Olivia Marie, Inc. v. Travelers Cas. Ins. Co. of Am., 2:11-cv-12394
| Decision Date | 13 February 2013 |
| Docket Number | No. 2:11-cv-12394,2:11-cv-12394 |
| Parties | OLIVIA MARIE, INC., d/b/a ITALMODA, a Michigan corporation, Plaintiff / Counter-Defendant, v. TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, a foreign Insurance Company, Defendant / Counter-Plaintiff. |
| Court | U.S. District Court — Eastern District of Michigan |
Hon. Gerald E. Rosen
Plaintiff Olivia Marie, Inc., d/b/a/ Italamoda, a high-end furniture retailer, alleges that it suffered three covered theft losses at two of its locations for which it filed claims with its insurance company, Defendant Travelers Casualty Insurance Company of America. Claiming that Defendant failed to pay statutory interest due on two of the insurance claims and refused to pay the third claim, Plaintiff filed a Complaint for breach of contract damages in Wayne County Circuit Court on April 29, 2011. Defendant was served with process on May 12, 2011.
On June 1, 2011 Defendant removed the case to this Court and on that same date, filed its Answer to Plaintiff's Complaint. Defendant's Motion for Judgmenton the Pleadings was filed a week later. Two days later, on June 10, 2011, Defendant filed the Motion to Stay Discovery. This Court denied Defendant's Motion for Summary Judgment WITHOUT PREJUDICE to allow for the completion of discovery, and denied Defendant's Motion to Stay Discovery as moot.
Following extensive and contentious motion practice, Defendant filed the present Motion for Summary Judgment on February 29, 2012. Defendant also attained leave to file a Counterclaim, which it filed on March 30, 2012, alleging that Plaintiff made fraudulent and material misrepresentations in submitting its insurance claims. Defendant's Counterclaim was not included in its Motion for Summary Judgment, and will be dealt with at a later date.
Having reviewed and considered Plaintiff's complaint, Defendant's motion, and Plaintiff's response to this motion, the Court has determined that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), this matter will be decided on the briefs. This opinion and order sets forth the Court's ruling.
This is an insurance claims case involving three separate incidents of theft to two of Plaintiff's business properties. Despite the substantial amount of discovery and extensive motion practice in this case, only a few key, undisputed facts are necessary for its disposition. There is no dispute as to whether the insurance policy was valid at the time of the thefts.
Plaintiff Olivia Marie, Inc., d/b/a/ Italamoda, a high-end furniture retailer, suffered a theft loss at its Ann Arbor, MI location on or about December 8-9, 2008. It did not initially report this theft to its insurer, Travelers Casualty Insurance Company of America ("Defendant"). Over one year later, Plaintiff suffered two additional thefts at its leased warehouse in Taylor, MI. The first theft ("Taylor I") occurred on July 5, 2009, while the second theft ("Taylor II") occurred on August 9, 2009. Because neither the Ann Arbor location nor the Taylor warehouse were listed on Plaintiff's insurance policy at the time of the thefts, Plaintiff's only possible eligibility for coverage on these claims would be if the properties were covered under the "Newly Acquired or Constructed Properties" provision of Plaintiff's policy.
The "Newly Acquired or Constructed Properties" provision, as relevant to this case, provides theft coverage for 180 days following the acquisition of a property by sale or lease. There is no question that both the Ann Arbor and Taylor I thefts occurred during the first 180 days following acquisition. The Taylor II theft, however, occurred on August 9, 2009, which was 198 days after Plaintiff's original lease date of January 23, 2009, placing it outside the "Newly Acquired or Constructed Properties" provision of the policy. Plaintiff argues, however, that the policy extends for 180 days from when a "risk of loss accrues to the insurer." Pl. Resp. 11. Thus, because Plaintiff did not take possession of the Taylor property until March of 2009, it contends that the Taylor II theft should be covered by the policy.
Seven months after the Taylor II theft, Plaintiff submitted all three claims to Defendant, which were accompanied by a large binder of invoices. Defendant received Plaintiff's claim on March 30, 2010, and retained Wendy Whan, an independent appraiser, to assist in organizing and evaluating the invoices.
On April 27, 2010, Defendant sent Plaintiff an email containing a blank "sworn statement of proof of loss" ("SSPOL"), in compliance with its obligations under the policy. The relevant policy provision provides as follows:
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(7) For loss or damage from other than "employee dishonesty" or "forgery" or alteration send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.
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b. We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records. In the event of an examination, an insured's answers must be signed.
Under the terms of the policy, Plaintiff was required to sign and return the SSPOL within 60 days. Defendant sent a follow-up email on May 12, 2010, in which it reminded Plaintiff that Def.'s Br. Ex. 2, Sub-Ex. 2.
Plaintiff never returned the SSPOL. Def.'s Br. Ex. 2, Req. for Admis. No. 7.
After receiving a report from Ms. Whan on the verifiable amount of damages for the Ann Arbor and Taylor I claims, as well as additional information from Plaintiff, Defendant paid those claims on September 28, 2010. Def.'s Br. Ex. 1, ¶¶ 11, 22; Def.'s Br. Ex. 2, Pl. Resp. to Def.'s Req. for Admis. No. 11; Def.'s Br. Ex. 6 at 163.
Plaintiff alleges that the timing of this payment violates MCL § 500.2006(1), which requires that "[a] person must pay on a timely basis to its insured, an individual or entity directly entitled to benefits under its insured's contract of insurance, or a third party tort claimant the benefits provided under the terms of itspolicy[.]" The statute states that payment "shall be considered paid on a timely basis if paid within 60 days after receipt of proof of loss by the insurer." MCL § 500.2006(3). Failure to make payment in a timely manner entitles claimant to 12% interest on the claim. MCL § 500.2006(1). Plaintiff contends that it is entitled to this interest payment because the claim was not paid within 60 days of Defendant's receipt of the insurance claim.
Following investigation of the Taylor II claim, Defendant sent an email to Plaintiff's adjuster, stating that "we believe that the lease inception date is 1-23-09 and that the loss date of 8-9-09 falls outside the 180 days required by the policy to report a newly acquired location." Def.'s Br. Ex. 20. Defendant continued, informing Plaintiff's appraiser that "I will be preparing a denial letter for this 3rd theft loss" and "I will get the letter out to you and our insured as soon as possible." Id. Taking the position that its "acquisition" of the Taylor warehouse began with its physical occupation of that property in March 2009, and was therefore covered by the policy, Plaintiff's adjuster replied two minutes later, stating "we will be commencing litigation immediately." Id.
On November 30, 2010, Plaintiff's adjuster sent an email to Defendant requesting that it reconsider its denial of the Taylor II claim. Plaintiff's adjuster emailed Defendant again on December 6, 2010, requesting a copy of the denial letter. On December 7, 2010, Defendant replied, stating "I am in the process ofpreparing the denial letter for Taylor #2 loss and will forward you a copy once it is completed." Pl. Resp. Ex. 1.
Plaintiff's appraiser again emailed Defendant on December 16, 2010, again requesting a copy of the letter of denial and demanding statutory interest on the first two claims. Plaintiff emailed his appraiser the following day, indicating that he was ready to take legal action, but Def.'s Br. Ex. 23.
Defendant responded on December 21, 2010, informing Plaintiff that:
Given your prior claims that our coverage position relating to claim number A5E4660 is incorrect coupled with the fact that Travelers has been provided conflicting information relating to the date of commencement of the lease of the Taylor warehouse and the facts and circumstances of the loss, Travelers has decided that it is necessary to clarify these facts and circumstances before rendering a formal claims decision. Accordingly, we are requesting that the insured submit to an Examination Under Oath ("EUO") in accordance with the policy duties.
Def.'s Br. Ex. 24.
Importantly, the final page of the letter provided:
This is not a denial of your claim. It should be expressly understood that Travelers is continuing to investigate the facts and circumstances surrounding this loss under a full Reservation of Rights because of questions regarding the circumstances of the loss and coverage under the...
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