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Klas Management, LLC v. Chubb Custom Insurance Co.

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

June 28, 2018

KLAS MANAGEMENT, LLC and KLAS APARTMENTS, LLC, Plaintiffs,
v.
CHUBB CUSTOM INSURANCE COMPANY; CHUBB GROUP HOLDINGS, INC.; YORK RISK SERVICES GROUP, INC.; and EFI GLOBAL, INC., Defendants.

          OPINION AND ORDER GRANTING MOTIONS TO DISMISS [16, 18]

          Honorable Laurie J. Michelson, Judge

         Under the terms of its insurance policy, Klas Apartments, LLC had two years from the date its apartment complex sustained storm damage to sue its insurer, Chubb Custom Insurance Company, for not paying for the damage. But Klas waited two years and a month to file suit. So, as will be explained in detail below, Klas sued Chubb for breaching the insurance policy too late.

         Klas has also sued the company that Chubb retained to assess the damage to the apartment complex, York Risk Services Group, Inc. Klas says York misrepresented the amount of damage to the complex (it was far greater than York said it was) which resulted in Chubb not paying all of Klas' claim. But Klas has not pled that it took any actions in reliance on York's alleged undervaluation, so Klas' claim against York will also be dismissed.

         I.

         A.

         As Chubb and York say they should be dismissed even if Klas' allegations are true, the Court presents Klas' allegations as fact. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Charlotte Arms is an apartment complex located in Monroe, Michigan. (PageID.13.) Its 108 apartments are spread across three buildings. (PageID.13.) A fourth building houses the complex's management office, community room, and laundry. (PageID.13.)

         In July 2014, Chubb Custom Insurance Company (Chubb) issued a one-year insurance policy to Klas Apartments, LLC (Klas), which, apparently, owns or operates the Charlotte Arms apartments. (To be more accurate, the policy was first issued to Charlotte Arms, LLC but the named insured was changed to Klas Apartments, LLC effective the date the policy was issued. (PageID.514.)) Under the policy, in exchange for a $14, 000 premium, Chubb would pay Klas “for direct physical loss of or damage” to the Charlotte Arms apartment complex “caused by or resulting from any Covered Cause of Loss.” (PageID.455.)

         On June 11, 2015, a summer hailstorm swept through Monroe. (PageID.12.) “Doppler radar detected that ‘half-dollar' size hail was spotted in and around Monroe” with some people reporting “hail measuring two . . . inches, or more.” (PageID.12.) The storm caused substantial damage to the Charlotte Arms complex. (PageID.13.)

         Just how substantial is the subject of considerable debate.

         In September 2015, Klas obtained an estimate from Precise Construction and Remodeling. (PageID.13.) Precise thought Charlotte Arms had sustained about $328, 000 in damage. (PageID.13.) Klas submitted a claim to Chubb, apparently relying on Precise's estimate. (PageID.13.)

         Chubb selected York Risk Services Group to be the adjuster on Klas' claim. (PageID.21.) In October 2015, York submitted an estimate to Chubb. (PageID.13.) Apparently, York thought the Precise estimate was anything but that. After factoring in depreciation (Charlotte Arms was built in the 1970s), York estimated the loss at about $225, 000. (PageID.13.)

         Around December 2015, Chubb elected to pay the “undisputed” amount of the loss, $200, 154.55 to be precise. (PageID.14; see also PageID.17-18.)

         In January 2016, Klas retained Odawa Development, LLC (and Design Pinnacle Group, LLC) to do “a thorough inspection” of Charlotte Arms. (PageID.14.) Odawa found that siding had been damaged and that there were “dents and holes from the hail . . . visible throughout.” (PageID.14.) Odawa also found that there were holes in roof decks (the part underneath the shingles), that water had leaked through those holes into attics, and that “all of the attic spaces contained significant mold growth as a result.” (PageID.15.) In ...


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