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Lawyer’s Corner: Attorney Fees & Interest in Nickola v MIC General Insurance Co

A recent Michigan Court of Appeals decision warns plaintiffs’ attorneys about attorney fees and interest. Failure to provide documentation could leave your client, and you, out of a lot of money.

In a published case that started in 2004, the Michigan Court of Appeals recently emphasized the importance of filing required documents with the court in order to collect attorney fees and interest for your client.

George and Thelma Nickola were in a serious auto accident in 2004. They settled their Third-Party claims for policy limits, then filed a claim under their own underinsured motorist (UIM) benefits for the difference.

According to the Nickolas’ policy, either party could demand arbitration. However, when they did, the insurance provider refused. As a result, the Nickolas filed suit on March 1, 2005, eventually asking for attorney fees for a “frivolous defense.” The court sent the case to arbitration and ordered the Plaintiffs’ attorney to provide a list of costs, expenses, and attorney fees up until that point.

When a third arbitrator could not be agreed on, neither side brought the issue back to court for over six years. Eventually the plaintiffs’ estate got an arbitration award for both plaintiffs. Then it sought a judgment and a ruling on the attorney fees and interest.

Attorney Fees

Somehow, in the nearly 8 years the case was pending, Plaintiffs’ attorney never submitted an accounting to the court. The court ruled:

“Plaintiff’s failure to comply with that order, despite having years to do so, is tantamount to waiver of this issue.”

That ruling was a warning shot to auto accident lawyers: file your accounting of attorney fees and costs or you could lose your clients’ right to collect them.

The court also ruled that the plaintiffs would not have been entitled to attorneys fees for defendant’s wrongful refusal of arbitration before the complaint was filed. MCR 2.114(A) applies to “all pleadings, motions, affidavits, or other papers provided for by” the court rules, not to pre-suit negotiations, including the auto insurance claim process.

Interest

The court also struck down the plaintiffs’ claim for interest under the UTPA. Finding UIM claims more similar to Third Party claims than First Party claims, the court ruled that interest would not apply while the matter was in “reasonable dispute.”

The Court of Appeals remanded the case so the trial court could enter a judgment on the arbitration award and allowed plaintiffs’ counsel to seek prejudgment interest at that time, but it noted the six year delay could pose a challenge to the interest award.

This case serves as a warning to plaintiffs’ attorneys not to drop the ball on court-ordered documentation. By failing to file an accounting, Plaintiffs’ counsel waived any claim they had to attorney fees, costing his client thousands of dollars.

David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He has over 20 years experience representing accident victims against the auto industry. If your client has been in a serious auto accident, contact Christensen Law for a referral today.