Angott v. Chubb Group Ins.

• Decision Date: 04 April 2006
• Docket Number: Docket No. 258026.
• Citation: 270 Mich. App. 465,717 N.W.2d 341
• Parties: John ANGOTT, Plaintiff/Appellant-Cross-Appellee, v. CHUBB GROUP of INSURANCE Companies, Defendant, and Great Northern Insurance Company, Defendant/Appellee-Cross-Appellant.
• Court: Court of Appeal of Michigan — District of US

717 N.W.2d 341

270 Mich. App. 465

John ANGOTT, Plaintiff/Appellant-Cross-Appellee, v. CHUBB GROUP of INSURANCE Companies, Defendant, and Great Northern Insurance Company, Defendant/Appellee-Cross-Appellant.

Docket No. 258026.

Court of Appeals of Michigan.

Submitted March 8, 2006, at Grand Rapids.

Decided April 4, 2006, at 9:00 a.m.

Publication Ordered June 12, 2006.

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John P. Jacobs, P.C. (by John P. Jacobs and Lincoln G. Herweyer), Detroit, for Theresa Kilby.

Gregory and Meyer, P.C. (by Alan G. Gregory and Paul J. Ellison), Troy, for Great Northern Insurance Company.

Before: MURPHY, P.J., and WHITE and METER, JJ.

MURPHY, P.J.

Plaintiff¹ appeals as of right and defendant² cross-appeals a final order entered by the trial court that addressed issues of appraisal modification, penalty interest, prejudgment interest, and costs. We hold that defendant waived any claim that plaintiff was not entitled to some of the requested insurance benefits for lack of coverage when it conceded coverage in the pleadings and demanded and pursued an appraisal, thereby also waiving any coverage-based challenge of the appraisal award. Further, we hold that plaintiff may be entitled to penalty interest, MCL 500.2006, and is entitled to prejudgment interest, MCL 600.6013. Finally, we hold that plaintiff is entitled to costs as the prevailing party. We reverse and remand.

Plaintiff purchased an insurance policy from defendant that included "Deluxe House Coverage" and "extended replacement cost." Plaintiff's home has approximately 8,500 square feet and was built on a hill that inclines toward Lake Michigan. In December 2000, plaintiff returned from a vacation to find that water pipes had burst and the escaping water had collected under the lowest floor of the house. Plaintiff mailed defendant a sworn statement in proof of loss concerning the damage, which defendant rejected. On December 14, 2001, plaintiff, having received no payment under the policy, filed a complaint against defendant seeking insurance benefits to cover the claimed damage. In April 2002, the land on the western side of plaintiff's property collapsed and subsided downhill toward Lake Michigan. On May 21, 2002, defendant filed an answer to plaintiff's complaint and demanded that the matter be submitted to an appraisal panel pursuant to MCL 500.2833(1)(m). Before an appraisal panel was convened, defendant finally made an initial payment of benefits to plaintiff in the amount of $300,000. Pursuant to the parties' stipulation, they convened an appraisal panel and the parties' attorneys coauthored a letter informing the panel that it was only to consider the loss and damage caused by the December 2000 broken water pipes. The appraisal panel awarded plaintiff $1,058,750 in damages.

Within 60 days of the appraisal award, defendant paid plaintiff $242,795, which represented the amount of the appraisal award minus the amount of the advance payment and disputed portions of the appraisal award. Defendant subsequently filed a motion to modify the appraisal award, arguing that the award included amounts for property damage that was not covered by the insurance policy. Plaintiff filed a motion to enter judgment in the amount of the appraisal award and requested pre- and post-judgment interest. The court issued a final order granting defendant's motion to modify the appraisal award; granting defendant's motion for summary disposition with respect to plaintiff's request for statutory penalty interest pursuant to the Uniform Trade Practices Act (UTPA), MCL 500.2001 et seq.; denying plaintiff's request for statutory prejudgment interest pursuant to MCL 600.6013; entering judgment in favor of plaintiff for the amount of the modified appraisal award; and allowing plaintiff taxable costs.

The Appraisal Award

Plaintiff's first argument on appeal is that the court erred by modifying the appraisal award. Specifically, plaintiff argues that defendant should have been precluded from disputing coverage because defendant waived the argument or was estopped from making the argument, that the court did not have authority to review the appraisal award, that the court misinterpreted the insurance policy, and that plaintiff should have been awarded consequential and incidental damages arising from the breach of contract claim equal to the full appraisal award even if coverage was limited. We hold that defendant waived any claim that plaintiff was not entitled to some of the requested insurance benefits for lack of coverage when it conceded coverage in the pleadings and demanded and pursued an appraisal, thereby also waiving any coverage-based challenge of the appraisal award. Therefore, on remand, the trial court is to enter a money judgment in favor of plaintiff consistent with the appraisal award.

"[T]he question of what constitutes a waiver is a question of law." MacInnes v. MacInnes, 260 Mich.App. 280, 283, 677 N.W.2d 889 (2004). The issue is thus reviewed de novo by this Court. Id. "In order for defendant to waive its rights against plaintiff, it must have intentionally and knowingly relinquished those rights." South Macomb Disposal Auth. v. Michigan Muni Risk Mgt. Auth., 207 Mich.App. 475, 476, 526 N.W.2d 3 (1994). "It necessarily follows that conduct that does not express any intent to relinquish a known right is not a waiver, and a waiver cannot be inferred by mere silence." Moore v. First Security Cas. Co., 224 Mich.App. 370, 376, 568 N.W.2d 841 (1997). Waiver may be shown by proof of express language of agreement or inferably established by such declaration, act, and conduct of the party against whom it is claimed. H J Tucker & Assoc., Inc. v. Allied Chucker & Engineering Co., 234 Mich.App. 550, 564, 595 N.W.2d 176 (1999). In the context of the court rules, "[a] defense not asserted in the responsive pleading or by motion [before filing a responsive pleading] . . . is waived. . . ." MCR 2.111(F)(2). Moreover, a party is bound by its pleadings. Joy Oil Co. v. Fruehauf Trailer Co., 319 Mich. 277, 280, 29 N.W.2d 691 (1947); Emerson v. Atwater, 12 Mich. 314, 316 (1864) ("Pleadings would avail little or nothing if parties were not bound by them.").

Defendant argues that land stabilization costs, except for ten percent of those costs, and landscape replacement costs were included in the appraisal award, but those items were not covered under the insurance policy and should not have been included in the award. In the sworn statement in proof of loss, the amount claimed by plaintiff was $1,368,518, which arguably included costs defined as land stabilization costs, along with landscape replacement costs. The claim was rejected, ostensibly because more detailed information and documentation was needed from plaintiff and further investigation was necessary to determine coverage under the policy. The rejection letter also provided that defendant reserved all rights and defenses under the policy. Thus, at this time, there was no waiver regarding coverage issues and defenses. Subsequently, however, plaintiff filed the complaint, and two of the paragraphs in it provided:

10. That this action for declaratory relief is brought pursuant to the statutes and court rules provided for the court to make a determination of the rights and remedies of the parties.

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27. That this court has the authority and is requested to declare the rights and remedies of the parties to said insurance contract.

In defendant's answer, it responded to these allegations as follows:

10. This cause of action is moot for the reason that a coverage decision has been made by Great Northern Insurance Company affording coverage for the property damage caused by the pipe break in December 2000.

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27. Denies for the reason that the coverage issue is moot. Coverage has been afforded; only damages are at issue which are subject to the appraisal provisions of MCLA 500.2833.

Moreover, as part of its affirmative defenses, defendant stated:

6. That the only issue remaining concerns the amount of damages; that any dispute between the insured and the insurer are subject to the appraisal provisions of the policy and MCLA 500.2833; that the jurisdiction of this Court is limited to appointment of an Umpire if the appraisers selected by the parties cannot agree on an Umpire.

7. That Defendant hereby demands appraisal pursuant to the policy and MCLA 500.2833 . . . .

The only reasonable interpretation of defendant's answer and affirmative defenses is that coverage matters were not, or were no longer, at issue. There is no limiting language with respect to defendant's statements in the responsive pleadings that it was affording coverage. To the contrary, defendant's response in its answer to paragraph 10 of plaintiff's complaint expressly indicated that it was "affording coverage for the property damage caused by the pipe break in December 2000." Defendant conceded coverage and was bound by the position taken in its pleadings. When reading defendant's responses to paragraphs 10 and 27 of the complaint, which paragraphs requested that the court render a determination of the parties' rights and remedies, defendant makes clear that court intervention, or the exercise of the court's jurisdiction, was unnecessary and was indeed improper, except possibly in regard to issues concerning the selection of an umpire in the appraisal process. Defendant did not want the trial court to settle the dispute, but rather, the appraisers, and defendant, in response to paragraph 27, clearly and unambiguously stated that only damages were at issue and that issue was subject to the appraisal process. That being said, defendant acknowledges, accepts, and vehemently argues that coverage issues are solely within the purview of the trial court, not the appraisers. Therefore, by indicating that the court should not be involved with the case and that the appraisal process was the only appropriate...