W.B. Cenac Medical Service, P.C. v. Michigan Physicians Mut. Liability Co.

• Decision Date: 15 March 1989
• Docket Number: Docket No. 107397
• Citation: 174 Mich.App. 676,436 N.W.2d 430
• Parties: W.B. CENAC MEDICAL SERVICE, P.C., Plaintiff-Appellant, v. MICHIGAN PHYSICIANS MUTUAL LIABILITY COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 430

436 N.W.2d 430

174 Mich.App. 676

W.B. CENAC MEDICAL SERVICE, P.C., Plaintiff-Appellant, v. MICHIGAN PHYSICIANS MUTUAL LIABILITY COMPANY, Defendant-Appellee.

Docket No. 107397.

Court of Appeals of Michigan.

Submitted Dec. 8, 1988.

Decided Feb. 6, 1989.

Released for Publication March 15, 1989.

Barsky & Meth, P.C. by Seth H. Barsky, Southfield, for plaintiff.

Kerr, Russell & Weber by Daniel G. Beyer and Kenneth C. Harrison, Detroit, for defendant.

Before WAHLS, P.J., and McDONALD and SIMON, ^* JJ.

WAHLS, Presiding Judge.

Plaintiff, W.B. Cenac Medical Service, P.C., appeals as of right from a January 22, 1988, order of the Calhoun Circuit Court denying the motion of plaintiff for summary disposition and granting the motion of defendant, Michigan Physicians Mutual Liability Company, for summary disposition. We reverse and remand for further proceedings, holding that, under an insurance policy insuring against loss of earnings due to business interruption caused by the destruction of business premises, an insured corporation should not be precluded from presenting arguments to a jury to support claims for the loss of earnings of a hypothetical employee who, but for the destruction of the business premises, could have generated earnings after the death of the corporation's sole income-generating employee and before the scheduled reopening of the corporation's business premises.

The record reveals that plaintiff is a professional corporation which operated a medical clinic and that Winston B. Cenac, D.O., was the sole corporate officer and income-generating employee. Defendant issued a property insurance policy to plaintiff which was effective from November 15, 1985, to November 15, 1986, and in which the named insureds were plaintiff, Dr. Cenac, and Dr. Cenac's wife, Noreen Cenac. Included in this policy was a business-interruption and loss-of-earnings clause, which provided, in pertinent part:

"We [Michigan Physicians Mutual Liability Company] will pay for your loss of earnings when your practice is interrupted. We will also pay for extra expenses you incur to continue your practice. But the actual or possible interruption of your practice must be the result of direct damage to your buildings or professional or office contents, or as a direct result of loss to a building or premises adjacent to yours by an insured peril when you are prohibited from entering your premises by order of civil authority. We will pay for your loss beginning the date of the damage for as long as it should reasonably take to restore your practice to the condition it was in before the damage, regardless of the expiration date of your policy or the time your practice is actually interrupted. Payments will not, though, continue beyond 30 days after completion of replacement, repair or rebuilding of your property." (Emphasis in original.)

The policy also required plaintiff to reduce its losses occasioned by a business interruption resulting from damage to its business premises either by using other premises or by repairing or replacing the damaged property as soon as possible.

On April 5, 1986, a fire at plaintiff's business premises caused property damage resulting in the loss of income from rent which would otherwise have been paid to plaintiff and from fees for professional services which would otherwise have been performed by Dr. Cenac. The projected date of restoration of the business premises was October 6, 1986. In conformity with the terms of its insurance policy, defendant began paying business-interruption benefits to plaintiff, benefits which included payment for the loss of earnings of Dr. Cenac. When in May, 1986, approximately six weeks after the fire, Dr. Cenac was killed in an airplane crash, defendant stopped paying for Dr. Cenac's loss of earnings. This prompted plaintiff to file a complaint against defendant contending that, under the terms of the insurance policy, it was entitled to payment for Dr. Cenac's loss of earnings until October 6, 1986, the projected date of restoration of the business premises, regardless of Dr. Cenac's death. After defendant filed an answer and list of affirmative defenses, plaintiff filed a motion for summary disposition under MCR 2.116(C)(10). In response, defendant also filed a motion for summary disposition under both MCR 2.116(C)(8) and 2.116(C)(10). Oral arguments were conducted and the trial court ruled in favor of defendant, stating:

"Now, the bottom line, gentlemen, is I will grant the defendant's motion and the reason I do so is I don't think there is any ambiguity in the policy as it relates to the facts here. First of all, as pointed out earlier, the interruption of the practice must be as a result of direct damage to your buildings.

"Now, reading further, it says if you can reduce your loss covered by this option, you must do so, one, by arranging to use other premises and/or equipment to continue your practice, and two, by rebuilding, repairing or replacing the damaged, stolen or destroyed property as soon as possible.

"I realize that the P.C. [plaintiff] was a named insured, that Dr. Cenac was also a named insured. Here, once Dr. Cenac died in the airplane accident we are faced with the speculative possibility that W.B. Cenac Medical Services, P.C. would have been conveyed to some other person. I underline the speculative nature of that prospect. I realize in the defendant's brief they [sic] indicate no one on behalf of Dr. Cenac individually asked MPMLC [defendant] to transfer the doctor's interest policy to another individual physician.

"Now, where you have the principal employee who generates the income pass away for whatever reason, unless you had the specific identification of the individuals to whom the P.C. is going to be transferred, the length of time this will take place, I don't believe that there is any underlying obligation for the insurance company to pay loss of income to the P.C. when they have no income generated, if you will, in existence. That's the reason, the bottom line, that I am granting the defendant's motion."

Although the trial court failed to specifically identify the subrule under which it granted defendant's motion for summary disposition, it is clear that the court looked beyond the pleadings in deciding this issue. Thus, we will review the motion as having been granted under MCR 2.116(C)(10)--there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The standard for reviewing such a motion is well established:

"A motion for summary disposition brought under MCR 2.116(C)(10), based on the lack of a genuine issue of material fact, tests whether there is factual support for the claim. In ruling on the motion, the trial court must consider the affidavits, pleadings, depositions, admissions and other documentary evidence submitted by the parties. MCR 2.116(G)(5). The opposing party must show that a genuine issue of fact exists. Giving the benefit of all reasonable doubt to the opposing party, the trial court must determine whether the kind of record that might be developed would leave open an issue upon which reasonable minds could differ. Weeks v Bd of Trustees, City of Detroit General Retirement System, 160 Mich App 81, 84; 408 NW2d 109 (1987). A reviewing court should be liberal in finding that a genuine issue of material fact exists. Rizzo v Kretschmer, 389 Mich 363, 372; 207 NW2d 316 (1973). A court must be satisfied that it is impossible for the claim or defense to be supported at trial because of some deficiency which cannot be overcome. Rizzo, supra at 371 .

"The party opposing a motion for summary disposition has the burden of showing that a genuine issue of disputed fact exists. Fulton v Pontiac General Hospital, 160 Mich App 728,...