.
Thought For The Day
A lady wants to mix niceness with insistence, a method that Mary Sue Coleman, president of the University of Michigan, calls relentlessly nice.
—Sheryl Sandberg