Westfield Insurance v. Appleton , 132 F. App'x 567 ( 2005 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0367n.06
Filed: May 9, 2005
No. 03-2016
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
WESTFIELD INSURANCE COMPANY, )
Plaintiff-Appellee, )
) On Appeal from the United States
v. ) District Court for the Western
) District of Michigan
RANDY and TAMMY APPLETON, )
Defendants-Appellants. )
_________________________________________/
Before: CLAY and GILMAN, Circuit Judges; and O’MALLEY, District Judge.*
O’MALLEY, J. Westfield Insurance Company (“Westfield”) filed this lawsuit against its
insureds, Randy and Tammy Appleton (“Appletons”), seeking a declaration that it is not liable under
the Appletons’ homeowners insurance policy. In response, the Appletons filed counterclaims
against Westfield. In due course, Westfield filed a motion for summary judgment, which the district
court granted. The court also dismissed with prejudice the Appletons’ counterclaims. The court
later denied the Appletons’ motion to reconsider its grant of summary judgment to Westfield. The
Appletons, thereafter, timely filed this appeal. For the reasons outlined more fully below, we
AFFIRM the district court’s grant of summary judgment in favor of Westfield and the district
court’s dismissal “with prejudice” of the Appletons’ counterclaims.
* The Honorable Kathleen O’Malley, United States District Judge for the Northern District
of Ohio, sitting by designation.
I. FACTUAL AND PROCEDURAL BACKGROUND
The undisputed facts are as follows. Westfield issued a homeowners insurance policy to
Randy Appleton for the property located at 33273 East Palmer Lake Road in Colon, Michigan.1
Generally, the policy insured against loss of the Appletons’ real property, as well as the personal
items within their home. The policy contained a “Duty After Loss” provision requiring the
Appletons to submit a proof of loss statement within sixty days after any claimed loss. The policy
further provided that, if the insureds failed timely to submit a proof of loss statement, the subject
claim would be invalidated unless they proved it was “not reasonably possible” to timely submit the
proof of loss statement.
On the morning of December 13, 2001, a fire destroyed the Appletons’ home. The next day,
with the Appletons’ permission, Westfield’s fire investigator, Ken Shelley, together with a Michigan
State Police Fire Marshal, examined the fire-damaged premises. After completing their
investigation that evening, Shelley and the Fire Marshal informed the Appletons that they could do
as they wished with the premises. Thereafter, the Appletons demolished the dwelling with the intent
to rebuild.
On January 11, 2002, Westfield’s insurance adjuster, Scott Whaley, requested by letter a
proof of loss statement and supporting documentation from the Appletons. The letter included three
blank proof of loss statement forms (along with instructions on how to complete the forms) and
established a March 12, 2002 deadline for completing and returning the forms (i.e., sixty days later
per the policy’s terms). The letter went on to state that failure to meet the March 12, 2002 deadline
1
Though the policy’s cover sheet indicates that the policy was prepared for “Randy
Appleton,” its use of the term “insured,” in this case, applies with equal force to
both Randy and Tammy Appleton as “insureds.” See Definitions Section.
2
would mean that Westfield would not honor the Appletons’ claim. Whaley then made two
appointments to help the Appletons complete the forms, but never conditioned the Appletons’
obligation to complete the forms on his assistance. Due to scheduling conflicts, Whaley had to
cancel both appointments and ultimately never met with the Appletons.
In early February, the Appletons sought legal representation. On February 12, 2002, Mike
Grenon, a special fire investigator for Westfield, met the Appletons at their attorney’s office and
took recorded statements regarding the fire. The statements, however, were not “under oath.” At
that meeting, Grenon told the Appletons that they also needed to submit personal property
inventories. Upon learning that the Appletons were represented, on February 13, 2002, Whaley
informed the Appletons’ attorney by letter that he would no longer contact the Appletons directly.
In his letter, Whaley specifically referenced his January 11, 2002 letter and reiterated the Appletons’
obligation to submit a sworn proof of loss statement.
On March 6, 2002, the Appletons submitted the personal property inventories that Grenon
had requested at the February 12, 2002 meeting, and asked when Westfield would make its final
decision on their claim. At that time, however, they did not provide the required proof of loss
statement. By letter dated March 7, 2002, Grenon followed up with the Appletons regarding their
property inventories and requested that they submit additional information including: 1) tax returns
and financial statements; 2) cell phone records; 3) airline ticket records; 4) their parents’ contact
information; and 5) “mortgage loan” information. On April 3, 2002, the Appletons submitted the
additional items that Grenon requested, and, through their attorney, again inquired as to when
Westfield would make its decision on their claim.
In an April 24, 2002 letter, Grenon acknowledged that he had received the Appletons’
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supplemental documentation relative to their property inventories, but never acknowledged their
inquiry regarding Westfield’s consideration of their claim. The Appletons never provided Westfield
with an executed sworn proof of loss statement prior to the March 12, 2002 deadline as 1) required
by their policy, and 2) requested in Whaley’s January 11 and 13, 2002 letters to the Appletons and
their attorney. Accordingly, Westfield denied the Appletons’ claim.
Rather than simply telling the Appletons of its intent to deny their claim, on April 30, 2002,
Westfield filed this action. In its complaint, Westfield sought a declaratory judgment that it had no
coverage obligation to the Appletons because they had failed to timely file a proof of loss statement,
as required by their insurance policy and the notices provided to them by Westfield.
The Appletons responded in two ways. First, they submitted a sworn proof of loss statement
to Westfield on May 15, 2002. By letter dated June 14, 2002, however, Westfield rejected the
Appletons’ proof of loss statement because it: 1) was untimely; 2) was not signed by Tammy
Appleton; and 3) “merely estimate[d] the cash value, whole loss and damage and amount claimed,
[without support] by adequate documentation or information.” Second, the Appletons answered
Westfield’s complaint, and asserted that Westfield had waived, or was otherwise estopped from
enforcing, strict compliance of the policy’s sixty-day “proof of loss” requirement. The Appletons
also filed counterclaims against Westfield for breach of contract and unfair trade practices in
violation of Michigan law.
Westfield ultimately moved for summary judgment on all of its claims. Finding no genuine
issues of material fact, the district court granted Westfield’s motion and, thereafter, dismissed the
Appletons’ counterclaims with prejudice as having no legal basis in light of the court’s grant of
summary judgment to Westfield. The Appletons filed a motion for reconsideration, which the
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district court considered and denied.2 The Appletons timely filed this appeal.
II. DISCUSSION
Michigan law, which the parties agree applies in this case, strongly favors insurance
companies in connection with insurance policies that contain the somewhat standard “proof of loss”
requirement – usually sixty days after a claimed loss. See Dellar v. Frankenmuth Mut. Ins. Co., 433
N.W.2d 380, 383 (Mich. Ct. App. 1987) (“Clearly, the failure to file a signed and sworn proof of
loss within sixty days of the loss bars recovery on a claim without regard to whether the insurer is
prejudiced by such failure.”). This is, of course, the general issue in this appeal – whether the
Appletons’ failure timely to submit a proof of loss statement, as required by their insurance policy,
is fatal to their coverage claim.
Michigan law recognizes limited exceptions to this seemingly harsh rule: 1) waiver and/or
estoppel based on an insurer’s conduct; and 2) substantial compliance with a policy’s terms by an
insured. The Appletons argue that both exceptions apply and afford them coverage under their
insurance contract with Westfield. They alternatively argue that, at the very least, genuine issues
of material fact exist such that a jury should determine whether either, or both, of these exceptions
apply in this case. Finally, the Appletons argue that, regardless of the foregoing, the district court’s
dismissal of their counterclaims with prejudice was inappropriate. We address each of these
arguments in turn below, and find that, though we are sympathetic to the Appletons’ circumstances,
none of their arguments merit reversal of the district court’s decision.
A. Standard of Review.
2
The district court construed the Appletons’ motion for reconsideration as a
motion to alter or amend a judgment pursuant to Fed. R. Civ. P. 59(e).
5
This Court reviews a district court’s grant of summary judgment de novo. See Coomer v.
Bethesda Hosp., Inc., 370 F.3d 499, 504 (6th Cir. 2004); Farhat v. Jopke, 370 F.3d 580, 587 (6th
Cir. 2004). Summary judgment is proper where no genuine issue of material fact exists and the
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In evaluating a
motion for summary judgment, this Court must view the evidence and draw all reasonable inferences
in favor of the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). The proper inquiry is “whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that one party must prevail as a matter of
law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
A federal court sitting in diversity must apply the forum state’s law in accordance with the
pronouncements of the state’s highest court. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 76-79
(1938); AllState Ins. Co. v. Thrifty Rent-A-Car Sys., Inc., 249 F.3d 450, 454 (6th Cir. 2001) (citing
Kingsley Assoc. v. Moll PlastiCrafters, Inc., 65 F.3d 498, 507 (6th Cir 1995)). If the state’s highest
court has not addressed the issue, then the federal court may consider decisions from the state
appellate courts, but only to the extent those decisions reflect the likely outcome were the state’s
highest court to decide the issue. See Allstate Ins. Co., 249 F.3d at 454. As noted, the parties agree
that Michigan law applies in this case.
B. No Genuine Issues of Material Fact Exist.
We first address the Appletons’ catch-all alternative argument that genuine issues of material
fact exist as to each exception such that the district court’s grant of summary judgment to Westfield
was inappropriate. There is no dispute at all in this case regarding the material facts, however.
The Appletons couch each of their legal arguments against the need for strict compliance
6
with the sixty-day “proof of loss” deadline as being based on arguably disputable facts. For
example, they argue that Whaley’s failure to actually help the Appletons fill out the proof of loss
forms, as he promised, presents a factual issue as to whether Westfield waived, or should be
estopped from enforcing, the sixty-day deadline. Similarly, they argue that the question of whether
they “substantially complied” with the policy’s proof of loss requirement by providing much, but
not all, of the information Westfield requested (e.g., personal property inventories and supplemental
information related thereto), and submitting a proof of loss statement almost immediately after
Westfield filed this action, is a factual issue to be determined jury. We disagree.
The Appletons identify legal issues, but not disputed facts that bear on those issues. In other
words, they dispute the district court’s legal conclusions regarding what the undisputed facts mean.
The record is clear as to the material events that occurred relative to the Appletons’ insurance claim
in this case. Simply, the Appletons do not dispute that: 1) on various occasions they or their
attorney discussed their claim with Westfield representatives; 2) they received multiple letters from
Westfield regarding their obligations under the policy; 3) though Whaley made two appointments
to help the Appletons complete the proof of loss forms, he later canceled both appointments due to
scheduling conflicts, and, thereafter, informed the Appletons that he would not have further direct
contact with them because they were represented by counsel; and 4) they failed timely to comply
with the sixty-day proof of loss statement requirement.
Whether Westfield waived, or is otherwise estopped from strictly enforcing the “proof of
loss” requirement in light of these facts is a purely legal question, as is the question of whether the
Appletons “substantially complied” with the policy under Michigan law. Accordingly, we analyze
each of the Appletons’ arguments to determine whether one or both of them prompt us to disagree
7
with the district court’s decision.
C. Westfield Neither Waived, Nor Is Estopped From Enforcing, The Sixty-Day “Proof Of
Loss” Requirement.
Generally, an insurer may waive a proof of loss requirement in a policy with its insured. 17A
APPLEMAN & APPLEMAN, INSURANCE LAW & PRACTICE § 9741 (1970). An insurer who furnishes
a proof of loss statement to its insured after an accident does not waive the proof of loss requirement
in its policy by subsequently denying, in writing, an insured’s claim that was untimely brought under
the terms of the policy. Id. § 9784. In addition, “a claim of waiver or estoppel must be specifically
pled and verified.” 3D COUCH ON INSURANCE § 194.16 (Lee R. Russ & Thomas F. Segalla, eds.,
1999) [hereinafter “COUCH”]; cf. City of Pigeon Forge v. Midland, 788 F.2d 368 (6th Cir. 1986)
(applying Tennessee law). “A waiver is a voluntary relinquishment of a known right. Estoppel is
based on some misleading conduct or language of one person which, being relied on, operates to the
prejudice of another, and is applied to the wrongdoer by the court in denial of some right, which
otherwise might exist, to prevent a fraud.” Dahrooge v. Rochester-German Ins. Co., 143 N.W. 608,
611 (Mich. 1913).
It has long been the practice under Michigan law that an insured has the burden of proving
that the insurer waived the policy provision requiring a proof of loss statement. Helmer v. Dearborn
Nat’l Ins. Co., 30 N.W.2d 399, 402 (Mich. 1948) (citing Struble v. Nat’l Liberty Ins. Co., 233 N.W.
417, 418 (Mich. 1930)). Further, the “question of whether there has been a waiver of the
requirement of . . . proof of loss is a question of law where the material facts are not disputed, or
where the evidence is insufficient to go to the jury.” COUCH, § 194.20 (emphasis added). An
insurer may impliedly waive the “proof of loss” requirement in its policy if its conduct could
reasonably create a belief in an insured’s mind that proof of the loss is unnecessary. Id. § 194.21.
8
The purpose of requiring “proof of loss statements” from insureds is to protect insurers against
fraudulent, excessive, or invalid claims by allowing the insurer to investigate an insured’s claims.
See Wendel v. Swanberg, 185 N.W.2d 348, 352 (Mich. 1971). They are not, therefore, meaningless
hoops through which insureds must jump to sustain their claims.
In this case, the Appletons argue that waiver and/or estoppel prevent Westfield from denying
them coverage for two reasons. First, they argue that Westfield forfeited its right to strictly enforce
the policy’s sixty-day deadline because its adjuster, Scott Whaley, promised to help them complete
the required proof of loss forms, and failed to do so. Second, they argue that Westfield forfeited its
right to strictly enforce the policy’s deadline because, near the end of the sixty-day period, Westfield
continued to request information from them, thereby “misdirecting” their attention away from the
proof of loss obligation. For the reasons outlined below, neither of these arguments prevails.
1. Whaley’s Unfulfilled Promise To Help The Appletons Complete The “Proof Of
Loss” Forms Does Not Operate As A Waiver.
With regard to waiver, the Appletons argue, as they did to the district court, that Compton
v. Michigan Millers Mutual Insurance Co., 389 N.W.2d 111 (Mich. Ct. App. 1986), provides
precedent for their contention that Whaley’s failure to provide promised assistance either operates
as a waiver, or creates a genuine issue of material fact as to whether a waiver resulted. The district
court determined, however, that Compton is factually distinguishable, and we agree.
In Compton, the plaintiffs’ home was completely razed by a fire. The plaintiffs filed a claim
with their insurer, who then prepared a proof of loss statement in the amount of $8,450. Claiming
that their loss amounted to $18,000, the plaintiffs rejected the insurer’s statement. Because the
insurer did not furnish the required forms within the sixty-day “proof of loss” period after the fire,
the plaintiffs argued that it should be equitably estopped from denying coverage based on the
9
plaintiffs’ failure to timely submit the proof of loss statement, as required by the policy. Id.
Because the insurer informed the plaintiffs that it would investigate the fire and prepare the proof
of loss statement, the Michigan Court of Appeals reasoned that “[i]f plaintiffs were unable to obtain
blank forms[,] or if [the insurer] refused to prepare one in the claimed amount of $18,000, then [the
insurer] should be estopped from claiming expiration of the 60-day period [as a defense].” Id. at
114.
Here, the district court concluded that Compton is distinguishable from this case because
Westfield timely provided the Appletons with blank proof of loss statement forms, and never
promised to unilaterally prepare the forms. The Appletons suggest, however, that Whaley’s offer
“to help” is akin to the insurers promise in Compton “to prepare.” Notwithstanding the fact that
such a comparison is facially a stretch, unlike the Appletons, the plaintiffs in Compton simply could
not comply with the policy’s proof of loss requirement because the insurer essentially withheld the
necessary forms. Westfield, however, provided the Appletons with the necessary forms along with
instructions and a clear, unambiguous deadline for completion. That deadline was reiterated to the
Appletons’ counsel, moreover, well before it expired. As is evident from their unassisted
completion of the forms on May 15, 2002, the Appletons cannot base their waiver argument on an
inability to complete and timely submit the forms.
The Appletons simply cannot argue that Westfield prevented them from completing the
forms, as was the case in Compton and Dellar, supra, 433 N.W.2d 380, another case on which the
Appletons rely. At best, they can argue that completing the forms was simply more difficult without
Whaley’s help. To argue that Whaley’s unfulfilled promise – which was necessarily “withdrawn”
when he was informed that the Appletons were represented by counsel – relieved the Appletons of
10
any reporting obligations whatsoever is unsupported by applicable case law. Neither Whaley’s offer
to help, nor Westfield’s initial January 11, 2002 letter, conditioned the Appletons’ contractual
obligations in any way. Instead, their obligations remained in effect, as repeatedly noted in
correspondence to them and their attorney.
Though limited exceptions exist, it remains the general rule under Michigan law (admittedly
unlike in many other states) that “the failure to file a signed and sworn proof of loss within sixty
days bars recovery on a claim without regard to whether the insurer is prejudiced by such failure.”
Dellar, 433 N.W.2d at 383 (citing Reynolds v. Allstate Ins. Co., 332 N.W.2d 583 (Mich. Ct. App.
1983)). Because waiver based on undisputed facts is a legal issue, and because the Appletons’
argument that Whaley’s unfulfilled promise to help them complete the forms is an unreasonable
basis for ignoring a known and unequivocal obligation, we cannot conclude that Westfield waived,
and/or is estopped from enforcing, strict compliance with the sixty-day proof of loss requirement
in its policy with the Appletons. Accordingly, we affirm the district court’s grant of summary
judgment on this ground.
2. Westfield’s Continued Requests For Additional Information.
The Appletons also briefly argue, without citing any supporting legal authority, that
Westfield’s continual request for additional information, and particularly Grenon’s request for
supplemental information (i.e., tax returns, phone records, etc.) shortly before the expiration of the
sixty-day deadline, should be considered as an additional factor in determining whether waiver
and/or estoppel prevents Westfield from strictly enforcing the sixty-day proof of loss deadline. In
response, Westfield asserts that 1) all of its correspondence and requests comported with, or was
required by, Michigan insurance law; and, moreover, 2) the Appletons’ policy, pursuant to
11
Michigan law, required all waivers to be in writing.
It is not surprising that an insurer might continue to seek information from its insured relative
to a pending claim before, during or after a “proof of loss” deadline. An insured’s provision of a
proof of loss statement does not necessarily mark the end of an insurer’s investigation; rather, it
simply assists the insurer in identifying the nature of the loss and preventing fraud by forcing the
insured to commit to a position within a reasonable time after a claimed loss. Accordingly, the
Appletons “misdirection” argument, if adopted, would likely apply in most cases. The Appletons
fail to cite any legal authority prohibiting an insurer from continuing to request information as
Westfield did in this case. Indeed, courts have held to the contrary. See Pieces of 8, Inc. v. Ins. By
Burley Agency, Inc., No. 233904 2002 WL 31447078 at *3 (Mich Ct. App. Nov. 1, 2002) (“That [an
insurer’s representative] also sought to take statements from the insureds past the time period in
which a sworn statement in proof of loss was required to be filed similarly provides no basis for
concluding that [the insurer] waived its right to enforce strict compliance with the proof-of-loss
deadline.”).
Under the circumstances, and especially in light of the fact that no written waiver exists in
this case, we can not find that Westfield’s ongoing requests for information were unreasonable,
much less intended to “misdirect” the Appletons’ attention from a known obligation. Accordingly,
we must affirm the district court’s grant of summary judgment in favor of Westfield on this ground.
D. Substantial Compliance Is Not A Viable Defense For The Appletons.
The Appletons further argue that, because they submitted what they characterize as
“voluminous information” in support of their claim, including personal property inventories and
unsworn recorded statements, they “substantially complied” with the public policy underlying proof
12
of loss statements, and, therefore, Westfield should not be allowed to strictly enforce the sixty-day
deadline to avoid a coverage obligation. Michigan follows the “substantial performance” rule in
connection with conditions precedent in insurance contracts. See Gibson v. Group Ins. Co., 369
N.W.2d 484, 486 (Mich. 1985). The doctrine of “substantial compliance,” or “substantial
performance,” generally arises when a change of beneficiary designation is made in a life insurance
policy and the settlor of the policy fails to submit the revised policy to the insurer before the settlor’s
death. See 44A AM. JUR.2D Insurance § 1712 (2003). Of course, the rule is not limited to that
specific factual scenario. It is also a general principle that “[p]olicy provisions making the
furnishing of proof of loss within a stipulated time a condition precedent to liability on the part of
the insurer . . . will ordinarily be given effect if a satisfactory excuse for the noncompliance or the
delay in compliance is not given.” Id. § 1323 (emphasis added).
The policy objectives underlying sworn “proof of loss” statements include: “(1) allowing
the insurer an opportunity to investigate the loss; (2) allowing the insurer to estimate its rights and
liabilities; and (3) preventing fraud.” Wineholt v. Cincinnati Ins. Co., 179 F. Supp. 2d 742, 752
(W.D. Mich. 2001) (citing Barnes v. State Farm Fire & Cas. Co., 623 F. Supp. 538, 540 (E.D. Mich.
1985)). The Wineholt court explained that substantial compliance requires “more than a minimal
effort” and the insured must make a “reasonable effort to provide information reasonably within its
possession and with a sufficient degree of particularity to allow the insurer to make an informed
review of the claim.” Wineholt, 179 F. Supp. 2d at 752 (citation omitted).
Because the Appletons’ failed to complete and timely submit readily available sworn proof
of loss statement forms, we find that they did not make a “reasonable effort” to provide Westfield
with all the information “reasonably within [their] possession.” It is true that the Appletons
13
complied with Westfield’s request that they submit personal property inventories, tax returns,
cellular phone bills, mortgage documents, and bank account statements. Under the circumstances,
however, and considering that they ultimately submitted their proof of loss statement on May 15,
2002 – two months late – the Appletons’ failure to comply with the most important part of their
known obligations, without the benefit of a legally satisfactory excuse, must operate to their
detriment.
The Appletons’ provision of the various items outlined above fails to alleviate the central
policy objective of the proof of loss statement – to avoid fraud. While Westfield may have requested
those items to assist in a fraud investigation, without a sworn statement from the Appletons,
Westfield, much like the insurer in Barnes supra would have no sworn statement with which to bind
the Appletons and protect itself against potential fraud.
Though the Appletons accurately note that Barnes v. State Farm Fire & Casualty Co., 623
F. Supp. 538, 540 (E.D. Mich. 1985), articulates the policy objectives underlying the need for proof
of loss statements, they seem to ignore the relevance of the facts in Barnes. There, the court held
that a husband’s signature on a proof of loss statement was insufficient to preserve his wife’s claim
where she had failed to sign a proof of loss statement that was timely submitted by her husband. Id.
at 540. This holding bears upon this case in two respects. First, it demonstrates that the mere
omission of a signature on an otherwise complete proof of loss statement can be fatal to a
“substantial compliance” defense because its omission so significantly hinders an insurer’s ability
to protect itself against fraud. Second, even if the Barnes court had concluded that the insureds had
“substantially complied,” which it did not, the insureds’ compliance in that case would still have
pertained to a timely submitted proof of loss statement. In light of Barnes, the Appletons’ failure
14
to file any proof of loss statement is much more troubling.
The Appletons also cite Dellar, supra, 433 N.W.2d at 383, in support of their proposition
that a timely submitted proof of loss statement would have “add[ed] nothing to the mounds of
information [they had] already provided.” Dellar, however, is distinguishable. In Dellar, the
plaintiff’s home was destroyed by fire, after which she immediately notified her insurer of the loss.
A thorough investigation followed, which included, but was not limited to, the plaintiff’s tape-
recorded statement, interviews of her neighbors and photographs and diagrams of the premises.
Throughout the process, the insurer was aware that neither the plaintiff, nor her attorney, had a copy
of the insurance policy. Further, the plaintiff was never provided the required proof of loss forms,
and thus technically could not comply with the policy’s sixty-day proof of loss requirement if she
wanted to. Accordingly, sixty-eight days after the loss, she submitted a “contents evaluation” form
and indicated that it was the only form she had with which to attempt compliance with the policy.
On these facts, the Dellar court found that the information received by the insurer constituted the
“functional equivalent” of a sworn proof of loss statement. Id. at 384.
In Pieces of 8, 2002 WL 31447078, the court accurately observed that Dellar’s reversal of
summary judgment in favor of the insurer was not premised solely on its finding that the information
provided was equivalent to a proof of loss statement. Rather, the Pieces of 8 court stated:
The [Dellar] panel also relied on the fact that the insurer had
failed to inform the insured that a sworn proof of loss was required
to be filed within sixty-days of the loss and, in failing to do so, had
breached its statutory duty to inform the insured of the materials
necessary to constitute a satisfactory proof of loss. Also relevant to
the panel’s decision was the insurer’s awareness that neither the
insured nor her attorney had a copy of the insurance policy, and that
steps were being taken to perfect a claim, but that a copy of the
contract was necessary for that purpose. Yet the insurer failed to
honor the insured’s repeated requests for a copy of the contract until
15
after expiration of the sixty-day period for filing the proof of loss.
Id. at *2 (footnotes omitted).
In Pieces of 8, a case in which the plaintiffs also argued that they submitted the “functional
equivalent” of a proof of loss and/or “substantially complied,” the court rejected the plaintiffs’
attempt to evade the sixty-day proof of loss requirement because, unlike in Dellar, the plaintiffs
were not prevented from complying. Id. (emphasis added). Indeed, as in the present case, the
Pieces of 8 plaintiffs were notified of their obligations under the policy and provided with blank
proof of loss forms. Accordingly, the Pieces of 8 court concluded that neither “substantial
compliance,” nor “waiver” or “estoppel,” operated to absolve the plaintiffs’ untimely submission
of their proof of loss forms.
Similarly, we cannot conclude under the facts of this case that the Appletons substantially
complied with the policy’s unambiguous terms such that Westfield should be estopped from strictly
enforcing the sixty-day proof of loss requirement. Though the resulting circumstances presented
here are unfortunate and the Court sympathizes with the Appletons loss, the law on this point is
sufficiently clear. The Appletons’ insurance contract imposed upon them a clear obligation timely
to submit a proof of loss statement within sixty days, which they did not do, and the facts here
simply do not implicate the legal theories and authorities posited by the Appletons to evade that
requirement. We, therefore, must affirm the district court’s grant of summary judgment to Westfield
on this ground.
E. Dismissal With Prejudice
In a final effort to avoid the dispositive effect of the district court’s decision, the Appletons
argue that their counterclaim for breach of the insurance contract should have been dismissed, if at
16
all, “without” prejudice. Their argument, however, is premised on two Michigan cases that are
inapplicable.
Unlike the substantive summary judgment issues, which we review de novo, we review
whether a dismissal should be “with” or “without” prejudice for an abuse of discretion. See
Craighead v. E.F. Hutton & Co., Inc., 899 F.2d 485, 495 (6th Cir. 1990) (“[t]he decision to dismiss
with prejudice is a harsh sanction, but the choice lies within the discretionary power of the district
court, and we will not reverse absent a clear showing of abuse of discretion”). Based on our prior
conclusions, and the inapplicability of the cases cited by the Appletons on this point, we do not
consider the district court’s dismissal of the Appletons’ claims “with prejudice” to have been an
abuse of discretion.
First, the Appletons cite Yeo v. State Farm Insurance Co., 555 N.W.2d 893 (Mich. Ct. App.
1996). In that case, an insurance policy required the insured, as a condition precedent to filing suit
against his insurer, to submit to an Examination Under Oath (“EUO”). As the Appletons did here,
the plaintiff in Yeo provided the insurer with a detailed statement, but it was not under oath. The
Yeo court found, first, that the insured’s failure to submit to an EUO was not wilful. The court then
held that dismissal of the insured’s suit against the insurance company should be without prejudice,
“which would allow [the] plaintiff to submit to an examination under oath and then [re-file] the
action.” Id. at 895. The court stated that, “as a general rule, a provision such as the one in the
instant case is a condition precedent to filing the action, and the failure to comply with such a
condition is not an absolute bar to recovery, but acts to suspend the right to recovery until the
examination is held . . . . Therefore, in general, dismissal without prejudice is proper.” Id. Notably,
however, the policy’s EUO requirement in Yeo did not have a time limit, as did the sworn “proof
17
of loss” requirement in the Appletons’ policy. The insured in Yeo, accordingly, could still comply
with the policy’s terms, even after dismissal of his original action. No such option remains for the
Appletons, making Yeo distinguishable.
Second, the Appletons cite Wineholt, supra, 179 F. Supp. 2d 742. In that case, unlike in Yeo,
the insurance policy required the insured to submit a proof of loss statement within sixty days. On
that point, therefore, Wineholt initially appears to apply. In that case, however, the insured complied
with the deadline. The insurer rejected the statement, not because it was untimely, but because it
was incomplete. Rather than resubmitting the statement, the insured sued.
The Wineholt court concluded that the insured had not substantially complied with the proof
of loss requirement, but then, citing Yeo, dismissed the case without prejudice. The court wrote:
“For purposes of a dismissal for failure to comply with the proof of loss requirement, the [c]ourt
finds no distinction between an examination under oath and a proof of loss precluding a dismissal
without prejudice to allow the insured an opportunity to seek insurance coverage and the insurer an
opportunity to obtain a more complete proof of loss form.” Id. at 753. The court found that, “as a
matter of equity,” it was best to dismiss the complaint without prejudice “to allow [the insured] to
comply with the proof of loss requirement,” and the court required the insured to “submit a
supplemental proof of loss . . . within [sixty] days from the date of the [court’s] Order.” Id.
The distinctions between these two cases and the Appletons’ case are clear. In Yeo, the
condition precedent that the insured submit to an EUO, carried no time limit by which the condition
had to be fulfilled. In Wineholt, the insured met the sixty-day time limit, but submitted an
incomplete statement. Because the Appletons were subject to a deadline, Yeo is inapposite. And,
because they did not meet the deadline, Wineholt is distinguishable. To apply the leniency afforded
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in Yeo and Wineholt in this case would render the “within 60 days” portion of the proof of loss
condition precedent meaningless. As previously outlined, however, rightly or wrongly, Michigan
law clearly favors the enforcement of such deadlines, absent specific and limited circumstances. See
generally Dellar, 433 N.W.2d 380; Reynolds v. Allstate Ins. Co., 332 N.W.2d 583 (Mich. Ct. App.
1983).
Because none of the exceptions recognized by Michigan law apply under the facts of this
case, we conclude that the Appletons’ failure to comply with their policy’s express provisions bars
any affirmative claim they might have against Westfield. Having failed to satisfy the “proof of loss”
condition precedent, they have no claim. Accordingly, we find that the district court did not abuse
its discretion by dismissing the Appletons’ counterclaims “with prejudice,” and AFFIRM the district
court’s decision on that issue.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s grant of summary judgment
in favor of Westfield, and its dismissal of the Appletons’ counterclaims.
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