455 Companies, LLC v. Landmark American Insurance Company
OPINION AND ORDER denying 62 Plaintiff's Motion for Summary Judgment; terminating as moot 112 Motion in Limine; granting 155 Motion to Amend/Correct. Signed by District Judge Robert H. Cleland. (LWag)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
455 COMPANIES, LLC,
Case No. 16-10034
LANDMARK AMERICAN INS. CO.,
OPINION AND ORDER DENYING PLAINTIFF’S
MOTION FOR PARTIAL SUMMARY JUDGMENT
Insured Plaintiff 455 Companies, LLC alleges that Defendant Landmark
American Insurance Company breached their property insurance contract by wrongly
denying their claim resulting from water damage to the insured property. The dispute
was reassigned to this court on May 17, 2017—shortly before its scheduled jury trial
date of July 10, 2017. (Dkt. # 156.) The parties have engaged in extensive motion
practice in anticipation of trial, and some sixteen motions remain pending. Each party
has filed a motion for summary judgment concerning separate issues, as well as several
motions to exclude testimony or other evidence that must be resolved with the summary
judgment motions. The court will address each party’s partial summary judgment motion
and various motions to exclude in separate opinions.
Now before the court is Plaintiff’s motion for partial summary judgment. (Dkt. #
62.) Plaintiff asks that the court find that the loss is covered under the policy as a matter
of law. (Dkt. # 62.) The motion is fully briefed, and a hearing is unnecessary. See E.D.
Mich. LR 7.1(f)(2).1 For the reasons that follow, the court will deny the motion.
Unless otherwise noted, the following facts are undisputed. Plaintiff owns a
114,000 square foot commercial building with five floors, a basement, and two
mechanical penthouses on the roof, all located at 455 West Fort Street in the downtown
business district of Detroit, Michigan (“the Building”). At all times during Plaintiff’s
ownership, the Building has been vacant.
A. The Policy
Plaintiff purchased an all-risk commercial property insurance policy (“the Policy”)
for the Building from Defendant. (Dkt. # 62-1.) The Policy provided coverage up to $15
million per occurrence on a replacement cost basis for a term to last from July 8, 2014,
through July 8, 2015. Specifically, the policy provides coverage “for direct physical loss
of or damage to Covered Property” subject to a $25,000.00 deductible. (Id. at Pg. ID
The “causes of loss—special form[,]” referenced by the policy declarations
excludes coverage for “loss or damage caused by or resulting from . . . .
(g) Water . . . that leaks or flows from plumbing, heating, air conditioning
or other equipment . . . caused by or resulting from freezing, unless
(1) You do your best to maintain heat in the building or structure; or
(2) You drain the equipment and shut off the supply if the heat is
Plaintiff has also filed an unopposed motion for leave to file an amended reply brief to
its partial summary judgment motion (Dkt. # 155), explaining that it inadvertently omitted
an exhibit in its original filing. The court GRANTS Plaintiff’s unopposed motion (Dkt. #
155) pursuant to E.D. Mich. LR 15.1 and will refer to the original motion with the
exception of the additional exhibit.
(Dkt. # 62-1, Pg. ID 1345.) The Policy also includes two relevant endorsements: one
titled “Protective Safeguards” and the other “Protective Safeguards—Form Change.” (Id.
at Pg. ID 1322-24.) A line at the top of the first, the “Protective Safeguards”
endorsement, provides, “THIS ENDORESEMENT CHANGES THE POLICY. PLEASE
READ IT CAREFULLY.” (Id. at 1322.) The form lists “protective safeguards” which are
“added to” the “commercial property conditions.” (Id.) The form provides, “As a condition
of this insurance, you are required to maintain the protective devices or services listed
in the Schedule above.” (Id.) The schedule section of the form lists “Heat maintained at
55 degrees” as a “protective system[.]” (Id.)
The second endorsement—entitled “Protective Safeguards—Form Change” also
provides, at the top of the page, “This Endorsement Changes the Policy. Please Read It
Carefully.” (Id. at Pg. ID 1324.) The Form Change endorsement states that “Item B. on
the Protective Safeguards is replaced by” its contents. (Id.) Specifically, the Form
Change states that it adds the following provision to the “Exclusions section of . . .
causes of loss – special form”:
We will not pay for loss or damage caused by or resulting from applicable
causes of loss specified below, if prior to the loss, you:
a) Knew of any suspension or impairment in any protective safeguard
listed in the Schedule above and failed to notify us of that fact; or
b) Failed to maintain any protection safeguard listed in the schedule
above, and over which you had control, in complete working order.
(Id.) The form then provides a range of “Applicable Cause[s] of Loss” with checkboxes,
with the box indicating “Water Damage” checked. (Id.) Finally, the Form Change
endorsement states “Water Damage applies to Warrant Heat maintained at 55
degrees.” (Id.) The “causes of loss—special form” defines water damage as “accidental
discharge or leakage of water or steam as the direct result of the breaking apart or
cracking of a plumbing, heating, air conditioning or other system or appliance . . . that is
located on the described premises and contains water or steam.” (Dkt. # 62-1, Pg. ID
B. The Loss
In early January of 2015, a pipe broke in the women’s restroom on the fifth floor
of the Building.2 On January 13, the leak was discovered.3 Michael J. Brugger, COMM’s
Director of Operations, was notified that the building was flooding and “ran over to the
building” from his office one block away. (Dkt. # 62-15, Pg. ID 1475, 1480.) Brugger,
with the assistance of another individual, traced the leak to the broken pipe in the fifth
floor bathroom, and shut off the water. (Id. at Pg. ID 1475-79.) Brugger testified that the
building was warm when he arrived. (Id. at Pg. ID 1481.) At some point after shutting off
the water, Brugger checked the temperature and pressure of the baseboard heat
recirculation system that heats the building. (Id. at Pg. ID 1489-90; 1499-1500.) Brugger
also testified that the recirculation pumps were on at the time, (Dkt. # 62-15, Pg. ID
1484-85), the baseboard was warm to the touch, (id. at Pg. ID 1507), and the steam
room was “hot like a sauna” (id. at Pg. ID 1493).
Brugger testified that he took photographs of the thermometer and pressure
gauges of the baseboard recirculation water pumps at that time, which indicate a setting
of approximately 160 degrees. (Id. at Pg. ID 1489, 1499-1501; see also Dkt. ## 62-16,
Nothing in the record establishes more precisely when the pipe burst.
Defendant “contends that the date of discovery has neither been established nor
confirmed by any witness” and cites to deposition testimony of two individuals stating
that they were not sure when the loss was discovered. (Dkt. # 82, Pg. ID 5109.) But
Michael Brugger testified affirmatively that it was January 13th, and the basis for his
belief is that “[he] was there.” (Dkt. # 62-15, Pg. ID 1473.) Accordingly, the court finds
that the date of discovery is not genuinely in dispute.
62-17, 62-18, 62-19.) The “metadata” proffered by Plaintiff in connection with the
photographs indicates that they were taken on January 13, 2015 between 12:04 and
12:06 p.m. (Dkt. ## 16-20, 16-21, 16-22, 16-23, 16-24.) Defendant contends that the
metadata is not admissible and is “subject to simple manipulation and fabrication by its
operator[,]” objects that the phone itself was never produced and “is subject to a
spoliation charge[,]” and that Brugger testified he could not recall exactly when he took
the photographs. (Dkt. # 82, Pg. ID 5110.) Defendant has filed a motion in limine to
exclude the photographs and attendant metadata under Federal Rule of Civil Procedure
37(e). (Dkt. # 123.)
Matthew Pollard, the building’s former facility manager, testified that, in his
experience, maintaining a reading of 160 degrees on the loop temperature kept the
building between 55 and 60 degrees. (Dkt. # 62-13, Pg. ID 1455, 1458.) Defendant
argues that Pollard’s testimony assumes the system is fully operational and all zones of
the system are in proper working order. (Dkt. # 82, Pg. ID 5111.) Thus, if the system is
not fully operational, some portions of the building will not be heated regardless of the
loop temperature’s reading.
Defendant contends that “[b]y all accounts, ice lined the interior windows of the
subject [c]ommercial building with varying thickness from half an inch to an inch thick on
the loss discovery date.” (Dkt. # 82, Pg. ID 5123.) In support, Defendant points to
deposition testimony of an Isaac Sheppard, Jr. stating that “there was a half inch to an
inch of ice on the window” and clarified that it appeared to be on the interior, not the
exterior, of the window. (Dkt. # 84-13.) But nothing in the three-page excerpt of Mr.
Sheppard’s deposition testimony indicates when he was on the premises. (See id.)
Signal Restoration Services (“Signal”) was called to begin repair work, and Signal
retained Solomon Plumbing to fix the broken fifth floor pipe. (Dkt. # 114-4, Pg. ID 766263.) Solomon Plumbing employee Jim Wagner testified that, when he arrived on
January 13, the building felt “really cold” (Dkt. # 84-14, Pg. ID 5368) and there was ice
built up on the inside of the windows (Dkt.# 133-2, Pg. ID 9518). Solomon’s repair
invoice for January 13 indicates the work performed was “repaired frozen 1 1/2[ inch]
water main on 5th floor.” (Dkt. # 84-15.)4
On or about January 16, 2015, Pollard discovered an additional water leak in the
penthouse. (Dkt. # 1-1, Pg. ID 13; Dkt. # 84-9, Pg. ID 5327-29.) Pollard explained that
when he discovered the penthouse leak, “there was water dripping out of a frozen pipe”
which had made its way from the penthouse down to the first floor. (Dkt. # 84-9, Pg. ID
Defendant proffers two expert witnesses to testify that the fifth floor pipe burst
due to either that section of the pipe freezing or from a pressure buildup caused by the
frozen penthouse pipe. Both witnesses are subject to a motion to exclude. (See Dkt. #
C. “No Heat” Call and Float Ball
At some point on January 13 or January 14, Pollard called DJ McConnell Co.
HVAC Services (“DJ McConnell Co.”) because the heat was not working in the building.
The parties dispute when this call took place. Plaintiff asserts that it was the morning of
January 14, 2015—after the loss. (Dkt. # 62, Pg. ID 1279-80.) In support, Plaintiff points
Plaintiff has filed a motion in limine to exclude the Solomon repair invoices as hearsay.
(See Dkt. # 114.)
to phone records showing a call from Pollard’s cell phone to a DJ McConnell Co. cell
phone at 9:52 a.m. (See Dkt. # 62-25, Pg. ID 1537; Dkt. # 62-26, Pg. ID 1552.)
Landmark contends that the January 14 call was not the first call for service (Dkt.
# 82, Pg. ID 5112), and points to a handwritten invoice dated January 13, 2015 (Dkt. #
84-4, Pg. ID 5279-80.) Dave McConnell, the owner, testified that he takes customer
calls on both his cell phone and the business’s landline, (Id. at Pg. ID 5278) but could
not recall on which line the call came in. (Id. at Pg. ID 5281-83.) Defendant avers that it
requested the landline records, but they have not been produced. (Dkt. # 82, Pg. ID
5111.) McConnell testified that he could not remember when he got the service call, but
it was either on the 13th or the 14th. (Dkt. # 84-4, Pg. ID 5281.)
McConnell described the work performed as follows:
Well, it was we were called for no heat. And we checked the steam
convertor and controls, and we found the steam trap for the convertor not
passing—not passing anything, no steam, no liquid. And we found that the
float ball in the trap had some sort of a hole in it and it filled full of water
and it was causing the trap to think that it was empty and causing it to plug
up the steam flow through the system, through the convertor. Discussed it
with the customer and they said they had a source for the float ball and
said they would take care of it.
(Id. at Pg. ID 5280.) McConnell could not recall who he had spoken to the float ball
about. (Id.) He testified that the steam trap was not hot to the touch like it would be if it
were operating, and quickly determined that there was heat coming in from the street,
but not heat going into the building. (Id. at Pg. ID 5285-86.) According to an invoice from
The Macomb Group, a replacement steam trap was ordered on January 14, 2015, at
2:28 p.m. 5 (Dkt. # 62-28, Pg. ID 1559.)
Defendant contends that this invoice does not support the proposition that the
replacement was ordered on January 14. (See Dkt. # 82, Pg. ID 5112.) Defendant
points to a “Net Due Date” of February 26, 2015 and a “Disc[ount] Due Date” of
Pollard testified that the frozen pipe in the penthouse, combined with the
problems with the float ball, led him to believe that the heat was not on at the time of the
loss. (Dkt. # 84-9, Pg. ID 5329-31.) The float ball is the subject of another motion to
exclude. (See Dkt. # 121.)
Summary judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “In deciding a motion for summary judgment, the court must
view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor.” Sagan v. United States, 342 F.3d 493, 497
(6th Cir. 2003). The movant has the initial burden of showing the absence of a genuine
dispute as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[T]hat
burden may be discharged by showing . . . that there is an absence of evidence to
support the nonmoving party’s case.” Bennett v. City of Eastpointe, 410 F.3d 810, 817
(6th Cir. 2005) (internal quotation marks omitted). The burden then shifts to the
nonmovant, who must put forth enough evidence to show that there exists “a genuine
issue for trial.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citation omitted).
In evaluating a summary judgment motion, “the court need consider only the
cited materials, but it may consider other materials in the record.” Fed. R. Civ. P.
56(c)(3). Summary judgment is not appropriate when “the evidence presents a sufficient
February 6, 2015, (Dkt. # 62-28, Pg. ID 1559), and quotes the testimony of its expert
Michael Dowdall saying, “The discount dates and the net due dates don’t jive with the
order date and the pickup dates.” (Dkt. # 83-1, Pg. ID 5190.) Defendant does not
explain what he means by the dates failing to “jive” or how “Net Due Date” and
“Disc[ount] Due Date” fail to “jive” with the order date—which indicates that the ball was
ordered on January 14.
disagreement to require submission to a jury.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 243 (1986). To do so, the evidence must amount to more than a “scintilla.” Id.
(“The mere existence of a scintilla of evidence in support of the plaintiff’s position will be
insufficient.”). However, if that threshold is reached, “the judge’s function is not himself
to weigh the evidence and determine the truth of the matter but to determine whether
there is a genuine issue for trial . . . credibility judgments and weighing of the evidence
are prohibited.” Moran v. Al Basit LLC, 788 F.3d 201, 204 (6th Cir. 2015) (internal
quotation marks and citations omitted).
Plaintiff’s motion requests that the court find that, as a matter of law, the loss is
covered under the Policy. (Dkt. # 62, Pg. ID 1273.) To reach that finding, Plaintiff asks
the court for two related findings: First, that the Policy excludes coverage for water
damage caused by frozen pipes only if Defendant can show that Plaintiff failed to use
“best efforts” to maintain heat above 55 degrees in the building. (Id.) And second, that
there is no genuine dispute that Plaintiff did, in fact, use “best efforts” within the
meaning of the Policy. (Id.at 1273.)
A. Policy Interpretation
The court has diversity jurisdiction under 28 U.S.C. § 1332. Federal courts
exercising diversity jurisdiction apply the law of the forum state. Uhl v. Komatsu Forklift
Co., Ltd., 512 F.3d 294, 302 (6th Cir. 2008). Michigan insurance law governs here, as
both parties tacitly acknowledge in their briefing.
Under Michigan law, an insurance contract is generally interpreted like any other
contract—according to Michigan contract interpretation principles. Stryker Corp. v. ZL
Ins. Am., 735 F.3d 349, 354 (6th Cir. 2012); Rory v. Cont’l Ins. Co., 473 Mich. 457, 703
N.W.2d 23, 26 (2005). The meaning of a contract is a question of law. Wilkie v. AutoOwners Ins. Co., 469 Mich. 41, 664 N.W.2d 776, 780 (2003). The policy application,
declarations page, amendatory endorsements, and the policy itself constitute the
contract. See Royal Prop. Grp., LLC v. Prime Ins. Syndicate, Inc., 267 Mich. App. 708,
715, 706 N.W.2d 426, 432 (Mich. App. 2005) (citing Hall v. Equitable Life Ass. Soc’y of
the U.S., 295 Mich. 404, 408, 295 N.W. 204, 206 (1940)). A contract should be read as
a whole instrument, with the goal of enforcing the intent of the parties. Prestige Cas. Co.
v. Mich. Mut. Ins. Co., 99 F.3d 1340, 1350 (6th Cir. 1996). Ambiguous terms are to be
construed in favor of the insured—however the court must not create ambiguity where
none exists. Frankenmuth Mut. Ins. Co. v. Masters, 460 Mich. 105, 111, 595 N.W.2d
832, 837 (1999) (citations omitted). Where there is no ambiguity, the court must enforce
the terms of the contract as written, in accordance with their commonly used meanings
and taking into account the reasonable expectations of the parties. Id. (citations
The “Protective Safeguards—Form Change” endorsement explicitly replaces
Item B on the “Protective Safeguards” endorsement. (Dkt. # 62-1, Pg. ID 1324.) So
modified, Item B on the “Protective Safeguards” endorsement adds a provision to the
“Exclusions” section of the “Causes of Loss—Special Form” page in the policy. (Id.) The
added provision states “We will not pay for loss or damage caused by or resulting from
applicable causes of loss specified below, if prior to the loss, you . . . [f]ailed to maintain
any protection safeguard listed in the schedule above, and over which you had control,
in complete working order.” (Id.) Below, the form specifies “Water Damage” and
provides that “Water Damage applies to Warrant Heat maintained at 55 degrees.” (Id.)
Part A of the “Protective Safeguards” endorsement provides that “Heat maintained at 55
degrees” is added to the “Commercial Property Conditions” form. (Id. at 1341.)
Thus, the endorsements add a condition and an exclusion to the policy.
Coverage is conditioned on maintaining heat at (presumably at least) 55 degrees.
Losses caused by water damage are excluded to the extent that Plaintiff failed to
maintain the heat at 55 degrees prior to the loss. If, as Defendant contends, pipes froze
and burst because Plaintiff failed to keep the building above 55 degrees, the exclusion
applies and the condition is unsatisfied regardless of whether Plaintiff used “best efforts”
to maintain the heat.
Plaintiff’s contention that “to the extent there is any conflict or ambiguity between
policy provisions, such ambiguity must be resolved in 455’s favor” (Dkt. # 62, Pg. ID
1283) ignores the longstanding principle that “conflicts between the terms of an
endorsement and the form provisions of an insurance contract are resolved in favor of
the terms of the endorsement.” McKusick v. Travelers Indem. Co., 246 Mich. App. 329,
340, 632 N.W.2d 525, 532 (2001) (citing Hawkeye-Security Ins. Co. v. Vector Constr.
Co., 185 Mich. App. 369, 380, 460 N.W.2d 329 (1990)). Thus, Plaintiff’s argument that
the loss form’s “best efforts” provision should be applied for water damage resulting
from freezing because it is “more specific” than the protective safeguard endorsements
(Dkt. # 62, Pg. ID 1233) is misguided.
The “best efforts” provision, to the extent it conflicts with the amendatory
endorsements, is abrogated by the endorsements irrespective of whether it is more
specific. See McKusick, 246 Mich. App. at 340. Further, the policy is unambiguous. To
be sure, combining the form policy with multiple endorsements that do not explicitly
modify or replace the “best efforts” provision is not ideal. But the mere fact that the
contract language is difficult to assemble because it is spread across multiple forms
does not render it ambiguous—“an insurance contract is not ambiguous if it fairly admits
of only one interpretation.” Id.at 338. (citing Matakas v. Citizens Mut. Ins. Co., 202 Mich.
App. 642, 649-650, 509 N.W.2d 898 (1993). The language here, once the amendatory
endorsements are applied, forecloses Plaintiff’s interpretation.
As the court concludes that coverage does not turn on a question of whether
Plaintiff used “best efforts” to maintain the Building’s temperature, the court finds that
Plaintiff’s pending motion to preclude Defendant from arguing that Plaintiff failed to use
best efforts (Dkt. # 112) is moot. The court will terminate the motion accordingly.
B. Factual Dispute
Considering only the evidence in the record not subject to a pending motion to
exclude, the court finds there to be a genuine dispute as to whether the buildings heat
was maintained above 55 degrees as required in the policy. Wagner’s testimony that
the building felt “really cold” (Dkt. # 84-14, Pg. ID 5368) and that there was ice built up
on the inside of the windows (Dkt.# 133-2, Pg. ID 9518) when he arrived on January 13
creates a question of fact as to whether the building’s temperature was maintained
above 55 degrees. The court is required to draw all reasonable inferences in favor of
the nonmoving party, Sagan, 342 F.3d at 497, and testimony that the Building was cold
and the interiors of the windows coated with ice the day the loss was discovered fairly
suggests that the Building had not, in fact, been kept above 55 degrees throughout the
preceding days. While this evidence may not be overwhelming, the court may not weigh
the evidence or make credibility judgments at this stage. Moran, 788 F.3d at 204.
Because facts material to policy coverage are the subject of a genuine dispute, the
court must deny Plaintiff’s motion.
IT IS ORDERED that Plaintiff’s unopposed motion to for leave to file an amended
reply brief (Dkt. # 155) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s motion for partial summary judgment
(Dkt. # 62) is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s related motion in limine (Dkt. # 112) is
TERMINATED AS MOOT.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: July 28, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, July 28, 2017, by electronic and/or ordinary mail.
Case Manager and Deputy Clerk
S:\Cleland\JUDGE'S DESK\C1 ORDERS\16-10034.455COMPANIES.deny.plaintiff.partial.summary.judment.TLH.docx
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