                          STATE OF MICHIGAN

                            COURT OF APPEALS



HOME-OWNERS INSURANCE COMPANY,                                       UNPUBLISHED
                                                                     October 28, 2014
               Plaintiff/Counterdefendant-
               Appellee/Cross-Appellant,

v                                                                    No. 312707
                                                                     Wayne Circuit Court
MARY GRIFFITH,                                                       LC No. 10-014995-CK

               Defendant/Counterplaintiff-
               Appellant/Cross-Appellee,

and

LINDA MCCORMICK, a/k/a MARIE GRIFFITH,

               Defendant-Cross-Appellee.


Before: JANSEN, P.J., and SAAD and DONOFRIO, JJ.

PER CURIAM.

         Defendant Mary Griffith (hereinafter “Mary”) filed a claim with plaintiff, her
homeowner’s insurer, following a fire loss at her home in Inkster, Michigan. Plaintiff thereafter
filed this action, seeking a declaration that neither Mary, nor her daughter Linda McCormick
(hereinafter “Linda”), who was residing or temporarily staying with Mary at the time of the fire,
was entitled to recover any benefits under the policy. Plaintiff also sought to recover damages
for its costs incurred in the investigation of Mary’s claim, and monies advanced before denying
Mary’s claim. The trial court granted in part plaintiff’s motion for summary disposition under
MCR 2.116(C)(10). The court ruled that Mary breached a condition precedent under the policy
by failing to timely submit a sworn statement of proof of loss and by failing to cooperate with the
investigation of the fire, and declared the policy void. However, the court denied plaintiff’s
request for recovery of expenses advanced and the costs associated with its investigation of the
claim. Mary appeals by right the trial court’s order declaring the policy void, and plaintiff cross-
appeals the trial court’s order denying its request for damages. We affirm the trial court’s order,
as modified to clarify that plaintiff is not obligated to indemnify Linda for any claims she may
submit under the policy.



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                       I. THE DECLARATORY JUDGMENT ACTION

        Mary argues that the trial court erred by granting summary disposition for plaintiff on its
request for declaratory relief to declare the policy void. We disagree. This Court reviews de
novo the trial court’s summary disposition decision. Spiek v Dep’t of Transp, 456 Mich 331,
337; 572 NW2d 201 (1998). A motion under MCR 2.116(C)(10) tests the factual support for a
claim. Babula v Robertson, 212 Mich App 45, 48; 536 NW2d 834 (1995). A reviewing court
must consider the pleadings, affidavits, depositions, admissions, and other documentary evidence
submitted by the parties. MCR 2.116(G)(5). Summary disposition should be granted if, except
as to the amount of damages, there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Babula, 212 Mich App at 48; see also Smith v Globe Life
Ins Co, 460 Mich 446, 455-456 n 2; 597 NW2d 28 (1999).

        Mary argues that plaintiff did not submit any evidence showing that she or Linda
breached the policy, such that the policy is void. The trial court’s ruling was based on two
grounds: (1) that Mary failed to cooperate with the investigation of her claim as required by the
policy, by intentionally concealing or misrepresenting material information during the
investigation, and (2) that Mary failed to timely provide a sworn proof-of-loss statement.

        At her examination under oath, Mary refused to provide several items of requested
information, including her date of birth, her Social Security number, her former names, and her
financial information. Mary also denied that she had ever previously filed an insurance claim
related to a fire loss. Plaintiff submitted evidence that Mary previously lived at a house in
Livonia that was destroyed by fire in 2003. That property had also been the subject of a
contentious divorce proceeding between Mary and her husband, Edward McCormick, who
apparently died before the divorce could be finalized. Litigation concerning the Livonia property
continued after Edward’s death when defendants were involved in multiple lawsuits. Mary was
known as “Mary McCormick” while she was married, but she denied using any other names.

        The insurance policy expressly provides that plaintiff is not obligated to provide coverage
for any loss to an insured who intentionally conceals or misrepresents any material fact or
circumstance, engages in fraudulent conduct, or makes a false statement relating to the insurance.
This policy language is consistent with that of MCL 500.2833(1)(c), which provides that every
fire insurance policy issued or delivered in this state shall contain a provision “[t]hat the policy
may be void on the basis of misrepresentation, fraud, or concealment.”

        In Mina v Gen Star Indemnity Co, 218 Mich App 678, 686-687; 555 NW2d 1 (1996),
rev’d in part on other grounds 455 Mich 866 (1997), this Court stated:

               To void a policy because the insured has wilfully misrepresented a
       material fact, an insurer must show that (1) the misrepresentation was material,
       (2) that it was false, (3) that the insured knew that it was false at the time it was
       made or that it was made recklessly, without any knowledge of its truth, and (4)
       that the insured made the material misrepresentation with the intention that the
       insurer would act upon it. Rayis v Shelby Mutual Ins Co of Shelby, Ohio, 80 Mich
       App 387, 393; 264 NW2d 5 (1978). A statement is material if it is reasonably
       relevant to the insurer’s investigation of a claim. Dadurian v Underwriters at

                                                -2-
       Lloyd’s, London, 787 F2d 756, 759-760 (CA 1, 1986); Fine v Bellefonte
       Underwriters Ins Co, 725 F2d 179, 183 (CA 2, 1984), cert den 469 US 874
       (1985).

        We disagree with Mary’s argument that plaintiff failed to submit any evidence that she
concealed or misrepresented any material information. Mary concedes that she did not reveal
that she had previously used the name Mary McCormick when she was married. Mary further
admits that she refused to provide personal information to plaintiff, such as her date of birth and
Social Security number. Mary had used her married name within the 10-year period preceding
the fire. Although Mary claimed that she was concerned about identity theft, she refused to
disclose more than just personal identifying information. She refused to produce any official
form of identification, including her former name and Social Security number. The failure to
provide this information prevented plaintiff from properly investigating Mary and her
background, which included multiple lawsuit related to a previous fire at the Livonia property in
2003. Although Mary asserts that any information regarding the 2003 fire at the Livonia
property was irrelevant, it was not for Mary to determine what information was material to
plaintiff’s investigation. Moreover, plaintiff had legitimate reasons for seeking information
about prior fires and claims. For instance, plaintiff was entitled to learn whether defendants were
attempting to recover for any items that might have previously been destroyed or covered in the
2003 fire. This information was particularly material in this case because defendants claimed to
have discarded various items before the investigation was completed and before their inventory
list was verified. The trial court did not err by ruling that Mary failed to disclose or
misrepresented material information related to plaintiff’s investigation of the insurance claim.

        We also reject Mary’s argument that the trial court erred by finding that she failed to
timely submit a sworn proof-of-loss statement. It is undisputed that Mary was required to submit
a sworn proof of loss by May 27, 2010, and that she was permitted to mail the form to plaintiff
by that date even if plaintiff did not receive it by then, as long as Mary provided evidence
showing that it was mailed by May 27.

       The general rule is that an insured’s failure to timely render a proof-of-loss statement
precludes a claim under the policy, absent a waiver of this requirement. The failure to comply
with the requirement for timely filing a proof-of-loss statement is considered a condition
precedent to the insurer’s liability. Auto-Owners Ins Co v Gallup, 191 Mich App 181, 183-184;
477 NW2d 463 (1991). The rule applies without regard to whether the insurer was prejudiced.
Dellar v Frankenmuth Mut Ins Co, 173 Mich App 138, 145; 433 NW2d 380 (1988); see also
DeFrain v State Farm Mut Auto Ins Co, 491 Mich 359, 367-368; 817 NW2d 504 (2012). As this
Court explained in Dellar, 173 Mich App at 145-146:

               The purpose of provisions in an insurance contract requiring the insured to
       give prompt notice is to allow the insurer to make a timely investigation in order
       to evaluate claims and to defend against fraudulent, invalid, or excessive claims.
       Wendel v Swanberg, [384 Mich 468, 477-478; 185 NW2d 348 (1971)]. The filing
       of a proof of loss within sixty days allows the insurer to determine with certitude
       that the insured demands payment under the policy, the amount of the claim, and
       the question of its liability.


                                               -3-
If the insurer invites the use of the mail to file a proof-of-loss statement, the insurer will bear the
risk of the document being lost in the mail. Gallup, 191 Mich App at 184.

         Michigan also follows the “substantial performance of contract rule,” which may apply to
the filing of a proof-of-loss statement to create an exception to the strict time requirements for
filing a sworn statement of proof of loss. Gibson v Group Ins Co of Michigan, 142 Mich App
271, 275-276; 369 NW2d 484 (1985). As explained in Gibson, 142 Mich App at 275-276:

               Although cases from foreign jurisdictions allow for the defeat of an
       insurance claim by any refusal to answer relevant questions during an
       investigation, the Michigan cases regarding forfeiture of contract rights are fairly
       summarized by the following commentary:

              “Michigan follows the substantial performance of contract rule. The
       common-law rule was that performance as a condition precedent to recovery on a
       contract must be strict performance in accordance with the terms of the contract.

                                                ***

               “A contract is substantially performed when all the essentials necessary to
       the full accomplishment of the purposes for which the thing contracted has been
       performed with such approximation that a party obtains substantially what is
       called for by the contract.

               “Generally speaking, deviations from the absolute terms of a contract do
       not necessarily cause a failure of performance, but may entitle a party to extra
       compensation or damages. Imperfections in the matters of details which do not
       constitute a deviation from the general plan do not prevent the performance from
       being regarded as substantial performance. On the other hand, where the
       deviations or alterations are such as would essentially change the terms of
       performance, they will be considered as a failure of performance.” 6A Michigan
       Law & Practice, Contracts, § 314, pp 315-316 (footnotes omitted).

Policy provisions requiring the timely submission of a proof-of-loss statement will ordinarily be
given effect unless a satisfactory excuse for noncompliance or delay is provided. Westfield Ins
Co v Appleton, 132 Fed Appx 567, 574; 2005 WL 1313413, 7 (CA 6, 2005).

        Although Mary admits that plaintiff did not receive the proof-of-loss statement by the
May 27, 2010, deadline, she contends that she substantially complied with the requirement by
placing the statement in the mail on May 27, 2010, and hand-delivering a copy to plaintiff on
June 3, 2010. She further claims that plaintiff was in receipt of it by June 4, 2010. Mary relies
only on a postal cancellation date of May 27, 2010, to support her assertion that she timely filed
her proof-of-loss statement. However, that date is not proof that the package was mailed on that
date. Moreover, Mary does not dispute that the proof-of-loss statement included with that letter
was not sworn. Where an unsigned proof-of-loss statement is submitted, the insured is not
considered bound by any of the statements therein as her own. Barnes v State Farm Fire & Cas
Co, 623 F Supp 538, 540 (ED Mich, 1985). Because there is an important policy reason for
requiring a properly signed proof-of-loss statement, substantial compliance is lacking if the
                                                 -4-
statement submitted is unsigned. Id. The proof-of-loss statement that was hand-delivered on
June 3 is dated June 2, beyond the May 27 deadline. Thus, the submitted evidence showed that a
proper proof-of-loss statement was not signed under oath and delivered to plaintiff by May 27.
Mary’s failure to timely submit a signed proof-of-loss statement does not constitute substantial
compliance.

        Contrary to Mary’s assertions, the trial court did not grant summary disposition on the
basis of any alleged wrongdoing by Linda. Although plaintiff submitted evidence that Linda
also failed to cooperate with plaintiff’s investigation, Linda took the position that she was not
required to cooperate because she was not an insured under the policy and was not pursuing any
claim for benefits. The trial court held that Linda did not have any claim for that reason.

        After reviewing the record, we conclude that there was no genuine issue of material fact
regarding Mary’s failure to satisfy a condition precedent to recovery under the insurance policy
with plaintiff. Mary did not provide a sworn copy of the proof-of-loss statement by May 27,
2010, and did not come forward with evidence showing that she timely mailed a proper copy by
that date. Mary also failed to fully cooperate with plaintiff’s investigation without a valid
excuse. Mary’s alleged concerns about identity theft did not excuse her from refusing to disclose
that she had previously used the name Mary McCormick and that she and her daughter had
previously pursued a claim for an earlier fire. No reasonable juror could conclude that Mary’s
omissions were made innocently and without intent to conceal material information from
plaintiff. The trial court properly granted plaintiff’s motion for summary disposition and
declared the policy void.

                         II. CLAIMS AGAINST LINDA MCCORMICK

        Plaintiff argues on cross-appeal that the trial court erred by failing to rule that it had no
duty to indemnify Linda for any claims she might submit as a possible insured under Mary’s
policy. It is apparent that the trial court intended its decision to encompass any claims by Linda
because when asked whether “the motion is granted as to Linda McCormick,” the court clarified
that “Linda doesn’t have a claim.” However, the trial court’s judgment did not expressly
indicate that it encompassed any claim by Linda such that plaintiff was not liable for any claim
that Linda might submit, although the court did declare the policy void. Because the court
clearly intended its declaratory ruling to apply to Linda and because Linda does not challenge
that ruling, and in fact admitted below that she was not pursuing any claim under the policy, we
modify the trial court’s order to expressly provide that plaintiff is not liable to indemnify Linda
for any claims she may have under the insurance policy.

                                         III. DAMAGES

       Plaintiff also argues on cross-appeal that the trial court erred by failing to award it
damages for (1) the costs it incurred in the investigation of Mary’s claim, and (2) the monies it
advanced to Mary before denying her claim. The trial court rejected plaintiff’s request for
damages because plaintiff did not cite any authority allowing it to be reimbursed for those
expenses. On appeal, plaintiff does not cite any policy provision in support of its request, but
instead simply argues that it may recover the specified damages under the general rule that a


                                                -5-
party damaged by a breach of contract is entitled to those damages that naturally flow from the
breach. See Huler v Nasser, 322 Mich 1, 8; 33 NW2d 637 (1948).

        Insurance policies are subject to the same principles of construction that apply to any
other type of contract. Rory v Continental Ins Co, 473 Mich 457, 461; 703 NW2d 23 (2005).
Michigan courts follow the rule of Hadley v Baxendale, 9 Exch 341; 156 Eng Rep 145 (1854),
“that a party who fails to perform its contractual obligations becomes liable for all foreseeable
damages flowing from the breach.” Burnside v State Farm Fire & Cas Co, 208 Mich App 422,
427-428; 528 NW2d 749 (1995). “ ‘Where there are no special circumstances to distinguish the
contract involved from the great mass of contracts of the same kind, the damages recoverable are
such as would naturally and generally result from the breach according to the usual course of
things[.]’ ” Id. at 427 n 2, quoting Huler, 322 Mich at 8. “The party asserting a breach of
contract has the burden of proving its damages with reasonable certainty, and may recover only
those damages that are the direct, natural, and proximate result of the breach.” Alan Custom
Homes, Inc v Krol, 256 Mich App 505, 512; 667 NW2d 379 (2003).

        With respect to plaintiff’s request to recover any advances provided to Mary, plaintiff
incorrectly asserts that the policy was found to be void ab initio. A policy that is considered void
ab initio is treated as if it never existed. United Security Ins Co v Comm’r of Ins, 133 Mich App
38, 42; 348 NW2d 34 (1984). Here, the trial court only ruled that the policy was void, because
Mary breached a condition precedent to recovery under the policy. The failure of one party to
satisfy a condition precedent simply means that there is no cause of action for failure to perform
the contract. See Harbor Park Market, Inc v Gronda, 277 Mich App 126, 131; 743 NW2d 585
(2007). Thus, while there was no cause of action on the contract, the policy was not void ab
initio. The trial court did not err by denying plaintiff’s request to recover any expenses it
advanced to Mary before the policy was declared void for failure to satisfy a condition precedent.
See Titan Ins Co v Hyten, 491 Mich 547, 567; 817 NW2d 562 (2012) (noting that when an
insurance policy is cancelled, it is terminated as of the cancellation date and is still effective up
to that date).

        With respect to plaintiff’s request to recover the expenses it incurred in investigating
Mary’s claim, plaintiff failed to show that these expenses were the direct, natural, and proximate
result of Mary’s breach. The purpose of the investigation was to determine the validity of
Mary’s insurance claims in the first instance, i.e., to determine whether she was in breach of the
policy’s terms. The investigation did not result from Mary’s breach. Thus, plaintiff failed to
show that the expenses it incurred in investigating Mary’s claim were the natural result of
Mary’s breach.

      We affirm the trial court’s order but modify it to provide that plaintiff is not liable to
indemnify Linda for any claims she may have under the insurance policy.

     Affirmed as modified. As the prevailing party, plaintiff may tax its costs pursuant to
MCR 7.219.

                                                              /s/ Kathleen Jansen
                                                              /s/ Henry William Saad
                                                              /s/ Pat M. Donofrio

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