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Home-Owners Insurance Co. v. Perkins

Court of Appeals of Michigan

June 11, 2019

HOME-OWNERS INSURANCE COMPANY, Plaintiff/Counterdefendant-Appellee/Cross-Appellant,
NANCY PERKINS, also known as NANCEY PERKINS, Defendant/Counterplaintiff-Appellant/Cross-Appellee.

          Cass Circuit Court LC No. 16-000673-CK

          Before Beckering, P.J., and Servitto and Stephens, JJ.

          Per Curiam.

         In this insurance dispute, defendant, Nancy Perkins, appeals by right the trial court's order dismissing plaintiff Home-Owners Insurance Company's claim against her and the order dismissing her counterclaim against plaintiff. Plaintiff cross-appeals the trial court's order dismissing its claim against defendant. At issue in this fire damage case is the proper interpretation of MCL 500.2833(1)(q) and its impact on the viability of each party's claim. For the reasons set forth below, we affirm.


         The underlying facts are not in dispute. Plaintiff issued a homeowners insurance policy to defendant for accidental loss and damage to property located at 61038 Front St. in Niles, Michigan. The policy term was from December 6, 2014 to December 6, 2015 and included coverage of $129, 000 on her dwelling, $90, 300 on her personal property, and $32, 500 for additional living expense, and further coverages for debris removal at the property location. On March 4, 2015, fire substantially destroyed defendant's home and personal possessions. She immediately notified plaintiff of her loss. Subsequently, she prepared and submitted an inventory of her personal possessions based on her best guess of the age and purchase price of the items she could recall being in her house, and she submitted a proof of loss based on this inventory. On August 28, 2015, plaintiff wrote a letter to defendant formally denying her insurance claim, alleging that she had committed arson, misrepresented facts in her claim of loss, and failed to comply with other provisions in the fire insurance policy. Plaintiff mailed the letter to defendant in care of her attorney at the time, James Jesse. Plaintiff sent the letter by certified mail, and Jeannette Jesse signed for it on September 11, 2015. Defendant averred in an affidavit submitted to the trial court that she did not receive plaintiff's denial letter.

         On October 5, 2016, plaintiff filed suit against defendant, alleging that defendant breached the insurance contract by submitting a claim that was "knowingly inaccurate and grossly exaggerated," by failing to comply with certain terms of the contract, and by concealing material facts and circumstances surrounding her loss "as part of an effort to fraudulently induce" plaintiff to pay her claim. Because of these alleged breaches, plaintiff asserted, it had been obligated to pay $56, 700 to Fifth-Third Bank, the mortgagee of defendant's house. Plaintiff sought a judgment against defendant for $56, 700.

         On February 6, 2017, defendant filed an answer denying plaintiff's allegations. Along with her answer, she filed a counterclaim alleging that plaintiff had breached the policy of insurance by wrongfully denying her claim for coverage under the policy after the fire. She sought the full benefits due under the policy, as well as 12 percent statutory interest pursuant to MCL 500.2006.[1]

         Plaintiff filed an answer and affirmative defenses to the counterclaim, and on April 10, 2017, a motion for summary disposition pursuant to MCR 2.116(C)(7) (statute of limitations). In its supporting brief, plaintiff argued that the applicable statute of limitations found in the policy and in MCL 500.2833(1)(q) barred defendant's counterclaim.[2] MCL 500.2833(1) mandates the contents required in every fire insurance policy issued or delivered in Michigan. Subsection (q) requires fire insurance policies to contain a provision declaring:

That an action under the policy may be commenced only after compliance with the policy requirements. An action must be commenced within 1 year after the loss or within the time period specified in the policy, whichever is longer. The time for commencing an action is tolled from the time the insured notifies the insurer of the loss until the insurer formally denies liability.

         In purported compliance with this statutory mandate, the fire insurance policy plaintiff issued to defendant contains an amendment to its property protection section that the parties refer to as the "suit against us" provision and that states:

We may not be sued unless there is full compliance with all terms and conditions of this policy. Suit must be brought within one year after loss or damage occurs. The time for commencing a suit is tolled from the time you notify us of the loss or damage until we formally deny liability for the claim.

         Plaintiff argued that defendant's claim accrued when it formally denied her claim in the August 28, 2015 letter. Under the terms of the "suit against us" provision, defendant had until August 28, 2016 to file a suit against plaintiff. Her February 2017 counterclaim was well outside this one-year period and, therefore, it was barred by the "suit against us" provision in the policy and by MCL 500.2833(1)(q).

         In her response to plaintiff's motion to dismiss, defendant argued that MCL 500.2833(1)(q) referred to all actions under the policy, not just actions filed by the insured. Thus, to comply with the statute, the one-year period in the "suit-against-us" provision had to be interpreted to apply to both plaintiff and defendant, and by filing its own suit after the statute of limitations expired, plaintiff had intentionally waived the statute of limitations defense with respect to defendant's claim. Defendant argued in the alternative that even if the "suit-against-us" provision is properly interpreted to apply only to insureds, the trial court should estop plaintiff from enforcing the one-year limitations period because plaintiff purposefully waited until the period had expired before suing her. This delay was clearly prejudicial to defendant because it deprived her of the knowledge that plaintiff had denied her claim, and thus, prevented her from filing suit during the one-year period. Defendant contended that estoppel by laches applied regardless of whether plaintiff's delay was intentional or merely dilatory.

         In reply, plaintiff asserted that the language in MCL 500.2833(1)(q), as well as that of the "suit against us" provision, applied only to the insured. Plaintiff did not address defendant's waiver argument, but argued that defendant could not use the doctrine of estoppel to circumvent the clear and unambiguous language of the fire insurance policy, and the court certainly could not use estoppel to reform a statute. Finally, plaintiff argued that if the court determined that the language in the statute applied to both the insurer and the insured, then the remedy was to dismiss both actions.

         The parties' arguments at the June 5, 2017 hearing on plaintiff's motion for summary disposition were consistent with their briefs. Ruling from the bench, the trial court found that plaintiff had notified defendant of the denial of her claim by sending the August 28, 2015 letter to attorney Jesse, and that it was Jesse's responsibility to deliver the denial letter to defendant. No evidence indicated that plaintiff had attempted to lull defendant into thinking it had approved her complaint until the limitations period expired. After determining that waiver and estoppel did not apply as a matter of law, the trial court granted plaintiff's motion for summary disposition of defendant's counterclaim. The court noted that the question remained whether the one-year period in the "suit against us" provision also barred plaintiff's claim, but observed that this issue was not before the court because defendant had not filed a motion for summary disposition based on the untimeliness of plaintiff's complaint. The court entered a corresponding order on June 16, 2017.

         Subsequently, defendant filed two motions for reconsideration, both of which the trial court denied.[3] Defendant also filed motions seeking permission to present to the jury the evidence supporting her counterclaim or, alternatively, to adjourn the trial so defendant could pursue appellate review of the trial court's order granting plaintiff summary disposition of her counterclaim. The trial court granted defendant's alternative relief and adjourned the trial, but defendant was unsuccessful in her delayed application for leave to ...

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