Keathley v. Grange Insurance Company of Michigan

Filing 92

OPINION AND ORDER granting 74 Motion for Summary Judgment. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
TIMIKA KEATHLEY,
Case No. 15-cv-11888
Plaintiff,
v.

Paul D. Borman
United States District Judge

GRANGE INSURANCE
COMPANY OF MICHIGAN,

Mona K. Majzoub
United States Magistrate Judge

Defendant.
___________________________/
OPINION AND ORDER GRANTING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT (ECF NO. 74)
This is an insurance loss case involving Plaintiff’s claim under a policy of
insurance issued by Defendant Grange Insurance Company of Michigan (“Grange”)
for loss suffered by damage to her home in late January, or early February, 2014,
allegedly caused by frozen/burst pipes. While there is no dispute that the Plaintiff’s
policy with Grange covered a loss caused by frozen/burst pipes, Grange disputes (1)
the timeliness of the notice of the loss; (2) Plaintiff’s exhibition of the allegedly
damaged property to Grange, and (3) Plaintiff’s attempt to recover for a mold loss that
was allegedly known at the time the coverage bound.
Before the Court for disposition is Grange’s Motion for Summary Judgment
(ECF No. 74). Plaintiff filed a Response (ECF No. 77) and Grange filed a Reply
1

(ECF No. 78). The Court held a hearing on December 21, 2018. For the reasons that
follow the Court GRANTS the motion for summary judgment.
I.

INTRODUCTION
The essence of the dispute in this insurance loss case is whether Grange

suffered material prejudice as a result of Plaintiff’s delay in giving notice of the loss.
The alleged frozen/burst pipe incident occurred sometime between January 28 and
February 2, 2014, but Plaintiff did not file a claim with Grange until April 4, 2014,
during which time Plaintiff undertook significant remediation and repair work on the
Property herself and largely refurbished the Property. Between the date of the alleged
loss occurrence and the date on which she alerted Grange to the occurrence, Plaintiff
in her own words “gutted the house,” fully completing remediation and nearly
completing all repairs, employing family and friends, and some outside contractors,
and paying them almost exclusively in cash, and ultimately submitting a claim to
Grange for approximately $132,000, with no invoices, receipts, or documented proof
of payment to support the scope of the loss or the necessity of the extensive repairs
that she undertook or the amounts that she claims to have paid. Grange was deprived
of any opportunity to investigate the damage in its original condition, to determine the
cause of the loss, or to determine the scope of the damage and the necessary repairs.
Grange did initially entertain the claim, and began an investigation, but ultimately
2

denied the claim when it was unable to determine the actual date of occurrence, the
actual extent of the damage, or the nature of the repairs undertaken, leaving Grange
unable to estimate a loss amount and/or cost to repair. The Court concludes that there
is no genuine issue of material fact that Grange suffered significant prejudice as a
result of the delayed notice and is entitled to summary judgment.
II.

FACTUAL BACKGROUND
Viewing the facts in the light most favorable to the Plaintiff, as the Court must

when evaluating Defendant’s motion for summary judgment, the following story
emerges from the testimony of a number of witnesses. Plaintiff purchased the home
that is the subject of the loss, 42746 Alba Court, Belleville, Michigan (“the Property”)
in December, 2013, and was in the process of doing some improvements, but not yet
living in the home, on the date of the claimed loss. (Def.’s Mot. Ex. B, March 31,
2016 Deposition of Timika Keathley 65:1-66:2.) Plaintiff is employed by General
Motors as an assembler but has not been working for some time and has been
receiving workman’s compensation due to a series of injuries. (Pl.’s Dep. 28:6-36:5.)
Plaintiff owns a company named Sincere Investments and for a number of years
through that business has been purchasing homes, rehabilitating them, and reselling
or renting them. Plaintiff’s ex-boyfriend Michael Green (who was her boyfriend at
the time of the claimed loss at issue in this case) owned a company named Mag
3

Improvements through which Mr. Green rehabilitated homes and resold them.
Plaintiff purchased properties through Sincere Investments for Mag Improvement.
(Pl.’s Dep. 36:14-40:16.)
Plaintiff bought the Property at issue in this litigation for about $200,000 and
intended to eventually live there – she did not intend to flip the Property. (Pl.’s Dep.
46:14-47:21.) Plaintiff purchased the Property in December, 2013, and received a
$4,500.00 credit on the purchase after her home inspection revealed a number of
issues, including mold throughout the basement. (Pl.’s Dep. 49:7-60:3.) Plaintiff
received the keys to the Property on January 10, 2014. (Pl.’s Dep. 65:1-66:2.) On
January 28, 2014, Plaintiff received a call from her painter, Eddie Lulaj, whom she
had hired to do work on the Property, to inform her that he arrived at the Property to
do some painting and found the house cold and the furnace not working. Plaintiff
knew that there were problems with the furnace and had called her home warranty
company on January 13, 2014, about problems with the furnace. Records received
from Plaintiff’s home warranty company indicate that Plaintiff also called them on
January 31, 2014, to state that the heating unit was out and that water pipes had burst
in her basement and were leaking. Plaintiff was informed that burst pipes were not
covered by her home warranty. (Pl.’s Dep. 79:21-82:16, 86:12-20, 89:10-23, 93:1395:7.)
4

Plaintiff testified that when Mr. Lulaj called to inform her that the house was
cold and the furnace was off, she instructed him to turn off the water to the house.
(Pl.’s Dep. 97:2-99:11.) Plaintiff called her home warranty company and told them
to get someone out for the furnace and was told it would take a couple of days to get
the parts. Plaintiff went to the Property the day that Mr. Lulaj called to make sure the
house was locked and did not return until the weekend of the Super Bowl, when she
and her boyfriend walked in to find water “shooting” out of the faucet in the laundry
room and coming out from under the sink “like a fall – a waterfall.” (Def.’s Mot. Ex.
A, April 29, 2014 Examination Under Oath (“EUO”) of Timika Keathley 129:16-21.)
Plaintiff’s boyfriend ran to the basement to turn off the water, which apparently had
not been properly turned off by Mr. Lulaj. (Pl.’s Dep. 100:15-102:24, 105:1-109:3.)
After the water had been turned off, she and her boyfriend walked through the house
and saw burst pipes “throughout” the house – in the laundry room, kitchen,
bathrooms. They finally reached a plumber, “Collin from [C]LA Plumbing,” who
came that night and “opened up walls” and removed pipes. There was enough
standing water that they were able to “push” the water, and they were able to use
towels to soak it up. Plaintiff’s father and her boyfriend’s family members came over
to help clean up and carry debris out of the house. Plaintiff did not take any pictures
of the standing water and maybe took one picture of a burst pipe before it was
5

removed from the wall. (Pl.’s Dep. 109:9-132:6.) Plaintiff did attach a number of
photographs (many are duplicates) to her Response, many of which depict the
basement and most of which, to the extent the images are decipherable, appear to be
post-demolition/removal of drywall and floor coverings. (Pl.’s Resp. Exs. 13, 15.)1
Plaintiff explained at her EUO that she ordered a dumpster to be delivered to
the house the day after they discovered the burst pipes to hold all of the debris that her
boyfriend and his helpers were tearing out. Plaintiff’s boyfriend and his sons removed
wet drywall and flooring, all of the “busted pipes,” and other debris, including a
jacuzzi tub, and Plaintiff paid them in cash. Plaintiff has no receipts for the cost of the
debris removal or the water clean up and dry out but she recalls that her boyfriend
brought in a few big fans. (Pl.’s EUO 33:14-38:10, 66:1-72:21, 73:3-75:1, 113:2-9,
118:6-120:12.) Plaintiff also paid cash for the dumpsters, paid cash to the “guys” who
laid the travertine floor and installed a glass shower door, and paid cash to the guy

1

Of note, although Plaintiff has accused Grange throughout this litigation of having
spoliated photographs that Grange’s adjuster (Jason May) took when he visited the
Property on May 28, 2014, (this Court denied Plaintiff’s motion for spoliation
sanctions, ECF No. 69) Plaintiff’s counsel, in correspondence dated March 3, 2015,
apparently directed to Grange’s counsel, states that Mr. May “spent no more than
fifteen minutes [at the Property], took no photos and took away no samples of the
broken pipes and furnace sections lying about the house.” (Pl.’s Resp. Ex. 15, March
3, 3015 Correspondence PgID 5094.) Although the factual dispute regarding whether
or not Mr. May took photographs is not material, see discussion infra at Sec. IVA2,
it is interesting to note that Mr. Brouzas, Plaintiff’s attorney, at least as of March 3,
2015, believed that Grange’s adjuster did not take the allegedly spoliated photographs.
6

who did work in the basement “filling cracks” – again with no invoice, receipts, or
proof of payment. (Pl.’s EUO 120:19-124:12.) Plaintiff testified that she did not
intend to file a claim so she was not documenting any of the work – she stated that she
is “highly intelligent” and has “many rental properties” and knows enough to take
pictures and contact Grange right away if she intended to file a claim. (Pl.’s EUO
124:22-126:8, 145:5-16.) Plaintiff testified that she first sought to have her losses
covered under her new home warranty policy. Then, when she determined that her
home warranty company was not going to cover the claim, she called her local
insurance agent who sold her the Grange policy, Karen Lamerton, within days of the
loss, but expressly told her agent that she did not want to file a claim with Grange at
that time for fear her premiums would increase and she was going to try to do the
work herself. Plaintiff states that Ms. Lamerton told her she had six months to file a
claim. (Pl.’s EUO 64:5-23, 124:22-126:8, 146:21-147:12.) As discussed infra,
Lamerton did not recall making that statement. According to the Plaintiff, she and her
boyfriend had “gutted the house,” completed demolition, replaced the plumbing, relaid
the floors in the bathrooms and began replacing the flooring and cabinets in the
kitchen, all before finally contacting Grange on April 4, 2014, to report the loss. (Pl.’s
Dep. 107:9-109:3, 133:23-134:25.)

7

Plaintiff met her hired public adjuster, Margie Banks, while on another job with
Ms. Banks and Plaintiff explained what had transpired at the Property. Ms. Banks told
Plaintiff she should file a claim with Grange for the repairs undertaken allegedly as
a result of the burst pipes. (Pl.’s Dep. 141:18-142:23.) Ms. Banks immediately
contacted Joe Tison from RestoJoe to come evaluate the Property and Ms. Banks
emailed Grange on April 4, 2014, stating that Plaintiff intended to file a “new” claim
for water damage caused by frozen pipes. Ms. Banks stated in the April 4, 2014 email
that “mitigation is complete and repairs are almost complete at this time.” (Pl.’s Dep.
143:3-144:15.)
Ms. Banks testified in her deposition that she signed a contract with the Plaintiff
on March 29, 2014, and brought Joe Tison onto the claim after she filed it with
Grange but by that time, all the work had been done. (Pl.’s Resp. Ex. 12, Nov. 19,
2015 Deposition of Margie Banks 56:1-21, 58:25-59:1.) Ms. Banks recalled, and
stated in her deposition, that Plaintiff told her that the painter, Mr. Lulaj, had
discovered the burst pipes when he entered the home on January 28, 2014, (Banks
Dep. 49:14-50:1, 59:13-24, 61:10-17) but both Mr. Lulaj and the Plaintiff recall that
Mr. Lulaj discovered the home was cold and the furnace out, but that he saw no
damage at that time and that Plaintiff and her boyfriend actually discovered the
damage a few days later, specifically on February 2, 2014. Ms. Banks was aware that
8

Plaintiff was doing work on the home before contacting Ms. Banks and understood
that Plaintiff had done drywall repairs, flooring replacements, “quite a bit of stuff.”
(Banks Dep. 49:1-11, 59:13-60:6.) Ms. Banks prepared an “estimate” of the damage
for Grange after she inspected the Property. The “estimate” includes costs for
extensive work to every room in the home, including replacement of multiple
“missing walls” and a new furnace and water heater, and reports a “net replacement
cost” of $132,773.06 for the work done at the Property. (Pl.’s Resp. Ex. 21, Margie
Banks’s Estimate PgID 5260-91, 5286.) Because demolition was complete and much
of the repair work had already been done, Ms. Banks was not able to inspect the
original damage, and Plaintiff had no invoices or receipts. As a result, Ms. Banks just
measured, took photos, and tried to determine what types of finishes were in place
before the loss. (Banks Dep. 77:22-79:16.) It is undisputed that her “estimates” were
significantly inaccurate in several respects. For example, Ms. Banks put in an
“estimate” for installation of new oak hardwood flooring (including costs for sanding,
staining, and finishing) in multiple places in the home when it is undisputed that what
was removed from the home was vinyl and carpet and not wood. (Margie Banks’s
Estimate PgID 5263, 5269; Pl.’s EUO 87:1-18.) Ms. Banks submitted a remediation
charge for the “dry out” work that was performed by Plaintiff’s boyfriend and his
sons, reporting a replacement cost equivalent to what a professional remediation
9

company would charge. Although Ms. Banks had no basis for such a charge as she
had no invoices or receipts of payment to Plaintiff’s boyfriend and his sons for their
“dry out” work, she felt that Plaintiff was entitled to receive what a professional
company like Serve-Pro would have charged. (Banks Dep. 86:6-89:23.) Ms. Banks
included an amount of $12,590.31 for “demolition” when it is undisputed that there
are no receipts or invoices for the demolition work performed by Plaintiff’s boyfriend
and other friends and family members. (Estimate, PgID 5288.) Ms. Banks estimated
an amount for mold remediation based on a Report prepared by Dave Varcoe of
Professional Environmental Services, Inc., even though Joe Tison, and not Dave
Varcoe, did the mold remediation. (Banks Dep. 93:22-96:24; Pl.’s Resp. Ex. 13,
Performance Environmental Services, Inc. “Limited Microbial Assessment” PgID
5068-85.) Ms. Banks testified that she never received an actual invoice from Joe
Tison for mold remediation.
Grange assigned Jason May to the Plaintiff’s claim. May tried to reach out to
the Plaintiff as soon as he was assigned the claim but did not get in touch with Banks
or the Plaintiff right away. When he finally got in touch with Ms. Banks, on or about
April 9, 2014, she told him that there was a water claim at the home, that there had
been burst pipes, that the drying and mitigation was complete and that the repairs were
nearly complete, that pipes were repaired, drywall, paint, and carpet had been replaced
10

and that the Plaintiff was not living in the home. (Pl.’s Resp. Ex. 2, March 22, 2016
Deposition of Jason May 13:1-16:12:9.) On April 30, 2014, May received an email
from Ms. Banks submitting certain documentation that May had requested and asking
May to meet them at the house soon because the Plaintiff wanted to move in to the
Property. (May Dep. 68:24-69:5.)
It is undisputed that May did not visit the Property until May 28, 2014. May
testified that because Banks had informed him that all of the mitigation work was
complete and repairs were almost complete, May did not see the need to rush out to
inspect the Property. Instead, May was seeking documentation from Banks –
mitigation documentation, moisture logs, repair invoices, etc. to help document the
loss. (May Dep. 21:22-23:2, 39:4-42:7.) May testified that when he visited the
Property, the basement had been gutted to the studs, and it appeared that every room
in the house had been remodeled or repaired and he was unable to do a damage report
because there was no identifiable damage. Mr. May testified that Joe Tison, who was
present at the May 28, 2014 inspection, told May that there was no damage to be seen.
As part of his review of the claim, May reviewed bills from DTE for the period
January 10-May 30, 2014, and saw no spike in usage which he would have expected
with the energy drain generally caused by remediation work – running large dry out
machines, etc. (May Dep. 96:6-97:6.)
11

By early June, Plaintiff’s claim had been referred to Grange’s Special
Investigative Unit (“SIU”). Sometime in July, SIU asked May to contact Plaintiff’s
adjuster to determine if there was still evidence of broken pipes onsite – Banks told
May that the pipes had been there when May was there on May 28, 2014, but had
since been removed by Joe Tison. (May Dep. 103:5-107:13.)2
Ms. Banks testified differently about the condition of the Property when Mr.
May came to inspect on May 28, 2014. Ms. Banks is generally critical of Mr. May
waiting over a month to inspect the Property and states that most insurance companies

2

There is undeniably a dispute of fact regarding whether or not there was a “pile” of
pipes in the basement when Mr. May came to the Property on May 28, 2014. Ms.
Banks, Mr. Tison, and Ms. Fields testify to the presence of broken pipes on the
basement floor on that date, and Mr. May testified that he “does not recall” a pile of
pipes. In correspondence between Mr. May, Ms. Banks, and Plaintiff in July, 2014,
Mr. May asks: “Are the broken pipe sections and furnace parts still available at your
home for inspection?” (Pl.’s Resp. Ex. 15, PgID 5128.) Ms. Banks and Ms. Keathley
both respond that the pipes were there when Mr. May inspected the Property on May
28, 2014, but had thereafter been discarded. (Id. at PgID 5124-29.) Mr. May
responds, not denying that the pipes were present when he was there but stating
simply: “I also asked that nothing be thrown away until we (Grange Insurance) gave
the okay.” (Id. at PgID 5127.) But, as discussed infra, this dispute is not material to
the issue of whether Grange was prejudiced by Plaintiff’s failure to give Notice to
Grange and Plaintiff’s related failure to exhibit the damaged property before gutting
the house, completing mitigation, and largely completing repairs. The presence or
absence of a pile of pipes on the basement floor on May 28, 2014, simply has no
relevance to the issue of whether Grange suffered prejudice resulting from the
undisputed inability to determine through its own investigation when and how those
pipes came to be damaged and what collateral damage to the Property was caused by
their “busting.”
12

want an adjuster out to the property within 24 hours. Ms. Banks testified that when
Mr. May came to inspect the Property, there was still evidence of damage – the
kitchen ceiling was open, the basement was in disarray, the kitchen and vanity
cabinets that had been removed were still on site, there was still debris in the
dumpsters, there were still areas visible under the vanities where the pipes had burst,
and there was a pile of pipes in the basement. (Banks Dep. 119:1-126:8.) Ms. Banks
testified that Judy Fields, the Van Buren Township inspector who was present when
Mr. May came to the Property, told May that when she went by the Property in
February, she saw a pile of pipes that the plumber had piled up after he cut them out.
Banks also saw the pipes and could tell that they had burst from freezing. (Banks
Dep. 131:2-135:5.) Ms. Banks testified that she had taken pictures of the damage that
she had sent to Jason May but she was unable to retrieve her photos. (Banks Dep.
135:15-22.) Ms. Banks testified that she provided May with a sketch of the rooms
prepared by the plumber indicating the places where the plumber had replaced pipes.
(Banks Dep. 112:7-24; Pl.’s Resp. Ex. 9, CLA Heating and Cooling Sketch.) That
sketch diagrams 4 (four) “¾ or ½” inch “busted” copper pipes and a valve and two
water lines that were replaced under sinks. The sketch does not indicate the scope of
work involved in replacing those pipes or the damage that they caused to the
surrounding areas. Ms. Banks testified that Mr. May kept asking for dry logs and
13

moisture mapping but none were done because by the time Joe Tison got to the
Property two months after the loss, everything was already dried out and moisture
mapping would have been a waste of time. (Banks Dep. 103:6-106:7, 109:22-110:24.)
Ms. Banks testified that Mr. May could see the mold growth in the basement and gave
the “go-ahead” to Joe Tison to do the mold remediation but to stay within the policy
limits. (Banks Dep. 100:20-101:11, 106:8-107:23.)
Joe Tison also was present when May inspected the Property on May 28, 2014,
and agrees with Ms. Banks that there was some remaining evidence of damage at the
time that was visible to the naked eye. (Def.’s Mot. Ex. C, March 23, 2016
Deposition of Joe Tison 63:22-64:14.) Tison testified that he used three extra large
dehumidifiers on Plaintiff’s job that ran continuously for six days. Tison admits that
generally he prepares estimates in advance of performing his work because some
insurance companies won’t pay for extra large dehumidifiers “so you have to play a
game with the insurance company.” (Tison Dep. 8:24-11:3, 12:25-13:25.) He
acknowledged that some insurance companies won’t pay for dehumidifiers at all
without moisture readings but he admits that he did not take any moisture readings at
Plaintiff’s Property because the drying work “was already underway.” (Tison Dep.
29:14-30:5, 11:4-12:5, 14:13-19, 25:24-27:11.) Plaintiff has never paid Tison for the
work he did on her Property. (Tison Dep. 24:15-25:9, 31:2-6.) Tison testified that
14

after water sits for 72 hours it is considered “black water” and the only option is to
“strip and rip” which is why he was calling Jason May to say I need to strip and rip
and will you ok this. (Tison Dep. 27:13-28:1.) Tison is sure that he took pictures of
the pile of pipes in Plaintiff’s basement, but he cannot locate any photographs. (Tison
Dep. 48:5-49:4, 51:7-19.) Tison has no documentation to support the moisture levels
he claims were present in the Property, and although he subbed out the flooring and
the painting, he cannot recall to whom he subbed the work and has no documentation
to support those costs. (Tison Dep. 38:1-18, 45:1-7.) Tison did his own estimate for
his mold remediation work and was not aware that Ms. Banks had prepared a different
estimate. (42:7-44:3.) Tison testified that Mr. May gave him approval to do further
remediation and specifically to remediate for mold – Tison says he would not have
done the mold remediation without May’s approval. (Tison Dep. 64:21-65:17.) Tison
states that he based his decision to perform “scrubbing” throughout the home utilizing
HEPA fans as part of his remediation work based on an oral conversation he would
have had with Dave Varcoe, even though Varcoe’s Report found normal air ecology
on all three levels. (Tison Dep. 33:25-37:19; Pl.’s Resp. Ex. 13, Varcoe Report PgID
5070, 5072.) May left Grange in September, before a decision had been made on
Plaintiff’s claim. (May Dep. 48:3-51:18, 81:4-10, 103:5-107:13.)

15

Jeanne Strick is the Grange SIU investigator assigned to investigate Plaintiff’s
claim. Ms. Strick testified that she is assigned claims that have “red flags” and she is
to determine if the red flags suggest any issue with coverage. Her role is to question
people, run background checks, work with vendors and experts, interview individuals
and to attempt to verify the facts of a claim and make a recommendation regarding
coverage – she does not make coverage decisions. (Pl.’s Resp. Ex. 7, Dec. 7, 2015
Deposition of Jeanne Strick 41:22-46:2.)

Ms. Strick determined that

misrepresentations were made in Plaintiff’s estimates and identified during Plaintiff’s
EUO, through which Plaintiff was attempting to get paid for work that was never
performed or costs that were inflated. (Strick Dep. 89:14-92:3.) Ms. Strick concluded
that Mr. May acted appropriately in deciding not to immediately visit the Property and
rather to collect documentation of the damage done and the work performed because
he was informed by Ms. Banks that the mitigation was done and that repairs were
almost complete. (Strick Dep. 99:5-12, 103:5-107:8.) Ms. Strick also reviewed water
usage numbers from the city that did not support a substantial water loss during the
relevant period of the alleged loss. The usage numbers were more reflective of
minimal usage in the home consistent with a home that was unoccupied. (Strick Dep.
119:12-122:8, 123:8-124:17, 125:9-15.) Ms. Strick determined that work that
Plaintiff undertook on the Property after the alleged frozen pipe incident went far
16

beyond what was required to “preserve” the Property and prevent further damage.
And Plaintiff did not keep any records of the costs of repairs and the estimates
prepared by Ms. Banks raised questions of inflated figures and work allegedly
performed or materials used that were not done and/or used. Plaintiff claims to have
paid out nearly $132,000 in cash out of pocket for repairs and was unable to back any
of it up with invoices, receipts, or any records of payment. (Strick Dep. 158:25167:3.) Ms. Strick admits that Grange did not contact some of the individuals that
Plaintiff indicated had performed the work to determine whether in fact they did the
work. (Strick Dep. 172:2-177:10.)
III.

LEGAL STANDARD
Summary judgment is appropriate where the moving party demonstrates that

there is no genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986); Fed. R. Civ. P. 56(a). “A fact is ‘material’ for purposes of a motion
for summary judgment where proof of that fact ‘would have [the] effect of
establishing or refuting one of the essential elements of a cause of action or defense
asserted by the parties.’” Dekarske v. Fed. Exp. Corp., 294 F.R.D. 68, 77 (E.D. Mich.
2013) (Borman, J.) (quoting Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.
1984)). A dispute is genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S.
17

242, 247-48 (1986).
“In deciding a motion for summary judgment, the court must draw all
reasonable inferences in favor of the nonmoving party.” Perry v. Jaguar of Troy, 353
F.3d 510, 513 (6th Cir. 2003) (citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)). At the same time, the non-movant must produce
enough evidence to allow a reasonable jury to find in his or her favor by a
preponderance of the evidence, Anderson, 477 U.S. at 252, and “[t]he ‘mere
possibility’ of a factual dispute does not suffice to create a triable case.” Combs v. Int’l
Ins. Co., 354 F.3d 568, 576 (6th Cir. 2004) (quoting Gregg v. Allen–Bradley Co., 801
F.2d 859, 863 (6th Cir. 1986)). Instead, “the non-moving party must be able to show
sufficient probative evidence [that] would permit a finding in [his] favor on more than
mere speculation, conjecture, or fantasy.” Arendale v. City of Memphis, 519 F.3d 587,
601 (6th Cir. 2008) (quoting Lewis v. Philip Morris Inc., 355 F.3d 515, 533 (6th Cir.
2004)). “The test is whether the party bearing the burden of proof has presented a jury
question as to each element in the case. The plaintiff must present more than a mere
scintilla of the evidence. To support his or her position, he or she must present
evidence on which the trier of fact could find for the plaintiff.” Davis v. McCourt, 226
F.3d 506, 511 (6th Cir. 2000) (internal quotation marks and citations omitted). That
evidence must be capable of presentation in a form that would be admissible at trial.
18

See Alexander v. CareSource, 576 F.3d 551, 558–59 (6th Cir. 2009).
IV.

ANALYSIS
Grange invokes three separate provisions of the Policy in moving for summary

judgment on Plaintiff’s claim: (1) the immediate notice of loss provision; (2) the
mandatory condition requiring Plaintiff to exhibit the allegedly damaged property to
Grange; and (3) the known loss provision with respect to Plaintiff’s attempt to recover
for mold remediation.
A.

The Immediate Notice Provision

The Policy contains the following provision on which Grange relies in moving
for summary judgment on Plaintiff’s claim:
SECTION I – PROPERTY PROTECTION CONDITIONS
1.

What to do in Case of Loss
If a covered loss occurs, the insured person must:
a.

give immediate notice to us or our agent.

(ECF No. 77-1, Pl.’s Resp. Ex. 1, Policy p. 35, PgID 4566.)
Grange contends that the loss occurred sometime between January 18, 2014,
and February 4, 2014, and that Plaintiff did not give Grange notice of the loss until
April 4, 2014, in violation of the immediate notice provision. Viewed in the light
most favorable to the Plaintiff, the facts demonstrate that the claimed frozen/burst pipe
19

incident occurred sometime between January 28, 2014 and February 2, 2014.
Plaintiff testified that she called her insurance agent, Karen Lamerton, within
a week of the incident and after she had learned that her home warranty company
would not cover burst pipes, to explain that she had suffered water damage from
frozen/burst pipes. (Pl.’s Dep. 140:3-15.) Ms. Lamerton recalled that Plaintiff called
her sometime in January regarding a frozen pipe incident and thought that she had
made a log entry reflecting the January contact but could not find an entry, although
she did clearly recall that Plaintiff called around that time and explained the incident.
(Def.’s Mot. Ex. G, Jan. 22, 2016 Deposition of Karen Lamerton 27:13-17, 28:1430:4.) Plaintiff told Lamerton that she did not want to file a claim with Grange at that
time because she was going to explore other coverages or try to do the work herself.
(Lamerton Dep. 27:18-28:3.) Plaintiff testified that Lamerton told her that she
(Plaintiff) had six months to file a claim. (Pl.’s Dep. 140:18-19.) Lamerton has no
recollection of making this statement to Plaintiff but did recall that she told Plaintiff
to retain all documentation and to preserve all physical evidence of damage, and to
take videos and photographs of the damage if she intended to file claim. (Lamerton
Dep. 28:2-9, 32:21-33:3, 49:6-19.) It is undisputed that Ms. Lamerton followed
Plaintiff’s directive and did not contact Grange to notify them of the Plaintiff’s call
and did not make a note of the call in her files.
20

Although Ms. Lamerton did not document the date of the call from Plaintiff,
other evidence confirms it likely occurred some time between January 28, 2014 and
February 2, 2014. Plaintiff’s painter, Eddie Lulaj, signed a letter that was drafted for
his signature by the Plaintiff sometime after she filed her claim with Grange, which
stated that he entered the Property on January 28, 2014, and noticed the house was
very cold. (Lulaj Dep. 42:11-17; Pl.’s Resp. Ex. 10, April 10, 2014 Letter, PgID
4895.) Lulaj testified that he could not be certain about the exact date because he was
signing this letter three months after the fact and Plaintiff had drafted the letter for him
and had put in that date. (Lulaj Dep. at 42:2-15.) But he was certain about the fact
that he entered the house, it was very cold, and he called the Plaintiff and told her that
the house was cold and the furnace was out. Plaintiff instructed him to turn off the
water which he did. He did not notice any damage to the house at that time. (Id. at
42:16-48:5.) Lulaj testified that he returned to the Property maybe a week or more
later and he then witnessed a lot of damage to the walls which were cut out to replace
busted pipes and to the floors – faucets were broken in the laundry room and upstairs
bathrooms, and there were many open holes in the walls. (Id. at 48:6-51:12.)
Also supporting the January 28 - February 2, 2014 time frame, Plaintiff’s home
warranty company produced log notes indicating that they received a call from
Plaintiff on January 28, 2014, stating that the furnace was out. Plaintiff believes that
21

this is the day that Mr. Lulaj called her to tell her the house was cold and the furnace
was out. Plaintiff testified that it was going to take a few days to get the parts and the
furnace was not repaired on that date. (Pl.’s Dep. 83:5-84:14.) Further log notes from
the home warranty company suggest that Plaintiff called them on January 31, 2014,
stating that there was damage from frozen/burst pipes and asking about coverage.
(Pl.’s Dep. 93:13-95:7.)
Plaintiff testified that she and her boyfriend discovered the loss on or about
February 2, 2014, because Plaintiff remembers it was around the date of the Super
Bowl, which occurred on February 2nd in 2014. She cannot pinpoint the exact date
but recalled that it would have been the day she called the plumber because he came
that day and began tearing out pipes. (Pl.’s Dep. 102:13-103:17.)
Thus the parties are generally in agreement as to the basic time frame of the
alleged occurrence of the frozen/burst pipe incident. What is in dispute is whether
Plaintiff’s call to her agent in January 2014, telling her about the frozen/burst pipe
incident, was notice of a covered loss under the Policy to Grange and, if not, whether
notice on April 4, 2014, satisfied the “immediate notice” provision of the Policy.
1.

Informing Plaintiff’s insurance agent of the occurrence in January,
2014 was not notice to Grange.

It is undisputed that Plaintiff instructed Ms. Lamerton, when she contacted her
in or about late January, 2014, not to file a claim with Grange. It is also undisputed
22

that on April 4, 2014, Plaintiff’s public adjuster Margie Banks sent an e-mail to
Grange informing Grange that Plaintiff was filing a “new” claim for a January, 2014
loss caused by burst pipes. There is no evidence that either Ms. Banks or the Plaintiff
made any reference to or mention of a January, 2014 phone call by the Plaintiff to Ms.
Lamerton when submitting this “new” claim to Grange in April, 2014.
Nonetheless, Plaintiff now argues that her phone call to Ms. Lamerton in or
about late January, 2014, was sufficient notice to Grange of the alleged loss. Grange
argues that the call to Ms. Lamerton in January, 2014, in which it is undisputed that
Plaintiff instructed Ms. Lamerton not to file a claim on her behalf, and informing Ms.
Lamerton that Plaintiff wanted to try to do the work herself without filing a claim,
cannot serve as notice to Grange.3

3

At oral argument on the motion for summary judgment, Plaintiff for the first time
raised an argument suggesting that Grange should be bound by Ms. Strick’s response
to questioning at her deposition as to whether Plaintiff satisfied the immediate notice
provision of the Policy through her January, 2014 phone call to Ms. Lamerton. (Strick
Dep. 168:8-17.) This brief question and answer reference gives no indication that
Ms. Strick was aware of the context of that January 2014 phone call, in which Plaintiff
expressly instructed Ms. Lamerton NOT to notify Grange and not to file a claim with
Grange, or how such a directive would have affected Ms. Strick’s response to the
question posed. In any event, the Court declines to consider this hastily and belatedly
raised argument. Roberts v. Principi, 283 F. App,x 325, 332 n. 3 (6th Cir. 2008)
(“Because counsel raised the issue only at oral argument, however, we decline to
review it.”); Lane v. LaFollette, Tenn., 490 F.3d 410, 420 (6th Cir. 2007) (issue
waived by first raising it at oral argument); Lafata v. Dearborn Heights Sch. Dist. No.
7, No. 13-CV-10755, 2013 WL 6500068, at *8 (E.D. Mich. Dec. 11, 2013)
(“Generally, courts will not consider theories or arguments raised for the first time at
23

The parties devoted little analysis to this argument in their briefing, but the
evidence suggests that Ms. Lamerton’s agency, Insurance Agency One, Inc.,
(“Insurance One”) is an authorized insurance agent of Grange for certain purposes.
(Pl.’s Resp. Ex. 19, Michigan Agency Agreement between Grange and Insurance
One.) “Notice of loss to an authorized insurance agent of the insurer as to a matter
within the scope of his authority is chargeable to an insurer.” First Mercury Ins. Co.
v. Christopher K Corp., No. 09-cv-14918, 2011 WL 3497294, at *5 (E.D. Mich. Aug.
10, 2011) (citing Wendel v. Swanberg, 384 Mich. 468, 479 & n. 7 (1971)) (emphasis
in original). Plaintiff argues that Ms. Lamerton, as an agent of Insurance One, was
authorized to “solicit insurance for a commission, bind insurance contracts, ‘[p]rovide
all the usual and customary services of an insurance agent on all insurance contracts
placed by the Agency with [Grange],’ and collect and receive premiums from the
insured.” (Pl.’s Resp. 10, PgID 4506.) None of this quoted language suggests that
Ms. Lamerton “was authorized or selected to receive notice of insurance claims on
behalf of [Grange] or investigate any claim losses.” First Mercury, 2011 WL

oral argument.”); Probst v. Central Ohio Youth Ctr., 511 F. Supp. 2d 862, 871 (S.D.
Ohio 2007) (“It is well established that a moving party may not raise an issue for the
first time in its reply brief or at oral argument.”); Van Sickle v. Automatic Data
Processing, Inc., 952 F. Supp. 1213, 1221 (E.D. Mich. 1997) (declining to consider
issued raised for first time at oral argument when opposing party was deprived of
opportunity to respond).
24

3497294, at *6. In any event, it is undisputed that Ms. Lamerton was instructed by
Plaintiff in the January 2014 phone call not to file a claim on her behalf and Ms.
Lamerton did not report a claim to Grange or otherwise notify Grange of the
occurrence reported by the Plaintiff. Ms. Lamerton’s knowledge, even if imputed to
Grange, was that Plaintiff was not giving notice of a covered loss and was not
intending to file a claim. “Because [Grange] can only be imputed with the knowledge
[] which [Lamerton] received during the scope of [her] authority[,]” Grange cannot
be charged on these facts with notice that Plaintiff was seeking to file a claim for a
covered loss. Id. Here, Ms. Lamerton specifically received notice of no claim,
knowledge which, if imputed to Grange, is just that: not notice of a claim or notice of
no claim. What does Plaintiff propose Grange could have done with such knowledge
– arrive at the Property to investigate an occurrence for which a claim had not been
filed? Finding notice sufficient under such circumstances would undermine the very
purpose of the immediate notice provision, which is to give the insurer the opportunity
to promptly investigate and evaluate a claim. Where no claim is being made and the
insurer is not in fact apprised of the occurrence, any “notice” given to an agent is
necessarily “not notice” to the insurer to begin the investigative process.
Perhaps the most telling evidence that the January 2014 phone call to Ms.
Lamerton was not notice to Grange under the policy is the fact that Ms. Banks,
25

Plaintiff’s experienced public adjuster, expressly denoted the ultimate frozen pipe
claim as a “new claim” in her April 4, 2014 Email to Grange, and made no mention
of the January 2014 contact between Plaintiff and Ms. Lamerton. “Obviously, the
plaintiff [and her public adjuster] knew that notice to [Ms. Lamerton] was insufficient
to provide notice to the insurer[].” Steelcase, Inc. v. American Motorists Ins. Co., No.
G87-553, 1989 WL 253892, at *9 (W.D. Mich. Feb. 24, 1989), aff’d Steelcase, Inc.
v. American Motorists Ins. Co., 907 F.2d 151 (6th Cir. 1990) (table case).
The Court concludes that Plaintiff’s call to Ms. Lamerton in January, 2014,
informing her of the incident, but instructing her explicitly to not report the loss to
Grange and not to file a claim on her behalf, was not notice to Grange of a covered
loss under the Policy.
2.

Notice to Grange on April 4, 2014, after demolition and remediation
were complete and repairs to the Property were almost complete,
materially prejudiced Grange’s ability to investigate the claim and
estimate the damage.

As discussed supra, on April 4, 2014, Plaintiff’s public adjuster Margie Banks
sent an email to Grange to “file a new claim on behalf of Ms. Timika Keathley,” for
the Property located at “42746 Alba Ct., Van Buren Twp., MI 48111.” (ECF No. 746, Def.’s Mot. Ex. E, April 4, 2014 Email from Margie Banks to Loss Rept, PgID
4240.) The email states as follows:
On January 28th, 2014, Mrs. Keathley received a phone call from her
26

painter that when he arrived at the home to paint he found water damage
through out caused by frozen pipes. The furnace has stopped working
for a period of time possibly caused by a temporary power outage in the
area during a winter storm.
Mrs. Keathley originally tried to claim damages under her home
warranty program as she had just purchased the home. The home
warranty company is not going to cover the claim.
Mitigation is complete and repairs are almost complete at this time. Mrs.
Keathley has documented the damages with photos.
The contact info for this claim is: Margie Banks - Public Adjuster - 586329-0118. A copy of our contract is attached to this email.
(4/4/14 New Claim Email, PgID 4240.)
Putting aside for the moment the discrepancy created by this email regarding
who discovered the loss and when (Plaintiff and her painter testified that he
discovered the Property to be cold and the furnace out but observed no damage when
he called the Plaintiff to alert her to the cold temperature in the home and Plaintiff
testified that she and her boyfriend discovered the loss almost a week later, around
Super Bowl Sunday) Grange argues that notice two months after the occurrence of the
alleged loss violated the immediate notice provision under the circumstances of this
case. “‘Provisions in liability insurance contracts requiring the insured to give the
insurer immediate or prompt notice of accident or suit are common, if not universal.’”
Triple Inv. Grp, LLC v. Hartford Steam Boiler Inspection and Ins. Co., 71 F. Supp.
3d 733, 739 (E.D. Mich. 2014) (quoting Wendel v. Swanberg, 384 Mich. 468, 477,
27

(1971)). The terms “immediate” and “prompt” and similar terms have been construed
to require a “reasonable time” under the facts of the case:
Prompt notice has “generally been construed to mean within a reasonable
time under the circumstances of the case.” 13 Couch on Ins. § 190:31
(2014); see also Dkt. No. 53 at 17–18 (citing Burgess v. American
Fidelity Fire Ins. Co., 107 Mich. App. 625, 628, 310 N.W.2d 23, 25
(1981), and Kennedy v. Dashner, 319 Mich. 491, 493–94, 30 N.W.2d 46,
47 (1947), to note that “Michigan law construes policy language
requiring the insured to give notice ‘immediately’ or ‘as soon as
practicable’ as requiring notice ‘within a reasonable time.’”).
Hartford Steam, 71 F. Supp. 3d at 739.
The immediate notice provision is intended to give the insurer adequate time
to investigate and prepare a defense, and thus an insurer must demonstrate that the late
notice prejudiced the insurer’s ability to investigate and prepare a defense:
The Sixth Circuit has found that, “[u]nder Michigan law, late notice to
an insurance company will not eliminate an insurer's obligations under
a policy unless the insurer can demonstrate that it has been prejudiced by
the delay.” West Bay Exploration Co. v. AIG Specialty Agencies of
Texas, Inc., 915 F.2d 1030, 1036 (6th Cir. 1990) (citing Michigan cases).
Michigan courts have required insurers to demonstrate prejudice due to
the purpose of insurance notice provisions. See id. at 1036 n. 8.
According to the Michigan Supreme Court, the purpose of notice
provisions is “to give the insurer an opportunity to investigate the facts
and circumstances affecting the question of liability and the extent of
such liability.” Wehner v. Foster, 331 Mich. 113, 119, 49 N.W.2d 87, 90
(1951); see also Wendel, 384 Mich. at 477, 185 N.W.2d at 352 (stating
that notice provisions “allow the insurer to make a timely investigation
of the accident in order to evaluate claims and to defend against
fraudulent, invalid, or excessive claims.”).
Hartford Steam, 71 F. Supp. 3d at 739-40.
28

“Since the purpose of insurance notice provisions are to provide an insurer an
opportunity to investigate and evaluate claims to defend against unsound ones, it
follows that prejudice will be found if the insurer demonstrates that a delay in
providing notice materially impaired the insurer's ability to contest its liability to an
insured.” Id. at 740. “[T]he burden of demonstrating prejudice rests upon the
insurer.” Id. “An insurer must do more than simply claim that evidence was lost,
physically altered, or has otherwise become unavailable and that witnesses have died,
disappeared, or their memories have faded. Instead, an insurer must establish what is
in fact lost by the missing evidence, how this prejudices its position, and why
information available from other sources is inadequate.” Id. (internal quotation marks
and citations omitted). “The question of prejudice is generally to be left to the trier
of fact. However, where the facts are so clear that one conclusion only is reasonably
possible, the question is one of law.” Id. (internal quotation marks and citations
omitted). “In determining whether an insurer's position has actually been prejudiced
by the insured's untimely notice, courts consider whether the delay has materially
impaired the insurer's ability: (1) to investigate liability and damage issues so as to
protect its interests; (2) to evaluate, negotiate, defend, or settle a claim or suit; (3) to
pursue claims against third parties; (4) to contest the liability of the insured to a third
party; and (5) to contest its liability to its insured.” Id.
29

In this case, Grange was materially prejudiced by its inability to “investigate
liability and damage so as to protect its interests,” and was specifically prejudiced by
its inability to evaluate the damage in its original state, to determine the necessary
repairs and to negotiate with contractors for the repairs it might have deemed
necessary, and to contest its liability to the insured. While there are several disputed
facts regarding the actual condition of the Property when Mr. May did decide to
inspect the Property on May 28, 2014, these disputes are not material to the issue of
prejudice in this case. May testified that the entire home was completely remodeled,
that there was no evidence of any damage, that there were no burst pipes for him to
inspect, and there was no damage to estimate. But Margie Banks, Joe Tison, and the
Plaintiff, each of whom was present when May inspected the Property on May 28,
2014, testified that there were several areas where broken pipes had been removed still
evident that day, that Joe Tison had collected the broken pipes in a pile in the
basement expressly for May’s inspection, that the kitchen ceiling was open and he
would have been able to inspect the water damage in that location, the kitchen
cabinets had not been installed, and the bathroom walls were open. In addition,
Plaintiff argues, Grange opted not to speak with any of the individuals who actually
performed the repairs, such as the plumber who actual prepared a schematic drawing
indicating where he had replaced the broken pipes. (Pl.’s Resp. Ex. 9.) Plaintiff
30

argues that she gave Grange the contact information, phone numbers, and detail
regarding the work performed by several individuals, and Grange elected not to
contact any of them. But an insurer does not have to rely on the investigative reports
of third parties as a substitute for conducting their own investigation:
An investigation of the storage tank conducted by a third party hired by
Steelcase was insufficient to protect appellees from prejudice in their
defense against Steelcase's claim. Whatever the quality of the report of
the independent testing company that examined the tanks shortly after
the leak, appellees could not have the same confidence in it that they
would have in the results of their own investigation. Nor could they be
certain that the independent tester investigated with the same motivations
and the same attention to possibly exculpatory details. The purpose of an
insurance policy notice provision is “to allow the insurer to make a
timely investigation of the accident in order to evaluate claims and to
defend against fraudulent or excessive claims.” Wendel, 384 Mich. at
477, 185 N.W.2d at 352. That purpose was subverted by the delay in
giving notice of the leak. An investigation by an independent agent is a
poor substitute. Although the Michigan courts have faulted insurers for
failing to investigate an accident after delayed notice where relevant
information could still be obtained, we do not believe that they would
find a failure to show prejudice where an insurer had no way to conduct
its own investigation on a matter of relevance to its defense. Even if a
jury were to conclude that the independent tests authorized by Steelcase
were accurate and reliable, that would not change our conclusion that
AMICO and GNIC were prejudiced by the inability to conduct their own
investigations.
Steelcase, Inc. v. American Motorists Ins. Co., 907 F.2d 151, at *3 (6th Cir. 1990)
(table case). In Steelcase, as here, the insured notified its insurance broker within days
of discovering the loss (a leak of 3,000 gallons of paint solvent from an underground
storage tank) but decided not to notify the insurer or file a claim with the insurer at
31

that time, “hoping that cleanup costs would be minimal and desiring to avoid
increased premiums.” Id. at *1.
By the time that Steelcase did give notice of the occurrence, the tank that held
the paint solvent had been destroyed, and an examination of that tank was deemed
essential to the insurer’s defense. Id. at *2. In addition, the insurer was completely
unable to participate in decisions related to remediation as the insured “hired
consultants and developed a clean-up plan that cost hundreds of thousands of dollars
before notifying the insurer of the leak.” Id. The delay also deprived the insurer of
investigating whether it had viable claims against any third-parties. Id. The Sixth
Circuit upheld the district court’s summary judgment rulings that, as a matter of law,
(1) notice to the insured’s insurance agent within days of discovering leak was not
notice to the insurers, and (2) the insurers suffered material prejudice as a result of the
insured’s delay in giving notice of the occurrence and intent to file a claim. Id. at *67.
In Hankins v. Fremont, No. 317358, 2014 WL 6853106 (Mich. Ct. App. Dec.
4, 2014), an unpublished per curiam decision, the Michigan Court of Appeals
analyzed a factually similar scenario that merits mention here. In Hankins, the
plaintiff claimed significant damage to his home as the result of a burst water pipe in
his basement, but waited two months to inform his insurance company of the damage.
32

The insurance company denied the claim, asserting prejudice due to the delay in
receiving notice of the claim because, during the delay, the plaintiff “hired a workman
to repair the pipe and to conduct extensive repairs and remodeling to the house,” and
the workman had disposed of the evidence of the damage and the repairs. Id. at *2.
Noting that the burden is on the insurer to establish material prejudice, the Michigan
Court of Appeals found such prejudice was established by the fact that plaintiff
undertook the repairs before contacting the insurer:
[D]efendant was significantly prejudiced by plaintiff's delay. Defendant
was unable to determine through its own investigation whether the pipe
had burst consistent with coverage, what caused the burst, the extent and
scope of damage, whether the repairs were necessary, and whether less
extensive repairs would have sufficed. Plaintiff's actions effectively
prevented defendant from conducting its own investigation of the
incident and the resulting damage.
Plaintiff, however, contends that defendant could have obtained
information about the damage from him or the workman, whom plaintiff
knew before the incident, and invoices. Yet, plaintiff fails to explain how
defendant could have protected its interest and challenged the insurance
claim as fraudulent, invalid, or excessive when defendant was entirely
restricted to the version of events plaintiff and his workman advanced.
Tenneco Inc. [v. Amerisure Mut. Ins. Co.], 281 Mich. App [429] at 447
[(2008)]. Because of plaintiff's delay, defendant was unable “to
investigate liability and damage issues so as to protect its interests,” “to
evaluate, negotiate, defend, or settle a claim or suit,” or “to contest its
liability to its insured.” Id. at 448–449 (quotation marks and citation
omitted).
2014 WL 6853106, at *2.
Grange faced the same situation here. It is undisputed that Grange was unable
33

to inspect the Property in its original damaged condition, was unable to determine
through its own investigation the cause or scope of the damage, and was deprived of
the opportunity to decide what repairs were necessary and was unable to negotiate
with contractors to perform those repairs. It is undisputed that all demolition and
remediation was done before Plaintiff filed a claim with Grange on April 4, 2014, that
all debris (save some broken pipes) had been discarded in an outdoor dumpster, and
that almost all repair work was complete or well underway. Plaintiff argues that
Grange should have been able to work off of Ms. Banks “estimate,” but the
acknowledged significant inaccuracies in her “estimate” only highlight the material
prejudice that Grange had already suffered by the time it was given notice of the loss.
Ms. Banks defended her inaccurate “estimate” as just an estimate – “a starting point”
for negotiations with the insurance company about what they were prepared to
approve and cover – and she admits that she was hampered in preparing the estimate
because she had no idea what the condition of the Property was, or what finishes were
in place prior to the loss, and had to do a fair amount of guessing – as Grange would
be required to do in preparing any competing estimate. (Banks Dep. 84:9-21.) In fact,
presenting “estimates,” rather than invoices, for work that is already complete is an
oddity in and of itself. Given that nearly all of the work had already been completed
on the Property at this point, Ms. Banks should have been able to present invoices for
34

work completed and proof of payment – not “estimates” of what it would cost to
repair the damage that had already been remediated and repaired. Ms. Banks testified
to her understanding that an invoice is an actual cost for work that is already complete
and an estimate is just an estimate – a starting point for negotiating with the insurance
company that has the ability to do its own estimate of the damage. (Banks Dep.
92:24-93:15.) But Grange was deprived of that ability here.
Ms. Banks views her role as a public adjuster as helping the insured –
apparently including seeking to recover for work that was never performed and
materials that were never used – and believes that it is up to Grange “to actually
determine what the damages are and prepare an estimate.” (Banks Dep. 90:16-20.)
But this only demonstrates the irreversible prejudice to Grange caused by Plaintiff’s
decision not to report the loss and to undertake all of the work herself (and to pay for
that work in cash and fail to keep invoices or receipts) before even contacting Grange.
At that point, there was no original damage for Grange to inspect – only piles of torn
out pipes and a handful of poor-resolution photographs. How could Grange possibly
determine after the fact whether it would have concluded that entire rooms were in
need of new drywall and flooring, among other extensive repairs that Plaintiff
undertook? Plaintiff testified that she paid $200,000.00 for the Property, and seeks
damages from Grange of approximately $130,000 – over half the value of the
35

Property. Grange was deprived of any opportunity to examine the damages to the
Property in their original state, and completely unable to determine the scope of the
work necessary to complete any repairs. In this case, the insured undertook all
demolition, mitigation, and extensive repairs and only then notified Grange of the loss
and presented Grange with an estimate unsupported by any invoices or receipts or
proof of payment which also contained significant misrepresentations of losses,
expecting Grange to take her word for it and pay up. Grange’s inability to inspect the
Property prior to demolition, remediation and repairs prejudiced its ability to
investigate, estimate, and resolve Plaintiff’s claim. Granted, viewing the facts in the
light most favorable to the Plaintiff, Grange could have, many months after the
incident, inspected a pile of removed broken pipes in the basement, maybe could have
sorted through debris in a dumpster, could have looked at a handful of photographs,
and could have sought out various individuals who are alleged to have performed the
work for cash.4 But none of this evidence could adequately answer the key threshold

4

It is significant that Plaintiff did not endeavor to depose any of these individuals, and
did not offer affidavits from these individuals to oppose Grange’s motion for summary
judgment. While Grange has the burden to prove prejudice, Plaintiff also had the
burden under Fed. R. Civ. P. 56 to meet Grange’s motion with facts of evidentiary
quality establishing genuine issues of material fact for trial. In any event, Grange
“could not have the same confidence in [such testimony] that they would have in the
results of their own investigation. Nor could they be certain that [these individuals
acted] with the same motivations and the same attention to possibly exculpatory
details.” Steelcase, 907 F.2d 151, at *3.
36

questions of what actually caused the claimed damage, how extensive that damage
was, what work was actually necessary to repair the damage, and whether Grange
would have approved the extensive remodel that Plaintiff undertook on her own and
would have paid the same price for the repairs.
While prejudice to the insurer caused by delay in providing notice is generally
a question for the trier fact, on these facts reasonable minds could not differ in finding
that the delay in this case, and more specifically the work completed during that delay
by the Plaintiff before giving notice to Grange (performing all water and mold
remediation, tearing out allegedly impacted drywall and floors and disposing of these
items in an outside dumpster, and undertaking extensive repairs to the Property),
prejudiced Grange’s ability to investigate the facts and circumstances of the alleged
loss and to determine the scope of the loss and the extent of Grange’s liability. As
United States District Judge Richard Enslen concluded in Steelcase, supra:
The delay involved in this case was unreasonable because [Plaintiff]
knew of the incident and of the possibility that insurance coverage was
available immediately after the [incident] occurred. [Plaintiff] delayed
notice for the sole purpose of advancing [her] own financial interests.
The delay prejudiced the insurer[] because it prevented [Grange] from
conducting a contemporaneous investigation of the incident and from
participating in [Plaintiff’s] decision to adopt particular [remediation and
repair] procedures.
1989 WL 253892, at *12 (alterations added). Plaintiff’s failure to give timely notice
in this case materially prejudiced Grange. Plaintiff’s failure to comply with this
37

condition precedent to coverage under the Policy entitles Grange to summary
judgment.
B.

Plaintiff Breached the Policy Provision Requiring the Insured to
Exhibit the Damaged Property

Grange also asserts that Plaintiff breached the Policy provision requiring the
insured to exhibit the damaged property to Grange:
1.

What to do in Case of Loss
If a covered loss occurs, the insured person must:
e.

exhibit the damaged property to us or our
representatives, as often as my be reasonably
required.

(ECF No. 77-1, Pl.’s Resp. Ex. 1, Policy p. 35, PgID 4566.)
Grange observes that this provision “works in tandem with the notice
provision,” and Grange merely incorporates its arguments made with respect to the
notice provision. (Def.’s Mot. 18, PgID 3743.) Plaintiff gives little attention to this
provision in her Response, stating only that Grange “did not want to inspect plaintiff’s
damaged home as its corporate representative Jeanne Strick wrongly believed that
Grange did not have to do so because the repairs already had been completed.” (Pl.’s
Resp. 33, PgID 4529.) First of all, there is no evidence in this record that Ms. Strick
was even aware of or involved in the claim when Mr. May made the decision to hold
off on inspecting the Property until May 28, 2014. In any event, Grange (Mr. May)
38

was only relying on Ms. Banks’s April 4, 2014 email, which expressly stated that
remediation was complete and repairs were almost complete. Plaintiff has presented
no evidence on which a reasonable juror could conclude that had Mr. May gone to the
Property sooner, there would have been additional physical evidence of the damaged
property in its original condition to inspect that was not present on May 28, 2014.
Indeed, it is undisputed that demolition of the drywall, flooring, cabinets, and
plumbing was complete long before Plaintiff notified Grange of the loss. Along with
that demolition went Grange’s ability to inspect the damaged Property in its original
damaged condition.
In addition, it is undisputed that extensive repairs had already been done when
Ms. Banks was asking Mr. May to come and inspect the Property. No reasonable
juror could conclude that had Mr. May come to the Property sooner, Plaintiff would
have “exhibited” the damaged Property in its original damaged condition. Plaintiff
did not preserve physical evidence of the damage (save for a pile of pipes and a
dumpster full of debris) and did not keep documentation of the work performed or the
payments made – indeed Plaintiff testified that she intentionally did not document the
“gutting” of the Property, or the remediation and repairs, and disposed of the majority
of the physical debris in a dumpster because she had no intention of filing a claim.

39

Viewing the facts in the light most favorable to the Plaintiff, the evidence
demonstrates that at the time Plaintiff gave notice to Grange, there was a pile of burst
pipes on the basement floor, along with a damaged furnace, an open hole in the
kitchen ceiling, debris (presumably the “guts” of the Property) in the dumpster, and
some photographs (mostly post-demolition). This is not “exhibiting the damaged
property” – this is exhibiting portions of what Plaintiff tore out and replaced before
Grange had the opportunity to see the damaged Property in its original condition. In
fact Plaintiff’s own testimony establishes that she had no intention of making a claim
when she undertook remediation and repairs – she wanted to complete the work on her
own and avoid an increase in her premiums – until she was encouraged by Ms. Banks
to file a claim.
Plaintiff suggests that the Policy required her to do what was necessary to
preserve the Property – but her own testimony establishes that she was trying to do the
repair and remodel herself for financial reasons, not merely attempting to “preserve
the Property” for Grange’s benefit, when she completed demolition, remediated the
water damage, and made extensive repairs, paying for it all in cash, long before she
notified Grange of the occurrence. There was no way for Grange to “travel back in
time and determine what [the Property] looked like at the time of the [occurrence].”
Steelcase, 1989 WL 253892, at *10. And the evidence that was available to Grange
40

once it was given notice was “clearly inadequate to compensate for [Grange’s]
inability to contemporaneously investigate the incident.” Id. Plaintiff failed to satisfy
the Policy provision requiring that she “exhibit the damaged property,” a condition
precedent to coverage under the Policy, entitling Grange to summary judgment.
C.

The Policy’s Known Loss Provision Excludes Coverage for Damage
Resulting From Mold Throughout the Basement of Which Plaintiff
Was Aware at the Time Coverage Was Bound

The Policy provides as follows:
SECTION I - PROPERTY PROTECTION AND SECTION II PERSONAL LIABILITY PROTECTION CONDITIONS
8.

Known Loss

We do not provide coverage for any loss or occurrence
which was known to any insured person and occurred prior
to the time you signed the application for coverage, or
asked us or our agent to provide coverage, even if the loss
or occurrence falls within the period covered by the policy.
(Pl.’s Resp. Ex. 1, Policy p. 48, PgID 4579.)
“‘The known loss doctrine is a common law concept that derives from the
fundamental requirement of fortuity in insurance law. Its basic premise is that
insurance policies are intended to protect insureds against risks of loss; not losses that
have already taken place or are substantially certain to occur. Accordingly, the
doctrine is properly invoked when the insured ‘knows’ about the claimed loss before
the policy is purchased.’” Lower Town Project, LLC v. Lawyers Title Ins. Co., 2011
41

WL 3319710, at *14 (E.D. Mich. Aug. 1, 2011) (quoting Aetna Cas. & Sur. Co. v.
Dow Chem. Co., 10 F. Supp. 2d 771, 789 (E.D. Mich.1998)). “‘Courts have held that
the known loss doctrine must be ‘judged using a subjective standard’ because
requiring this ‘knowledge element best serves the overall principle of insurance.’”
(quoting Aetna, 10 F. Supp. 2d at 789.) “The crucial analysis, then, is whether the
insured ‘was aware, at a minimum, of an immediate threat of [the risk of loss] for
which it was ultimately held responsible and for which it now seeks coverage.’”
(quoting Aetna, 10 F. Supp. 2d at 789) (alteration in original).
Grange relies on the inspection report that Plaintiff obtained from Pillar to Post
in connection with the purchase of her home in December, 2013, which stated in
capital letters: MOLD ABATEMENT NEEDED THROUGHOUT BASEMENT
AREAS. ALL MOLD ABATEMENT MUST BE DONE IN ACCORDANCE WITH
EPA PROTOCOLS FOR OCCUPANTS HEALTH AND SAFETY. (Def.’s Mot. Ex.
H, June 28, 2016 Declaration of Matt Dalfino, Ex. A, October 3, 2013 Home
Inspection Report conducted at the Property, p. 51, PgID 4473.) The testimony is
undisputed that no formal mold abatement was conducted on the Property prior to the
frozen/burst pipe incident in late January or early February 2014. Because Plaintiff
was aware of this condition, the mold constitutes a loss about which Plaintiff was

42

aware at the time she signed the Policy.5
Plaintiff admits an awareness of the mold problem but argues in response that
the prior owner took care of the “mold” problem in the basement bathroom and
around the sump pump before closing by either spraying on “Kilz” or painting over
it when her Home Inspection Report clearly required professional abatement. (Pl.’s
Dep. 78:12-79:16.) But the Pillar to Post report expressly directed that the mold
problem to which the inspector was referring was “throughout the basement,” and had
to be abated in accordance with EPA protocols. In fact, Plaintiff obtained a significant
price reduction for the purpose, among other things, of conducting the abatement. It
is undisputed that Plaintiff never undertook to abate the mold problem throughout the
basement. No reasonable juror could conclude that Plaintiff reasonably believed that
the prior owner addressed the mold problem in the basement by painting over it or
spraying some “Kilz” on it. Even assuming that Plaintiff had given adequate notice,
and that Grange would not be entitled to summary judgment on her claims, Plaintiff
would be precluded from recovering any damages related to mold abatement because
the presence of mold throughout the basement,” which Plaintiff was informed through

5

Although Dave Varcoe’s Report does find the presence of mold in the basement of
the Property, nothing in that Report purports to determine how long the mold had been
present or to distinguish any “new” mold from the preexisting mold found on
Plaintiff’s Home Inspection Report. (Pl.’s Resp. Ex. 13.)
43

her Home Inspection Report required professional abatement in accordance with EPA
protocols, was known to Plaintiff at the time that Plaintiff secured the Policy with
Grange.
D.

Plaintiff is Not Entitled to Recovery of Attorney’s Fees

Grange argues that Michigan law “unequivocally precludes an insured from
recovering attorney fees as an element of damages against an insurer for breach of
contract.” (Def.’s Mot. 20, PgID 3745) (citing Shathaia v. Travelers Cas. Ins. Co. of
Am., 984 F. Supp. 2d 714, 728 (2013) (Duggan, J.). Plaintiff’s counsel conceded at
the hearing on Defendant’s motion that he is not entitled to seek attorneys’ fees. Thus,
Grange would be entitled to summary judgment on Plaintiff’s claim for attorneys’ fees
even were the Plaintiff’s claim to proceed to trial.
V.

CONCLUSION
Before giving notice to Grange of the occurrence, Plaintiff “gutted” the home

and deposited most of the debris in a dumpster in her driveway in the middle of
winter, preserving at most a pile of busted pipes for Grange to inspect, along with
some photographs, as evidence in support of a claimed outlay of over $132,000 in
cash (unsupported by invoices, receipts, or proof of payment) to demolish, remediate,
and repair alleged damage to the Property. The delay in notice, and the work
performed prior to finally giving notice, deprived Grange of any ability to investigate
44

the cause of the extensive damage Plaintiff reported, to determine for itself the scope
of the damage and the necessary repairs, or to select and negotiate with contractors to
perform the work that it may have concluded (after its investigation) was necessary.
Material prejudice is patent here and no reasonable juror could conclude otherwise.

Accordingly, the Court GRANTS Grange’s motion for summary judgment.

s/Paul D. Borman
PAUL D. BORMAN
UNITED STATES DISTRICT JUDGE
Dated: February 4, 2019

45