Damage to CDs worth $400K limited to recovery of $5,000.

Byline: Kelly Caplan

A basement flood destroyed $400,000 worth of a recording artist's CDs, but a provision in her homeowner's insurance policy limited her recovery to $5,000, according to a panel of the Michigan Court of Appeals.

In this interlocutory appeal, the insurer said the trial court erred when it held that genuine issues of material fact existed regarding whether the CDs were business property, and fell within the business exception to the plaintiff's coverage.

And the insurance company argued the court failed to look at another part of policy, limiting recovery under an electronic-media exception.

A Court of Appeals majority agreed with the defendant's alternative argument, and reversed.

The court found the business property provision did not apply to the CDs, but the electronic-media did apply. The majority said. "[U]nder that exception, plaintiff was limited to a $5,000 recovery for the CDs at maximum. Because there is no dispute that defendant paid that $5,000," failure to grant summary disposition as to the CDs was in error.

The unpublished per curiam decision, Winans v. Farmers Ins Exchange (MiLW 08-102660, 8 pages), was issued by Judges Jane M. Beckering and Karen M. Fort Hood. Judge Douglas Shapiro dissented.

Background

Plaintiff Vivian Winans is a recording artist who has released several musical albums and related materials over the past 30 years.

Her home included a main house and a "cabana," where, allegedly unknown to her, approximately $400,000 worth of her CDs were stored in its basement.

In early 2017, a pipe burst, and the cabana flooded; the CDs stored in the basement were destroyed.

She filed a claim with defendant Farmers Insurance Exchange, which denied the majority of her claim.

Farmers concluded that the destroyed CDs were "business property" and an exception in Winans' policy limited her to a $5,000 recovery on that property.

Farmers also argued that, even if the CDs weren't business property, a separate, electronic-media exception in the policy also limited recovery to $5,000.

Winans sued for breach of contract; Farmers filed a motion for summary disposition.

The Oakland County Circuit Court held that genuine issues of material fact existed as to whether the CDs constituted business property, such that summary disposition was inappropriate regarding that issue.

The court, however, did not address the defendant's...