NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 13a0483n.06

No. 12-1864

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

REGINALD HAYES and CASSANDRA

HAYES,

Plaintiffs-Appellants,

v.

LIBERTY INSURANCE CORPORATION,

Defendant-Appellee.

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ON APPEAL FROM THE

UNITED STATES DISTRICT

COURT FOR THE EASTERN

DISTRICT OF MICHIGAN

BEFORE: BOGGS and COLE, Circuit Judges; QUIST, District Judge.*

PER CURIAM. Reginald Hayes and Cassandra Hayes appeal the district court’s grant of

summary judgment and its interlocutory order dissolving a preliminary injunction in this insurance

dispute. We affirm.

LibertyInsurance Corporation (Liberty)issued a homeowners policyto the Hayeses effective

February 28, 2010, to February 28, 2011. On or about November 23, 2010, the Hayeses discovered

leaking pipes in their home. An investigation by a contractor revealed asbestos in the walls,

requiring the Hayeses to vacate their home and seek temporary living arrangements. Liberty

subsequently notified the Hayeses that their homeowners policy provided coverage for additional

The Honorable Gordon J. Quist, United States District Judge for the Western District of *

Michigan, sitting by designation.
No. 12-1864

Hayes v. Liberty Ins. Corp.

living expenses for twelve months following the date of loss and that no additional living expenses

incurred beyond November 23, 2011, would be processed. 

On November 21, 2011, the Hayeses filed a complaint for specific performance/anticipatory

breach and declaratory relief against Liberty in the Genesee County Circuit Court. The state court

granted the Hayeses’ motion for a preliminary injunction and ordered Liberty to continue paying

additional living expenses to the Hayeses. Liberty removed the case to the district court based on

diversity of citizenship and subsequently moved for summary judgment and for dissolution of the

preliminary injunction. Concluding that the homeowners policy required Liberty to pay additional

living expenses for only a maximum of twelve months, the district court granted Liberty’s motions

for summary judgment and for dissolution of the preliminary injunction. Liberty’s counterclaims

for rescission, unjust enrichment, and declaratory judgment remained pending. This timely appeal

followed.

We have jurisdiction to review the district court’s interlocutory order dissolving the

preliminary injunction pursuant to 28 U.S.C. § 1292(a)(1). We review the district court’s order de

novo where, as here, the dissolution is based on a legal premise. Reese v. City of Columbus, 71 F.3d

619, 622 (6th Cir. 1995). We may also review the district court’s summary-judgment ruling because

that ruling formed the basis for the district court’s decision to dissolve the preliminary injunction. 

See Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP, 423 F.3d 539, 545 (6th Cir. 2005). 

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

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No. 12-1864

Hayes v. Liberty Ins. Corp.

Under Michigan law, “[a]n insurance policy is much the same as any other contract.” AutoOwners Ins. Co. v. Churchman, 489 N.W.2d 431, 433 (Mich. 1992). The court must look at the

policy “as a whole and give meaning to all terms.” Id. at 434. “An insurance contract is ambiguous

if, after reading the entire contract, its language reasonably can be understood in differing ways.” 

Fragner v. Am. Cmty. Mut. Ins. Co., 502 N.W.2d 350, 352 (Mich. Ct. App. 1993). “If the

contractual language is unambiguous, courts must interpret and enforce the contract as written

because an unambiguous contract reflects the parties’ intent as a matter of law.” Hastings Mut. Ins.

Co. v. Safety King, Inc., 778 N.W.2d 275, 278 (Mich. Ct. App. 2009). 

Two provisions of the homeowners policy are at issue in this case. The homeowners policy

provides the following coverage for the loss of use of the insured premises: 

COVERAGE D - Loss Of Use

. . . .

1. If a loss covered under this Section makes that part of the “residence

premises” where you reside not fit to live in, we cover the Additional Living

Expense, meaning any necessary increase in living expenses, incurred by you

so that your household can maintain its normal standard of living.

Payment will be for the shortest time required to repair or replace the damage

or, if you permanently relocate, the shortest time required for your household

to settle elsewhere.

An endorsement to the policy provides as follows:

C. INCREASED LIMIT - COVERAGE D

We will pay the amount of loss covered by Coverage D which is actually

sustained by you during the 12 consecutive months following the date of loss,

subject to the periods of time under paragraphs 1, 2, and 3 of Coverage D -

Loss of Use.

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No. 12-1864

Hayes v. Liberty Ins. Corp.

We agree with the district court that these provisions, read together, place a twelve-month limit on 

the payment of additional living expenses, “subject to” the further limitation on payment of such

expenses “for the shortest time required to repair or replace the damage or, if you permanently

relocate, the shortest time required for your household to settle elsewhere.” 

The Hayeses contend that the periods of time under paragraphs 1, 2, and 3 of Coverage D

always trump the twelve-month limit on payment of additional living expenses and that the district

court rewrote the parties’ unambiguous contract provision to include the condition: “unless it takes

a shorter period of time to repair or replace the damage or permanently relocate.” According to the

Hayeses, the district court rewrote the provision to avoid rendering the twelve-month limit a nullity,

improperly relying on rules of contract interpretation and construction when the policy provision

contains no ambiguity. But giving effect to all of a contract’s terms is not a rule of construction to

be applied only after a finding of ambiguity: “[C]ourts cannot simply ignore portions of a contract

in order to avoid a finding of ambiguity or in order to declare an ambiguity. Instead, contracts must

be construed so as to give effect to every word or phrase as far as practicable.” Klapp v. United Ins.

Grp. Agency, Inc., 663 N.W.2d 447, 453 (Mich. 2003) (internal quotation marks omitted). 

The case upon which the Hayeses rely, Michigan Township Participating Plan v. Pavolich,

591 N.W.2d 325 (Mich. Ct. App. 1998), is inapposite. In that case, the Michigan Court of Appeals

held that a portion of the insurance policy covering “you or any family member” was surplusage

because the village, the named insured, “cannot sustain bodily injury or have family members.” Id.

at 331. Here, the twelve-month limit on payment of additional living expenses is not mere

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No. 12-1864

Hayes v. Liberty Ins. Corp.

surplusage – clearly, Liberty can (and did) place a time limit on the payment of benefits to the

Hayeses. 

Because we agree with the district court that the homeowners policy, read as a whole,

unambiguously places a twelve-month limit on the payment of additional living expenses, we affirm

the district court’s grant of summary judgment and its dissolution of the preliminary injunction

ordering Liberty to continue paying those expenses to the Hayeses beyond the twelve-month period.

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