Casetech Specialties, Inc. et al v. Selective Insurance Company of the Southeast

Filing 25

OPINION and ORDER Granting Plaintiffs' MOTION for Partial Summary Judgment 10 . Signed by District Judge Nancy G. Edmunds. (JCur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

CASETECH SPECIALTIES, INC., ET AL.,
Case No. 13-11792
Plaintiffs,
Honorable Nancy G. Edmunds
v.
SELECTIVE INSURANCE CO.,
Defendant.
/

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL
SUMMARY JUDGMENT [10]

This insurance dispute is before the Court on Plaintiffs’ motion for partial summary
judgment asking the Court to interpret provisions of its commercial property insurance
policy with Defendant Selective Insurance Company of the Southeast (“Defendant Insurer”)
and declare that the policy's optional coverage language, "Replacement Cost (without
deduction for depreciation)," means replacement of damaged equipment with new
equipment. Defendant Insurer disagrees with this interpretation, arguing instead that this
language only requires it to reimburse Plaintiff Insured for the cost of replacing its old,

damaged equipment with used equipment of comparable material and quality.1 For the
reasons stated below, Plaintiffs’ motion is GRANTED.
I.

Facts
Plaintiff Casetech Specialties, Inc. (“Casetech” or "Plaintiff Insured") is owned and

operated by Plaintiff Anthony Armeni. Casetech is a small business that manufactures and
installs custom cabinetry. (Compl., ¶¶ 5, 6, 14, and 15.)
On June 7, 2012, an electrical surge at the building leased by Casetech destroyed
several large pieces of industrial equipment used in the fabrication of custom cabinetry,
including an 8,500 lb Biesse Rover 18 CNC Machining Center (the “Router”), an 8,500 lb
Holzer CA80 Panel Saw (the “Panel Saw”), and the table sensor on a Gannamat SRT
Express. (Compl., ¶ 20.) Casetech’s owner, Mr. Armeni, notified his insurance agent, and
she referred him to Julie Ross, the local representative for Defendant Insurer. (Def.’s
Resp., Ex. 1, Armeni Dep. at 50.) Julie Ross told Mr. Armeni that she would send out an
adjuster, Dennis Dobransky, and also suggested that Mr. Armeni call the Router
manufacturer, Biesse, and get estimates for a comparable Router. She also suggested
that he do the same for the Panel Saw. Plaintiff Armani did as suggested. (Id.)

1

At the hearing, held on December 19, 2013, the parties clarified that Plaintiffs' motion
addresses only this one policy-interpretation issue. Thus, as Defendant conceded, there
is no need for the Court to address its additional arguments that (1) Plaintiff Insured is not
entitled to any reimbursement for "Replacement Cost" of the damaged equipment until the
damaged property is actually replaced, and unless the replacement is made as soon as
reasonably possible after the damage; (2) because Plaintiff Insured has not satisfied this
condition precedent of the insurance policy, Defendant Insurer is not obligated to make any
reimbursement under the "Replacement Cost" Optional Coverage provision; and (3) even
if Defendant Insurer is required under the policy to pay for new equipment to replace the
old damaged equipment, the Coinsurance Penalty Provisions in the policy substantially
reduce the amount, if any, owed Plaintiff Insured.
2

On June 20, 2012, Plaintiffs learned that the models of the damaged Router and
Panel Saw were discontinued. Plaintiff Armeni testified that he was told to get quotes for
new replacements that were comparable to the damaged Router and Panel Saw, and he
did so. (Id. at 50-52.) The Router manufacturer, Biesse, informed Plaintiff Armeni that
“[t]he closest replacement model” for the destroyed Router “would be a Rover AS 1332,”
an “entry level machine capable of ‘pendulum processing’ meaning, the machine has
multiple zones like your current [Router]. . . .” (Pls.’ Mot., Ex. C, 6/20/12 ltr.) Its price was
$109,700, and included installation, training, and a one-year factory warranty. (Id.)
Another replacement Router similar to the Biesse Router was identified as the Weeke CNC
Machining Center, Model Venture 106E; and its price was $124,900, including delivery and
installation. (Compl., ¶ 22.) The most comparable Panel Saw was a Holzma Optimat HPP
250R, which was available for $77,500. (Id.)
The anticipated replacement cost for new Router and Panel Saw was $185,200; less
than Plaintiffs’ policy limit of $364,000. (Pls.’ Mot., Ex. B, Coverage Schedule.)
Defendant Insurer had an adjuster, Dennis Dobransky, come out to Casetech to
examine the damaged equipment. Mr. Dobranksy called in another professional, Pat
Campion, who thought the equipment might be repairable. (Id. at 52.) Mr. Campion told
Plaintiff Armeni that the best they could do at that point was to try and get Casetech's
business up and running as quickly as possible and suggested that Plaintiff get some used
equipment in the meantime. That is what Plaintiff Armeni did, finding a used Morbidelli
Router that was immediately available. (Id. at 52-55.) Before he could make arrangements
to purchase that used Router or locate a used Panel Saw, however, Mr. Dobransky notified

3

Plaintiff Insured that its claim might not be covered and that actual physical damage to the
Router and Panel Saw would have to be verified to obtain coverage under its policy.
After getting nowhere on that issue with either Mr. Campion or Mr. Dobransky, Plaintiff
Armeni hired an adjuster, Howard Mishne, who had coverage discussions with Mr.
Dobransky. Although Mr. Mishne told Plaintiff that Casetech's policy had Replacement
Cost Coverage that entitled it to new equipment to replace the old, damaged equipment,
Plaintiff Armeni continued to look for a used Router and Panel Saw because it took weeks
for new equipment to arrive and be set up and he wanted to get the business up and
running as soon as possible. (Id. at 54-60.)
In his affidavit, Mr. Dobransky avers the following. After being informed by Plaintiffs
of the damaged equipment, Defendant Insurer notified HSB, its equipment reinsurer. Mr.
Dobransky was the HSB claims adjuster assigned to Plaintiff Insured’s claim. (Def.’s
Resp., Ex. 4, Dobransky Aff., ¶¶ 1-2.) Mr. Dobransky told Plaintiff Armeni that direct
physical damage to the Panel Saw and Router was required to trigger coverage under
Casetech's insurance policy. To verify direct physical damage, HSB hired an equipment
consultant to inspect the Router and Panel Saw. (Id. at ¶¶ 3-4.)
On July 11, 2012, while Defendant Insurer was evaluating whether there was “direct
physical damage” to the Router and Panel Saw, Plaintiff Armeni advised Defendant that
he had located a used Morbidelli CNC Machining Center, point-to-point router, for $32,500
that could be installed for $3,975 and a used panel saw for $35,000; for a total of $71,475.
(Def.’s Resp., Ex. 5, faxed 6/26/12 invoice and faxed 7/10/12 proposal; Ex. 6, faxed page
from website; Ex. 4, Dobransky Aff., ¶ 5.)

4

On July 19, 2012, Plaintiff Insured hired Globe Midwest/Adjusters International,
Professional Loss Consultants, to represent it in its insurance claim for the June 7, 2012
loss, and notified Defendant Insurer of that fact. Globe Midwest assigned Howard Mishne
to handle Plaintiff Insured's insurance claim. (Def.’s Resp., Ex. 4, Dobransky Aff., ¶ 6.)
On July 20, 2012, Defendant Insurer verified direct physical damage to Plaintiff
Insured's Router. (Id. at ¶ 7.)
On August 1, 2012, Defendant Insurer verified direct physical damage to Plaintiff
Insured's Panel Saw. (Id. at ¶ 7.)
On August 1, 2012, Howard Mishne emailed Dennis Dobransky with quotes for
replacements of the Router ($50,756.96) and Panel Saw ($47,600.00) with used
equipment, and requested that Dobransky contact him to discuss settlement of this portion
of Plaintiff Insured's claim. (Id. at ¶ 8; Def.’s Resp., Ex. 8, 8/01/12 email.)
Subsequently, Plaintiff Insured requested authorization to purchase the used Router
and Panel Saw, but Defendant Insured raised the issue of a Coinsurance Penalty Provision
being potentially applicable to Plaintiff Insured's loss. Plaintiff Insured's agent, Mr. Mishne,
responded that if used equipment is purchased, then the Coinsurance Penalty must be
calculated using used equipment valuations thus avoiding any Coinsurance Penalty.
Defendant Insurer and HSB agreed to pay Plaintiff Insured in advance so it could purchase
the used equipment. A $90,000 payment was issued toward the purchase of the used
Router and Panel Saw, but “[t]he full replacement cost was not paid because replacement
cost is not payable under the policy unless and until the equipment is actually replaced.”
(Def.’s Resp., Ex. 4, Dobransky Aff., ¶¶ 9-10 (emphasis added).)

5

Dobransky avers that Defendant Insurer had “accepted liability for the cost to replace
both machines with used machines of like kind and quality” and received quotes from Mr.
Mishne for replacements for about $101,000 installed. (Pls.’ Mot., Ex. F, 9/11/12 email
from Dobransky to Mishne (emphasis added).)
On August 7, 2012, HSB authorized Defendant Insurer “to issue a partial payment for
the machines for $90,000.” (Id.)
On August 14, 2012, Defendant Insurer emailed HSB notifying it that “the check was
being mailed from New Jersey.” (Id.)
On August 14, 2012, Mr. Mishne emailed Mr. Dobransky notifying him that:
.

Plaintiff Insured disagreed with Defendant Insurer's policy interpretation
construing "Replacement Cost" as meaning only used replacement
equipment;

.

Plaintiff Insured's position was that "Replacement Cost" means new for
old damaged equipment;

.

Plaintiff Insured was requesting a formal written clarification from
Defendant Insurer confirming its interpretation this policy language;

.

Plaintiff Insured's intent was to obtain new equipment to replace the old,
damaged equipment;

.

Plaintiff Insured sought used equipment as a temporary fix because that
was all Defendant Insurer said it would cover under the policy as a
replacement and this would permit it to re-open for business until it
obtained new replacement equipment;

.

Due to Defendant Insurer's coverage questions and delays caused solely
by the incompetency of Defendant Insurer's agent, Plaintiff Insured lost
opportunities to purchase any available equipment; and when Defendant
Insurer finally agreed to pay something under the policy, there were no
comparable pieces of equipment available even in the used marketplace;
and

.

Plaintiff Insured requested "immediate payment of the replacement cost
for new machines" and expressed its willingness to "provide the names
6

of vendors who [could] be named on the checks to accommodate the
replacement option of the policy."
(Pls.' Reply, Ex. E, 8/14/12 email.)
After Plaintiff Insured's receipt of Defendant Insurer’s $90,000 check, it purchased the
previously-quoted used Panel Saw for about $50,000.00 and rented a replacement Router
for $2,333.33 a month.2 (Def.’s Resp., Ex. 4, Dobransky Aff., ¶¶ 11-14.)
Plaintiff Armeni testified that the $90,000 check was only a partial payment of what
was owed to Plaintiff Insured under its policy. He further testified that it allowed Plaintiff
Insured to do something temporarily to mitigate its losses (it had received a letter from
Defendant Insurer informing it of the obligation to do so) by obtaining a used Panel Saw
and rental Router. (Pls.' Reply, Ex. D, Armeni Dep. at 60-62, 64.)
Plaintiff Insured subsequently learned that the electrical surges that damaged the
Router and Panel Saw were caused by a defect in it's leased business premises, and in
October 2012, relocated from Troy to Fraser, Michigan. (Id. at 64; Compl., ¶¶ 5, 7, 50.)
In November and December 2012, Plaintiff Insured's agent, Mr. Mishne, reiterated its
demand for new replacement equipment and continued to challenge Defendant Insurer's
interpretation of its policy's "Replacement Cost" Optional Coverage provisions. (Compl.,
¶¶ 51-52, 55.)
On March 25, 2013, Plaintiffs filed suit against Defendant Insurer in state court
alleging claims of breach of contract, violation of Michigan's Uniform Trade Practices Act,
breach of fiduciary duty, theft/conversion/embezzlement, and for a declaratory judgment.

2

The rental Router was subsequently damaged by an electrical surge, generating a
second insurance claim.
7

(Compl.)

Defendant subsequently removed the action here on grounds of diversity

jurisdiction.
II.

Summary Judgment Standard
It is well established that summary judgment under Federal Rule of Civil Procedure

56 is proper when the movant "shows that there is no genuine dispute as to any material
fact, and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a);
SEC v. Sierra Brokerage Services, Inc., 712 F.3d 321, 326-27 (6th Cir. 2013) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52 (1986)) (quotations omitted). When
reviewing the record, "the court must view the evidence in the light most favorable to the
non-moving party and draw all reasonable inferences in its favor." Id. Furthermore, the
"substantive law will identify which facts are material, and summary judgment will not lie if
the dispute about a material fact is 'genuine,' that is, if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party." Id.
When considering the material facts on the record, a court must bear in mind that
“[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be
insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.”
Anderson, 477 U.S. at 252.
III.

Analysis
Plaintiffs' motion requires the Court to interpret provisions of Casetech's commercial

property insurance policy. Those provisions are set forth below. The Court begins,

8

however, with the general principles it must follow when construing contract provisions
under Michigan law.3
A. General Principles of Contract Interpretation
The rules of construction for insurance contracts are the same as those for any other
written contract. Comerica Bank v. Lexington Ins. Co., 3 F.3d 939, 942 (6th Cir. 1993).
First, the court must determine whether the contract language at issue is ambiguous or
unambiguous. Second, the court must construe the contract. The question of whether a
contract is ambiguous is a question of law for the court. Steinmetz Elec. Contractors v.
Local Union No. 58, 517 F. Supp. 428, 432 (E.D. Mich. 1981); Mayer v. Auto-Owners Ins.
Co., 338 N.W.2d 407, 409 (Mich. Ct. App. 1983). Construction of the insurance contract
is also a question of law for the court. Petovello v. Murray, 362 N.W.2d 857, 858 (Mich. Ct.
App. 1984); Fragner v. Am. Cmty. Mut. Ins. Co., 502 N.W.2d 350, 352 (Mich. Ct. App.
1993). The function of the court is to determine and give effect to the parties' intent as
discerned from the policy's language, looking at the policy as a whole. Auto-Owners Ins.
Co. v. Churchman, 489 N.W.2d 431, 434 (Mich. 1992). Policy in an insurance contract is
given its ordinary meaning "unless it is apparent from a reading of the whole instrument that
a different or special meaning was intended." Comerica Bank, 3 F.3d at 942. It is improper
for the court to ignore the plain meaning of the policy's language in favor of a technical or
strained construction. Arco Indus. Corp. v. Travelers Ins. Co., 730 F. Supp. 59, 66 (W.D.
Mich. 1989).
B. Policy Language

3

The parties do not dispute that Michigan law applies to their contract dispute.
9

It is not disputed that Plaintiff Insured suffered a covered loss. Likewise, it is
undisputed that, although the basic grant of coverage under its policy is for the Actual Cash
Value of the covered property, Plaintiff Insured purchased Optional Replacement Cost
Coverage. Relevant portions of the Replacement Cost Coverage provisions are as follows:
G. Optional Coverages
*****
3. Replacement Cost
a. Replacement Cost (without deduction for depreciation)
replaces Actual Cash Value in the Loss Condition,
Valuation, of this Coverage Form.
*****
c. You may make a claim for loss or damage covered by this
insurance on an actual cost basis instead of on a
replacement cost basis. In the event you elect to have loss
or damage settled on an actual cash basis, you may still
make a claim for the additional coverage this Optional
Coverage provides if you notify us of your intent to do so
within 180 days after the loss or damage.
d. We will not pay on a replacement cost basis for any loss or
damage:
(1)

Until the lost or damaged property is actually
repaired or replaced; and

(2)

Unless the repairs or replacement are made as
soon as reasonably possible after the loss or
damage.
*****

e. We will not pay more for loss or damage on a replacement
cost basis than the least of (1), (2) or (3) . . . :
(1)

The Limit of Insurance applicable to the lost or
damaged property;
10

(2)

The cost to replace the lost or damaged property
with other property:
(a)

(b)
(3)

Of comparable
quality; and

material

and

Used for the same purpose; or

The amount actually spent that is necessary to
repair or replace the lost or damaged property. .
..

(Pls.' Mot., Ex. B, Policy at 16-17, §§ G.3.c, G.3.d, G.3.e (emphasis added).)
The parties do not dispute that the Limit of Insurance on Plaintiff Insured's policy is
$364,000 and that its Coinsurance Percentage is 90%. (Id. at Declaration Page.)
C. Parties' Arguments
Plaintiff Insured argues that under the section of its policy providing for "Optional
Coverages," the language "Replacement Cost (without deduction for depreciation)," when
read along with other provisions of the policy as well as the payment limitations for that
Optional Coverage (§ G.3.e(1) and (2)), means that Defendant Insurer must pay Plaintiff
Insured the cost it will incur for replacing its old, damaged equipment with new equipment,
as long as the cost does not exceed the policy limit of $364,000 and the new replacement
equipment is of comparable material and quality and used for the same purpose (e.g., a
Chevy for a Chevy, not a Cadillac or a jet for a Chevy). Defendant Insurer disagrees with
this interpretation, arguing instead that this language only requires it to reimburse Plaintiff
Insured for the cost of replacing its old, damaged equipment with used equipment of
comparable material and quality.
D. Interpretation of "Replacement Cost (without deduction for depreciation)"

11

Considering the policy language as a whole, this Court agrees with Plaintiff Insured
that "Replacement Cost (without deduction for depreciation)" means the cost for replacing
new for old. Absent a policy definition to the contrary, the term "depreciation," is given its
plain, ordinary meaning -- a decrease in value because of wear or age. To interpret this
phrase, as Defendant Insurer urges -- to mean the cost for used, depreciated equipment
of comparable material and quality -- would require the Court to ignore the plain language
of the "(without deduction for depreciation)" parenthetical in § G.3.a of the policy. This is
something the Court cannot do under Michigan contract law.
Defendant Insurer further argues that its interpretation of "Replacement Cost (without
deduction for depreciation)" is supported by the absence of the word "new" in § G.3.e(2)
and the absence of the phrase "with new property" in § G.3.e(3). Section G.3.e provides
that:
e. We will not pay more for loss or damage on a replacement
cost basis than the least of (1), (2) or (3) . . . :
(1)

The Limit of Insurance applicable to the lost or
damaged property;

(2)

The cost to replace the lost or damaged property
with other property:
(a)

Of comparable
quality; and

material

and

(b)

Used for the same purpose; or

(3)

The amount actually spent that is necessary to
repair or replace the lost or damaged property. .
..
(Pls.' Mot., Ex. B, Policy at 17, § G.3.e (emphasis added).) Defendant Insurer's argument
ignores the phrase "on a replacement cost basis" in the introductory sentence of this

12

subsection. The Court cannot do the same. Michigan law precludes the Court from
ignoring the plain language included in this insurance contract.
Read as a whole, § G.3.e provides that the insurer is obligated to pay the least of
G.3.e(1), (2), or (3), calculating the loss or damage on a replacement cost basis, which this
Court interprets as "new-for-old basis." Section G.3.e thus limits the insurer's liability to the
lesser of (1) the insured's policy limit, (2) the cost to replace old, damaged property with
new property of comparable material and quality that is used for the same purpose (e.g.,
a Chevy for a Chevy, not a Cadillac for a Chevy, or a jet for a Chevy), or (3) the amount
actually spent that is necessary to replace the damaged property (and not any excess
amounts expended).

Plaintiff Insured presents evidence that the Replacement Cost

language in its policy is standard for this type of optional coverage in a commercial property
policy and is well-understood in the insurance industry to mean that the insurer is obligated
to indemnify the insured with new property, subject to various conditions. (Pls.' Reply, Ex.
A, Gross Aff., ¶¶ 4-5; Pls.' Mot, Exs. D & E, insurance industry bulletin providing
interpretation of "Replacement Cost" as meaning "new for old.")4

4

As evidenced by these exhibits, The National Underwriters Company publishes legal
interpretations of insurance policy language through its Fire, Casualty and Surety ("FC&S")
Bulletins. One Bulletin specifically addresses the meaning of "Replacement Cost"
insurance. An insurer wrote to FC&S requesting an interpretation of a replacement cost
endorsement included in the insured's standard ISO insurance policy. (Pls.' Mot., Ex. E.)
Lightning destroyed the insured's computerized phone system -- it could not be repaired
and had to be replaced. The insurer located a used, reconditioned phone system of the
same make and model as the destroyed phone system and offered to purchase and install
it. The insurer believed that this would meet the insured's commercial insurance policy
because it gave the insurance company the option to "pay the cost of repairing or replacing
the lost or damaged property." The insured disagreed and felt it was entitled to a new
phone system under its replacement cost endorsement. The National Underwriters
Company agreed with the insured's interpretation:
13

To read Plaintiff Insured's policy as Defendant Insurer urges -- allowing it to indemnify
Plaintiff Insured for the cost of replacing damaged property with used property of like kind
and quality -- would nullify the Optional Replacement Cost Coverage entirely.

Under

Defendant's interpretation, Section G.3.e(2), which is part of the Replacement Cost
Optional Coverage and indemnifies on a Replacement Cost basis, would mean the same
thing as Sections E.4.a(2) and E.4.a(4), which are part of the main body of the insurance
policy and indemnify on an Actual Cash Value basis (see § E.7.a). A comparison of the
language of G.3.e(2) above with that of E.4.a(2) and (4) below illustrates this point.
E. Loss Conditions
The following conditions apply in addition to the Common Policy
Conditions and the Commercial Property Conditions.
*****
4. Loss Payment
a. In the event of loss or damage covered by this Coverage
Form, at our option, we will either:
(1)

Pay the value of lost or damaged property;

(2)

Pay the cost of repairing or replacing the lost or
damaged property, . . . ;

(3)

Take all or any part of the property at an agreed
or appraised value; or

The policy states that the value of the covered property (the phone system)
will be determined "at replacement cost (without deduction for depreciation)."
A reconditioned phone system is still a used phone system, and, as such, is
depreciated. The policy promises the insured that losses to covered property
will be adjusted on a replacement cost basis. Note that replacement cost
means "new for old." The insured is entitled to a new phone system.
(Pls.' Mot., Ex. E (emphasis added).)
14

(4)

Repair, rebuild or replace the property with other
property of like kind and quality, . . . .

We will determine the value of lost or damaged property, or the cost of its repair
or replacement, in accordance with the applicable terms of the Valuation
Condition in this Coverage Form or any applicable provision which amends or
supersedes the Valuation Condition.
(Id. at § E.4.a (emphasis added).)
Under its interpretation, Defendant Insurer is allowed to replace damaged property
with used property of like kind and quality under § E.4.a(4) on an Actual Cash Value basis
and is also allowed to the same thing under § G.3.e(2). Applying Michigan contract law, this
Court rejects Defendant's interpretation of § G.3.e(2) because it nullifies the Optional
"Replacement Cost" Coverage provided in that section, and ignores the "replacement cost
basis" language provided in § G.3.e.

Moreover, as expressly stated in § G.3.a,

"Replacement Cost (without deduction for depreciation) replaces Actual Cash Value in the
Loss Condition, Valuation, [§ E.7.a] of this Coverage Form." (Id. at § G.3.a (emphasis
added).)
Furthermore, Section E.7.a provides that the insurer "will determine the value of
Covered Property in the event of loss or damage" to be calculated "[a]t actual cash value
as of the time of loss or damage. . . ." (Id. at § E.7.a.) In contrast, under the Replacement
Cost Optional Coverage, § G.3.c, the policy provides that the insured (rather than the
insurer) is given the option of electing whether a claim will be valued on an actual cash
value basis, replacement cost basis, or both:
c. You may make a claim for loss or damage covered by this insurance
on an actual cash value basis instead of on a replacement cost basis. In
the event you elect to have loss or damage settled on an actual cash
value basis, you may still make a claim for the additional coverage this

15

Optional Coverage provides if you notify us of your intent to do so within
180 days after the loss or damage.
(Id. at § G.3.c (emphasis added).) The plain language of § G.3.c is inconsistent with
Defendant Insurer's proffered interpretation of "Replacement Cost (without deduction for
depreciation)." If that phrase means, as Defendant Insurer contends, that it need only
reimburse the insured for the cost of replacing damaged equipment with used equipment
that is of like kind and quality, then the language in § G.3.c allowing the insured to "still
make a claim for the additional coverage" granted under the Replacement Cost Optional
Coverage provision would be rendered irrelevant. Again, this is not allowed under wellestablished Michigan contract law.
As the undisputed facts show here, Plaintiff Insured did notify Defendant Insurer of its
intent to make a claim for Replacement Cost Optional Coverage on August 14, 2012, within
180 days after the damage to its Router and Panel Saw.5 Even if, as Defendant Insurer
argues, Plaintiff Insured made a claim on an Actual Cash Value basis for the used Panel
Saw it purchased and the Router it rented, § G.3.c allows Plaintiff Insured to also make a
claim for the "additional coverage" provided under the Replacement Cost provisions of the
insurance policy -- reimbursement for the cost of replacing damaged equipment with new
equipment of comparable material and quality that is used for the same purpose as the old,
damaged equipment.

5

These undisputed facts refute Defendant Insurer's waiver argument. (Resp. at 15-16.)
16

IV.

Conclusion
For the above-stated reasons, Plaintiffs' motion for partial summary judgment is

GRANTED.
s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: December 23, 2013
I hereby certify that a copy of the foregoing document was served upon counsel of record
on December 23, 2013, by electronic and/or ordinary mail.
s/Johnetta M. Curry-Williams
Case Manager
Acting in the Absence of Carol Hemeyer

17