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Freeway Drive Investments, LLC v. Employers Mutual Casualty Co.

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

December 18, 2017



          Honorable Victoria A. Roberts, Judge

         Freeway Drive Investments, LLC (“Freeway Drive”) owns a single story commercial building, insured by Employers Mutual Casualty Company (“EMCC”). The building sustained damage when trusses within the roof shifted and dropped, causing visible sagging. Freeway Drive filed a claim for coverage; EMCC denied it.

         Freeway Drive sued EMCC for breach of the policy of insurance (“Policy”), and a declaration that EMCC is contractually obligated to pay all costs related to the damage. The parties filed cross motions for summary judgment. (“Freeway Drive Motion” and “EMCC Motion”).

         Freeway Drive argues that the collapse was caused by the weight of snow, a covered loss under the Policy. EMCC argues that the collapse was caused by thermal deterioration due to the application of fire retardant, and the Policy exempts such deterioration damage from coverage. EMCC also argues that even if Freeway Drive is correct concerning the cause of loss, the Policy does not provide coverage for a collapse solely due to the weight of snow.

         The Court concludes that collapse due to the weight of snow is a covered loss under these circumstances. But, genuine issues of material fact as to the cause of the roof collapse require that the Court DENY both motions for summary judgment.

         I. Factual Background

         A. The Collapse And Initial Inspection

         On March 3, 2015, Richard Pietila, a maintenance contractor with Pietila Construction, and other employees, performed maintenance work inside the building. They heard a loud noise and noticed the roof sagging. Pietila testified at deposition that he and the other employees went outside to assess the situation, and observed that there was a substantial amount of snow on the roof of the building; he believed about four feet had accumulated. Pietila called Sherman Freund, the general manager of Freeway Drive to inform him about the roof and to get approval to clear the snow. Pietila did not reach Freund; he left him a message. The next morning, Pietila observed that the sagging had worsened. He went into the attic and saw several broken trusses and other damage to the roof's structure. Pietila testified that about a week or a week and a half earlier, he was in the attic and saw no problems with the roofing structure. He believes that the damage was caused by snow on the roof. [Freeway Drive Motion, Pg. 4-5].

         B. Brinjikji's Inspections

         Freeway Drive, through construction contractor John Bialowicz, asked structural engineer Abdul Brinjikji to assess the damage. Brinjikji testified at deposition that he visited the building three times. On his first visit, he went into the attic on the south side of the building, and observed the sagging roof, broken trusses, and truss diagonals that had slipped or pulled from their connector plates. He did not inspect the north side of the building because the lighting was insufficient. Brinjikji saw snow on the roof on this first visit, but could not estimate how much. After this initial visit, Brinjikji sent a text message to Bialowicz, recommending that everyone be evacuated from the building. [Freeway Drive Motion, Ex. 5]. Brinjikji's expert opinion is that the roof collapse was caused by an overload of snow. He developed a plan to shore up the roof, and Pietila Construction began the repairs. [Freeway Drive Motion, 5-7].

         In April 2015, after Pietila Construction performed the initial repairs, Brinjikji inspected the building a second time. Brinjikji testified that during this second visit, he went to the attic again and was able to see better. He noticed additional slippage on the south side of the roof, but cannot say whether this additional slippage was caused by a progressive collapse, or if the slippage was present during his first inspection. Brinjikji was also able to inspect the north side of the roof, and saw slipped diagonals. He cannot say when this slippage occurred. After this second inspection Brinjikji still opined that the collapse was caused by a snow load. [Freeway Drive Motion, Ex. 4, Pg. 40-41, 43-45].

         Brinjikji visited the site a third time on February 12, 2016. He confirmed that the majority of the roofing repairs had been completed.

         C. Claim Submission

         Freund testified at deposition that he was in Florida when the roof collapsed. He learned about the incident when he received a phone call from his office. He was told that snow fall caused the collapse, and advised his office to call the insurance agent. In a letter to Freeway Drive dated March 4, 2015, EMCC's adjustor, Lisa Singer, acknowledged that EMCC had been notified of the loss at the building. Singer advised that Freeway Drive had 60 days to submit proof of loss. [Freeway Drive Motion, Pg. 8].

         Freund was also told that a representative from EMCC would look at the building, and that a representative from Freeway Drive should be there to let that person in the building. On March 6, 2015, Mark Lusky, Freeway Drive's property manager, went to the building to meet a man who identified himself as an engineer. [Freeway Drive Motion, Pg. 8-9]. Lusky testified at deposition that the engineer was in the attic for less than five minutes. [Freeway Drive Motion, Ex. 8, Pg. 34]. In a letter to Freeway Drive also dated March 6, 2015, Singer stated that EMCC was investigating the claim and that it lacked sufficient information to make a decision at that time. The next day, Singer sent Lusky a voice mail saying that the building was “not structurally safe” and that “nobody should be in the building.” [Freeway Drive Motion, Pg. 9].

         D. Claim Denial

         In a letter to Freeway Drive dated March 7, 2015, Singer stated that EMCC had completed its investigation, and that it denied Freeway Drive's claim. Singer indicated that EMCC's investigation revealed that the damage to the roof trusses was a result of fire retardant applied to the roofing structure when it was built. The letter also stated that over time, the fire retardant, along with moisture in the attic, resulted in structural failure of the trusses. Singer said that the loss did not fall within the Policy's collapse coverage, that the damage was not caused by a “specified cause of loss” as defined by the Policy, and that the loss was subject to the Policy's collapse exclusion. [Freeway Drive Motion, Pg. 9-10].

         Freeway Drive asked EMCC to provide reports, testing, and other information to support its denial. In response, Singer stated that the engineering report was privileged work product that would not be released to Freeway Drive. The parties exchanged additional correspondence, and on June 15, 2015, Singer sent a letter to Freeway Drive's attorney with the conclusion of its engineering report prepared by Richard A. Hamann. Hamann stated than in his professional opinion, the damage to the roof was not due to excessive load, but to long term degradation of the truss lumber due to chemical treatments prior to fabrication caused by exposure to excessive moisture. [Freeway Drive Motion, Pg. 10].

         E. Hamann's Report

         Hamann's report was prepared based on his observations from his March 6, 2015 inspection of the building. Hamann noted that the inspection was limited to visual observations, that a thorough inspection of the roof was not completed, and that no tests of building materials were completed in preparation for his report. Hamann also stated that the metal connector plates showed evidence of a minor amount of sporadic white calcification, but there was no evidence of significant calcification or ink stamps on the lumber. Such significant calcification, according to Hamann, would indicate that the truss lumber had been treated with a fire retardant prior to fabrication. Hamann indicated that the lumber would have to be tested to determine if it was chemically treated. [Freeway Drive Motion, Pg. 11-12]. The report also said that the depth of the snow on the roof was greater in areas where the roof trusses sagged excessively. [Freeway Drive Motion, Ex. 14, Pg. 3].

         After receiving EMCC's denial letter, Freeway Drive tested a sample of the truss lumber for the presence of fire retardant. The test, performed by Avomeen Analytical Services of Ann Arbor (“Avomeen”), indicated the presence of small amounts of Boron, which Avomeen said was one of the “three major fire retardant tracer elements.” Specifically, Avomeen concluded that the amount of total fire retardant permeated into the wood ranged from 7 - 22 parts per million, or 0.007% - 0.0022% by weight. [Freeway Drive Motion, Pg. 12].

         At deposition, Brinjikji testified that Boron did not affect wood like earlier used fire retardants in older buildings did. Brinjikji said that according to some studies, if wood treated with Boron reaches high temperatures, mainly 284 degrees Fahrenheit, the wood weakens. Brinjikji could not say for certain that the temperature in the attic got that high, but said that logically there was no way that it did. Even if temperatures had gotten that high, according to Brinjikji, the structural integrity of the wood would only reduce by 5%. [Freeway Drive Motion, Ex. 4, Pg. 70-72, 75-76].

         II. Legal Standard

         A. Summary Judgment

         Under Federal Rule of Civil Procedure 56(a), “[t]he Court shall 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.” The movant bears the initial burden to inform the Court of the basis for the motion, and must identify particular portions of the record which demonstrate the absence of a genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant satisfies its burden, the non-moving party must set forth specific facts showing a genuine issue for trial. Id. at 324.

         In deciding a summary judgment motion, the Court “views the factual evidence and draws all reasonable inferences in favor of the nonmoving party.” McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). The Court need consider only the cited materials, but it may consider other evidence in the record. Fed.R.Civ.P. 56(c)(3). “[O]n cross-motions for summary judgment, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 692 (6th Cir. 2001) (citation and internal quotation marks omitted).

         III. Analysis

         EMCC argues that it is entitled to summary judgment because: 1) the loss did not constitute a covered collapse within the terms of the “Additional Coverage - Collapse” Policy provision; 2) there is no coverage under the Policy for a loss resulting from a collapse caused solely by the weight of snow; 3) the Policy's “Wear and Tear” and Deterioration exclusions bar coverage because the collapse was caused by thermal deterioration due to the application of fire retardant; and 4) the damage to the north side of the building is not attributable to a snow overload.

         Freeway Drive argues that it is entitled to summary judgment because: 1) coverage for its loss is available under the Policy's general coverage language; 2) weight of snow is a covered cause of loss under the Policy; 3) there is no evidence that the loss resulted from wear and tear or deterioration; and 4) at minimum, there is a genuine fact dispute as to the damage to the north side trusses.

         Through briefing, the parties provide some clarity to a dispute which arises from an almost incomprehensible insurance policy. EMCC spends considerable time discussing the “Additional Coverage - Collapse” provision, and argues that Freeway Drive is not entitled to coverage under that provision. But that is a non-issue, since Freeway Drive agrees. It concedes that there is no coverage under that provision because first and ...

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