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Allied Mechanical Services, Inc. v. National Fire and Marine Insurance Co.

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

April 10, 2017

ALLIED MECHANICAL SERVICES, INC., Plaintiff,
v.
NATIONAL FIRE AND MARINE INSURANCE COMPANY, Defendant.

          OPINION

          HON. JANET T. NEFF, Judge

         This is a diversity action for breach of contract brought by Plaintiff Allied Mechanical Services, Inc. (“Allied”) against Defendant National Fire and Marine Insurance Company (“NFMIC”). Allied sues NFMIC for breach of an insurance contract. Count I of the complaint seeks an order compelling NFMIC to participate in the appraisal process described in the contract. NFMIC has filed a counterclaim alleging that appraisal is premature, and asking the Court to find that a particular clause in the insurance contract applies to the appraisal process. (ECF No. 4, Page ID.84.) Before the Court are motions for summary judgment filed by the parties. (ECF Nos. 13, 15.) For the reasons discussed herein, Allied's motion will be granted and NFMIC's motion will be denied.

         I.

         Rule 56 of the Federal Rules of Civil Procedure requires the Court to grant summary judgment “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). In evaluating a motion for summary judgment the Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “[T]he district court must construe the evidence and draw all reasonable inferences in favor of the nonmoving party.” Martin v. Cincinnati Gas & Elec. Co., 561 F.3d 439, 443 (6th Cir. 2009). The proper inquiry is whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); see generally Street v. J.C. Bradford & Co., 886 F.2d 1472, 1476-80 (6th Cir. 1989).

         II.

         NFMIC issued Allied an insurance policy (the “Policy”) covering a vacant building located at 2211 Miller Road, Kalamazoo, Michigan. The building was destroyed in a fire. The Policy provides that NFMIC will pay the “actual cash value” for damaged or lost property, which is defined as follows in paragraph E.6:

d. Actual Cash Value . . .
(1) when damage to property is economically repairable, “actual cash value” means the cost of repairing the damage, less reasonable deduction for wear and tear, deterioration, and obsolescence;
(2) when the loss or damage to property creates a total loss, actual cash value means the market value of the property in a condition equal to that of the destroyed property, if reasonably available on the used market or
(3) otherwise actual cash value means the market value of new property of like kind and quality, less reasonable reduction for wear and tear, deterioration, and obsolescence.

(Policy, ECF No. 12-1, PageID.136.) The parties agree that paragraph (1) does not apply because the damage to Allied's property created a “total loss.” However, the parties disagree about whether paragraph (2) or paragraph (3) applies.

         After Allied submitted a claim for coverage, NFMIC hired an appraiser who determined that the market value of the property was $279, 000. The appraiser determined this value by comparing the property to “actual sales of similar properties, ” and then making adjustments based on “time, location, physical characteristics, and any other factors affecting value[.]” (Brown Letter, ECF 12-4, PageID.208.) After further research, the appraiser also determined that other properties “in a condition equal” to the destroyed property were available for sale on April 6, 2015, the date of Allied's loss. (Brown Aff. ¶¶ 10-11, ECF No. 16-1, PageID.371-72.)

         Allied disagreed with NFMIC's valuation of the property. It maintained that there were no properties “in a condition equal to that of the destroyed property . . . reasonably available on the used market, ” so it relied on paragraph (3), and came up with an actual cash value of approximately $598, 000. (Ex. A to Pl's Sworn Statement in Proof of Loss, ECF No. 12-7, PageID.231.) Because of its disagreement with NFMIC, Allied submitted a demand for appraisal under the Policy, which states:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select a competent and impartial umpire. If they cannot agree either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to ...

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