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Court recognizes company's right to recover sanctions from insurer

The Supreme Court overturned a Court of Appeals decision this week in Acorn Investment Company v. Michigan Basic Property Insurance Association, and approved the award of sanctions against the insurer.  The insurer had rejected a fire loss case evaluation of $11,000.00, and then lost an appraisal fight that resulted in a bench trial and judgment of $20,000.00.

The Court of Appeals had held that even though Michigan Basic rejected and did not improve upon the case evaluation, it did not meet the definition of persons obligated to pay actual costs:  under a strict reading of the Court Rule, the Supreme Court unanimously disagreed. Sometimes the decisions of arch insurer-ally Kirsten Frank Kelly go too far even for our Supreme Court.  The high court rejected the reasoning of the Court of Appeals, finding that it improperly relied on cases interpreting a prior court rule and were "merely inapposite."  In the long run, the final outcome of the case makes it more likely that a losing party will be hit with sanctions for rejecting a third-party evaluation.

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