Gardner White Furniture Co., Inc. v. Affiliate FM Insurance Company
OPINION and ORDER Granting Defendant's 18 MOTION for Summary Judgment and Denying Plaintiff's 17 MOTION for Partial Summary Judgment. Signed by District Judge Judith E. Levy. (SBur)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Gardner White Furniture Co., Inc.,
Affiliated FM Insurance Co.,
Case No. 16-cv-10865
Judith E. Levy
United States District Judge
Mag. Judge Anthony P. Patti
OPINION AND ORDER GRANTING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT  AND DENYING PLAINTIFF’S
MOTION FOR PARTIAL SUMMARY JUDGMENT 
Before the Court are plaintiff Gardner White Furniture Co., Inc.’s
motion for partial summary judgment (Dkt. 17), and defendant Affiliated
FM Insurance Co.’s motion for summary judgment. (Dkt. 18.)
For the reasons set forth below, defendant’s motion for summary
judgment is granted, and plaintiff’s motion for partial summary
judgment is denied.
Plaintiff Gardner White Furniture Co., Inc. operates furniture
retail sales facilities and warehouses in Michigan. (Dkt. 12 at 1–2.)
Defendant Affiliated FM Insurance Co. is an insurance company that
issued an insurance policy to plaintiff. (Id. at 2.)
On or about August 19, 2014, plaintiff sustained damage from a
severe storm to its retail store located at 7680 Telegraph Road, Taylor,
Michigan. (Dkt. 12 at 3.)
Thereafter, plaintiff submitted a claim for storm and wind loss to
defendant. On November 6, 2014, defendant sent plaintiff an advance
payment on the claim for $200,000. (Dkt. 19-2.)
On December 11, 2014, plaintiff’s contractor, Professional
Renovation Services, LLC (“PRS”), provided plaintiff with a preliminary
loss valuation of the repair work, which listed a replacement cost value
(“RCV”) of $545,867.15, actual cash value (“ACV”) of the loss of
$416,684.09, and depreciation of $129,183.06. (Dkt. 17 at 14; Dkt. 17-4
On January 16, 2015, a proposed valuation was discussed by the
parties. This proposal indicated that the replacement cost value was
$545,510.88, the actual cash value was $335,816.11, and withheld
depreciation was therefore $209,694.77. (Dkt. 17-4 at 3.) On January
20, 2015, defendant accepted the proposed amounts. (Dkt. 19-4 (email
from Sorrell to Kniivila).)
After these discussions, defendant provided a total of $362,240.29
(including the $200,000 advance), consisting of $36,424.18 for emergency
service costs and $325,816.11, which was the actual cash value after
applying the $10,000 deductible, to indemnify plaintiff. (Dkt. 15 at 3;
Dkt. 17 at 15; Dkt. 19-2 at 2–3; Dkt. 19-8 at 2; 19-9 at 2.) As plaintiff was
informed along with the February 18, 2015 payment of $125,816.11, the
payment “represents the ACV [actual cash value] payment of the above
captioned claim,” which added to the $200,000 advance payment,
represented the entire ACV agreed to on January 20, 2015. (Dkt. 19-8.)
Plaintiff claims that after repairs began, it discovered the work
needed was far more extensive than originally estimated. (Dkt. 12 at 4.)
On October 1, 2015, “following the completion of the repairs to the
Property” (Dkt. 17 at 15), plaintiff submitted a revised bill to defendant,
stating that the actual cost of repairs completed was $576,626.39, which
was over the RCV of $545,510.88 agreed on by the parties. (Dkt. 21 at
10; Dkt. 17-5 at 2–3.) Because the actual cost of repairs exceeded the
RCV, plaintiff requested the remaining $209,694.77 in withheld
depreciation. According to plaintiff, defendant has wrongfully refused to
provide the withheld depreciation. (Dkt. 12 at 4; Dkt. 17-5 at 2.)
Defendant argues that plaintiff’s revised estimates include work to
expand and renovate plaintiff’s property, which is not covered under the
policy. (Dkt. 21 at 7.) Specifically, plaintiff spent only $318,468.16 on
repairs, which was less than the actual cash value the parties initially
agreed on, and anything spent over that amount was for renovations
unrelated to the insurance claim, and therefore not covered by the policy.
(Dkt. 15 at 3.) For example, plaintiff’s revised bill allegedly included
charges for significant improvements, upgrades, and renovations of the
storefront, employee break room, interior floors, dining room, office area,
and breakroom even though not all of these areas were damaged by the
storm. Further, even though defendant covered the cost of repairing the
roof, $171,478, after the repairs were completed, plaintiff argued the cost
defendant should have paid was not the agreed-on coverage, but
$805,610. (See Dkts. 19, 21.)
After defendant refused to pay the depreciation, plaintiff
submitted a demand for appraisal to defendant on November 23, 2015.
On or about December 7, 2015, defendant “denied” the appraisal, stating
it had satisfied its obligations. (Dkt. 15 at 5.)
On March 9, 2016, plaintiff filed a complaint requesting an
appraisal (Count I), and asserting defendant breached the policy by
“failing to pay certain costs” and refusing to participate in an appraisal,
thereby causing plaintiff “damages . . . that exceed $200,000.” (Dkt. 1 at
5–6.) Plaintiff alleged that it had “made all repairs related to the Loss
and  spent more than Defendant’s replacement cost value,” and
therefore was entitled to the withheld depreciation. (Id. at 4.)
On September 14, 2016, plaintiff filed an amended complaint,
asserting the same two counts. But plaintiff newly alleged that in the
alternative, it is also entitled to “submit its claim based on the actual
cash value of the property lost or damaged.” (Dkt. 12 at 4.)
Plaintiff now seeks a declaration that defendant must participate
in an appraisal, as provided for under the policy, because the parties
disagree about the actual cash value and amount of the loss (Count I).
(Dkt. 12 at 5–6.) As the policy states, “In case the insured and this
Company shall fail to agree as to the actual cash value or the amount of
loss, then, on the written demand of either, each shall select a competent
and disinterested appraiser,” and that both shall “select a competent and
disinterested umpire,” then appraise the property, and should they fail
to agree on the value, “submit their differences only to the umpire.” (Dkt.
12-1 at 3.) In the alternative, plaintiff also alleges breach of contract,
arguing defendant was obligated to pay the actual cash value of the
property lost (Count II). (Id. at 6–7.)
Summary judgment is proper when “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). The court may not
grant summary judgment 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. 242, 248 (1986). The court “views the evidence, all
facts, and any inferences that may be drawn from the facts in the light
most favorable to the nonmoving party.” Pure Tech Sys., Inc. v. Mt.
Hawley Ins. Co., 95 F. App’x 132, 135 (6th Cir. 2004) (citing Skousen v.
Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002)).
Plaintiff and defendant each seek summary judgment on Count I.
Plaintiff argues defendant is required to participate in an appraisal
because they disagree about the actual cash value and amount of loss.
(Dkt. 17 at 23–26.)
Defendant argues this provision does not apply
because the dispute is about the scope of the policy, not valuation. (Dkt.
18 at 23–24.)
Further, defendant argues that both claims are
procedurally and substantively barred by the express terms of the
contract. (Id. at 11.)
Whether Plaintiff’s Claims Are Time-Barred
Defendant argues that plaintiff’s lawsuit is barred for two reasons:
(1) the policy permitted a claim for actual cash value only until the
repairs were complete; and (2) the policy required plaintiff to file a claim
with the loss amount and actual cash value within a specific time frame.
Because plaintiff did not file within the requisite time, the suit is barred,
as the policy states no suit shall be permitted unless the claimant
complies with all terms of the policy. (Dkt. 19 at 15–17.)
Under Michigan law, “insurance policies are interpreted in the
same manner as every other contract.” Stryker Corp. v. XL Ins. Amer.,
735 F.3d 349, 357 (6th Cir. 2012) (internal citation omitted).
“[i]nterpretation of the policy is a question of law.” Federal Mogul U.S.
Asbestos Personal Injury Trust v. Continental Cas. Co., 666 F.3d 384, 387
(6th Cir. 2011). Courts look first to “the contract as a whole,” and to the
“language of the insurance policy.” Id. (quoting Citizens Ins. Co. v. ProSeal Serv. Grp., Inc., 477 Mich. 75, 82 (2007)). The terms “must be given
their plain meaning,” and, if a term is undefined, “the court must
interpret it according to its commonly used meaning, taking into account
the reasonable expectations of the parties.” Prestige Cas. Co. v. Mich.
Mut. Ins. Co., 99 F.3d 1340, 1350 (6th Cir. 1996). A court “should not
create ambiguity . . . where the terms of the contract are clear and
precise,” id., but if terms are ambiguous, or “susceptible to two different
reasonable interpretations,” then a court must construe them “in the
light most favorable to the insured.” Realcomp II, Ltd. v. Ace Amer. Ins.
Co., 46 F. Supp. 3d 736, 740 (E.D. Mich. 2014).
The policy at issue states that “within sixty days after the loss,
unless such time is extended in writing by this Company, the insured
shall render to this Company a proof of loss, . . . stating the knowledge
and belief of the insured as to the following: time and origin of the loss .
. . the actual cash value of each item thereof and the amount of loss
thereto.” (Dkt. 12-1 at 3 (lines 90-122).) Actual cash value is defined as
“the cost to repair or replace the property, at the time and place of the
loss or damage, with material of like kind or quality, less proper
deduction for obsolescence and physical depreciation.” (Id. at 41.)
Any payment owed “shall be payable sixty days after proof of loss,
as herein provided, received by this Company and ascertainment of the
loss is made  in writing.” (Dkt. 12-1 at 3 (lines 150-156).)
Any amount paid out from the policy is “determined based on the
cost of repairing or replacing (whichever is the lesser), at the time of loss,
with materials or equipment of like kind and quality without deduction
(Dkt.12-1 at 37 (para. 14).)
Pursuant to this
calculation, the insured party may “submit [a] claim based on the actual
cash value of the property lost or damaged until repair and replacement
has been completed,” and may submit a claim for “the additional coverage
which replacement cost provides if notification of intention to do so is
received by this Company within 180 days after the loss or damage.” (Id.
at 38 (para. 14(b)(2)).)
Any replacement cost is subject to the further condition that “[i]n
no event will payment exceed the actual cost incurred for repairs,
replacement, or the limit of liability stated in this policy, whichever is the
lesser.” (Dkt. 12-1 at 39 (para. 14(c)(2)).)
And “[i]f the Insured fails to comply with any of the valuation
provisions . . . the basis of valuation will revert to the actual cash value
as defined in this policy.” (Dkt. 12-1 at 39.)
Finally, no lawsuit is permitted “on this policy . . . unless all the
requirements of this policy shall have been complied with.” The contract
contradicts itself as to whether the suit must be brought within one or
two years after the loss. (Dkt. 12-1 at 3 (lines 157-161), 26 (para. 12).)
Here, the terms of the contract are clear and unambiguous. A claim
must be submitted to the insurer within sixty days of the loss, and must
include information such as the date of the loss and actual cash value of
the loss. Actual cash value is a defined term, and clearly includes the
costs of repair or replacement, and excludes depreciation. The insured
may submit a claim in the amount of actual cash value, but only up and
until the repairs or replacements are complete. Additionally, the insured
may request replacement costs in addition to actual cash value, but must
do so within 180 days of the loss or damage having occurred. Should the
additional replacement costs not be requested within this time frame, the
valuation to which the insured may be entitled is the actual cash value.
Applying this interpretation, plaintiff’s claim fails for several
reasons, as the undisputed timeline of events makes plain. Plaintiff’s
loss occurred on or about August 19, 2014.
At some time prior to
November 6, 2014, plaintiff submitted a claim, which defendant
On November 7, 2014, defendant advanced plaintiff
$200,000. On December 11, 2014, plaintiff’s contractor, PRS, submitted
an estimate of the replacement cost value, depreciation, and actual cash
value. The parties discussed the valuation on or around January 16,
2015, and plaintiff agreed to the proposed valuation on January 20, 2015.
On February 18, 2015, defendant sent plaintiff a letter and check for
$125,816.11, which constituted the outstanding balance of the ACV
agreed to on January 20, 2015. Plaintiff then contacted defendant on
October 1, 2015, to request the withheld depreciation because the actual
cost of repairs exceeded the agreed-on RCV.
No documentation submitted by either party suggests the parties
disagreed on the actual cash value prior to October 1, 2015, which is both
after the 180 days to claim additional coverage for repairs and after the
repairs were completed. Specifically, no documentation suggests that
plaintiff gave notice to defendant prior to October 1, 2015 that it intended
to seek additional replacement costs. Thus, the claim is time-barred
because plaintiff failed to notify defendant of its intent to seek additional
costs by February 19, 2015, or 180 days after the storm damage occurred.
And the claim is time-barred because plaintiff did not request a different
ACV prior to repairs being completed in October 2015. Accordingly,
plaintiff has not complied with the terms of the policy and is not entitled
to bring suit on these claims. See Tate v. Paul Revere Ins. Co., Case No.
05-cv-70438, 2005 WL 1861933, at *3 (E.D. Mich. Aug. 3, 2005) (holding
claims time-barred because claim was not brought in time limits set forth
For the reasons set forth above, defendant’s motion for summary
judgment is GRANTED. (Dkt. 18.)
Plaintiff’s motion for partial summary judgment is DENIED. (Dkt.
This opinion and order resolves all claims and closes the case.
IT IS SO ORDERED.
Dated: July 13, 2017
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on July 13, 2017.
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