ROCHELLE SHERMAN-NADIV V FARM BUREAU GENERAL INS CO OF MIAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
ROCHELLE SHERMAN-NADIV and YAIR
November 20, 2008
January 13, 2009
Oakland Circuit Court
LC No. 2005-070844-CK
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,
Advance Sheets Version
Before: Jansen, P.J., and O’Connell and Owens, JJ.
In this insurance action, plaintiffs appeal as of right, arguing both that defendant was
improperly granted a motion in limine because the language forming the basis for the denial of
coverage was ambiguous and that the jury’s finding that the subject premises had been vacant for
30 days before the loss occurred was against the great weight of the evidence. We affirm.
Plaintiffs, Rochelle Sherman-Nadiv and Yair Nadiv, own several rental properties in
southeast Michigan, including a rental home at 41 West Hayes Street in Hazel Park (the house).
Defendant, Farm Bureau General Insurance Company of Michigan, issued an insurance policy
on the house to plaintiffs. After tenants moved from the house in the autumn of 2003, the house
remained vacant for several months. During this time, plaintiffs oversaw repairs and renovation
work undertaken to prepare the house for rental relicensure by the city. The city issued a
landlord license for the house on April 29, 2004. Soon thereafter, Gregory Fyfe contacted
plaintiffs and expressed an interest in renting the home. Sherman-Nadiv met Fyfe at the house
on May 1, 2004, and Fyfe agreed to rent the house. Fyfe signed the lease, gave Sherman-Nadiv
$500, and received a house key.
Fyfe promised to pay the balance of the initial month’s rent by May 15, 2004, but he
never did. When Sherman-Nadiv went to the house on May 15, 2004, to collect the rent from
him, she discovered that the house was unoccupied. When she returned to the house a couple of
days later to post a notice to quit, she again noticed that the house appeared to be unoccupied.
Although some clothes and a couch were later found in the house, none of the individuals living
in neighboring homes reported seeing activity at the house during the period when Fyfe
supposedly lived at the house, and overall there was conflicting evidence regarding whether the
house was occupied in May 2004.
On May 29, 2004, a woman living near the house noticed through an open window that
the ceiling to the living room and dining room had been damaged, and she contacted ShermanNadiv. Sherman-Nadiv went to the house and, upon entering, discovered that the house had
suffered extensive water damage as a result of a break in the supply line of the second-floor
toilet. Plaintiffs filed a claim for loss with defendant, reporting the date and time of loss as May
29, 2004, at 12:00 p.m. Defendant formally denied plaintiffs’ claim on July 11, 2005, and
plaintiffs subsequently brought this action in order to recover under the insurance contract.
At trial, a jury was asked to decide whether plaintiffs engaged in “fraud, false swearing,
misrepresentation and/or concealment of material facts in the presentation of [the insurance]
claim to Defendant with intent for the Defendant to rely on the misrepresentations which bars
[plaintiffs’] claim pursuant to the terms of the policy.” The jury determined that plaintiffs did
not do so. The jury also rendered a verdict indicating that “the premises located at 41 W. Hayes,
Hazel Park, Michigan [was] vacant more than 30 consecutive days immediately before the loss.”
First, plaintiffs argue that the trial court erred when it granted defendant’s motion in
limine to preclude plaintiffs from presenting evidence, testimony, or argument at trial regarding
whether the house was “being constructed” at the time of the loss. We disagree.
The trial court has the discretion to admit or exclude evidence, and we will not disturb the
trial court’s ruling on such an issue absent a determination that an abuse of discretion occurred.
Elezovic v Ford Motor Co, 472 Mich 408, 419; 697 NW2d 851 (2005). A trial court does not
abuse its discretion when its decision falls within the range of principled outcomes. Maldonado
v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006). The proper interpretation of a
contract and the legal effect of a contractual clause are questions of law that we review de novo.
McDonald v Farm Bureau Ins Co, 480 Mich 191, 197; 747 NW2d 811 (2008).
Because insurance policies are contractual agreements, they are subject to the same rules
of contract interpretation that apply to contracts in general. Rory v Continental Ins Co, 473 Mich
457, 461; 703 NW2d 23 (2005); Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489
NW2d 431 (1992). A court must construe and apply unambiguous insurance policy provisions
as written, unless a policy provision is illegal or a traditional defense to the enforceability of a
contract applies. Auto-Owners Ins Co, supra at 566-567. An insurance policy is read as a
whole, and meaning should be attributed to all terms. Royal Prop Group, LLC v Prime Ins
Syndicate, Inc, 267 Mich App 708, 715; 706 NW2d 426 (2005). “The contractual language is to
be given its ordinary and plain meaning.” Id.
The insurance policy in this case provides, in pertinent part:
We insure for direct physical loss to the property covered caused by a peril
listed below, unless the loss is excluded in the General Exclusions.
12. Accidental discharge or overflow of water or steam from within a
plumbing, heating, air conditioning, or automatic fire protective sprinkler system
or from within a household appliance. We also pay for tearing out and replacing
any part of a covered building necessary to repair the system or appliance from
which the water or steam escaped.
This peril does not include loss:
b. on the Described Location, if the dwelling has been vacant for
more than 30 consecutive days immediately before the loss. A dwelling
being constructed is not considered vacant[.]
The plain and ordinary meaning of the phrase “being constructed,” as used in the
contract, indicates that a house being erected (that is, built from the ground up) is not considered
vacant pursuant to the policy exclusion. The language is unambiguous. If the exclusion had
stated that a house “under construction” was not considered vacant, it is arguable that the phrase
would be susceptible to more than one reasonable construction. Had the parties intended the
exception to apply to houses where repairs, remodeling, or renovation work were being
performed, the policy would have reflected this intent unambiguously. Plaintiffs’ argument that
“being constructed” encompasses repairs, remodeling, or renovation work is unpersuasive
because this broad interpretation would lead to the result that a house would not be considered
vacant under a wide variety of circumstances where major or minor repair work was performed
in the 30 days preceding a loss. In that case, the insurer would be uncertain regarding the extent
of the risk it would be required to cover, and an insured, in order to defeat the policy exclusion,
would only be required to show evidence that any sort of repair, however minor, occurred in the
30 days preceding the loss. On the other hand, the process of building or constructing a house
consists of a discrete event with a beginning and an end. In that case, both the insurer and
insured are aware of the scope of the risk and extent of coverage because of this comparatively
certain time period.
In any event, contrary to plaintiffs’ argument, the record demonstrates that the trial court
did not rely on a narrow construction of “being constructed” when it granted defendant’s motion
in limine. The trial court interpreted “being constructed” broadly as “action that is still in
progress,” but concluded that there was no indication that any construction or repair work had
been performed at the house in the 30 days preceding the loss. Accordingly, the trial court did
not abuse its discretion when it granted defendant’s motion in limine to preclude evidence,
testimony, or arguments that the house was “being constructed” in the 30 days preceding the
Plaintiffs also claim that the jury’s verdict was against the great weight of the evidence.
However, plaintiffs failed to properly raise this issue below in a motion for a new trial, and our
failure to review this unpreserved issue will not result in a miscarriage of justice. Therefore, we
decline to consider this issue further.1 See Hyde v Univ of Michigan Bd of Regents, 226
Mich App 511, 525; 575 NW2d 36 (1997).
/s/ Kathleen Jansen
/s/ Peter D. O’Connell
/s/ Donald S. Owens
Nevertheless, although plaintiffs argue otherwise, the verdicts in this case were not
inconsistent. The jury could have believed Sherman-Nadiv’s testimony regarding her encounter
with Fyfe, and also believed that Fyfe leased, but never occupied, the house.