United States District Court, E.D. Michigan, Southern Division
ZENA KAROUMI, BASIL Y. KAROUMI, Plaintiffs,
ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, Defendant.
ORDER DENYING CROSS-MOTIONS FOR SUMMARY
TERRENCE G. BERG UNITED STATES DISTRICT JUDGE
Zena Karoumi and Basil Y. Karoumi are suing Defendant
Allstate Vehicle and Property Insurance Company
(“Allstate”) in connection with an insurance
coverage dispute. Plaintiffs assert that Allstate breached
its obligations under their insurance policy by refusing to
cover water damage to their home allegedly caused by a broken
water-supply line in 2017. Allstate denied Plaintiffs'
claims on the grounds that the loss was not accidental, that
Plaintiffs willfully concealed and misrepresented material
facts about the loss and, further, that they failed to fully
comply with the policy's terms. Both sides have moved for
summary judgment but for reasons discussed below both
parties' motions for summary judgment (ECF Nos. 16, 20)
will be denied.
Zena and Basil Y. Karoumi, a married couple, purchased
homeowner's insurance policy number 960 628 056 from
Allstate. ECF No. 16-2 PageID.119. That policy insured
Plaintiffs' home, located at 37339 Calka, Sterling
Heights, Michigan, from October 9, 2016 through October 9,
2017. ECF No. 16-2 PageID.122. In the event Plaintiffs, the
insureds, sought coverage for a loss under the policy,
Allstate asserted “a right to reasonable and safe
opportunities to view and inspect the loss as often as
necessary, unimpeded by actions of you or others . . .
.” ECF No. 16-12 PageID.157. The policy further
provided that the insureds were obligated to “show
[Allstate] the damaged property” “as often as
[Allstate] reasonably require[d].” Id. Failure
to comply with these and other policy provisions, according
to the policy's language, obviated Allstate's duty to
provide coverage if the insureds' noncompliance was
prejudicial to Allstate. Id. In addition, the policy
mandated that “[n]o suit or action may be brought
against [Allstate] unless there has been full compliance with
all policy terms.” ECF No. 16-2 PageID.173.
to Plaintiffs, they arrived home from a family trip to Cedar
Point, an amusement park in Sandusky, Ohio, on July 3, 2017
to find their house flooding. ECF No. 16-3 PageID.180 (Basil
Karoumi Dep.); ECF No. 16-4 PageID.188 (Zena Karoumi Dep.).
In deposition testimony, they described finding a significant
amount of water in the basement, as well as puddles of water
in the kitchen and living room. See ECF No. 16-5
PageID.208-09 (Mariana Karoumi Dep.); ECF No. 16-3
PageID.182. Basil Karoumi traced the origin of the leaking
water to a cabinet under the kitchen sink. ECF No. 16-3
PageID.180; ECF No. 16-5 PageID.208. He testified that, upon
identifying the source of the flooding, he turned off the
water main to prevent further damage to the house. ECF No.
16-3 PageID.181; see ECF No. 16-5 PageID.208.
same evening, Zuhoor Danha, Plaintiff Zena Karoumi's
sister-in-law, called Allstate to file an insurance claim for
the water damage to Plaintiffs' home. ECF No. 16-4
PageID.188 (Zena Karoumi Dep.); ECF No. 16-5 PageID.208, 2011
(Mariana Karoumi Dep.); ECF No. 20-11 PageID.556 (Zuhoor
Danha Dep.). Zuhoor Danha and her husband had been in Cedar
Point with Plaintiffs, along with several other family
members, and were dropping off some things at Plaintiffs'
house when the water damage was discovered. ECF No. 20-11
PageID.556. Consistent with Danha's testimony,
Allstate's records show the insurance company received
notice of the water damage on July 3, 2017, at approximately
9:07 p.m. ECF No. 16-7 PageID.236 (Christopher Decker Aff.);
ECF No. 16-8 PageID.239 (Allstate First Notice of Loss
Snapshot). Allstate's initial loss description describes
the damage as: “Water pipe broke under sink causing
interior water damage to kitchen, two living rooms, 3
bathrooms, 3 bedrooms and entire basement with 4 rooms,
flooring walls, ceilings in basement.” ECF No. 16-8
either July 3, 2017, the evening Plaintiffs discovered the
flooding, or the next day (or both-the record is unclear),
Kelly Putros, a handyman and friend of Basil Karoumi's
cousin, came to the house to examine the leak.
Compare ECF No. 16-3 PageID.181 (Basil Karoumi Dep.)
(“Q: Okay. And this was, this was the day after you
found the water, right, when Kelly was out there? A: Yes, the
next day.”), and ECF No. 16-5 PageID.209
(Mariana Karoumi Dep.) (“[Putros] came the next day
because it was really late that day [the day Plaintiffs
discovered the damage]”) with ECF No. 16-6
PageID.225-26, 228-29 (Putros Dep.) (suggesting Putros came
by the house the night Plaintiffs discovered the leak)
and ECF No. 20-7 PageID.519 (Basil Karoumi Aff.)
(“Mr. Putros came to the Home two times[, ] on July 3,
2017, and July 4, 2017”).
is a self-taught handyman and does not have any kind of
plumbing license. ECF No. 16-6 PageID.232. According to Basil
Karoumi, on July 4, 2017, Putros, after examining the
water-supply line below the kitchen sink, told Karoumi,
“this pipe is loose and it is rusty as well.” ECF
No. 16-3 PageID.181. He then replaced the supply line with a
new one he purchased at Home Depot or Lowe's and put the
discarded supply line in his tool box. ECF No. 16-6
PageID.226-27. Putros testified that he is unsure where the
old supply line is and believes he most likely threw it away.
ECF No. 16-6 PageID.227; ECF No. 20-7 PageID.519 (“Mr.
Putros threw [away] the broken cold-water supply line on July
4, 2017.”). According to his sworn affidavit, before
throwing away the supply line Putros inspected the line and
found no evidence that it had been intentionally broken or
improperly installed. ECF No. 25 PageID.890. He further
averred that Plaintiffs neither instructed nor authorized him
to dispose of the allegedly broken supply line. Id.
Zuhoor Danha's initial July 3, 2017 call to initiate an
insurance claim on Plaintiffs' behalf, Allstate had
difficulty reaching Plaintiffs to follow up. Claims Service
Representatives attempted to reach Basil Karoumi by phone
through an Arabic interpreter on July 3, 5, and 6, 2017. ECF
No. 16-7 PageID.237. But Karoumi did not answer any of those
phone calls and did not have his voice mail set up for
Allstate representatives to leave a message. ECF No. 16-7
PageID.237. Christopher Decker, an Allstate Claims Service
Representative, also emailed Basil Karoumi on July 6, 2017
“asking him to contact Allstate about his claim.”
ECF No. 16-7 PageID.237. The next day, Plaintiffs'
daughter, Mariana Karoumi, contacted Decker to advise him
that, because she is a fluent English-speaker, she would be
the contact person for her parents' claim. ECF No. 16-7
PageID.237. In a subsequent conversation with Decker, Mariana
Karoumi advised him that “a plumber had not yet been
out to the house.” ECF No. 16-7 PageID.237. Mariana
Karoumi also told Andrew Feher, another Allstate Claims
Service Representative, on July 7, 2017, that “the
plumbing repairs had not yet been completed.” ECF No.
16-10 PageID.249 (Andrew Feher Aff.).
the July 7 phone call, Feher specifically advised that the
Karoumis “should not throw away whatever was
damaged” when plumbing repairs were ultimately made
because “Allstate would need to inspect the damaged
parts.” Id. It is uncontested that this is the
first time Allstate expressly instructed anyone to preserve
the allegedly damaged water-supply line. ECF No. 20-10
PageID.548 (Mariana Karoumi Aff.).
a subsequent site inspection, Mariana Karoumi told Karrie
Koneczny, one of the adjusters, that the plumbing repairs had
actually been completed as soon as the Karoumis discovered
the flooding but she was unsure of the identity of the
plumber. ECF No. 16-9 PageID.246 (Karrie Koneczny Aff.);
see ECF No. 16-7. Karoumi explained that, at the
time of her earlier conversations with Decker and Feher, she
had not yet realized “that Mr. Putros had already
disposed of the cold-water supply line.” ECF No. 20-10
PageID.548. After examining damage to the Karoumis' home,
Koneczny said she “questioned the extent of the damages
being claimed by the Karoumis” as “they were not
consistent with what I was seeing at the property.” ECF
No. 16-9 PageID.247.
the water damage to Plaintiffs' house was being
remediated, they and their six family members lived, at least
part of the time, at the home of Plaintiff Basil
Karoumi's brother, Ziad Karoomi. See ECF No.
16-5 PageID.215. It was Ziad Karoomi's wife, Zuhoor
Danha, who first called Allstate to file the insurance claim
on Plaintiffs' behalf. ECF No. 16-4 PageID.188 (Zena
Karoumi Dep.). Ziad Karoomi and his wife Zuhoor Danha had
also accompanied Plaintiffs on their trip to Cedar Point,
from which they returned to discover the water leak.
Plaintiffs stated in deposition testimony that they were
paying $4, 000 per month to live in Ziad Karoomi's home.
ECF No. 16-5 PageID.215. Accordingly, they sought additional
living expenses (“ALE”) in the amount of $4, 000
per month from Allstate. ECF No. 16-12 PageID.271-72 (Lori
Davis Aff.). Allstate was “concerned” by the
magnitude of this ALE demand, which it deemed excessive and
potentially fraudulent. ECF No. 16-12 PageID.272.
in part by the unusually large ALE claim, Allstate's
Claims Service Representative decided to investigate Ziad
Karoomi's insurance claim history. Id. She found
that in 2014 Karoomi had also filed a water damage claim-with
Farm Bureau Insurance Company-that was almost identical to
the one Plaintiffs submitted to Allstate in 2017. See
Id. Like Plaintiffs, Karoomi had reported water damage
to his house caused by a broken supply line under his sink.
Id.; see ECF No. 16-13 (Report on
Karoomi's 2014 Claim). Remarkably, Karoomi had also told
his insurer that he discovered the water damage after
returning home from a water park in Sandusky, Ohio. ECF No.
16-13 at PageID.275. Karoomi's 2014 claim also involved
Kelly Putros and Peggy Pauley-the same handyman and water
mitigation vendor used by Plaintiffs. Id.
Additionally, in connection with his 2014 insurance claim,
Ziad Karoomi told Farm Bureau Insurance Company that he was
paying Putros $2, 500 per month to reside at a house owned by
Putros while his own home was being restored. ECF No. 16-13
ultimately denied Plaintiffs' insurance claim on November
2, 2017, on the basis that “[t]he damage from the
claimed July 3, 2017 water damage incident was not
accidental, but was instead intentionally caused by you,
and/or at your direction, and/or with your knowledge and
consent.” ECF No. 16-15 PageID.306 (Allstate Denial of
Coverage). Allstate further asserted that Plaintiffs had
“willfully concealed and misrepresented facts and
circumstances of a material nature, and ha[d] otherwise
engaged in fraudulent conduct in connection with these
claims.” Id. Additionally, Allstate explained
that under the policy Plaintiffs could not bring any action
against the insurer unless “there has been full