Summary
In Morgan, supra at 173, MCL 600.6013; MSA 27A.6013 may have governed the award of prejudgment interest if the Court had not dismissed the complaint.
Summary of this case from Old Orchard v. Hamilton Ins. Co.Opinion
Docket No. 73623.
Decided March 19, 1985. Leave to appeal denied, 422 Mich. 969.
Sommers, Schwartz, Silver Schwartz (by Norman D. Tucker), for plaintiff.
Moll, Desenberg, Bayer Behrendt (by Jon P. Desenberg and Thomas G. Van Belkum), for defendant.
Plaintiff, Eugene Morgan, M.D., filed a complaint in Wayne County Circuit Court on July 10, 1978, alleging medical malpractice against defendant, Richard S. Kamil, M.D., as a result of hip surgery performed in November, 1977. On November 3, 1977, prior to performance of the medical services in question, plaintiff signed a medical malpractice arbitration agreement. On or about November 26, 1979, plaintiff demanded arbitration pursuant to that agreement.
Thereafter, defendant moved for accelerated judgment on the basis that the matter should be resolved through arbitration, not in circuit court. On January 8, 1982, the circuit court entered an order compelling arbitration. Arbitration hearings were conducted and in April, 1983, the panel awarded plaintiff $200,000.
On May 10, 1983, plaintiff moved under GCR 1963, 769 to confirm the arbitration award and for entry of judgment thereon. Plaintiff requested interest on the judgment, together with costs and attorney fees. Defendant opposed the motion, contending that interest on the judgment was not authorized. Hearings were held on the motion in May and June, 1983.
On August 12, 1983, the circuit court, in a written opinion, found that plaintiff was entitled to interest on the judgment under MCL 600.6013; MSA 27A.6013. On August 30, 1983, a judgment was entered which awarded plaintiff the $200,000 together with statutory interest and costs. Interest was computed at 6% simple interest from July 10, 1978, (the date the complaint was filed) through June 1, 1980, and 12% interest compounded annually from June 1, 1980, until the date the judgment was satisfied. The 12% compounded interest was applied to both the judgment principal and to the interest which had accrued prior to June 1, 1980.
The question presented is whether a party to a medical malpractice agreement who files a complaint in circuit court for a medical malpractice action is entitled to prejudgment interest under MCL 600.6013; MSA 27A.6013 on the judgment entered on an arbitration award even though the complaint was dismissed because the trial court ordered the parties to proceed with arbitration.
We hold today that the trial court erred in awarding plaintiff prejudgment interest on the medical malpractice arbitration award. MCL 600.6013; MSA 27A.6013 allows interest only on money judgments recovered in civil actions; it does not authorize interest on an arbitration award and the judgments entered confirming the award. The Legislature intended MCL 600.6013; MSA 27A.6013 to apply only to judgments obtained in civil actions, through court proceedings, not arbitration.
MCL 600.6013; MSA 27A.6013 provides in pertinent part: "Interest shall be allowed on a money judgment recovered in a civil action, as provided in this section." Under this statute, prejudgment interest is computed from the date the complaint is filed. "Statutory interest on a judgment, as contrasted with interest as an element of damages, is procedural rather than substantive." Henley v Dep't of State Highways, 128 Mich. App. 214, 222; 340 N.W.2d 72 (1983).
Pursuant to GCR 1963, 101, a civil action is commenced by filing a complaint with the court. See also MCL 600.1901; MSA 27A.1901. "An arbitration agreement is a contract whereby all the parties thereto agree to forego their rights to proceed with a court action and, instead, to submit their disputes to a panel of arbiters." Horn v Cooke, 118 Mich. App. 740, 744; 325 N.W.2d 558 (1982). In the instant case, the plaintiff signed an arbitration agreement whereby he agreed to submit any claims he might have arising from the medical treatment he received from the defendant to an arbitration panel for a decision. "Arbitration was the essential and singular nature of the agreement." Morris v Metriyakool, 418 Mich. 423, 441; 344 N.W.2d 736 (1984) (Opinion of KAVANAGH, J.).
In Bowes v International Pharmakon Laboratories, Inc, 111 Mich. App. 410; 314 N.W.2d 642 (1981), this Court determined that a medical malpractice arbitration agreement divests the trial court of jurisdiction over a malpractice action. Under both the uniform arbitration act and the medical malpractice arbitration act, MCL 600.5001— 600.5035; MSA 27A.5001-27A.5035; MCL 600.5040 et seq.; MSA 27A.5040 et seq., "a valid, binding arbitration agreement places subject matter jurisdiction in a panel of * * * arbitrators. * * * The circuit court's function is then no longer original but in the nature of an appellate court with supervisory powers." Id., 414.
In several first-party actions against defendant insurers, where disputed claims arose under uninsured motorist coverage provisions in insurance policy contracts issued by the defendants to the plaintiffs, arbitration was the procedure for settling the disputes between the plaintiff insureds and the defendant insurers. See Moultrie v Detroit Automobile Inter-Ins Exchange, 123 Mich. App. 403; 333 N.W.2d 298 (1983); Babayan v Detroit Automobile Inter-Ins Exchange, 121 Mich. App. 515; 328 N.W.2d 429 (1982); Reinshuttle v Aetna Life Casualty Ins Co, Inc, 72 Mich. App. 74; 248 N.W.2d 671 (1976); and Osinski v Detroit Automobile Inter-Ins Exchange, 69 Mich. App. 426; 245 N.W.2d 76 (1976).
The panels of this Court deciding these cases have all held that interest on the arbitration award is based on MCL 438.7; MSA 19.4, not on MCL 600.6013; MSA 27A.6013.
As explained by the Moultrie Court:
"In Osinski v Detroit Automobile Inter-Ins Exchange, 69 Mich. App. 426, 428; 245 N.W.2d 76 (1976), this Court reversed an award of interest on an arbitration award, pursuant to MCL 600.6013; MSA 27A.6013, from the date of filing the arbitration award, noting:
"`By its express terms § 6013 applies only to a money judgment recovered in a "civil action" and permits interest to accrue from the date of filing the complaint. A civil action is commenced only "by filing a complaint with the Court". GCR 1963, 101; MCL 600.1901; MSA 27A.1901. In the instant case the arbitration proceedings were instituted by a filing of a claim for arbitration with the insurance company — not a complaint with the court. The pre-circuit court proceedings simply were not the equivalent of civil action, and therefore § 6013 does not authorize the payment or receipt of interest on an arbitration award entered prior to the filing of a complaint with the circuit court.'
"The Court went on to hold that, based on MCL 438.7; MSA 19.4 and MCL 438.31; MSA 19.15(1), the proper interest on the arbitration award was five percent from the date the award was made and not from the date of filing the demand for arbitration. Osinski, supra, pp 428-430. Accord Reinshuttle v Aetna Life Casualty Ins Co, Inc, 72 Mich. App. 74; 248 N.W.2d 671 (1976); Babayan v Detroit Automobile Inter-Ins Exchange, 121 Mich. App. 515; 328 N.W.2d 419 (1982). We are in accord with those decisions and, therefore, we hold that plaintiffs were entitled to interest on the arbitration award at the rate of five percent per annum from February 6, 1981, the date of the arbitration award." 123 Mich. App. 406-407.
We find the reasoning in Osinski, supra, and its progeny persuasive and applicable to the instant case.
Plaintiff relies on Waldrop v Rodery, 34 Mich. App. 1; 190 N.W.2d 691 (1971). This reliance, however, is misplaced because the facts in Waldrop are distinguishable. Here, the plaintiff agreed to arbitrate and so signed an agreement prior to initiating a lawsuit in court.
Plaintiff's argument that interest was properly awarded here because he, in fact, commenced a civil action in circuit court by filing a complaint is unavailing. Since plaintiff was a party to the arbitration agreement, the circuit court lacked subject matter jurisdiction over the lawsuit. The civil action was properly dismissed when accelerated judgment was granted to defendant and the parties were ordered to proceed with arbitration. See Bowes, supra.
We reverse the trial court's award of interest under MCL 600.6013; MSA 27A.6013. Under Osinski, supra, the plaintiff is entitled to interest pursuant to MCL 438.7; MSA 19.4, which provides for interest on arbitration awards in actions founded on contracts:
"In all actions founded on contracts express or implied, whenever in the execution thereof any amount in money shall be liquidated or ascertained in favor of either party, by verdict, report of referees, award of arbitrators, or by assessment made by the clerk of the court or by any other mode of assessment according to law, it shall be lawful, unless such verdict, report, award, or assessment shall be set aside, to allow and receive interest upon such amount so ascertained or liquidated, until payment thereof, or until judgment shall be thereupon rendered; and in making up and recording such judgment, the interest on such amount shall be added thereto, and included in the judgment."
Therefore, we remand to the trial court for a determination of interest on the arbitration award under MCL 438.7; MSA 19.4. We also direct the court to MCL 438.31; MSA 19.15(1) — the rate of interest is 5%.
Reversed and remanded. We retain no further jurisdiction.