Hart v. State Farm Fire & Cas. Co., 082121 MIEDC, 2:20-cv-10573

CourtUnited States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
Docket Number2:20-cv-10573
PartiesMarco Hart, Jr., and Shantel Pye, Plaintiffs, v. State Farm Fire and Casualty Company, Defendant.
Date21 August 2021

Marco Hart, Jr., and Shantel Pye, Plaintiffs,


State Farm Fire and Casualty Company, Defendant.

No. 2:20-cv-10573

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

August 21, 2021



Plaintiffs, Shantel Pye and Marco Hart, Jr., bring this action against Defendant, State Farm Fire and Casualty Co., their insurance company, for its refusal to submit to appraisal the value of property damaged by a fire at their home on July 20, 2019. (Am. Compl. ¶¶ 8-22). Although Plaintiffs claim losses in excess of $286, 916.05, Defendant has paid only $96, 539.84 on their claim. (ECF No. 5-3, PageID.193-97; ECF No. 20-3, PageID.485, 487). Plaintiffs have moved for summary judgment and argue not only that appraisal is warranted, but that several portions of Defendant's appraisal policy should be voided as contrary to Mich. Comp. Laws (“MCL”) § 500.2833(1)(m). (ECF No. 20, PageID.390). Although a hearing was initially scheduled for August 25, 2021, the Court has now determined that the instant Motion [20] is appropriate for determination without a hearing pursuant to L.R. 7.1(f)(2). For the reasons articulated below, Plaintiffs' Motion [20] will be GRANTED in part and DENIED in part.


On July 20, 2019, Plaintiffs' home in Detroit, Michigan, was damaged by fire and smoke. (ECF No. 5-3, PageID.193-197). Plaintiffs were insured by Defendant at the time of the damage through a homeowners insurance policy (No. 82-EE-X146-2). (ECF No. 20-2, PageID.425). Although Defendant accepted liability for the damages caused by fire and smoke, it disagreed with the amount and scope of loss alleged by Plaintiffs, and paid only $96, 539.84 on their claim. (ECF No. 20-3, PageID.485, 487). Accordingly, Plaintiffs demanded on February 10, 2020, that the parties' differences be resolved through appraisal. (ECF No. 20-4, PageID.489). On February 11, 2020, Defendant rejected the demand and refused to participate in appraisal, stating: We acknowledge receipt of your letter of February 10, 2020, requesting Appraisal.

The amounts listed on the Proof of Loss and our estimate are not for the same scope of repairs. Difference in scope of damages are a matter of coverage and not of price.

We have also not been presented with a written, itemized documentation of the specific items you are disputing in the State Farm estimate.

Therefore, we respectfully decline your request for Appraisal because Appraisal is not the appropriate remedy to resolve scope and coverage issues.

(ECF No. 20-5, PageID.492). Plaintiffs responded by initiating the instant litigation.

Standard of Review

Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A ‘material' fact is one that ‘might affect the outcome of the suit under the governing law.' And a genuine dispute of material fact exists if ‘the evidence is such that a reasonable jury could return a verdict for the [nonmoving] party.'” Abu-Joudeh v. Schneider, 954 F.3d 842, 849 (6th Cir. 2020) (citations omitted) (first quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); then quoting Jackson v. VHS Detroit Receiving Hosp., Inc., 814 F.3d 769, 775 (6th Cir. 2016)).

The moving party bears the burden of demonstrating an absence of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden, the burden then shifts to the nonmoving party to establish a “genuine issue” for trial via “specific facts.” Additionally, the moving party is entitled to summary judgment when the nonmoving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.”

Abu-Joudeh, 954 F.3d at 840 (citations omitted) (quoting Celotex Corp., 477 U.S. at 322, 324).

The Court views all of the facts in the light most favorable to the nonmoving party and draws “all justifiable inferences” in the nonmoving party's favor. Anderson, 477 U.S. at 255; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “In other words, ‘at the summary judgment stage[, ] the judge's function is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'” Jackson, 814 F.3d at 775 (alteration in original) (quoting Anderson, 477 U.S. at 249).


Michigan law requires the following provisions to be included in any fire insurance policy “issued or delivered” in the State: That if the insured and insurer fail to agree on the actual cash value or amount of the loss, either party may make a written demand that the amount of the loss or the actual cash value be set by appraisal. If either makes a written demand for appraisal, each party shall select a competent, independent appraiser and notify the other of the appraiser's identity within 20 days after receipt of the written demand. The 2 appraisers shall then select a competent, impartial umpire. If the 2 appraisers are unable to agree upon an umpire within 15 days, the insured or insurer may ask a judge of the circuit court for the county in which the loss occurred or in which the property is located to select an umpire. The appraisers shall then set the amount of the loss and actual cash value as to each item. If the appraisers submit a written report of an agreement to the insurer, the amount agreed upon shall be the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any 2 of these 3 shall set the amount of the loss. Each appraiser shall be paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire shall be paid equally by the insured and the insurer.

MCL 500.2833(1)(m). Any provision of a fire insurance policy, which is contrary to [MCL 500.2833(1)(m)], shall be absolutely void, and an insurer issuing a fire insurance policy containing any such provision shall be liable to the insured under the policy in the same manner and to the same extent as if the provision were not contained in the policy.

MCL 500.2860.

Plaintiffs allege that Defendant's Policy Form HW-2122 contains nine provisions that should be void as contrary to MCL 500.2833(1)(m), and argue that the Court should order appraisal. (ECF No. 20, PageID.393). Defendant disagrees, and argues that, in any case, Plaintiffs' allegations are only ripe as to one of the nine provisions because the others have not been asserted against Plaintiffs. (ECF No. 21, PageID.539).

I. Plaintiffs' Challenges to Defendant's Appraisal Provisions Are Ripe

A claim may not be adjudicated on its merits if it is unripe. Nat'l Rifle Ass'n of Am. v. Magaw, 132 F.3d 272, 284 (6th Cir. 1997). “A claim is unripe when it ‘is anchored in future events that may not occur as anticipated, or at all.'” Jackson v. City of Cleveland, 925 F.3d 793, 807 (6th Cir. 2019) (quoting id.). Here, Plaintiffs concede that Defendant has not yet attempted to enforce eight of the nine appraisal provisions found in Policy Form HW-2122. (ECF No. 20, PageID.404). Nevertheless, Plaintiffs argue that that all the provisions at issue are ripe for challenge in light of the “so-called broad rule” discussed by the Sixth Circuit in Myers v. W.-Southern Life Ins. Co. 849 F.2d 259, 260 (6th Cir. 1988) (quoting Federoff v. Ewing, 386 Mich. 474, 480 (1971)).[1]

Under Michigan's broad rule, “an actual showing of public injury” is not required for a court to void a contractual provision as contrary to public policy. Federoff, 386 Mich. at 480. This rule was first applied by the Michigan Supreme Court in Mahoney v. Lincoln Brick Co., which explained: [A]ll agreements the purpose of which is to create a situation which tends to operate to the detriment of the public interest are against public policy and void, whether in the particular case the purpose of the agreement is or is not effectuated. For a particular undertaking to be against public policy actual injury need not be shown; it is enough if the potentialities for harm are present.

304 Mich. 694, 8 N.W.2d 883 (1943).

In short, the broad rule permits a plaintiff to challenge a contractual provision by which they are bound if that provision operates to the detriment of the public interest, regardless of whether the specific provision has yet caused the plaintiff harm. See Id. In the language of justiciability, the broad rule means that the issue of whether a contract is against public policy is ripe for adjudication even if the allegedly voidable provision has not yet been asserted. See Myers, 849 F.3d at 260 (explaining that “[t]he test to be applied is not what is actually done, but that which may or might be done under the terms of the contract” (emphasis removed) (quoting Mahoney, 304 Mich. 706)). In such a case, the alleged injury must be construed as having occurred at the time the agreement was made. Accordingly, the Court holds that the injury alleged here is not “anchored in future events.” Jackson, 925 F.3d at 807 (quoting Nat'l Rifle Ass'n, 132 F.3d at 284).

Shina v. State Farm Fire & Cas. Co., No. 20-10080, 2021 U.S. Dist. LEXIS 20993 (E.D. Mich. Feb. 4, 2021), the case on which Defendant heavily relies, is not to the contrary. In Shina, the plaintiffs attempted to challenge the same nine provisions as Plaintiffs here, but the court determined that the issue was not ripe. See id. at *18 (noting that “it is not clear whether State...

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