AHRENS CONSTRUCTION INC V AMERISURE INS CO
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STATE OF MICHIGAN
COURT OF APPEALS
AHRENS CONSTRUCTION, INC.,
UNPUBLISHED
February 9, 2010
Plaintiff-Appellant,
v
No. 288272
Kalamazoo Circuit Court
LC No. 08-000164-CK
AMERISURE INSURANCE COMPANY,
Defendant-Appellee.
Before: Beckering, P.J., and Markey and Borrello, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court’s order granting defendant’s motion for
summary disposition under MCR 2.116(C)(10). We affirm. This appeal has been decided
without oral argument pursuant to MCR 7.214(E).
At issue here is whether defendant Amerisure Insurance Company (“Amerisure”) had a
duty to defend its insured, plaintiff Ahrens Construction, Inc. (“Ahrens”), in the underlying
breach of contract suit, Miller-Davis Co v Ahrens Constr, Inc, 285 Mich App 289; ___ NW2d
___ (2009).1
Ahrens subcontracted to build the roof of a natatorium; Miller-Davis Company (“MillerDavis”) was the general contractor on the project. After the project was completed, the roof
trapped condensation and had to be rebuilt by Miller-Davis. In the underlying suit, Miller-Davis
sued Ahrens for breach of contract; Amerisure, Ahrens’s commercial liability insurance carrier,
investigated and determined that there was no coverage. Accordingly, Amerisure declined to
defend Ahrens in the underlying suit. However, some of the expenses ultimately awarded to
Miller-Davis were costs to repair property in the natatorium that was not installed or constructed
by Ahrens, i.e., costs arising from damage to the property of others. For example, the
condensation dripped onto and stained the pool, pool deck, walls, light fixtures, and sidewalks—
1
In Miller-Davis Co, this Court reversed the trial court’s judgment for the plaintiff, holding that
the statute of repose at issue, MCL 600.5839, had expired and the suit was not timely filed.
Miller-Davis Co, 285 Mich App at 313.
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none of which were part of the allegedly defective work performed by Ahrens. These expenses,
argues Ahrens, were covered by the policy and thus Amerisure should have defended the suit.
The underlying suit involved two counts against Ahrens, breach of construction contract
and breach of express contract indemnification. Only the first of these is involved here.
Relevant to that count, Miller-Davis alleged Ahrens breached its contract by failing to complete
the roofing project in conformance with the project specifications and failed to correct the
defective work to make it conform to project specifications. Miller-Davis alleged it was
damaged by having to substantially remove, replace, and reinstall the roof at its own expense.
There was no count for negligence and no allegation that Ahrens’s breach of the construction
contract caused Miller-Davis to incur expenses for anything other than replacing the roof.
Nonetheless, the trial court awarded Miller-Davis all of its expenses related to fixing the
defective roof and resulting damage, $348,851.50.
Ahrens then sued Amerisure, alleging that it had a duty to defend in the underlying suit
because some of the expenses Miller-Davis was awarded resulted from an “occurrence” under
the policy. Ahrens argued that under Radenbaugh v Farm Bureau Gen Ins Co, 240 Mich App
134; 610 NW2d 272 (2000), damage to the property of others that resulted from the insured’s
shoddy workmanship is considered an “occurrence” for which coverage is owed. Amerisure
moved for summary disposition under MCR 2.116(C)(10), arguing that the award entered in the
underlying suit was for Miller-Davis’s costs to repair and replace Ahrens’s shoddy
workmanship. Under Hawkeye-Security Ins Co v Vector Constr Co, 185 Mich App 369, 378;
460 NW2d 329 (1990), defective workmanship is not an “occurrence.”
The trial court agreed with Amerisure.2 The court stated that the policy “does not provide
coverage for the costs of damages arising out of the replacement of Ahrens’ [sic] work.” The
court also concluded that, “the insurance agreement contemplates that damages caused by the
plaintiff are not covered under the insurance contract. An examination of the language shows
that the parties did not intend to provide coverage for claims arising out of the defect of
plaintiff’s product.”
We review de novo a trial court’s decision to grant or deny a motion for summary
disposition. Spiek v Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998). Issues
of contract interpretation are questions of law, also reviewed de novo. Sweebe v Sweebe, 474
Mich 151, 154; 712 NW2d 708 (2006).
An insurer has a duty to defend its insured “‘if the allegations of the underlying suit
arguably fall within the coverage of the policy.’” Radenbaugh, 240 Mich App at 137, quoting
Royce v Citizens Ins Co, 219 Mich App 537, 543; 557 NW2d 144 (1996). The policy provides
coverage for property damage arising from an “occurrence”:
This insurance applies to “bodily injury” and “property damage” only if:
2
The trial court judge assigned to this case was also assigned to the underlying suit.
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(1) The “bodily injury” or “property damage” is caused by an
“occurrence” that takes place in the “coverage territory” . . . . [Policy,
§ I(A)(1)(b).]
The policy also provides a definition for the term “occurrence”:
12. “Occurrence” means an accident, including continuous or repeated exposure
to substantially the same general harmful conditions. [Policy, § V(12).]
Further, there is little dispute that damages arising solely from faulty workmanship are not
considered as resulting from an “occurrence.” Hawkeye-Security, 185 Mich App at 378;
Radenbaugh, 240 Mich App at 141 (“Were the underlying complaint limited to claims relating
solely to the insured’s product, we would agree with defendant [that there was no coverage]”).3
To begin with, we make it clear that this suit does not challenge the trial court’s award
itself, but only Amerisure’s refusal to defend against the complaint filed by Miller-Davis. To
determine whether coverage was due, Amerisure looked at the allegations of the underlying
complaint. These stated, in relevant part:
22. Because of the nature and extent of Ahrens’ [sic] defective and nonconforming work and Ahrens’ failure and refusal to perform, Miller-Davis found
it necessary, at the demand of the Project owner and the Project Architect, to
perform corrective work (“Corrective Work”) which included substantially the
removal, replacement and reinstallation of Roof System at great cost and expense
to Miller-Davis.
***
41. The defective and non-conforming work that Ahrens performed is a
substantial and material breach of the Contract between Miller-Davis and Ahrens.
42. In order to fulfill its responsibility as the Construction Manager on the
Project, Miller-Davis was required to have the defective and/or non-conforming
3
This Court in Radenbaugh, 240 Mich App at 145-148, cited favorably and adopted as its own
the reasoning from Calvert Ins Co v Herbert Roofing & Insulation Co, 807 F Supp 435, 437-439
(ED Mich, 1992). Quoting Calvert, this Court stated:
“[W]hen an insured’s defective workmanship results in damage to the property of
others, an ‘accident’ exists within the meaning of the standard comprehensive
liability policy. . . .
***
However, when the damage arising out of the insured’s defective workmanship is
confined to the insured’s own work product, the insured is the injured party, and
the damage cannot be viewed as accidental within the meaning of the standard
liability policy.” [Radenbaugh, 240 Mich App at 147 (citation omitted).]
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work performed and Ahrens’ defective work corrected at Miller-Davis’ [sic] cost
and expense.
As can be seen, the damages sought in the complaint relate solely to Ahrens’s breach and failure
to properly construct the roof, requiring Miller-Davis to perform corrective work on the roof at
its own cost and expense. There is nothing in the complaint about having expenses arising from
the cost of repairing or replacing other property. That is, even if Miller-Davis’s award included
expenses for damage to the other property, such as the pool, wall, etc., the allegations in the
complaint did not seek such expenses. Any error by the trial court in awarding expenses beyond
those sought is properly raised in the appeal of the underlying suit. Amerisure did not breach its
insurance contract by refusing to defend in the underlying suit where the only damages claimed
(as relevant here) arose directly from having to correct Ahrens’s defective work, as compared to
damages related to the property of others. No “occurrence” giving rise to coverage was alleged
in the complaint.
Affirmed. Defendant, being the prevailing party, may tax costs pursuant to MCR 7.219.
/s/ Jane M. Beckering
/s/ Jane E. Markey
/s/ Stephen L. Borrello
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