Lead Opinion
Defendant Allstate Insurance Company appeals by leave granted the trial court’s denial of its motion for summary disposition of all plaintiffs Dallas and Christine Hayleys’ claims pursuant to MCR 2.116(C)(8) and MCR 2.116(0(10). We reverse.
I. FACTS
Flaintiffs’ home sustained water damage in 1999 because of ice damming on their roof. The damage consisted primarily of flooding of the carpeting in a bedroom and the family room. Flaintiffs submitted a claim for this damage to defendant, their homeowner’s insurer, which defendant paid. The damage was repaired and, at the time, plaintiffs believed the problem had been resolved. Subsequently, in 2000, plaintiffs discovered a toxic form of mold in their home when they removed suspended ceding tiles in their utility room. Plaintiffs discovered that mold was growing on approximately one-fourth of the unfinished drywall ceiling above the suspended tiles. Clean Air Management, Inc., investigated the problem and advised plaintiffs that the mold was stachyhotrys, a toxic form of mold. Plaintiffs alleged that the mold was caused by the 1999 water damage and requested that defendant reopen the 1999 claim to cover the cost of its removal. However, defendant refused to pay for any claim associated with the mold discovered in 2000.
Plaintiffs thereafter brought this action, alleging claims for breach of contract, violation of the Uniform Tráde Practices Act
II. LEGAL ANALYSIS
We review de novo a trial court’s determination regarding a motion for summary disposition.
A. POLICY EXCLUSION
Defendant contends that the trial court erroneously denied its motion for summary disposition regarding plaintiffs’ breach of contract claim, as defendant’s policy specifically excludes coverage for mold damage. We agree.
This Court summarized the guidelines for enforcing exclusionary clauses in insurance policies as follows: When reviewing an exclusionary clause, we read the contract as a whole to effectuate the overall intent of the parties.
Exclusionary clauses in insurance policies are strictly construed in favor of the insured. Coverage under a policy is lost if any exclusion in the policy applies to an insured’s particular claims. Clear and specific exclusions must be given effect because an insurance company cannot be liable for a risk it did not assume.[7 ]
Defendant’s policy contains the following exclusion from coverage:
Losses We Do Not Cover Under Coverages A and B:
We do not cover loss to the property described in Coverage A — Dwelling Protection or Coverage B — Other Structures Protection consisting of or caused by:
In addition, we do not cover loss consisting of or caused by any of the following:
15. a)...
d) rust or other corrosion, mold, wet or dry rot;...
23. We do not cover loss to covered property described in Coverage A — Dwelling Protection or Coverage B — Other Structures Protection when:
a) there are two or more causes of loss to the covered property; and
b) the predominant cause(s) of loss is (are) excluded under Losses We Do Not Cover, items 1 through 22 above.
We agree with defendant that ¶ 15(d) clearly excludes both losses caused by mold and losses consisting of mold damage. Further, contrary to plaintiffs’ arguments, ¶ 23 does nothing to extend coverage to such losses. To the contrary, ¶ 23 further identifies losses that “[w]e do not cover” in a limiting fashion and that paragraph cannot reasonably be construed to an opposite effect, i.e., to somehow extend coverage to losses not otherwise covered. Further, the paragraph only applies where “there are two or more causes of loss.” Here, there is only one cause of loss, the water backup that resulted from the ice dam. Defendant paid for covered losses resulting from that cause to the extent they were not excluded from coverage, as mold is. Finally, we disagree with the dissent’s conclusion that Steven Bell admitted in his deposition that defendant would pay for mold remediation if caused by a covered water backup. Instead, Bell only stated that mold remediation might occur during the process of remediating some other loss that was covered by the policy. Such incidental mold remediation did not occur here as the water damage was corrected, at defendant’s expense, before the mold problem developed.
B. UNIFORM TRADE PRACTICES ACT
Defendant further argues that the trial court should have dismissed plaintiffs’ claim under the UTPA, wherein plaintiffs requested an award of twelve percent penalty interest pursuant to MCL 500.2006 on the basis that defendant had unreasonably denied their claim. In light of our conclusion that defendant appropriately rejected plaintiffs’ claim, we agree.
C. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
Finally, defendant contends that the trial court erred in denying summary disposition of plaintiffs’ claim for intentional infliction of emotional distress. We agree.
To establish a claim of intentional infliction of emotional distress, a plaintiff must prove the following elements: “(1) extreme and outrageous conduct, (2) intent or recklessness, (3) causation, and (4) severe emotional distress.”
The failure to pay a contractual obligation or insurance benefits does not amount to outrageous conduct, even if it is done in bad faith or wilfully.
Plaintiffs concede that defendant is entitled to summary disposition regarding their claims of gross negligence and breach of a duty of good faith. Therefore, we dismiss those claims without further review.
We reverse and remand for entry of an order granting defendant summary disposition of all plaintiffs’ claims. We do not retain jurisdiction.
Notes
MCL 500.2001 et seq.
Beaudrie v Henderson,
Id. at 129-130.
Auto-Owners Ins Co v Allied Adjusters & Appraisers, Inc,
Singer v American States Ins,
Auto-Owners, supra at 397.
Century Surety Co v Charron,
Pacific Employers Ins Co v Michigan Mut Ins Co,
Farm Bureau Mut Ins Co of Michigan v Nikkel,
Graham v Ford,
Id.
Teadt v Lutheran Church Missouri Synod,
Id.
Taylor v Blue Cross & Blue Shield of Michigan,
Runions v Auto-Owners Ins Co,
Dissenting Opinion
(dissenting). I respectfully dissent from the opinion of my colleagues. The plain language of Allstate’s insurance policy provides for coverage for an otherwise excluded loss if the predominant source of the loss was a covered event. I would, therefore, affirm the trial court’s denial of defendant’s motion for summary disposition regarding plaintiffs’ breach of contract and Uniform Trade Practices Act (UTPA) claims.
I. POLICY EXCLUSION
I also agree with defendant that ¶ 15(d) purports to exclude both losses caused by mold and losses consisting of mold damage. However, ¶ 23 of the policy recognizes that there may be more than one cause of a loss to covered property. Under ¶ 23, if there is more than one cause contributing to the loss, coverage is still available so long as the predominant cause of the loss is not excluded under the policy.
Paragraph 23 appears to embody the efficient proximate cause rule, or the theory of dual or concurrent causation, as it is known in Michigan. Michigan has no
In an unpublished opinion, a panel of this Court declined to adopt the theory of dual or concurrent causation where the exclusionary provision at issue was an “anticoncurrent causation” clause.
We must, therefore, look to other jurisdictions for guidance.
“When a loss is sustained by a sequence or concurrence of at least two causes, one covered under [an insurance] policy and the other excluded under the policy, the cause setting the chain of events in motion is the cause to which the loss is attributed....” Other courts have defined efficient proximate cause to mean the predominant cause, rather than the first in time.[8 ]
The determination of the cause of the loss is a question of fact.
II. UNIFORM TRADE PRACTICES ACT
I also disagree with the majority’s decision regarding plaintiffs’ claim under the UTPA. In light of the conclusion that the Allstate policy clearly covers mold loss incidental to a primary covered loss, and in light of Mr. Bell’s admission of coverage, in addition to plaintiffs’ evidence linking the mold to the 1999 ice damming condition, I believe there is a genuine issue of material fact concerning whether plaintiffs’ claim was reasonably in dispute. Therefore, I would find that the trial court properly denied summary disposition regarding this claim.
Accordingly, I would affirm the trial court’s denial of defendant’s motion for summary disposition with regard to plaintiffs’ breach of contract and UTPA claims and reverse the trial court’s denial with regard to plaintiffs’ claim of intentional infliction of emotional distress.
Compare Sunshine Motors, Inc v New Hampshire Ins Co,
Dahlke v Home Owners Ins Co, unpublished opinion per curiam of the Court of Appeals, issued December 23, 2003 (Docket No. 239128), slip op at 4.
Id. at 2.
Vanguard Ins Co v Clarke,
Id. at 466.
For examples of other states that have adopted the efficient proximate cause rule, see State Farm Fire & Cas Co v Von Der Lieth, 54 Cal 3d 1123; 2 Cal Rptr 2d 183;
Allstate Ins Co v Smiley, 276 Ill App 971;
CP v Allstate Ins Co,
Von Der Lieth, supra at 1132, citing Garvey v State Farm Fire & Cas Co, 48 Cal 3d 395; 257 Cal Rptr 292;
A fair reading of the following testimony from Mr. Bell’s deposition indicates that Mr. Bell did in fact admit that defendant would pay for the remediation of mold caused by a covered loss.
Q. A house catches on fire, the firefighters go in to suppress the fire and water ends up in the house and it’s not initially cleaned up and mold results, is it covered?
A. The initial fire loss is covered.
Q. What about the resulting water loss?
A. The water loss is part of the fire damage; therefore, it’s covered also.
Q. Okay. And if it happens to be mold resulting from that, is it covered?
A. It depends on whether it’s part of the actual water loss and is taken care of.
Q. So sometimes Allstate Insurance Company, under these homeowners policies will, in fact, pay for the remediation of mold?
A. Typically, it’s part of the actual structure damages.
Q. Okay. But there are times when mold remediation is paid by Allstate under a homeowners policy?
A. Yes. [Deposition of Steven Bell, April 3, 2002, pp 33-34.]