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ID Ventures, LLC v. Chubb Custom Ins. Co.

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

April 16, 2018

ID VENTURES, LLC, Plaintiff,



         This is a first-party property insurance dispute in which plaintiff ID Ventures alleges that defendant Chubb Custom Insurance Company (“Chubb”) breached the Commercial Property Insurance Policy it issued by failing to pay a claim for damage to the plumbing in an apartment building owned and operated by ID Ventures and covered under the subject insurance policy. Plaintiff filed its complaint in state court on November 3, 2017, asserting two causes of action, one for breach of contract and the other asking the court to declare the respective rights and obligations of the parties under the insurance policy. Defendant removed the case, invoking this court's diversity jurisdiction. The matter is before the court on defendant's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). Defendant argues that both of plaintiff's causes of actions are time-barred, along with its assertion that penalty interest should be imposed under Michigan's Uniform Trade Practices Act, M.C.L. § 500.2006. Oral argument on the motion was held April 9, 2018.


         Plaintiff owns and operates an apartment building located at 1141 Holcomb Street in Detroit, Michigan (“Subject Property”). Plaintiff obtained insurance for the Subject Property through Charles Walker & Associates (“Walker”) in Southfield, Michigan. Walker procured an insurance policy with Chubb (“Subject Policy”) and plaintiff made payments directly to Walker. Walker did not provide plaintiff with a policy number or the actual insurance policy. Walker is not a party to this lawsuit, but plaintiff indicates it may seek to amend to add Walker.[1]

         On January 8, 2015, Detroit Water and Sewerage Department (“DWSD”) repaired a water main break on Holcomb Street immediately outside the Subject Property. Before the repair, the monthly bill for water and sewer services at the Subject Property averaged $1, 500 to $2, 000. Following the repair, the monthly invoice increased exponentially: on January 15, 2015, the monthly bill was for $13, 380.51; on February 15, 2015, the bill was for $55, 005.33; and on March 14, 2015, the bill was for $39, 773.26. Plaintiff determined that the typical number of units of water consumed in a month before the repair was 100-200, with the highest amount in five years being 514 units. Since the fix done by DWSD, monthly usage was in excess of 8, 000 units.

         Eventually, plaintiff determined that stones, sand and other debris used by DWSD to repair the water main break had flowed into the pipes and plumbing at the Subject Property. Plaintiff alleges that it was foreseeable by DWSD that “these materials would enter and infiltrate the plumbing system of the Subject Property, ” constituting negligence by DWSW “and for which actions Plaintiff has sustained damages.” (Complaint ¶14). In order to fix the problem, plaintiff had the plumbing cleaned out and replaced the Sloan flush valves. Plaintiff also pursued an administrative appeal of the water bills through DWSD.

         Plaintiff engaged in discussions with Walker to obtain a copy of the insurance policy and to file a claim with Chubb. Plaintiff asserts that after a lengthy delay, Walker ultimately produced the policy and filed a claim which was denied. (Complaint ¶¶ 20, 21). Plaintiff does not dispute that it had a copy of the policy on November 16, 2016. The claim is dated December 21, 2016 and it identifies the date of loss as January 8, 2015. (Property Loss Notice, attached to Complaint). A synopsis accompanying the claim describes the damages caused by the manner in which DWSW undertook to repair the water main.

         The Policy contains a two-year limitations on actions provision:

No one may bring a legal action against us under this Coverage Part unless:
1. There has been full compliance with all of the terms of this Coverage Part; and
2. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.

         The water main repair occurred on January 8, 2015. Plaintiff maintains that damage to its plumbing and water fixtures “commenced on January 8, 2015 and continued on through and including the present.” (Complaint ¶ 16). Plaintiff submits a plumbing proposal for $94, 360.00, dated September 20, 2016, to support its position that damage was still being done to the plumbing on that date. Plaintiff also asserts that its obligation to pay the water bill did not occur until his appeal became final on April 12, 2016.

         Plaintiff filed its action against defendant on November 3, 2017 alleging breach of contract and declaratory relief. Defendant asserts that the contractual limitations period for filing lawsuits expired on January 8, 2017. Plaintiff maintains that its lawsuit is not barred because the limitations period is tolled while its claim is ...

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