City of Detroit v. Presti
| Decision Date | 22 May 2000 |
| Docket Number | Docket No. 208648. |
| Citation | 610 N.W.2d 261,240 Mich. App. 208 |
| Parties | CITY OF DETROIT, Plaintiff-Appellee, v. Joseph PRESTI, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Margo C. Balkwill, Assistant Corporation Counsel, for the plaintiff.
Fresard and Associates, P.C. (by Donn Fresard), St. Clair Shores, for the defendant.
Before: DOCTOROFF, P.J., and HOLBROOK, JR., and MICHAEL J. KELLY, JJ.
Defendant appeals by leave granted the trial court's order denying his motion for a new trial and directing entry of a new judgment under MCR 2.611(A)(1) and (A)(2). We affirm the trial court's order, but remand for adjustment of the amount of the final insurance settlement to be retained by plaintiff.
Defendant owned a rental home located in the city of Detroit. The home had been vacant for a short period when, in early 1996, vandals entered the home and caused considerable damage to the structure, including the plaster walls, bathroom fixtures, kitchen cupboards, and countertops. In addition, a small fire was started in one of the rooms using wood from the home's walls.
On February 1, 1996, defendant filed a claim with his insurer, Citizens Insurance Company of America, for "fire damage" to the rental home. A Citizens claim investigator reported that the home sustained fire and smoke damage, as well as water damage from extinguishing the fire and from water lines that had subsequently frozen and burst. The adjuster estimated repair costs in excess of $43,000. Before the vandalism, the home had an appraised value of $14,000. A wrecking company estimated that it would cost approximately $4,185 to demolish the damaged house. Citizens calculated the whole loss and damage and issued a check to the insured for $31,160.1 In accordance with M.C.L. § 500.2845; MSA 24.12845, it withheld $4,185 from the final settlement check as surety for the repair, replacement, or removal of the damaged house.
Section 2845 requires that insurers paying a final settlement for loss to insured real property due to fire or explosion withhold a percentage of the proceeds for the benefit of the city, village, or township in which the insured property is located to ensure that the damaged or destroyed structure is repaired, replaced, or removed for the protection of the public health and safety. Section 2845 also imposes certain procedural requirements on the municipality in which the insured property is located in order to have the withheld amount placed in escrow as assurance that the damaged or destroyed property will be repaired, replaced, or removed. If the property is not repaired, replaced, or removed, the municipality is entitled to retain the escrowed proceeds.
Specifically, M.C.L. § 500.2845; MSA 24.128452 provided, in pertinent part, as follows:
(1) Except as otherwise provided in this section, with respect to insured real property located in a city, village, or township which has elected to apply this section as provided in subsection (11), when a claim is filed for a loss to insured real property due to fire or explosion and a final settlement is reached on the loss to the insured real property, an insurer shall withhold from payment 15% of the actual cash value of the insured real property at the time of the loss or 15% of the final settlement, whichever is less. At the time that 15% of the settlement or judgment is withheld, the insurer shall give notice of the withholding to the treasurer of the city, village, or township in which the insured real property is located, to the insured, and to any mortgagee having an existing lien or liens against the insured real property, if the mortgagee is named on the policy....
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(d) Within 30 days after the escrowing of the withheld amount under this section, the city, village, or township may apply to the circuit court for declaratory relief in order to establish its right to the proceeds upon a showing that the health, safety, and welfare of the inhabitants of the city, village, or township will be jeopardized unless such proceeds are retained by the city, village or township....
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(3) Upon receipt of money and information from an insurer as prescribed in subsections (1) and (2), the local treasurer shall record the information and the date of receipt of the money and shall immediately deposit the money in a trust or escrow account established for purposes of this section....
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