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Milan v. Pacific Indemnity Company

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

June 11, 2015



LINDA V. PARKER, District Judge.

In this diversity action removed from the Circuit Court for Oakland County, Michigan, Plaintiffs seek benefits under an "excess" insurance policy issued by Defendant Pacific Indemnity Company allegedly due as a result of an automobile accident in which Plaintiff E. Ronald Milan was injured. Presently before the Court is Defendant's motion for partial summary judgment, filed pursuant to Federal Rule of Civil Procedure 56 on November 14, 2014. (ECF No. 31.) The motion has been fully briefed (ECF Nos. 33, 34); and on February 11, 2015, this Court held a hearing with respect to the motion. At the end of the hearing, Plaintiffs' counsel asked the Court for the opportunity to submit additional documentation in support of Plaintiffs' claim. The Court granted the request and Plaintiffs submitted supplemental exhibits on February 23, 2015. (ECF No. 37.) Defendant filed a supplemental brief addressing those exhibits on March 2, 2015. (ECF No. 38.) The Court is now prepared to issue a decision.

I. Summary Judgment Standard

Summary judgment pursuant to Federal Rule of Civil Procedure 56 is appropriate "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). The central inquiry is "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 v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). After adequate time for discovery and upon motion, Rule 56 mandates summary judgment against a party who fails to establish the existence of an element essential to that party's case and on which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The movant has the initial burden of showing "the absence of a genuine issue of material fact." Id. at 323. Once the movant meets this burden, the "nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citation omitted). To demonstrate a genuine issue, the nonmoving party must present sufficient evidence upon which a jury could reasonably find for that party; a "scintilla of evidence" is insufficient. See Liberty Lobby, 477 U.S. at 252.

"A party asserting that a fact cannot be or is genuinely disputed" must designate specifically the materials in the record supporting the assertion, "including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1). The court must accept as true the non-movant's evidence and draw "all justifiable inferences" in the non-movant's favor. See Liberty Lobby, 477 U.S. at 255.

II. Factual and Procedural Background

On August 26, 2010, Plaintiff E. Ronald Milan ("Mr. Milan") was injured when his vehicle was rear ended by another vehicle which was traveling at a high rate of speed.[1] At the time, Mr. Milan was 78 years old. Prior to the date of the accident, Mr. Milan purchased an underinsured motorist insurance coverage policy from Defendant Pacific Indemnity Company (hereafter "Pacific Indemnity").[2] The policy provides that in the event of a claim for underinsurance motorist coverage, Pacific Indemnity will pay excess benefits to Mr. Milan up to the sum of one million dollars once his claim reaches a threshold of $250, 000. Plaintiffs filed this lawsuit to recover, inter alia, "loss of future earnings" related to a multi-unit apartment complex development project in Dallas, Texas, initially called Nueva Vista and subsequently renamed Solaris (hereafter the "Solaris project").[3] (Compl. ¶ 17.)

For the past thirty-five years or more, Mr. Milan has been involved in approximately thirty commercial real estate development projects, in addition to working as a personal injury and real estate lawyer. For the majority of these projects, Mr. Milan was the developer, building the project from the ground up (e.g. obtaining site plan approval, the drawings, and engineering plans) or "gentrifying" existing property. (ECF No. 31, Ex. A at 47, 52, 65, 72.) Mr. Milan was a partner with Martin Nessel in several limited liability companies that owned real estate development projects. (ECF No. 31, Ex. 6 at 21.)

In February or March 2010, Martin Nessel's son, Ariel Nessel ("Ari"), presented the Solaris project to Mr. Milan. (ECF No. 31, Ex. 5 ¶ 7.) Mr. Milan asserts in an affidavit submitted in response to Pacific Indemnity's motion that Ari was interested in his opinion and analysis of whether the project was viable and if Mr. Milan "would take this project on." (Id. ) The project involved scheduled improvements of $5, 000 per unit to the apartment complex's over 400 units. (Id., Ex. 3 at 48.) Ari had been involved in real estate for more than ten years at that time, doing construction management for other developers and then on his own projects. (Id., Ex. 7 at 5-6.) Martin Nessel also was going to be involved in the Solaris project.

At some point in 2010, Mr. Milan informed Martin Nessel and Ari that the Solaris project "would be a good project to add to [his] portfolio." (ECF No. 31, Ex. 5 ¶ 9.) Mr. Milan had not yet visited the project site by this point in time and Martin Nessel testified during his deposition that, to his knowledge, Mr. Milan has never been there. (Id., Ex. 6 at 30; see also ECF No. 37, Ex. 13.) Martin Nessel did travel to Dallas from Michigan to see what Ari was proposing to buy and conveyed to Mr. Milan his view that it was a worthwhile investment. (ECF No. 31, Ex. 6 at 26-27.) Mr. Milan claims that they "then turned to the financing part of the project as well as the remodeling that would have to be done to modernize the project, rental rates, leasing, and positioning." (Id. )

According to Mr. Milan, in November 2010, he met with Ari and Martin Nessel at the latter's house in Michigan, at which time a Memorandum of Agreement was prepared. (ECF No. 31, Ex. 3 at 50; Ex. 4.) The document reflects the following: Mr. Milan and Martin Nessel would each acquire a fifty percent (50%) interest in the Solaris project as tenants-in-common; Ari would asset manage the project and contract for an improvement program; Mr. Milan and Martin Nessel would provide all the funds for the undertaking equally in exchange for a twelve percent (12%) preferred return on their invested capital; Ari would receive a one percent (1%) asset management fee and a fourteen percent (14%) fee for the contracted improvements; and management of the project would be provided by third parties at 3.5% plus a bonus. (Id., Ex. 4.) Mr. Milan and Martin Nessel were each expected to invest one million dollars initially and had the money ready to commit to the project. (Id., Ex. 3 at 53; Ex. 5 ¶ 13.) The Memorandum of Agreement was never executed. (Id., Ex. 3 at 50.)

Mr. Milan attests that, although not part of the written agreement, he, Martin Nessel, and Ari also agreed that Mr. Milan would, "as [he] had done in the past[, ] supervise the execution of the rehab of the project that would require [his] physical presence for periods of time in Dallas." (Id., Ex. 5 ¶ 12.) Mr. Milan contends that this was not included in the written agreement because

the only person that it pertained to was Martin Nessel and he was fully familiar with [Mr. Milan's] method of operation and the requirement that [he] personally supervise as [Martin Nessel] had invested in a few properties prior to that date and had agreed that this method ...

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