THOMAS KENNEDY V AUTO-OWNERS INSURANCE CO
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STATE OF MICHIGAN
COURT OF APPEALS
THOMAS KENNEDY and KRISTIN KENNEDY,
UNPUBLISHED
August 4, 2011
Plaintiffs-Appellees/CrossAppellants,
v
AUTO-OWNERS INSURANCE COMPANY and
HOME-OWNERS INSURANCE COMPANY,
No. 294955
Marquette Circuit Court
LC No. 07-045044-CK
Defendants-Appellants/CrossAppellees.
Before: RONAYNE KRAUSE, P.J., and SERVITTO and GLEICHER, JJ.
RONAYNE KRAUSE, P.J. (concurring in part and dissenting in part).
I concur entirely with the majority’s determination that there is a genuine question of fact
as to whether plaintiffs actually ran out of propane. I also agree that the insurance policy is
unambiguous, and plaintiffs’ failure to sell the house was properly excluded as potential
consequential damages. However, I respectfully believe that the majority misreads the insurance
policy, and I respectfully conclude that the denial of consequential damages altogether is overly
broad.
To summarize the situation, plaintiffs had two houses, one of which (hereinafter, “the
house”) they kept vacant but habitable, with the thermostat set at 55 degrees. Two water pipes
nevertheless burst and caused extensive damage. The house’s redundant furnaces were fuelled
by propane, and as the majority excellently explains, there is a genuine question of fact whether
plaintiffs’ propane tanks ran out of propane. Furthermore, again as the majority explains, the
trial court erred in concluding that this factual question was immaterial. Plaintiffs had the house
listed for sale, but they were unable to sell it and it eventually went into foreclosure. The
majority properly explains that the failure to sell and subsequent foreclosure lack a sufficient link
to the water damage to be considered consequential damages.
In reverse order, however, I would not preclude any possibility of plaintiffs recovering
consequential damages. Plaintiffs’ inability to repair the damage from the burst pipes because of
defendants’ denial of their insurance claim could itself cause further damage to the house over
time. For example, mold, deterioration of the structure from exposure to environmental stresses,
or the inevitable decay of any structure that sets in if it is not lived in, all would certainly be
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within the contemplation of the parties. It is obvious and well-known that unresolved problems
only get worse over time, never better, particularly when water damage is involved.
Furthermore, this would be a loss directly from the nonperformance of the contract, assuming a
jury ultimately finds in plaintiffs’ favor regarding the sufficiency of their precautions or their
propane levels. I agree that the failure to sell the house and the foreclosure are not consequential
damages, but I cannot agree with the implication that there are not, at least theoretically, other
consequential damages potentially available.
More significantly, the insurance policy at issue required plaintiffs to “take precautions
to . . . maintain heat in the building.” Both parties assert that this is unambiguous, although
ambiguity is a question of law, Klapp v United Ins Group Agency, Inc, 468 Mich 459, 463; 663
NW2d 447 (2003), to which parties may not stipulate. Naturally, plaintiffs assert that only some
precautions need to be taken, whereas defendants assert that reasonable precautions must be
taken. I note with some interest that the specific policy endorsement explicitly deleted a
requirement that the insured actually maintain heat in the building, replacing it with the
requirement of “taking precautions.” The precautions unambiguously do not necessarily have to
be successful—therefore, the policy exclusion would not be triggered even if plaintiffs did in fact
run out of propane.
I agree with the majority that the contract itself is not ambiguous. As they state, a
precaution is defined by the dictionary as “a measure taken in advance to avert possible harm or
misfortune” or “caution employed beforehand; prudent foresight.” The plain language of the
contract does not specify whether a de minimus amount of precaution will suffice or whether
some quantum of care beyond that is called for. I think that if this Court recognizes that
“prudent foresight” is part of the definition, the policy calls for the latter. Therefore, the
plaintiffs need not take successful precautions to maintain heat in the building, but they must take
reasonable precautions. In any event, allowing merely “some” precautions could lead to an
absurd result, such as satisfying the policy requirements if plaintiffs had merely lit a candle
somewhere in the basement—that would be a precaution, but obviously a blatantly unreasonable
one. This must be a jury question.
The majority concludes that “the precautions required by the policy are to maintain heat
in the home, which fundamentally requires a heat source.” I cannot find any support for this
conclusion in the policy, case law, dictionary, or any other reference or authority. Plaintiffs had
redundant heat sources, and they also had redundant mechanisms to monitor the heat—both of
which were calculated to facilitate the maintenance of heat in the home. The fact that the
monitoring systems would require human intervention at some point might arguably make them
poor or unreliable precautions, but that goes purely to evaluating how reasonable the precaution
is, not what it was designed to accomplish. Again, the reasonableness would be for the jury to
decide.
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In summary, I agree that there is a genuine question of material fact as to whether
plaintiffs ran out of propane, and I agree that plaintiffs’ inability to sell the house and foreclosure
are not permissible items of consequential damages. However, I would hold that the insurance
policy requires reasonable precautions to maintain heat, which may or may not be directly heatgenerating acts, and I would further hold that there may possibly be items of consequential
damages directly caused by the unrepaired water damages.
/s/ Amy Ronayne Krause
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