James Glass v. Farm Bureau General Insurance Company of Michigan

STATE OF MICHIGAN
COURT OF APPEALS
JAMES GLASS, UNPUBLISHED
June 14, 2016
Plaintiff-Appellant,
v No. 326461
Wayne Circuit Court
FARM BUREAU GENERAL INSURANCE LC No. 14-010302-CK
COMPANY OF MICHIGAN,
Defendant-Appellee.
Before: JANSEN, P.J., and O’CONNELL and RIORDAN, JJ.
PER CURIAM.
Plaintiff, James Glass, appeals as of right the trial court’s order granting summary
disposition to defendant, Farm Bureau General Insurance Company of Michigan (Farm Bureau),
under MCR 2.116(C)(10) on the basis that plaintiff’s attempt to enter into a land contract did not
replace property that he lost in a fire for the purposes of Farm Bureau’s insurance policy. We
affirm.
I. FACTUAL BACKGROUND
In August 2013, plaintiff’s home in Detroit suffered extensive fire damage. Glass had an
insurance policy with Farm Bureau. Farm Bureau paid for Glass to relocate to a furnished
apartment from October 2013 to January 2014. The Detroit property, which Glass initially
purchased for $20,000 in October 2012, had an actual cash value of $48,000 and an estimated
repair cost of $100,794. Farm Bureau paid the home’s actual cash value to Glass in October
2013.
In November 2013, Glass notified Farm Bureau that he did not intend to repair the
property but instead intended to replace the property with a residence located in Ypsilanti. Glass
entered into a land contract that was contingent on Farm Bureau paying an additional sum of
about $52,794, which Glass would use as a down payment under the land contract.
In January 2014, Farm Bureau denied plaintiff’s request for replacement costs on the
basis that his land contract did not constitute “replacement” of his Detroit property under the
policy. Farm Bureau also denied Glass continued additional living expenses under the policy. In
his subsequent suit, Glass sought payment of about $84,284 in benefits that he claimed Farm
Bureau denied under his policy. The trial court granted summary disposition, determining that
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there were no genuine issues of material fact regarding whether Farm Bureau breached the
policy.
II. STANDARDS OF REVIEW
This Court reviews de novo the trial court’s decision on a motion for summary
disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999); Gorman v
American Honda Motor Co, Inc, 302 Mich App 113, 115; 839 NW2d 223 (2013). A party is
entitled to summary disposition under MCR 2.116(C)(10) if “there is no genuine issue as to any
material fact, and the moving party is entitled to judgment . . . as a matter of law.” The trial
court must consider all the documentary evidence in the light most favorable to the nonmoving
party. MCR 2.116(G)(5); Maiden, 461 Mich at 120. A genuine issue of material fact exists if,
when viewing the record in the light most favorable to the nonmoving party, reasonable minds
could differ on the issue. Gorman, 302 Mich App at 116.
This Court reviews de novo the proper interpretation of a contract. Wilkie v Auto-Owners
Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). We review de novo the legal effect of a
contractual provision. Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 369;
666 NW2d 251 (2003).
This Court applies the same principles to contractual interpretation as to statutory
interpretation, with the purpose of determining and enforcing the parties’ intent. Klapp v United
Ins Group Agency, Inc, 468 Mich 459, 468; 663 NW2d 447 (2003). We discern the parties’
intent from the contract’s language. Davis v LaFontaine Motors, Inc, 271 Mich App 68, 73; 719
NW2d 890 (2006). If the contract’s language is unambiguous, we interpret the contract as a
matter of law. Klapp, 468 Mich at 469. We construe contractual terms in context, according to
their commonly used meanings. Henderson v State Farm Fire & Cas Co, 460 Mich 348, 354;
596 NW2d 190 (1999). We may consult a dictionary definition to determine the commonly
understood meaning of undefined terms. See Griffith v State Farm Mut Auto Ins Co, 472 Mich
521, 526; 697 NW2d 895 (2005). However, when a contract defines a term, we must afford that
term its stated meaning. Farm Bureau Mut Ins Co of Mich v Nikkel, 460 Mich 558, 567; 596
NW2d 915 (1999).
III. REPLACEMENT
First, Glass contends that the trial court erred when it determined that his entry into a land
contract did not constitute actual replacement of the damaged property. We disagree.
Plaintiff’s policy with Farm Bureau provided in pertinent part:
a. If, at the time of loss, the amount of insurance in this policy on the damaged
building is 80% or more of the full replacement cost of the building immediately
before the loss, we will pay the cost to repair or replace, . . . but not more than the
least of the following amounts:
***
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(3) the necessary amount actually spent to repair or replace the damaged
building.
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d. We will pay no more than the actual cash value of the damage, unless:
(1) actual repair or replacement is completed. . . . [Emphasis added.]
As described above, Farm Bureau’s policy provided that it would pay no more than the
cost of the actual damage to the property (in this case, the $48,000 that Farm Bureau paid Glass
in October 2013) unless “actual repair or replacement is completed.”1 The insurance contract
does not define the word “actual.” Consulting a dictionary, the word “actual” commonly means
“existing in act and not merely potentially,” “existing in fact or reality,” or “existing or occurring
at the time.” Merriam-Webster’s Collegiate Dictionary (11th ed). Because plaintiff’s land
contract was contingent on Farm Bureau’s payment of additional money, replacement was not
complete at the time that Glass entered into the contract—the Ypsilanti property was merely a
potential replacement. We conclude that the trial court properly granted summary disposition
regarding whether plaintiff’s land contract constituted an actual replacement under the parties’
policy.
IV. ADDITIONAL LIVING EXPENSES
Second, Glass contends that the trial court erred when it found that Farm Bureau properly
ceased paying additional living expenses under the policy. We disagree.
Plaintiff’s policy with Farm Bureau also provided that Farm Bureau would pay additional
living expenses that resulted from a covered loss for a limited period of time:
Payment [of additional living expenses] shall be for the shortest time required to
repair or replace the damaged property, or for you to permanently relocate.
Farm Bureau terminated plaintiff’s living expense payments after four months. In their motion
for summary disposition, Farm Bureau provided a letter in which their adjustor indicated that
“repairs would take no more than four months to complete.”
To survive a motion for summary disposition, once the nonmoving party has identified
issues in which there are no disputed issues of material fact, the burden is on the plaintiff to show
that disputed issues exist. MCR 2.116(G)(4); Quinto v Cross & Peters Co, 451 Mich 358, 362;
547 NW2d 314 (1996). The nonmoving party “must go beyond the pleadings to set forth
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This is consistent with Michigan law provided that an insured can only recover replacement
cost benefits if the dwelling is “actually repaired, rebuilt or replaced at another site.” Smith v
Mich Basic Prop Ins Ass’n, 441 Mich 181, 189; 490 NW2d 864, 198 (1992) (quotation marks
and citation omitted).
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specific facts showing that a genuine issue of material fact exists.” Id. If the nonmoving party
does not make such a showing, the trial court properly grants summary disposition. Id. at 363.
On appeal, Glass asserts that repairs would have taken more than four months to
complete. However, Glass provides no evidence to support this assertion, nor did Glass provide
any evidence below regarding how long repairs would have taken to complete. Because Glass
failed to make a showing regarding a genuine issue of material fact as to whether four months
was the shortest time required to repair or replace the property, we conclude that the trial court
properly granted summary disposition.
We affirm.
/s/ Kathleen Jansen
/s/ Peter D. O’Connell
/s/ Michael J. Riordan
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