TIEL OIL CO V EMPLOYERS MUTUAL CASUALTY CO
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STATE OF MICHIGAN
COURT OF APPEALS
TIEL OIL COMPANY,
UNPUBLISHED
January 15, 2009
Plaintiff-Appellant,
v
No. 280180
Mecosta Circuit Court
LC No. 06-017661-CK
EMPLOYERS MUTUAL CASUALTY
COMPANY,
Defendant-Appellee.
Before: Murray, P.J., and O’Connell and Davis, JJ.
PER CURIAM.
Plaintiff Tiel Oil Company appeals as of right the Mecosta Circuit Court’s order granting
defendant Employers Mutual Casualty Company’s motion for summary disposition. This case
involves defendant’s denial of insurance claims made by plaintiff for damage occurring at two of its
gasoline stations. Because we conclude there is a genuine issue of material fact regarding when the
claims were denied by defendant, we reverse and remand for further proceedings consistent with this
opinion.
I.
Facts
Plaintiff suffered losses at two gas stations it owns and operates, one in Big Rapids on February
6, 2004, and one in Reed City on March 17, 2004, when certain underground pipes containing gasoline
experienced cracks in their protective outer pipe. Plaintiff carried insurance policies on both locations
with defendant. Plaintiff notified defendant of both claims, which were assigned to the same claims
adjuster, Kay Inman. On August 31, 2004, defendant sent two letters to plaintiff, one for each claim,
notifying plaintiff that it had “determined that the damage was caused by the soil freezing and causing
earth movement which cracked the pipe” and that “this type of claim is not covered by your insurance
policy” (First Letter). The letter invited plaintiff to “submit additional information” and reserved the
right to “reassess its position . . . in light of additional information it may receive in the future.”
Plaintiff asserts that it sent in additional information, while defendant claims plaintiff merely requested
reconsideration of the denial. Whatever the catalyst, defendant sent another letter for each claim on
October 8, 2004, indicating that the “possible causes of loss were earth movement, [or] water entering
through a sump and freezing.” (Second Letter). The letter listed several new exclusion provisions and
stated that “our position of denial remains the same.” The Second Letter contained identical language
to the First Letter inviting submission of additional information.
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On December 21, 2005, plaintiff’s counsel sent a letter to defendant providing an affidavit and
photographs, arguing that “the crack was not caused by earth movement, but rather by water collecting
in the submersible pump basins and backing up into the space between the inner and outer walls of the
pipes, freezing and cracking” and requesting defendant “reconsider the denial.” Defendant responded
on December 23, 2005, citing for the first time the frozen plumbing exclusion (Third Letter). The
letter provided that “[i]n order to reconsider this claim, I will need to know exactly how this area is
heated. After I receive this information, I may request other information or documentation.” It also
contained the identical language inviting further submissions.
Plaintiff responded in March 2006, arguing that there was no need to heat petroleum piping
because petroleum does not freeze. Defendant sent the Fourth Letter four days later, reiterating the
frozen plumbing exception and noting that the affidavit provided by plaintiff “states the loss was
caused by freezing and cracking of the pipes.” Defendant stated that “[t]he fact remains that this loss
was caused by frozen plumbing” and that “our denial of this claim still stands.” There was no
language inviting further submission of information.
In October 2006, plaintiff filed its complaint requesting declaratory relief and alleging a breach
of contract. Plaintiff had mailed the documents on Friday, October 5, 2006, but the documents were
not filed with the Mecosta Circuit Court until Tuesday, October 10, 2006, evidently due to the delay
caused by the Columbus Day federal postal holiday. Defendant filed its answer and alleged the
affirmative defense that plaintiff’s claims were untimely, having not been brought within two years of
the date of loss.
Defendant ultimately moved for summary disposition on this affirmative defense, alleging that
it had formally denied liability for the losses on August 31, 2004. Plaintiff responded that there was a
genuine issue of material fact because the term “formal denial” was ambiguous such that it was unclear
which of the letters was the “formal denial” that stopped the tolling for filing a claim. At the hearing,
the trial court concluded:
It doesn’t look good that—you may not be paying the claim and may not have wanted
to pay the claim. But, I mean, when the policy speaks to denial and common language
speaks to denial and court cases speak to denial, I think the word “denial” should be in
there. It’s one thing to say this is not covered, hence your claim is denied.
Now settle your heart pumping down a little bit, let’s look at the October 8th
letter. Ms. DeFevre, at the bottom of the letter: As the resulting damage was cracking
piping under the ground, the above captioned exclusion may have caused or contributed
to the sustained damage. Therefore, our position of denial remains at this time. That
word “denial” is in that letter.
***
And as far as the verbiage about inviting more information, that doesn’t take
away from the denial that I’ve concluded was made on October 8th.
So I’m determining that the denial was actually made on October 8th because the
word “denial” is in there. Arguably it could be August 31st, but there’s no question the
word “denial” is in there on October 8th.
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Plaintiff then argued that the claim was still timely filed on October 10, 2006 because October 8 was a
Sunday and October 9 was a legal holiday—Columbus Day. In its order, the trial court ruled “that
October 9, 2006 was not a holiday within the meaning of the court rules and, further, that the
complaint in the instant case was filed after the two year deadline established by the insurance policy”
and granted defendant’s motion for summary disposition.
II.
Analysis
As noted, plaintiff argued to the trial court that it was not until the March 2005 letter that
defendant issued a “formal denial”, but the trial court concluded that the October 8, 2004 letter was the
“formal denial.” We hold that there is a genuine issue of material fact as to which date constituted the
formal denial.
Motions for summary disposition made under MCR 2.116(C)(10) are reviewed de novo.
Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). The facts are considered in the light
most favorable to the nonmoving party. Id. This Court reviews the record and the documentary
evidence but does not make findings of fact or weigh credibility. Taylor v Lenawee Rd Comm’rs, 216
Mich App 435, 437; 549 NW2d 80 (1996).
The policy defendant issued to plaintiff provides:
E. Property Loss Conditions
***
4. Legal Action Against Us
No one may bring a legal action against us under this insurance unless:
a. There has been full compliance with all of the terms of this insurance; and
b. The action is brought within 2 years after the date on which the direct physical
loss of damage occurred.
The endorsement, labeled “MICHIGAN CHANGES” provides:
D. The following is added to the Legal Action Against Us Property Loss Conditions:
The time for commencing action against us is tolled from the time you notify us of
the loss or damage until we formally deny liability for the claims.
The parties do not dispute that plaintiff properly notified defendant or that defendant at some
point denied the claim. The dispute is when the denial took place. The trial court took it upon itself to
determine which of the letters constituted the “formal denial,” declaring it to be the Second Letter.
However, trial courts may not make findings of fact on a motion for summary disposition, In re
Handelsman, 266 Mich App 433, 437; 702 NW2d 641 (2005), and that is precisely what the trial court
did when it considered the different letters and declared which was the “formal denial.” However, at
least the first three letters contain language indicating both that a denial (though not always with that
precise language) had occurred “at that time” and that additional information would be accepted and
considered in deciding or “reassessing” the coverage dispute. Hence, which letter constituted a formal
denial was for a fact-finder, not a judge deciding a motion for summary disposition. The very fact that
such a choice had to be made, and the trial court’s own admission that “[a]rguably it could be” the First
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Letter, evidences the existence of a disputed material fact that should have precluded summary
disposition in favor of defendant.1
Taking all the evidence in the light most favorable to plaintiff as the nonmoving party, Dressel,
supra at 561, there was a question regarding whether the filing of the complaint was timely because
there was a material fact issue concerning which of the four letters from defendant constituted a
“formal denial.”
Adding to our conclusion is the uncertainty regarding whether the Third or Fourth Letters
related to both claims, or only the Big Rapids claim, which they reference. According to plaintiff, the
issue was “a bit of a tempest in a teapot” because both claims were identical, were investigated by the
same investigator, and the engineer’s report makes no factual distinction between the two claims. The
record evidence, however, is not conclusive. According to defendant’s case notes for the Reed City
claim, defendant was notified via email in June 2005 that plaintiff was represented by counsel, though
it was not until December 21, 2005, that plaintiff’s counsel sent a letter to defendant indicating that
plaintiff was represented by counsel on the Big Rapids claim. However, the case notes suggest that
defendant was aware that plaintiff was represented by counsel for both claims, and even defendant’s
own engineer treated the claims identically.
Taking this evidence in the light most favorable to plaintiff, it is possible that the Third and
Fourth Letters relate to both claims, not simply to the Big Rapids claim. Accordingly, whether the
Third and Fourth Letters relate to both claims was an outstanding issue of material fact, and the trial
court was thus precluded from determining as a matter of law whether plaintiff’s complaint was timely.
Therefore, summary disposition in favor of defendant was improper. Dressel, supra at 561.2
Reversed and remanded for further proceedings consistent with this opinion. We do not retain
jurisdiction.
Plaintiff may tax costs, being the prevailing party. MCR 7.219(A).
/s/ Christopher M. Murray
/s/ Peter D. O’Connell
/s/ Alton T. Davis
1
Of course the trial court likely chose between these letters because the parties largely argued which
one should be considered the formal denial, rather than explicitly arguing that a finder of fact needed to
decide this issue.
2
Because when the denial took place must be decided by the trier of fact on remand, it is not necessary
for us to determine whether Columbus Day is a legal holiday for the Mecosta Circuit Court. Judge
O’Connell is of the opinion that Columbus Day is a legal holiday.
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