Arlene's Truck Salvage v. Northfield/Northland Insurance Company

Filing 34

OPINION & ORDER (1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Dkt. 24) AND (2) DENYING DEFENDANT'S MOTION TO EXCLUDE AS MOOT (Dkt. 25). Signed by District Judge Mark A. Goldsmith. (JCur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ARLENE’S TRUCK SALVAGE,
Plaintiff,

Case No. 23-cv-11314

v.

HON. MARK A. GOLDSMITH

NORTHFIELD/NORTHLAND
INSURANCE COMPANY,
Defendant.
_____________________________________/

OPINION & ORDER
(1) GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (Dkt. 24)
AND (2) DENYING DEFENDANT’S MOTION TO EXCLUDE AS MOOT (Dkt. 25)
Before the Court are Defendant Northfield/Northland Insurance Company’s motion for
summary judgment (Dkt. 24) and motion to exclude Plaintiff Arlene’s Truck Salvage’s (ATS)
proposed experts (Dkt. 25). 1 For the reasons that follow, the Court (i) grants Northfield’s summary
judgment motion and (ii) denies as moot its motion to exclude ATS’s proposed experts.
I. BACKGROUND
ATS, a vehicle scrapping and salvaging business, and Northfield, a commercial insurer,
are parties to an insurance policy contract providing coverage for ATS’s building located in
Ypsilanti, Michigan. Compl. ¶¶ 4, 9 (Dkt. 4); Def. Statement of Material Facts (SOMF) ¶ 1.

1

Because oral argument will not aid the Court’s decisional process, the motions will be decided
based on the parties’ briefing. See E.D. Mich. LR 7.1(f)(2); Fed. R. Civ. P. 78(b). In addition to
the motions, the briefing includes ATS’s response to the summary judgment motion (Dkt. 28) and
response to Northfield’s motion to exclude ATS’s proposed experts (Dkt. 26) and Northfield’s
reply in support of its motion for summary judgment (Dkt. 30) and reply in support of its motion
to exclude (Dkt. 27).
1

In May 2022, ATS discovered physical damage to its building that rendered it structurally
unsound. Compl. ¶¶ 12, 15. ATS submits that the damage was caused by a combination of (i) the
nearby pile-driving activities at a neighboring property, (ii) a sinkhole, and (iii) a Detroit Thomas
Edison (DTE) utility pole attached to the building. Id. ¶ 13; Resp. to Mot. for Summ. J. at 9–10.
ATS sought insurance coverage from Northfield for the damage to its building. Compl. ¶ 14.
Following its investigation of ATS’s claim, Northfield denied coverage, asserting that the damage
was caused by “rising or shifting” soil conditions, which is excluded from coverage. Pl. SOMF ¶
7.
ATS filed this action, alleging breach of contract based on Northfield’s denial of coverage
under the policy. Compl. ¶¶ 7–33. 2 Northfield moves for summary judgment on ATS’s claim. In
addition to the summary judgment motion, Northfield moves to exclude ATS’s proposed experts
Yogi Anand and David Dowling.
The Court begins by addressing the summary judgment motion. Because the Court
concludes that Northfield is entitled to summary judgment for the reasons explained below, it need
not address the merits of Northfield’s motion to exclude and denies that motion as moot.
II. ANALYSIS 3
The parties dispute whether damage to the building is a covered loss under the policy.
Under Michigan law, which governs in this diversity case, “insurance policies are subject to the
2

ATS has dropped its claims for quantum meruit/unjust enrichment and promissory estoppel
(Counts II and III). Resp. to Mot. for Summ. J. at 15.
3

In assessing whether a party is entitled to summary judgment on any claim, the Court applies the
traditional summary judgment standard as articulated in Scott v. Harris, 550 U.S. 372, 380 (2007).
The movant is entitled to summary judgment if that party shows that there is no genuine dispute
as to any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(a). If the movant makes an initial showing that there is an absence of evidence to support
the nonmoving party’s case, the nonmovant can survive summary judgment only by coming
forward with evidence showing there is a genuine issue for trial. Celotex Corp. v. Catrett, 477
U.S. 317, 324–325 (1986).
2

same contract construction principles that apply to any other species of contract.” Rory v.
Continental Ins. Co., 703 N.W.2d 23, 26 (Mich. 2005). “Exclusionary clauses are construed
strictly in favor of the insured, but clear and specific exclusions will be given their effect.
However, an exception to an exclusion operates to preserve coverage despite the exclusionary
clause. An exception to an exclusion does not grant coverage, but only operates to preserve
coverage despite the exclusion.” Freeway Drive Invs., LLC v. Emps. Mut. Cas. Co., No. 1612677, 2017 WL 6452232, at *6 (E.D. Mich. Dec. 18, 2017) (punctuation modified). The insured
bears the burden to establish that that its claim falls within the terms of the policy, and the insurer
has the burden to prove that a policy exclusion applies. Id. The insured has the burden of proof
of showing that the exception to the exclusion applies. Harrow Prod., Inc. v. Liberty Mut. Ins.
Co., 64 F.3d 1015, 1020 (6th Cir. 1995).
ATS argues that its loss is covered under the policy because it was caused in whole or part
by (i) the pile-driving activity at a neighboring property, (ii) a sinkhole, or (iii) the utility pole
attached to the building—each of which ATS submits are covered causes under the policy that do
not fall under an exclusion. See Resp. to Mot. for Summ. J. at 9–16. Northfield disputes this. It
argues that ATS is not covered under the policy because of the “Earth Movement” exclusion and
“anti-concurrent, anti-sequential cause” provision. Mot. for Summ. J. ¶ 8.
The Court proceeds by first discussing the “Earth Movement” exclusion and its application
to the alleged pile driving and sinkhole activity, and next discusses the “anti-concurrent, antisequential cause” provision and its application to ATS’s claim related to the DTE utility pole.
A. “Earth Movement” Exclusion
The policy provides that Northfield “will pay for direct physical loss of or damage to
Covered Property . . . caused by or resulting from any Covered Cause of Loss.” Policy at
PageID.852 (Dkt. 24-1). A loss is covered if it is “direct physical loss unless the loss is excluded
3

or limited in this policy.” Id. at PageID.868. One exclusion to the general policy is the “Earth
Movement” exclusion. See id. Under this exclusion, Northfield is not obligated to pay for damage
indirectly or directly caused by “Earth sinking (other than sinkhole collapse), rising or shifting
including soil conditions which cause settling, cracking or other disarrangement of foundations or
other parts of realty . . . .” Id. The policy further states that the exclusion apples “regardless of
whether” the earth movement “is caused by an act of nature or is otherwise caused.” Id. “Sinkhole
collapse”—an exception to this exclusion—means “the sudden sinking or collapse of land into
underground empty spaces created by the action of water on limestone or dolomite.” Id. at
PageID.877.
ATS submits that the “Earth Movement” exclusion does not apply because the damage to
its building was caused either by (i) human activities, namely, the installation of pilings at a
neighboring cement plant, and/or (ii) sinkhole collapse. Resp. to Mot. for Summ. J. at 9. The
Court addresses each argument in turn.
1. Manmade or Natural Causes
The plain language of the policy forecloses ATS’s argument that man-made pile-driving
activity renders the exclusion inapplicable to its asserted loss. As provided in the policy, the
exclusion applies whether the earth movement is “caused by an act of nature or is otherwise
caused.” Policy at PageID.868.
As Northfield points out, Michigan courts’ treatment of similar earth-movement exclusions
further undermines ATS’s position. See Br. Supp. Mot. for Summ. J. at 13–14 (citing HomeOwners Ins. Co. v. Andriacchi, 903 N.W.2d 197, 203 (Mich. Ct. App. 2017)). In Andriachhi, the
Michigan Court of Appeals examined a policy that excluded “[a]ny earth movement (other than
sinkhole collapse), such as an earthquake, landslide or earth sinking, rising or shifting . . . .”
Andriacchi, 903 N.W.2d at 203. The insured argued that the exclusion did not apply to building
4

damage resulting from nearby street repairs because the exclusion applied only to “naturally
occurring events . . . such as earthquake, landslide or earth sinking, rising or shifting.” Id. at 203.
Rejecting this interpretation, the court held that the language of the exclusion was clear because it
applied to “any earth movement, be it the result of natural phenomena or the upshot of human
activities.” Id. at 207.
Like the exclusion in Andriacchi, the “Earth Movement” exclusion here applies regardless
of whether the movement was the result of a natural cause. Policy at PageID.868. Thus, even if
ATS is correct in its assertion that the earth movement that damaged the building was the result of
human activities such as pile driving, that fact does not establish an exclusion from coverage.
2. Sinkhole Collapse
Although not entirely clear from its briefing, ATS also appears to maintain that the damage
to its building was caused by sinkhole collapse and, therefore, falls within the exception to the
“Earth Movement” exclusion. Resp. to Mot. for Summ. J. at 9 (noting that “even [Northfield’s]
own expert . . . cannot exclude a sinkhole” as the cause of the damage).
The record is devoid of any evidence to support the view that the loss was caused by
sinkhole collapse. Even if the Court were to credit ATS’s expert reports, neither report supports
ATS’s assertion that the damage was caused by sinkhole collapse. Although Anand’s report notes
“sink holes” in the concrete flooring of the building, such references are merely descriptive
observations of the condition of the building’s concrete floor. See Anand Report at PageID.1553
(Dkt. 28-6). Anand’s report does not conclude that sinkhole collapse—as that term is defined
under the policy—caused the structural damage complained of by ATS. And the findings of ATS’s
other proposed expert cut against its position: Dowling’s report concludes that “the damage is not
[caused by] a naturally occurring sinkhole, but non-environmental conditions.” Dowling Report
at PageID.1561 (Dkt. 28-7).
5

Lacking its own evidentiary support showing sinkhole collapse, ATS attempts to rely on
Northfield’s expert report by Fares Ghannam. It asserts that the Ghannam report is unable to
“exclude a sinkhole” as the cause for the loss. Resp. to Mot. for Summ. J. at 9. This argument
mischaracterizes Ghannam’s findings. The report states that the “observed shallow-depth void in
the soil was inconsistent with having been caused by sinkhole or associated sinkhole activity.”
Ghannam Report at PageID.901 (Dkt. 24-3). While the report does allow that “[d]etermination of
the exact cause” of the earth movement would require further “subsurface geotechnical
evaluation,” id. at PageID.906, such a finding provides no support for concluding that the damage
was caused by sinkhole collapse.
Given the absence of evidence as to sinkholes, ATS has failed to raise an issue of material
fact as to whether the damage to its building was caused by sinkhole collapse.
B. DTE Utility Pole
In addition to the pile-driving activities and sinkhole collapse, ATS contends that a DTE
utility pole attached to its building contributed to its loss by damaging the building’s rafters, which,
in turn, “open[ed] the roof line [and] allowed water to enter from the roof and caused damage . . .
.” Resp. to Mot. for Summ. J. at 10–11. Northfield submits that the policy’s “anti-concurrent,
anti-sequential cause” provision precludes ATS’s claim. Br. Supp. Mot. for Summ. J. at 20. The
Court agrees with Northfield.
The “anti-concurrent, anti-sequential cause” provision provides that Northfield will not pay
for “loss or damage caused directly or indirectly” by earth movement “regardless of any other
cause or event that contributes concurrently or in any sequence to the loss.” Policy at PageID.868.
This clause operates to exclude coverage for loss or damage regardless of any other cause or event
that contributes concurrently or in any sequence to the loss. See Zedan v. SGL No. 1 Ltd., 527 F.
Supp. 3d 937, 941 (E.D. Mich. 2021).
6

Application of this clause is fatal to ATS’s DTE utility pole theory. Even were the Court
to accept as true that both the DTE utility pole (a covered cause) and the pile driving (an excluded
cause) contributed to ATS’s loss, the “anti-concurrent, anti-sequential cause” provision precludes
ATS from coverage.
Resisting this conclusion, ATS argues that the clause should not apply because it is “nonspecific.” Resp. to Mot. for Summ. J. at 13. It contends—without supporting citation—that the
phrases “regardless” and “any” render the clause “overbroad.” Id. But courts applying Michigan
law have enforced nearly identically phrased “anti-concurrent, anti-sequential cause” provisions.
See e.g., Zedan, 527 F. Supp. 3d at 941 (holding that a policy providing that coverage for “loss or
damage caused by one of the Basic Form Exclusions is excluded regardless of any other cause or
event that contributes concurrently or in any sequence to the loss” precluded insured’s claim for
fire losses alleged to be caused both by renovation work (an uncovered loss) and a fire (a covered
loss)).
ATS’s attack on the clause as overbroad is inconsistent with the “default rule,” under which
a loss that is the result of both a covered cause and excluded cause is deemed not covered, even in
the absence of an “anti-concurrent, anti-sequential cause” provision. As the Sixth Circuit has
explained, “the default rule under Michigan law is that a loss is not covered when it is concurrently
caused by the combination of a covered cause and an excluded cause . . . . the absence of an anticoncurrent, anti-sequential clause . . . does nothing to alter Michigan’s default rule that a loss is
not covered when it is caused by a combination of a covered risk and an excluded risk.” Iroquois
on the Beach, Inc. v. Gen. Star Indem. Co., 550 F.3d 585, 588–589 (6th Cir. 2008) (emphasis
omitted). The Court may not find that the parties intended to alter Michigan’s default rule on the
ground that the policy’s “anti-concurrent, anti-sequential cause language” was without adequate
specificity. Zedan, 527 F. Supp. 3d at 943 n.5 (“Iroquois demonstrates that a court may not find
7

that the parties intended to ‘alter’ Michigan's default rule on the ground that they omitted ‘anticoncurrent, anti-sequential cause’ language from one exclusion and included such language in
another exclusion.”).
ATS also argues that the “anti-concurrent, anti-sequential cause” provision is inapplicable
because its loss related to the DTE utility pole is “independent and distinct from” the pile-driving
activities. Resp. to Mot. for Summ. J. at 14. In other words, ATS argues that it asserts claims
related to two insurable losses—a loss from the pile driving activity and a loss from the DTE utility
pole. See id.
ATS’s argument is belied by its own pleadings. Its complaint alleges a single loss,
asserting: “on or about [May 20, 2022], . . . [ATS] suffered a property loss at [its] property which
has continuously worsened destroying significant portions of the interior and exterior of the
commercial building . . . .” Compl. ¶ 12. The complaint further alleges that the causes of that loss
include “sink holes, third party causing movement of soil, improper installation to structural
portions of the building . . . .” Id. ¶ 13. Thus, ATS’s complaint alleges one loss resulting from
multiple causes. It cannot assert a new claim through argument in its response to a motion for
summary judgment. See Bridgeport Music, Inc. v. WM Music Corp., 508 F.3d 394, 400 (6th Cir.
2007) (explaining that a plaintiff cannot “expand its claims to assert new theories” in a response
to summary judgment).
Because there is no disputed material fact that ATS’s claimed loss was caused in part by
an excluded cause (earth movement) and in part by a covered cause (DTE utility pole), ATS’s
claim based on the DTE utility pole is precluded by the policy’s “anti-concurrent, anti-sequential
cause” provision. And because ATS has failed to raise a disputed issue of material fact as to
whether it is entitled to coverage under the policy agreement, Northfield is entitled to summary
judgment on ATS’s breach of contract claim.
8

III. CONCLUSION
For the foregoing reasons, the Court (i) grants Northfield’s motion for summary judgment
(Dkt. 24) and (ii) denies as moot Northfield’s motion to exclude Arlene’s Truck Salvage’s
proposed experts (Dkt. 25).
SO ORDERED.
Dated: September 25, 2024
Detroit, Michigan

s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge

9