Laframboise v. State Farm Fire & Cas. Co.

588 F.Supp.3d 763

Scott LAFRAMBOISE, Plaintiffs,

v.STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

Case No. 1:21-cv-12876

United States District Court, E.D. Michigan, Northern Division.

Signed March 3, 2022

Adam Kutinsky, Birmingham, MI, for Plaintiffs.

Cary R. Berlin, Patrick Johnson & Mott PC, Mt. Clemens, MI, for Defendant.

OPINION AND ORDER (1) GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, (2) DENYING AS MOOT DEFENDANT'S MOTION TO FILE SUPPLEMENTAL AUTHORITY, AND (3) DIRECTING DEFENDANT TO COMPLY WITH MICHIGAN'S APPRAISAL PROCESS

THOMAS L. LUDINGTON, United States District Judge

A tree fell on Plaintiff's house. He maintained a homeowners-insurance policy with Defendant. Defendant has acknowledged coverage for the damage caused by the tree. According to Defendant, Plaintiff's house has other problems caused by occurrences expressly excluded from the policy's coverage, not by the tree impact.

Neither Plaintiff nor Defendant contends that the policy's language is unclear or ambiguous, so Plaintiff has invoked Michigan's statutory appraisal process to determine the amount of the loss. Defendant confusingly opposes the appraisal remedy, citing the policy verbatim in 15 affirmative defenses over 13 pages as justifying a need to interpret the policy's coverage provisions rather than simply read them.

Plaintiff framed the issue by filing suit to enforce the policy providing for the appraisal process and then filing a motion for summary judgment. As noted, Defendant appears to oppose the appraisal process and, thus, it also seems to oppose the Motion for Partial Summary Judgment.

Because neither of the parties finds any issue with the clarity of the insurance policy requiring judicial interpretation (i.e., a coverage issue), Plaintiff's Motion will be granted, and Defendant's Motion will be denied. Consequently, the parties will be directed to comply with Michigan's appraisal process.

I.

A.

During a windstorm in June 2020, a tree crashed into the southwest corner of Plaintiff Scott Laframboise's house located at 5130 North Center Road, Saginaw, Michigan 48604. ECF No. 10-5 at PageID.305. Fortunately, Plaintiff had an active insurance policy with Defendant State Farm that covered the storm-induced loss. ECF No. 7 at PageID.60. The policy's declaration page provided $267,400 of coverage for the dwelling and $200,550 for personal property. Id. Plaintiff timely filed an insurance claim with Defendant. See id.

Defendant acknowledged the loss, inspected the property, and then "issued an estimate of costs to complete repairs," calculating the "Replacement Cost Value" to be $86,942.77 and the "Actual Cash Value" to be $74,614.75. Id. Plaintiff hired J&J Contracting to conduct a separate analysis, which led to an estimate of $120,197.40. ECF No. 10-4 at PageID.301. One week later, Defendant paid Plaintiff $56,607.72. ECF No. 7 at PageID.60.

Plaintiff attempted to repair the damaged portion of his house. But the house's faulty foundation apparently prevented the rebuild, so he sought additional money from Defendant. Plaintiff again retained J&J to estimate the cost to "remove" and "rebuild [his] 1890 [square foot] home," to "excavate for [a] new crawl space," and to hire "license subcontractors" to install new "mechanical/electrical/plumbing." ECF No. 1-2 at PageID.14. J&J's quote to tear down, remove, and rebuild Plaintiff's home totaled $236,250.00. Id.

Defendant consulted a city building inspector, Bruce Palmer, who indicated that "50% of the structure would have to be removed" to repair the damaged portion of the house. ECF No. 10-3 at PageID.297 (emphasis omitted). The building inspector indicated that "the City was not requiring the entire house to be demolished," contrary to Plaintiff's contractor's determination that a full demolish was required. Id. Because his house was not repaired, Plaintiff contends, moisture created mold on his furniture, leading him to file a supplemental claim. See id. at PageID.297.

Because the parties disagreed on "what damages were related to the tree," Defendant hired Alex E. Sadovskiy, a forensic engineer from Donan Engineering Co., "to determine the extent of [the] structural damage from [the] tree impact." See id. at PageID.298; ECF No. 10-5 at PageID.304. Plaintiff and J&J attended the assessment "to point out areas of concern and to provide firsthand information." Id.

Alex Sadovskiy found that the tree impact damaged Plaintiff's house, but that much of the problems that Plaintiff and J&J identified were not direct causes of the tree fall. Mr. Sadovskiy explained that the "rafter thrust" of the tree's impact displaced the "south, east, and west walls above the edges of the south slab foundation." ECF No. 10-5 at PageID.310. But, he continued that "the tree impact" did not damage the "remaining walls," "the remainder of the roof and house to the north of the south foundation," or "the foundation." Id. Yet he cautioned that determining whether the south foundation "was damaged by the tree impact," would require "the concrete foundation along the east, west, and south sides of the south foundation [to] be exposed." Id. at PageID.310–11. He also found that the tree impact did not cause "the sloping floors and leaning walls outside of the impact zone." Id. at PageID.311.

In summary, Alex Sadovskiy concluded his report, providing that:

• The tree impact caused the following damage: fractured roof above the south slab-on-grade foundation; displaced ceiling above the living room; displaced north wall in the southeast bedroom. The south, east, and west exterior walls over the south foundation were displaced by the tree impact.

• The house was not structurally damaged beyond the impacted area on the south side of the house.

• The cause of the sloping floors and leaning walls outside of the damages described above are due to settlement and improper site drainage.

• Different foundation types constructed at different times are a contributing cause of settlement.

• A qualified professional should check the electrical and plumbing systems for damages and replace as necessary.

Id. at PageID.312.

Plaintiff sent Defendant a third estimate written by an unidentified entity, calculating the repair cost to be $260,955.75, which is $140,758.35 more than J&J's July 2020 estimate. See ECF No. 7 at PageID.61, 168–205.

On October 4, 2021, Plaintiff made a formal demand for appraisal under Michigan Compiled Laws § 500.2833(1)(m). Id. at PageID.61, 207. Two days later, Plaintiff appointed "Joseph Ledbetter of DisasterCo as his appraiser." See id. at PageID.208. Defendant did not appoint an appraiser within the 20 days mandated by § 500.2833(1)(m). Twenty-three days later, Plaintiff filed suit in the Saginaw County Circuit Court to recover benefits under the policy, alleging breach of the insurance contract against Defendant. See Laframboise v. State Farm Fire and Cas. Co. , No. 21-045910-CK (Mich. 10th Cir. Ct. Saginaw Cnty. filed Nov. 2, 2021).

As of November 29, 2021, Defendant has paid Plaintiff $79,798.76 for the damage to the house and $33,690.88 for living expenses (i.e., $113,489.64). ECF No. 10-6 at PageID.330–31.

Defendant removed the case to this Court under 28 U.S.C. § 1332 on December 9, 2021. See ECF No. 1 at PageID.1. Six days later, Defendant filed an answer to Plaintiff's Complaint. ECF No. 3. One month later, Plaintiff filed a motion for partial summary judgment, which has been fully briefed. ECF Nos. 7; 10; 11. In response, Defendant filed a motion to submit supplemental authority, doubling as a cross-motion for partial summary judgment. ECF No. 12.

B.

As relevant, Michigan Compiled Laws § 500.2833(1)(m) provides:

That if the insured and insurer fail to agree on the actual cash value or amount of the loss , either party may make a written demand that the amount of the loss or the actual cash value be set by appraisal. If either makes a written demand for appraisal, each party shall select a competent, independent appraiser and notify the other of the appraiser's identity within 20 days after receipt of the written demand. The 2 appraisers shall then select a competent, impartial umpire. If the 2 appraisers are unable to agree upon an umpire within 15 days, the insured or insurer may ask a judge of the circuit court for the county in which the loss occurred or in which the property is located to select an umpire. The appraisers shall then set the amount of the loss and actual cash value as to each item.

MICH. COMP. LAWS § 500.2833(1)(m) (emphases added).

In other words, when an insurer and its insured disagree on the "amount of the loss"—as opposed to an interpretation of the policy's text—the insured may demand the appraisal procedure. The two appraisers and the umpire then determine the loss's value.

C.

The policy provides, as relevant:

SECTION I – LOSSES INSURED

COVERAGE A – DWELLING

1. We will pay for accidental direct physical loss to the property described in Coverage A, unless the loss is excluded or limited in SECTION I – LOSSES NOT INSURED or otherwise excluded or limited in this policy. However, loss does not include and we will not pay for, any diminution in value .

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SECTION I – LOSSES NOT INSURED

1(k). We will not pay for any loss to the property described in Coverage A that consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through m. below, regardless of whether the loss occurs abruptly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of settling, cracking, shrinking, bulging, or expansion of pavements, patios, foundations (including slabs, basement walls, crawl space walls, and footings), walls, floors, roofs, or ceilings;

.... 2(g). We will not pay for, under any part of this policy, any loss that would not have occurred in the absence of one or more of the following excluded events. We will not pay for such loss regardless of: (a) the cause of the excluded

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