Farm Bureau denies another claim on a technicality
Farm Bureau has been one of the more aggressive insurers in relying on the pro-insurance Michigan Supreme Court to avoid paying claims. It was successful again in Sherman-Nadiv v. Farm Bureau, where the insured wasn't allowed to challenge a jury verdict because it had not filed the proper motion in the lower court. The case involved a rental property that the plaintiffs had insured with Farm Bureau. The policy contained language in the fine print that excluded coverage if the home was "unoccupied" for 30 days, unless it was "being constructed".
When the previous tenants left, the insureds had to perform some renovations and modifications, but had completed these repairs by May 1 when they re-rented the home to a new tenant. On May 15, they visited the property--probably to collect the balance of the rent--and while some furniture had been moved in, the new tenants were nowhere to be found. The tenants never did re-appear, and on May 29 the home suffered substantial water damage from a bad pipe.
Farm Bureau denied the insureds' damage claim, citing the above exclusion. The insureds claimed that the property was "occupied" at some point during May by the new tenants, and that the property was "being constructed" during the previous 30 days, as well. The jury dismissed Farm Bureau's fraud defense against the insureds, but found the home to have been unoccupied for 30 days. The lower court had refused to instruct the jury on a broader interpretation of the construction clause, as requested by the insureds.
The Appellate Court ruled that the phrase "being constructed" contained no ambiguity and that it allowed of only one interpretation: a home being built from the ground up. It also ruled that no "manifest injustice" would result from its refusal to consider the insureds' claim that the home was not "unoccupied" for 30 days, and therefore refused to consider that issue.