Opinion
Case No. 18-11659
08-02-2019
O.L. MATTHEWS, M.D., P.C., Plaintiff, v. HARLEYSVILLE INSURANCE COMPANY, Defendant.
Mark A. Pitchford, Pitchford Kendal PC, Bloomfield Hills, MI, A. Tony Taweel, Detroit, MI, for Plaintiff. Nathan G. Peplinski, Michael F. Schmidt, Harvey, Kruse, Troy, MI, for Defendant.
Mark A. Pitchford, Pitchford Kendal PC, Bloomfield Hills, MI, A. Tony Taweel, Detroit, MI, for Plaintiff.
Nathan G. Peplinski, Michael F. Schmidt, Harvey, Kruse, Troy, MI, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [#27]
GERSHWIN A. DRAIN, United States District Judge I. INTRODUCTION
Defendant removed the instant breach of contract action to this Court on May 25, 2018. The genesis of this matter stems from Defendant Harleysville Insurance Company’s denial of Plaintiff O.L. Matthews, M.D., P.C.’s claim for water damage loss under an "all risks" policy of insurance.
Presently before the Court is the Defendant’s Motion for Summary Judgment, filed on January 15, 2019. This matter is fully briefed and a hearing was held on July 30, 2019. For the reasons that follow, the Court will grant Defendant’s Motion for Summary Judgment.
II. FACTUAL BACKGROUND
O.L. Matthews, M.D. is the President and owner of O.L. Matthews, M.D., P.C. Matthews' business bought a building at 1286 Middlebelt in the early 1980s. Matthews does not know how old the building was when he purchased it. Nor did Williams have knowledge concerning the condition of the roof. Matthews noticed leaks through the roof in January and February of 2017. Matthews filed a claim with Defendant, however his claim was denied. Matthews did not pursue this claim further.
At the time the leaks were discovered, Matthews hired Roy’s Roofing to provide maintenance to the roof. Darrell Wood is the owner of Roy’s Roofing. He went to Matthews' office in January and again in February of 2017 because of the roof leaks. When Wood first went out to check the roof in January, he observed water on the roof describing the amount of water "it was like a lake." Def.'s Mot. Summ. J., Ex. 4 at PgID 1002. After Wood removed the water, he noted that there were a lot of seams open and a lot of bad spots. Id. He described the roof as "messed up," "damaged" and it had a lot of "bad" and "sagging" areas. Id. at PgID 1002-03. He also noted that there were a lot of open seams and holes in the roof. Wood claims that his repair was a "band-aid" and that the roof needed to be replaced. Id. Wood informed Matthews that the roof drain was not working which is why the water was ponding on the roof. Id. He told Williams that someone would have to continually go up on the roof and remove the water. Id. at 1003-04.
In July of 2017, Dr. Matthew contacted Andrew Yonko, who is the President and owner of King’s Roofing. Def.'s Mot. for Summ. J., Ex. 5 at PgID 1009. Yonko inspected the roof and provided an estimate. Id. Yonko’s estimate noted "deterioration open seams" which was from "wear and tear." Id. at PgID 1017. Yonko testified that the roof would have a serviceable life of 15 to 20 years. Id. Before King’s Roofing could begin the work, another leak occurred on August 17, 2017. On that day, Matthews contacted Yonko to tell him that water was coming into the building. This leak is the subject of the instant lawsuit. King’s Roofing came out a few days later and performed sealing of the entire roof to stop any water intrusion.
When Yonko was on the roof making the repairs, he saw there were sagging roof panels in numerous areas and that the roof membrane was being pulled apart by the weight of the water. He further found that the drain was 1 ¾" above the roof deck. At his deposition, he testified that this was a design problem. He further testified that he believes the leak and holes were caused by water that had ponded on the roof tearing the membrane.
On August 21, 2017, Matthews filed a claim for water damage arising from the August 17, 2017 leak. Defendant denied this claim as well.
Plaintiff retained Michael Williams as an expert in this matter. Williams inspected the roof on September 20, 2017, approximately four weeks after the date of the incident. At that time, he observed "standing water ponding on approximately 75% of the flat portion of the roof." Def.'s Mot. for Summ. J., Ex. 9. His report notes that "the measured water depth in several of the ponded areas was 2 ½ inches ... the roof joists lines being almost an inch above the water surface in the ponded area and the roof drain being 1" – 1 1/2" above the roof deck, the roof deck must support the weight of almost 5 inches of water before it can discharge into the roof drain." Id.
Williams testified at his deposition that the cause of the loss was that "the original slope was not dramatic enough, or it was not a steep enough grade to begin with, and that started the problem off from day one." Def.'s Mot. for Summ. J., Ex. 8 at PgID 1049. He clarified that the cause of the loss was the "result of poor design to begin with, which did not provide enough slope to the roof and ... that was exacerbated by incorrectly installing a grating there that made the roof pond even more." Id. He agreed that the design flaw "was going to result in that wear and tear because ... it’s going to eventually stretch the membrane and they're going to leak[.]" Id. at PgID 1052. Williams also noted that when he inspected the roof in September of 2017, he "saw evidence of poor workmanship on the repair work that had been done prior to my inspection." Id. at PgID 1050. Williams further agreed that the ponding water was the result of the "bad design of the roof[,]" the "bad design of where the drain was[,]" and "the improper prior repairs adding weight to the roof[.]"
III. LAW & ANALYSIS
A. Standard of Review
Federal Rule of Civil Procedure 56(a) "directs that summary judgment shall be granted if there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Cehrs v. Ne. Ohio Alzheimer’s Research Ctr. , 155 F.3d 775, 779 (6th Cir. 1998) (quotations omitted). The court must view the facts, and draw reasonable inferences from those facts, in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). No genuine dispute of material fact exists where the record "taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus., Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Ultimately, the court evaluates "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505.
B. Defendant’s Motion for Summary Judgment
Defendant argues that neither the damage to the roof nor the damage to the interior of the building and its personal property meet the definition of a Covered Cause of Loss because coverage is excluded under Exclusion B(2)(I), which precludes coverage for loss from "[w]ear and tear[,]" and "deterioration[.]" Defendant further asserts that coverage is excluded pursuant to Exclusion B(3)(c), which precludes coverage for loss from "[f]aulty, inadequate or defective ... [d]esign[,] workmanship, ... repair, construction ... or [m]aintenance." Lastly, Defendant argues that the loss to the interior of the building is also not covered under Limitation 4(a)(5), which precludes coverage for loss or damage to the interior of any building resulting from rain.
Plaintiff responds that Section B(2) does not contain anti-concurrent causation language, thus Defendant must show that wear and tear and deterioration either by themselves or in combination, are the sole proximate cause of the loss. Plaintiff further asserts that the exclusions listed in Section (B)(3) permit coverage for ensuing loss resulting from the weight of rain ponding on the roof, therefore none of the (B)(3) exclusions are applicable here because the evidence shows that the weight of the ponding water on the roof caused the loss. Lastly, Plaintiff maintains that Limitation 4(a)(5) is inapplicable because the weight of the ponding water is a covered loss under the subject policy.
In Michigan, insurance contracts must be enforced according to their plain language. Rory v. Continental Ins. Co. , 473 Mich. 457, 461, 703 N.W.2d 23 (2005). Where the language of a contract is clear and unambiguous, the court should give contractual language "full effect according to its plain meaning unless it violates the law or is in contravention of public policy." Stryker Corp. v. XL Ins. Am. , 735 F.3d 349, 354 (6th Cir. 2012) (quoting Westfield Ins. Co. v. Ken’s Serv. , 295 Mich. App. 610, 815 N.W.2d 786, 789 (Mich. Ct. App. 2012) ). "[E]xclusionary clauses in insurance policies are strictly construed in favor of the insured." Hunt v. Drielick , 496 Mich. 366, 852 N.W.2d 562, 565-66 (Mich. 2014). However, "[c]lear and specific exclusions must be enforced," because a court may not hold an insurance company accountable for a risk it did not assume. Id. at 566.
Defendant relies on Yonko’s estimate for the roof, which noted "deterioration open seams," as well as Yonko’s deposition testimony wherein he opined that the roof membrane was being pulled apart from "wear and tear." See Def.'s Mot. Summ. J., Ex. 5 at PgID 1021. Plaintiff’s expert, Williams, testified that the roof was poorly designed and that "the wear and tear that it has received is from the weight of the water pulling the membrane apart." Id ., Ex. 8 at 71. Williams opined that the sagging panels and leakage was the "result of poor design to begin with, which did not provide enough slope to the roof and ... that was exacerbated by incorrectly installing a grating there that made the roof pond more."
Williams' testimony is difficult to follow. He later testifies that "I wouldn't use the word wear and tear. I'm saying long-term damage to the sheeting." Moreover, while Williams' report indicated that "Dr. Matthews does not appear to have been at all neglectful of trying to maintain this roof[,]" he also testified that the roof should have been replaced 15 to 20 years earlier and, although Matthews never went on the roof, he knew in at least January or February of 2017 that the roof had to be maintained but he did not do anything for roughly eight months. See Plf.’s Resp., Ex. D at pg 3; Def.'s Mot. for Summ. J., Ex. 8 at 36, 52.
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Based on this evidence, Defendant argues that multiple exclusions apply under Section B(2)(I). Plaintiff counters that the exclusions set forth in Section B(2) are not subject to the anti-concurrent causation language used in Section B(1). Thus, exclusions in Section (B)(2) can only preclude coverage if such exclusions are the sole proximate cause of the loss. Because the evidence shows that the weight of rain water on the roof caused the loss, Defendant cannot demonstrate that "wear and tear," "deterioration," or "settling" either by themselves, or in combination, solely caused the loss.
In support of Plaintiff’s argument, Plaintiff relies on the express language set forth in each of the exclusion sections—(B)(1), (B)(2) and (B)(3). Section (B)(1) includes anti-concurrent language, while Sections (B)(2) and (B)(3) do not contain such language. Section (B)(1) states:
B. Exclusions
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.
Plf.’s Resp., Ex. A at pg 15 (emphasis supplied). Section (B)(2) lists additional exclusions and states that "[w]e will not pay for loss or damage caused by or resulting from any of the following[.]" Id. at pg 17. Plaintiff points out that absent from this section is the anti-concurrent causation language that is present in Section (B)(1). Thus, Plaintiff maintains that in order to preclude coverage under Section (B)(2), Defendant must demonstrate that a listed exclusion is the sole, proximate cause of the loss which Defendant cannot do since all of the experts agree that the weight of the ponding water on the roof, a covered loss, caused the damage to the building.
Plaintiff relies on Section 5—Additional Coverages, which states in relevant part:
(2) We will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building that is insured ... if the collapse is caused by ... (e) [w]eight of rain that collects on a roof[.]
Plf.’s Resp., Ex. A at pg 4-5. As an initial matter, neither party has pointed to evidence that "collapse of a building or any part of a building" occurred within the meaning of the subject policy. The policy defines collapse to mean:
d. Collapse
(1) With respect to buildings.
(a) Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.
(b) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse;
(c) A part of a building that is standing is not considered to be in a state of collapse even if has separated from another part of the building; and
(d) A building that is standing or any part of the building that is standing is not considered to be in state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.
Id. at 4. The evidence reveals that the building was standing and no "abrupt falling down or caving in of ... any part of the building" occurred. The water damage in August of 2017 cannot be considered "an abrupt" occurrence when leaking began in January and February of 2017. At that time, Plaintiff was put on notice that the roof had ponded water and needed additional maintenance beyond what Roy’s Roofing had done in January and February of 2017. It therefore appears unlikely that Plaintiff can meet its burden to show that Section 5-Additional Coverages applies to provide coverage. Heniser v. Frankenmuth Mutual Ins. Co. , 449 Mich. 155, 172, 534 N.W.2d 502, 510 (1995) ("It is the insured’s burden to establish that his claim falls within the terms of the policy.") However, even if Plaintiff could establish that Section 5 applies to the facts of this case, Plaintiff cannot establish the claim should have been granted. Plaintiff’s theory is that because the weight of rain also contributed to the loss, summary judgment is unavailable because Defendant cannot prove one of the listed exclusions in Sections (B)(2) and (B)(3) are the sole proximate cause of the loss.
Yet, Plaintiff’s anti-concurrent causation and proximate cause arguments have been rejected by the Sixth Circuit Court of Appeals in Iroquois on the Beach v. General Star Indemnity Co. , 550 F.3d 585 (6th Cir. 2008), where the insured made a similar argument. Specifically, the insured argued that an exclusion in section B.2.f. for water seepage in the subject policy was inapplicable because windstorms, a covered cause of loss, initiated the sequence of events that resulted in the loss and B.2.f. contains no "anti-concurrent, anti-sequential" clause as in paragraph B.1. Id. at 587. In rejecting this argument, the Iroquois on the Beach court held:
Here, Iroquois essentially argues that we should apply the efficient-proximate-cause doctrine because there are two causes, one of which is excluded (seepage of water) and one of which is covered (windstorms), and the covered cause (windstorms) set in motion the chain of events leading to the loss. However, the Supreme Court of Michigan has expressly declined to adopt this doctrine[.]
* * *
Thus, 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.
Id. at 588 (emphasis in original). Plaintiff argues that Iroquois on the Beach is "problematic" because it "did not allow for a full analysis of the policy language to determine the proximate cause of the loss." Plf.’s Br. at 23. However, Iroquois on the Beach expressly rejected the same argument that Plaintiff advances here. Additional authority is directly contrary to Plaintiff’s theory. In Pioneer State Mut. Ins. Co. v. Splan , No. 220477, 2003 WL 1361552, 2003 Mich. App. LEXIS 743 (Mich. Ct. App. Mar. 18, 2003), the court rejected the argument for dual causation coverage, finding that the design defect exclusion applied to any claim under the Collapse Additional Coverage clause. Id. at *4, 2003 Mich. App. LEXIS 743, at *11-12 (noting that "the courts of this state have rejected the ‘concurrent causation’ theory in the context of insurance liability ... [a]s a matter of law, if one cause is covered by a policy, it does not nullify another, unambiguously excluded cause in the insurance policy."); see also Telerico v. Nationwide Mut. Fire Ins. Co. , No. 11-10702, 2012 WL 3609882, 2012 U.S. Dist. LEXIS 118763 (E.D. Mich. Aug. 22, 2012) (rejecting the plaintiff’s dual causation theory and concluding that "the policy unambiguously excludes from coverage damage caused by structural defects in the residence."). Id. at *8, 2012 U.S. Dist. LEXIS 118763 at 21; see also Suttmann v. Wolverine Mut. Ins. Co. , No. 211904, 1999 WL 33326878, 1999 Mich. App. LEXIS 2240 (Mich. Ct. App. Dec. 21 1999) (rejecting concurrent causation theory and finding that design and construction exclusions applied to bar all coverage, including any coverage claimed under the collapse provision).
Based on this well settled authority, Plaintiff’s anti-concurrent causation and proximate cause arguments are unavailing. Under Michigan law, an insurer does not need anti-concurrent causation language to enforce an exclusion. See Iroquois on the Beach , 550 F.3d at 588-89 (because Michigan does not follow the "efficient-proximate-cause doctrine ... the adoption of an anti-concurrent [ ] clause would allow the parties to contract out of the application of the doctrine. But since Michigan does not follow the doctrine, the addition of such a clause here would be surplusage. Consequently, the absence of an anti-concurrent, anti-sequential clause here does nothing to alter Michigan’s default rule....").
Lastly, Limitation 4(a)(5) provides that Defendant will not pay for loss or damage to the interior of a building resulting from rain unless there is first a covered cause of loss.
4. Limitations
a. We will not pay for loss of or damage to:
* * *
(5) The interior of any building or structure caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
(a) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
(b) The loss or damages caused by or results from thawing of snow, sleet or ice on the building or structure.
Plf.’s Resp., Ex. A at pg 2. Williams testified that the loss was caused by design flaws with the slope of the roof and the drain placement, as well as substandard repair work. Under the Limitation 5, the subsequent damage to the interior of the building from rain is only covered if there is a prior covered cause of loss to the roof. Because the damage to the roof was caused by explicit exclusions under Sections (B)(2) and (B)(3), there can be no covered cause of loss for the rain that leaked into the building.
Plaintiff argues that Limitation 5 does not apply because there was a hole in the roof. Yet, the evidence of record demonstrates that the hole in the roof was caused by poor design and repair work. The evidence also shows that the roof had not been properly maintained. Dr. Matthews was aware that water was ponding on the roof as early as January of 2017. At that time, he was informed that someone would have to continually check the water on the roof and remove it. However, Dr. Matthews did not hire anyone to fix the issue until August of 2017, after the loss occurred. Thus, inadequate maintenance was also a contributing cause of loss. Therefore, Limitation 5 applies and precludes coverage for damage to the interior of the building because it did not "first sustain[ ] damage by a Covered Cause of Loss to its roof[.]"
In this case, all of the witnesses agreed that the roof should have been replaced years before the incident because of its defective design, which resulted in ponding which in turn resulted in sagging and holes in the roof. Plaintiff cannot create coverage by reading only the collapse section in isolation from the applicable exclusions set forth in Sections (B)(2) and (B)(3) and Limitation (a)(5).
IV. CONCLUSION
For the foregoing reasons, Defendant’s Motion for Summary Judgment [#27] is GRANTED.
SO ORDERED.