                        RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit Rule 206
                                     File Name: 08a0456p.06

                UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT
                                   _________________


                                               X
                                                -
 IROQUOIS ON THE BEACH, INC., a Michigan

           Plaintiff-Appellant/Cross-Appellee, --
 Corporation,

                                                -
                                                               Nos. 07-2458/2495

                                                ,
                                                 >
                                                -
           v.

                                                -
        Defendant-Appellee/Cross-Appellant. -
 GENERAL STAR INDEMNITY COMPANY,
                                                -
                                               N

                        Appeal from the United States District Court
                     for the Western District of Michigan at Marquette.
                    No. 06-00233—Robert Holmes Bell, District Judge.

                                  Argued: October 22, 2008
                          Decided and Filed: December 23, 2008
                                                                                 *
                Before: MOORE, GRIFFIN, and BRIGHT, Circuit Judges.

                                     _________________

                                          COUNSEL
ARGUED: Raymond W. Morganti, SIEMION, HUCKABAY, BODARY, PADILLA,
MORGANTI & BOWERMAN, Southfield, Michigan, for Appellant. Matthew J.
Thomas, RUTLEDGE, MANION, RABAUT, TERRY & THOMAS, Detroit, Michigan,
for Appellee.     ON BRIEF:          Raymond W. Morganti, SIEMION, HUCKABAY,
BODARY, PADILLA, MORGANTI & BOWERMAN, Southfield, Michigan, for
Appellant. Matthew J. Thomas, Alvin A. Rutledge, RUTLEDGE, MANION, RABAUT,
TERRY & THOMAS, Detroit, Michigan, for Appellee.




        *
         The Honorable Myron H. Bright, Circuit Judge of the United States Court of Appeals for the
Eighth Circuit, sitting by designation.


                                                1
Nos. 07-2458/2495         Iroquois on the Beach v. General                                 Page 2
                          Star Indemnity Co.


                                     _________________

                                           OPINION
                                     _________________

        MYRON H. BRIGHT, Circuit Judge. Appellant Iroquois on the Beach, Inc.
(“Iroquois”), a seasonal hotel insured under an “all risk” policy, appeals from the district
court’s1 grant of summary judgment dismissing its claims against General Star
Indemnity Company (“General Star”) for water and wind damage losses sustained to its
building. The district court determined that exclusion B.2.f. of the insurance policy
applied to preclude insurance coverage. The record without dispute established that
continuous or repeated seepage or leakage of water over a period of at least fourteen
days caused the damages to the insured hotel and that this cause came within the above
exclusion. We affirm.

                                    I.    BACKGROUND

        Iroquois, a seasonal hotel on Mackinac Island, Michigan, operates from
approximately May 15 to October 15 of each year. It stands three stories tall and offers
forty-six guest rooms, a restaurant with an “old dining room” and a “new dining room,”
and a bar. The original building dates back to 1903. The last addition occurred in 1979
or 1980 (“1979/1980 addition”), which added two towers, the new dining room, and
several guest rooms.

        General Star Indemnity Company has provided commercial property insurance
to Iroquois since June 1, 2002. On September 6, 2005, General Star issued Policy No.
IAG389285B, an “all risk” policy effective from September 1, 2005 to September 1,
2006. The Policy provides coverage for the Hotel Iroquois and several other structures.
Its terms and exclusions frame the issues for this dispute.




        1
         The Honorable Robert Holmes Bell, United States District Court for the Western District of
Michigan, Northern Division.
Nos. 07-2458/2495       Iroquois on the Beach v. General                          Page 3
                        Star Indemnity Co.


        In July or early August of 2005, Iroquois’s owner, Margaret Davey McIntire, met
with Rick Marshall, a construction contractor who often did work for the hotel. McIntire
told Marshall that the back of the building would not hold paint and the windows in that
part of the building did not open and close properly. In response, Marshall encouraged
McIntire to contact architect Mark Buday. Buday scheduled an inspection of the
building on October 26, 2005 to allow the tourist season to end.

        When Buday arrived with structural engineer Ryan Johnston to inspect the hotel,
sections of the siding were removed from the 1979/1980 addition to facilitate the
inspection. Shortly after the inspection, Marshall became concerned about a potential
collapse and shored up parts of the building. On November 11, 2005, Johnston released
a report based on the October 26 inspection and subsequent visits, in which he identified
decay in several areas of the 1979/1980 addition. McIntire indicated surprise at learning
of the decay.

        In a November 12, 2005 letter to Iroquois’s owner, Buday explained that water
was entering the building envelope because of the insufficient steel frame that failed to
protect the building in windy conditions, the inappropriateness of the existing cladding
system for the site’s extreme climatic conditions, and the too high or sloped existing
grade around the building. He suggested that the damage occurred gradually over the
course of several years. He recommended installing a steel frame, adding a rain screen
cladding system, and adjusting the grade.

        To date, the cost of repairs to the Iroquois have totaled about $1.5 or $1.6
million, excluding the costs of upcoming repairs to another tower.

        On December 1, 2005, General Star received Iroquois’s notice of a loss dated
November 17, 2005. Iroquois then forwarded to General Star an April 17, 2006
coverage letter drafted by Iroquois’s attorney, setting forward the legal basis for the
insurance claim. On May 8, 2006, General Star sent a letter denying coverage for the
loss at issue.
Nos. 07-2458/2495            Iroquois on the Beach v. General                                       Page 4
                             Star Indemnity Co.


         On July 17, 2006, Iroquois sued General Star in the Circuit Court for the County
of Mackinac. General Star removed the case to federal court on August 31, 2006.

         The district court noted that General Star did not dispute that Iroquois’s loss to
its building falls within the insurance policy, leaving the remaining issue of whether the
loss came within one or more of the policy exclusions. The district court ultimately
granted General Star’s motion for summary judgment, ruling that exclusion B.2.f.2
precluded insurance coverage. The district court also determined that genuine issues of
material fact existed relating to the four other policy exclusions.3 Iroquois timely
appealed, asserting that the B.2.f. exclusion did not as a matter of law bar coverage.

                                           II.    ANALYSIS

         This court reviews a district court’s grant or denial of summary judgment de
novo. Shahid v. Ford Motor Co., 76 F.3d 1404, 1408 (6th Cir. 1996).

         Although the insurer asserted five exclusions as a basis to deny the insured’s
recovery under the policy, we focus on exclusion B.2.f., which is dispositive and on
which the district court relied to preclude insurance coverage. The district court ruled
that the undisputed facts present in this case triggered this exclusion. The court granted
summary judgment of dismissal for General Star after determining that the exclusion
applied.




         2
          This exclusion precluded coverage for losses caused by the continuous or repeated seepage or
leakage of water over a period of fourteen days or more.
         3
           In addition to exclusion B.2.f., the four other exclusions asserted by General Star include:
1) Exclusion B.1.h., which precludes insurance coverage for losses caused by fungus, wet rot, dry rot, and
bacteria; 2) Exclusion B.2.d.(2), which precludes insurance coverage for losses caused by rust or other
corrosion, decay, deterioration, hidden or latent defect, or any quality in property that causes it to damage
or destroy itself; 3) Exclusion B.3.a., which precludes insurance coverage for losses caused by weather
conditions; and 4) Exclusion B.3.c(2) and (3), which precludes insurance coverage for faulty, inadequate,
or defective design or maintenance.
Nos. 07-2458/2495       Iroquois on the Beach v. General                             Page 5
                        Star Indemnity Co.


        Section B.2.f provides:

        B. Exclusions
           2. We will not pay for loss or damage caused by or resulting from
               any of the following:
           ...
               f. Continuous or repeated seepage or leakage of water, or the
                  presence or condensation of humidity, moisture or vapor, that
                  occurs over a period of 14 days or more.

        Iroquois argues that exclusion B.2.f. is inapplicable because windstorms, a
covered loss under the policy, initiated the sequence of events that resulted in the loss
and B.2.f. contains no “anti-concurrent, anti-sequential” clause as in paragraph of B.1.
Such a clause excludes coverage “regardless of any other cause or event that contributes
concurrently or in any sequence to the loss.” Iroquois argues that the omission of this
clause in B.2.f. indicates that the insurer intended to provide coverage where the loss is
caused by wind if it was the first or last step leading to the seepage or leakage of water.
Iroquois cites case law from New Jersey in support of recovery when the insured risk
was the last step in the chain of causation set in motion by an uninsured peril. See
Simonetti v. Selective Ins. Co., 859 A.2d 694, 690-700 (N.J. Super. Ct. App. Div. 2004).

        In considering Iroquois’s argument, we observe that many jurisdictions have
adopted the doctrine of “efficient proximate cause,” or what Michigan courts call the
theory of “dual or concurrent causation.” This theory applies when “two or more
identifiable causes, at least one of which is covered under the policy and at least one of
which is excluded thereunder, contribute to a single loss.” 7 STEVEN PLITT ET AL.,
COUCH ON INSURANCE § 101:45 (3d ed. 2008). Under this doctrine, “[i]f the cause
which is determined to have set the chain of events in motion, the efficient proximate
cause, is covered under the terms of the policy, the loss will likewise be covered.” Id.
Jurisdictions that have adopted this doctrine generally allow parties to contract out of its
application by adopting an anti-concurrent, anti-sequential clause. Id.

        Here, Iroquois essentially argues that we should apply the efficient-proximate-
cause doctrine because there are two causes, one of which is excluded (seepage of water)
Nos. 07-2458/2495            Iroquois on the Beach v. General                                     Page 6
                             Star Indemnity Co.


and one of which is covered (windstorms), and the covered cause (windstorms) set in
motion the chain of events leading to the loss. However, the Supreme Court of Michigan
has expressly declined to adopt this doctrine, explaining that it found no reason “to
introduce a legal theory or doctrine that departs from the literal interpretation of an
unambiguous insurance contract.” See Vanguard Ins. Co. v. Clarke, 475 N.W.2d 48, 53
(Mich. 1991), overruled in part on other grounds by Wilkie v. Auto-Owners Ins. Co., 664
N.W.2d 776, 785-87 (Mich. 2003). Thus, the default rule under Michigan law is that a
loss is not covered when it is concurrently caused by the combination of a covered cause
and an excluded cause.4 Accordingly, the exclusion for seepage or leakage of water for
at least fourteen days is dispositive in this case.

         Additional case law supports the view that Michigan does not permit courts to
stray from the policy language in this manner. “[C]ourts must . . . give effect to every
word, phrase, and clause in a contract and avoid an interpretation that would render any
part of the contract surplusage or nugatory.” Klapp v. United Ins. Group Agency, Inc.,
663 N.W.2d 447, 453 (Mich. 2003). Moreover, “the language of the parties’ contract
is the best way to determine what the parties intended.” Id. at 457.

         Finally, Iroquois’s argument relating to the lack of an anti-concurrent, anti-
sequential clause is irrelevant in the instant case. If Michigan followed the efficient-
proximate-cause doctrine, then the adoption of an anti-concurrent, anti-sequential clause
would allow the parties to contract out of the application of that doctrine. But since
Michigan does not follow the doctrine, the addition of such a clause here would be
surplusage. Consequently, the absence of an anti-concurrent, anti-sequential clause here
does nothing to alter Michigan’s default rule that a loss is not covered when it is caused
by a combination of a covered risk and an excluded risk. The record clearly shows that
the seepage or leakage of water occurred for at least fourteen days, thus triggering the
exclusion to prevent insurance coverage.


         4
          This default rule could presumably be altered by the inclusion of an express concurrent-causation
provision. See Hayley v. Allstate Ins. Co., 686 N.W.2d 273, 277-78 (Mich. Ct. App. 2004) (Cooper, J.,
dissenting).
Nos. 07-2458/2495      Iroquois on the Beach v. General                      Page 7
                       Star Indemnity Co.


                               III.   CONCLUSION

       For the foregoing reasons, we AFFIRM the district court’s judgment dismissing
the action for insurance coverage by Iroquois.
