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STATE OF MICHIGAN 

COURT OF APPEALS 

MICHIGAN BATTERY EQUIPMENT, INC., 

 Plaintiff-Appellant/Cross-Appellee, 

FOR PUBLICATION 

September 15, 2016 

9:00 a.m. 

v No. 326945 

Genesee Circuit Court 

EMCASCO INSURANCE COMPANY, LC No. 2014-102661-CK 

 Defendant-Appellee/CrossAppellant. 

Before: CAVANAGH, P.J., and SAAD and FORT HOOD, JJ. 

SAAD, J. 

 In this insurance coverage dispute, plaintiff, Michigan Battery Equipment, Inc. (Michigan 

Battery), appeals the trial court’s order that granted summary disposition in favor of defendant, 

EMCASCO Insurance Company (EMC).1 The trial court granted summary disposition because 

it held that the loss was caused by wet rot which was a risk not covered, but instead was 

specifically excluded from coverage under the policy. For the reasons provided below, we 

affirm.2

 

1

 EMC filed a cross-appeal in this case. But on cross-appeal, EMC does not challenge any ruling 

or action by the trial court. Instead, EMC merely argues that the trial court’s ruling should be 

affirmed. In these circumstances, a cross-appeal is not necessary, even when the appellee is 

asserting an alternative ground to affirm. See Middlebrooks v Wayne Co, 446 Mich 151, 166 n 

41; 521 NW2d 774 (1994). 

2

 We review a trial court’s decision on a motion for summary disposition de novo. BC Tile & 

Marble Co, Inc v Multi Bldg Co, Inc, 288 Mich App 576, 583; 794 NW2d 76 (2010). A motion 

under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Maiden v Rozwood, 461 

Mich 109, 120; 597 NW2d 817 (1999). In deciding a motion under MCR 2.116(C)(10), the trial 

court considers affidavits, pleadings, depositions, admissions, and any other documentary 

evidence submitted by the parties in the light most favorable to the nonmoving party. Id. 

“Summary disposition pursuant to MCR 2.116(C)(10) is proper when there is no genuine issue 

of material fact and the moving party is entitled to judgment as a matter of law.” McCoig 

Materials, LLC v Galui Constr, Inc, 295 Mich App 684, 693; 818 NW2d 410 (2012). Also, the 
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I. 

BRIEF FACTS AND GENERAL PRINCIPLES REGARDING INSURANCE CONTRACTS 

 Due to prolonged water infiltration through deteriorated rubber grommets in the roof, the 

roof trusses of Michigan Battery’s warehouse rotted. In January 2014, snow and ice 

accumulated on the roof, which caused the rotted trusses to split, crack, and fall down a few feet. 

The question on appeal is whether EMC’s insurance policy covers the damage to Michigan 

Battery’s roof. To resolve this dispute, we must examine the terms of the insurance policy and 

determine whether the damage is excluded from coverage under any exclusion. Insurance 

policies must be enforced in accordance with their terms. Henderson v State Farm Fire & Cas 

Co, 460 Mich 348, 354; 596 NW2d 190 (1999). “The language of insurance contracts should be 

read as a whole and must be construed to give effect to every word, clause, and phrase.” 

McGrath v Allstate Ins Co, 290 Mich App 434, 439; 802 NW2d 619 (2010). “[U]nless a contract 

provision violates law or one of the traditional defenses to the enforceability of a contract 

applies, a court must construe and apply unambiguous contract provisions as written.” Rory v 

Continental Ins Co, 473 Mich 457, 465; 703 NW2d 23 (2005). To determine the intent of the 

parties, a court must first ascertain whether the policy provides coverage to the insured. Hunt v 

Drielick, 496 Mich 366, 373; 852 NW2d 562 (2014). Then, it must determine “whether that 

coverage is negated by an exclusion.” Id. “While it is the insured’s burden to establish that his 

claim falls within the terms of the policy, the insurer should bear the burden of proving an 

absence of coverage.” Id. (quotation marks and citations omitted). Where a contract provision is 

ambiguous, the contract is construed in favor of the insured. Henderson, 460 Mich at 354. 

However, “[a] court should not create ambiguity in an insurance policy where the terms of the 

contract are clear and precise.” Id. Instead, contract terms should be interpreted using their plan 

and ordinary meanings. Id. 

II. 

ALL-RISK POLICY AND EXCLUSION FOR WET ROT 

 Michigan Battery insured its property with an “all-risk” policy issued by EMC on its 

warehouse and attached offices. “Notwithstanding the presence of an ‘all-risks’ provision in an 

insurance policy, the loss will not be covered if it comes within any specific exclusion contained 

in the policy.” 10A Couch, Insurance, 3d § 148.68. Here, the policy provides for various 

exclusions, of which two were the focus of the arguments at the trial court: (1) the exclusion for 

damage caused by collapse and (2) the exclusion for damage caused by fungus, wet rot, dry rot, 

and bacteria. Such exclusionary clauses are strictly construed in favor of the insured. AutoOwners Ins Co v Churchman, 440 Mich 560, 567; 489 NW2d 431 (1992). However, “[c]lear 

and specific exclusions must be given effect,” and “coverage under a policy is lost if any 

exclusion within the policy applies to an insured’s particular claims.” Id.

interpretation of an insurance contract and whether an ambiguity exists are questions of law that 

we review de novo. Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). 
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 Because the language of the policy is controlling, we turn our attention to the rot 

exclusion in the policy, which provides in pertinent part: 

B. Exclusions 

1. We will not pay for loss or damage caused directly or indirectly by any of the 

following. Such loss or damage is excluded regardless of any other cause or 

event that contributes concurrently or in any sequence to the loss. 

* * * 

h. “Fungus,” Wet Rot, Dry Rot And Bacteria 

Presence, growth, proliferation, spread or any activity of “fungus,” wet or 

dry rot or bacteria. 

But if “fungus,” wet or dry rot or bacteria results in a “specified cause of 

loss,” we will pay for the loss or damage caused by that “specified cause 

of loss.” 

This exclusion does not apply: 

1. When “fungus,” wet or dry rot or bacteria results from fire or 

lightning; or 

2. To the extent that coverage is provided in the Additional 

Coverage—Limited Coverage For “Fungus,” Wet Rot, Dry Rot 

And Bacteria with respect to loss or damage by a cause of loss 

other than fire or lightning. 

Exclusions B.1.a. through B.1.h. apply whether or not the loss event results in 

widespread damage or affects a substantial area. 

As the trial court properly held, the plain language of the above-quoted insurance policy 

provisions excludes from coverage damage caused by fungus, wet rot, dry rot, and bacteria. 

However, this exclusion has exceptions: (1) when the fungus, wet rot, dry rot, or bacteria results 

from fire or lightning; and (2) to the extent that coverage is provided in the “Additional 

Coverage” provision; and (3) where the fungus, rot, or bacteria “results in a ‘specified cause of 

loss.’ ” As a result, because there is no question that wet rot caused the damage at issue, we 

must determine if any of exceptions to the rot exclusion applies. 

 The first exception does not apply, because there is nothing on the record to show, and 

the parties do not argue, that the wet rot here was the result from fire or lightning. Indeed, the 

record shows that the wet rot was caused by water leakage through grommets located in the roof. 

 Additionally, the second exception related to the rot being covered under the “Additional 

Coverage” does not apply. Under this “Additional Coverage,” damage from fungus, rot, and 

bacteria is covered where the fungus, rot, or bacteria is the result of (1) “a specified cause of 
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loss” other than fire or lightning or (2) flood. The term “specified causes of loss” is defined as 

meaning 

fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or 

civil commotion; vandalism; leakage from fire-extinguishing equipment; sinkhole 

collapse; volcanic action; falling objects; weight of snow, ice or sleet; water 

damage. 

And “water damage” is further defined as 

accidental discharge or leakage of water or steam as the direct result of the 

breaking apart or cracking of a plumbing, heating, air conditioning or other 

system or appliance (other than a sump system including its related equipment 

and parts), that is located on the descried premises and contains water or steam. 

 Here, there is nothing on the record to establish, and the parties do not argue, that the wet 

rot in the warehouse was the result of or caused by a specified cause of loss. Likewise, there is 

nothing in the record to support that the damage was caused by flood. As already noted, the wet 

rot damage was caused by water intrusion through deteriorated rubber grommets in the roof. 

Accordingly, because the wet rot was not the result of a “specified cause of loss” and was not the 

result of flood, the “Additional Coverage” provision simply does not apply. 

 Similarly, third exception is not implicated. The rot in the trusses resulted in the roof and 

trusses to fall down a couple feet, which, importantly, is not one of the enumerated specified 

causes of loss. 

 Therefore, the wet rot and resulting damage is not covered under the policy because it is 

excluded under the general exclusion in section B.1.h and none of the exclusion’s exceptions 

applies. In brief, the policy plainly identifies the risks that EMC was willing to, and did contract 

to cover, and unfortunately for Michigan Battery, wet rot is not one of those risks. Indeed, this 

risk was specifically excluded from coverage, and had Michigan Battery desired to obtain 

coverage, it could have purchased a rider for this specific loss. Consequently, because EMC 

identified wet rot as a particular type of risk that is was unwilling to insure, Michigan Battery 

cannot recover under the policy. See Churchman, 440 Mich at 567 (“It is impossible to hold an 

insurance company liable for a risk it did not assume.”). And because this exclusion specifically 

precludes coverage, we need not address how any other exclusion or any other “additional 

coverage” in the policy applies. See id. (“[C]overage under a policy is lost if any exclusion 

within the policy applies to an insured’s particular claims.”); Brown v Farm Bureau Gen Ins Co 

of Mich, 273 Mich App 658, 661; 730 NW2d 518 (2007). 

 Accordingly, we affirm the trial court’s grant of summary disposition in favor of EMC. 

EMC, as the prevailing party, may tax costs pursuant to MCR 7.219. 

/s/ Henry William Saad 

/s/ Mark J. Cavanagh 

/s/ Karen M. Fort Hood