Clausen Miller Partners Courtney Murphy, Jacob Zissu and Eric Krejci Obtain Jury Verdict in Favor of Insurer, Dismissing Multi-Million Dollar First Party Property Damage Claim

September 6, 2018 / News

Clausen Miller partners Courtney Murphy, Jacob Zissu and Eric Krejci recently obtained a jury verdict in favor of a major property insurer, dismissing an insured’s multi-million dollar first party property claim stemming from water loss and damage sustained to its vacant building located in Detroit, Michigan.

455 Companies LLC alleged that the insurer breached its property insurance contract by denying 455’s claim for water loss and damage to its insured property.  455 owned a 114,000 square foot commercial building with five floors, a basement and two mechanical penthouses on the roof located at 455 West Fort Street in the downtown business district of Detroit, Michigan.  The loss allegedly occurred in early January 2015, when a pipe broke in a women’s restroom located on the fifth floor of the building causing extensive water loss and damage to all lower floors including the basement.  An additional pipe was found to have cracked in the building’s mechanical penthouse located just above the fifth floor restroom.

Having previously granted the insurer’s prior summary judgment motion relative to the meaning, scope and application of the Policy’s Protective Safeguard Endorsements, the court earlier held that the Endorsements, taken together, added a condition and an exclusion to the Policy which conditioned coverage on maintaining the building’s heat at or above 55 degrees.  The Court further held that losses caused by water damage are excluded to the extent that 455 failed to maintain the heat at 55 degrees prior to the loss.

At issue during the trial was whether the insured actually maintained the building’s heat at or above 55 degrees as was required by the Endorsements. In support of the insurer’s position, the Clausen team presented various experts with specialties in metallurgical engineering, HVAC engineering and structural engineering to address the manner and means of the pipe failure, the alloy composition of the failed pipe as a causal/contributing factor, the operability of the building’s heating system, and the effect of the water loss on the building’s structure generally.

For its part, 455 presented testimony of “first responders”, photographs taken of purported temperature gauges with correlating metadata, and expert analysis to demonstrate that the building was at or above 55 degrees at all times prior to and immediately after the loss was discovered.  Notwithstanding 455’s presentation, the jury sided with the insurer and dismissed all claims including, but not limited to, water remediation costs in excess of $1,200,000 dollars.

455 Companies’ claims for $4,250,000 for consequential damages relative to loss sale/rental value was also previously dismissed by way of summary judgment.

Partner Joseph Ferrini of Clausen’s Appellate Practice Group assisted in reviewing/editing proposed jury charges and verdict sheet to ensure that the record was properly protected from an appellate standpoint, efforts taken in recognition of the importance of collaborative coordination between trial and appellate counsel.

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