TROY, Mich. — Michigan’s Court
of Appeals has ruled that applicable statutes of limitations bar an insurer’s
warranty and negligence claims against a furnace manufacturer for water and
mold damage to its insureds’ home.
Auto Club Insurance Co. v. Amana
Appliances, No. 272864 (Mich. Ct. App.).
The court said in its March 20
per curiam opinion that a trial court
ruled correctly in dismissing Auto Club Group Insurance Co.’s warranty claim
against Amana Appliances as untimely, but should have also dismissed Auto
Club’s negligence claim on the same basis.
Auto Club sued Amana in September 2005 to recover $203,024.40 paid to James
and Nancy Matlis for water and mold damage that occurred while the Matlises
were away from their Michigan home during the winter of 2002-2003.
The Matlises sought coverage for an alleged furnace malfunction that led to
burst water pipes, the Court of Appeals said.
Amana moved for summary disposition, contending that the claims were filed
outside a three-year statute of limitations and/or that the claims were
limited by the economic loss doctrine.
The manufacturer maintained that the applicable limitations period was
provided by the Uniform Commercial Code, and that it began to run when the
furnace was delivered to the Matlises’ home in 1999.
Auto Club argued that the claims were based on common law products liability,
and the statute of limitations didn’t begin to run until the damage occurred.
The Court of Appeals acknowledged that in product defect cases, such as
pharmaceutical cases, a cause of action accrues when the party discovers it,
or should have discovered it.
“However, plaintiff has presented no documentary evidence to establish that
the breach of warranty occurred in the winter of 2002-2003,” the court said.
“Rather, plaintiff opined that a breach of warranty occurred based on its
conclusion that an electrical short with regard to the furnace caused the
damage to the insured’s premises,” the court explained. “Plaintiff has
submitted no documentary in accordance with MCR 2.116(G)(5) to establish that
the discovery statute for breach of warranty
by defendants was not submitted
to allow this case to be removed from the UCC period (emphasis by the court).
A blanket assertion, without more, is insufficient to invoke the discovery
statute of limitations for breach of warranty.”
The court ruled, too, that Auto Body’s negligence cause of action “is
premised on an underlying theory of products liability,” which also provides
a three-year limitations period from the date of accrual.
Again, the court said, the insurer contended that the cause of action didn’t
accrue until the furnace failed.
“However, without evidentiary support, we cannot conclude that such activity
constitutes a product defect that commenced the statue of limitations at that
time,” the court concluded.
The per curiam opinion was by Judges Mark J. Cavanagh and Karen Fort Hood.
Presiding Judge Kurtis T. Wilder wrote a concurring opinion in which he said
he would also find that the economic doctrine applied to bar Auto Body’s
claims.
Mary T. Nemeth of Gross & Nemeth in Detroit represented Auto Club Group
Insurance Co.
Nancy L. Kahn of Foster, Swift, Collins & Swift in Farmington Hills,
Mich., represented Amana Appliances.
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Opinion Ref# MOL-0804-05
Concurring Opinion Ref# MOL-0804-06
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