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Batton-Jajuga v. Farm Bureau General Insurance Company of Michigan

Court of Appeals of Michigan

December 21, 2017

DEBRA BATTON-JAJUGA, Plaintiff-Appellee,
v.
FARM BUREAU GENERAL INSURANCE COMPANY OF MICHIGAN, Defendant-Appellant.

         Livingston Circuit Court LC No. 15-028647-CK

          Before: Murphy, P.J., and Kelly and Swartzle, JJ.

          SWARTZLE, J.

         Defendant Farm Bureau General Insurance Company of Michigan (Farm Bureau) insured real property owned by plaintiff Batton-Jajuga, and the property was destroyed in a fire. Batton-Jajuga had indemnification coverage as well as replacement-cost coverage. When she attempted to replace her destroyed property with different property purchased with a land contract, Farm Bureau refused to pay any replacement costs. Farm Bureau claimed that Batton-Jajuga's interest in the new property was less than a fee simple and therefore was not a "complete" replacement.

         Farm Bureau breached the insurance agreement by refusing to pay. While a vendee to a land contract does not immediately acquire a full fee simple in the real property, the vendee does become the equitable owner of the property when the contract becomes effective, and this was sufficient under the law and the parties' agreement. Accordingly, we affirm the trial court's grant of summary disposition to plaintiff.

         I. BACKGROUND

         The relevant facts are not in dispute. Farm Bureau insured Batton-Jajuga's real property located in Monroe, Michigan up to $289, 000. The parties' agreement included two types of property coverage: (1) indemnification up to the depreciated value of the property (i.e., the actual cash value); and (2) replacement-cost coverage (i.e., the full cost of repair or replacement above the actual cash value). With respect to replacement-cost coverage, the parties' agreement provided in pertinent part:

5. Loss Settlement. Covered property losses are settled as follows:
* * *
b. Buildings under Coverage A or Coverage B at replacement cost . . . subject to the following:
(1) If, at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of the deductible and without deduction for depreciation, but not more than the least of the following:
(a) the limit of liability under this policy that applies to the building;
(b) the replacement cost of that part of the building damaged for like construction and use on the same premises; or
(c) the necessary amount actually spent to repair or replace the ...

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