Michigan Millers Mutual Insurance v. Fidelity & Deposit Co.
809 F. Supp. 2d 703
W.D. Mich.2011Background
- Explosion at a Bangor, Michigan farm house in 2002 killed five; farm owned by Cherrytree Farms LLC and managed by Signature Farms LP; United Feeds, Inc. and Signature Farms LP were insured under Michigan Millers policies in issue.
- In 2004, Lotz and Reppert wrongful death actions were filed; Michigan Millers agreed to defend United Feeds and Signature Farms LP but did not clearly address Cherrytree Farms in that defense decision.
- In 2004, Signature Farms LP and Cherrytree Farms LLC filed Farms' Coverage Case against Michigan Millers, Cincinnati, and Henriott; farm-related issues centered on whether Cherrytree should be insured and on underwriting, not professional services defense.
- 2006 Lotz verdict and settlements; Reppert settlement followed; Cincinnati later sought to join Farms' Coverage Case seeking claims against Millers for defense and settlement issues.
- 2007 Farms filed an amended complaint alleging additional professional service-type handling failures; F&D denied coverage arguing interrelated claims and 2004 underwriting nature.
- Michigan Millers obtained a 2007-08 F&D policy (claims-made, no defense duty) with $5M limits and $750k retention; F&D initially treated the 2004 dispute as underwriting, not professional services.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 2007 amended Farms' complaint is a professional services claim first made during policy period | Farms' 2007 claims are professional services as defined by policy. | 2004 complaint was underwriting, not professional services; 2007 claims are a continuation and barred by interrelation. | Farms' 2007 amendment is a professional services claim first made in policy period; covered. |
| Whether Cincinnati's 2007 complaint is a new, covered professional services claim | Cincinnati's claims arise from handling/settlement decisions, within coverage. | Cincinnati's complaint is barred as a continuation of 2004 underwriting dispute. | Cincinnati 2007 complaint is a new professional services claim within policy coverage. |
| Whether Michigan Millers timely tendered the 2007 Farms' amended complaint to F&D | Tender occurred timely for the 2007 Cincinnati complaint; 2007 amendments were effectively provided. | Failure to tender 2004 complaint is irrelevant; need timely tender for 2007 claims. | Michigan Millers timely tendered the 2007 amended complaint; defense costs owed. |
| Whether the prior/pending litigation date excludes coverage | Exclusion does not apply to 2007 claims since they arose after 2002 and are not mere continuations. | Because under policy terms, pre-2002 disputes may bar related 2007 claims. | Prior and pending litigation exclusion does not bar 2007 Farms' or Cincinnati claims. |
| Whether the 'Other Insurance' clause shifts or limits liability between F&D and ERC | F&D coverage should apply; ERC is largely reimbursement; timing matters. | Determination of overlap and timing pending; clause could limit excess liability. | Alternate motion premature; not conclusively resolved; await development of losses. |
Key Cases Cited
- National Union Fire Insurance Co. v. Willis, 296 F.3d 336 (5th Cir.2002) (claims-made vs. civil action framing in insurance disputes)
- Community Foundation for Jewish Education v. Federal Insurance Co., 16 F. App'x 462 (6th Cir.2001) (interpretation of policy terms and coverage in multi-party disputes)
- Ameriwood Indus. Int'l Corp. v. Am. Cas. Co., 840 F. Supp. 1143 (W.D. Mich. 1993) (trials on coverage and professional services definitions)