City of Warren v. International Insurance Company, 524 F. App'x 254

City of Warren sought defense costs and settlement indemnification from Hannover for Rizzo dispute; Hannover denied coverage citing Exclusion 18.e.
Rizzo contract (Oct 2001) required royalties and a Direct Dump System; dispute over feasibility and a third compactor led Rizzo to withhold royalties.
Rizzo I–III litigation and related arbitrations culminated in a 2007–2009 sequence, including a 2009 arbitration award for $6,419,580 against the City and Rizzo for breach and withheld royalties.
June 30, 2009 mediation produced a global settlement of $5,975,000; parties placed the settlement record and agreed not to enforce the arbitration award.
January 2010 the City sued Hannover seeking defense and indemnification; district court granted summary judgment to Hannover based on Exclusion 18.e.
Appellate review affirmed, holding Exclusion 18.e unambiguous and applicable; and that Hannover’s duty, if any, mirrored indemnity scope and did not cover non-covered claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Exclusion 18.e exclude § 1983 and conspiracy claims?	Rizzo claims § 1983/conspiracy arise from City’s breach and retaliation.	Exclusion 18.e excludes public officials’ omissions arising from contractual breach; applies to these claims.	Exclusion 18.e applies; claims arise out of breach of contract.
Is Hannover obligated to advance defense costs or merely indemnify under the policy terms?	Policy language ‘pay on behalf of’ and Ultimate Net Loss imply advancement of defense costs.	Policy language limits duties to indemnification for covered claims; defense costs scope mirrors indemnity.	The duty mirrors indemnification scope; Hannover had no broader duty to advance defense costs for non-covered claims.
Did Hannover waive or is estopped from raising Exclusion 18.e defenses after initial denial?	Hannover denied coverage in Jan 2009 without bases, triggering waiver.	Subsequent detailed May 2009 letter explained Exclusion 18.e; waiver/estoppel does not broaden policy coverage.	Waiver/estoppel do not broaden coverage for excluded risks; denial was validly supplemented with exclusions.

Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197 (1991) (determine policy ambiguity and construe terms)
Fire Ins. Exchange v. Diehl, 450 Mich. 678 (1996) (ambiguities construed in insured's favor)
Edgar’s Warehouse, Inc. v. United States Fid. & Guar. Co., 375 Mich. 598 (1965) (rejects rewriting plain policy terms)
Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560 (1992) (exclusions construed in insured's favor but must be clear)
Kangas v. Aetna Cas. & Surety Co., 235 N.W.2d 42 (Mich. Ct. App. 1975) (explains 'arising out of' standard)
Thornton v. Allstate Ins. Co., 425 Mich. 643 (1986) (reiterates 'arising out of' concept and foreseeability)
Am. Bumper and Mfg. Co. v. Hartford Fire Ins. Co., 452 Mich. 440 (1996) (duty to defend vs indemnify distinction)
Kirschner v. Process Design Assocs., Inc., 459 Mich. 587 (1999) (waiver/estoppel limitations on expanding coverage)
Fresard v. Michigan Millers Mut. Ins. Co., 414 Mich. 686 (1982) (interpretation of entire policy language)
Hunter v. Pearl Assurance Co., 292 Mich. 543 (1940) (read policy terms to give effect to every part)