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### STATE OF MICHIGAN

COURT OF APPEALS

BROTHER CONSTRUCTION, L.L.C.,

Plaintiff/Counter Defendant, UNPUBLISHED September 1, 2016

v No. 323380 Ingham Circuit Court
BABUBHAI B. RATHOD and SHAILA B. RATHOD, LC No. 11-001253-CK

Defendants/Counter Plaintiffs/CrossPlaintiffs/Third-Party PlaintiffsAppellants,

v

ASSURANCE COMPANY OF AMERICA,

Defendant/Cross DefendantAppellee,

and

AL BOURDEAU INSURANCE SERVICES, INC.,

Defendant/Third-Party DefendantAppellee,

and

VIJAY RAJESH JOSHI, AUTO OWNERS INSURANCE COMPANY, d/b/a HOME OWNERS INSURANCE COMPANY, and MELTON INSURANCE SERVICES, d/b/a

MELTON MCFADDEN INSURANCE AGENCY,

Third-Party Defendants.-2- Before: S HAPIRO , P.J., and O’C ONNELL and W ILDER , JJ.

PER CURIAM

.

Plaintiff Brother Construction, L.L.C. (Brother) brought this action, involving claims of breach of contract and negligence against defendants, Babubhai B. Rathod and Shaila B. Rathod (the Rathods), Assurance Company of America (ACA), and Al Bourd eau Insurance Services, Inc. (the Bourdeau Agency). T he Rathods filed various counterc laims, cross-claims, and a thirdparty complaint. Following the circuit court’s resolution of t he parties’ motions for summary disposition, the circuit court entered an order dismissing with prejudice all claims between the
Rathods and Brother. The Rathods filed this app eal as of right . We affirm.

I. STATEMENT OF FACTS

This case arises from a fire that occurred during the construc tion of a home owned by the Rathods. In 2009, the Rathods hir ed Vijay Rajesh Joshi, the ow ner of Brother, to help with the construction and design of their new home in Okemos, Michigan. Brother obtained a builder’s risk insurance policy on behalf of Babubhai Rathod from Ernest Gaffner, an agent at the Bourdeau Agency. According to Joshi, Gaffner told him that the policy would cover the house until completion. Gaffner, however, denied making such a state ment.

The Bourdeau Agency procured the builder’s risk policy through ACA. The policy provided that the policy period was “ From : 09/09/2009 To : 09/09/2010” and that it was a “OneShot” policy. The policy’s endorsement regarding cancellation and renewal provided in part: “If we decide not to renew this policy, we will mail or deliver to the first Named Insured’s last mailing address known to us or our authorized agent written not ice of the nonrenewal not less than 30 days before the expiration date.”

Joshi testified that he never received a notice of cancellatio n of the policy from the Bourdeau Agency or a notice of nonrenewal from ACA. Babubhai R athod believed the policy would renew automatically or he would receive a discontinue not ice or a bill for the premium for the next year. It is undisputed that the Rathods never paid an other premium after the premium for the 2009-2010 policy.

In June 2010, Gaffner received a document noting the expiratio n date of the policy from ACA. The document provided: “The following ‘one shot’ Builders Risk Plan policies will be expiring. If renewal is needed, please issue the renewal endor sement . . . . If you do not renew the policy, the policy will expire on the expiration date indic ated below.” The document also listed Brother’s policy with an expiration date of September 9, 2010. Gaffner testified that, in the past, the insured w ould contact him if t he insured wanted t he policy renewed.

Rachele Holden, the Assistant Vice-President of Builder’s Risk for ACA, stated in her affidavit that builder’s risk policies are typically written fo r one year or less depending on the expected length of the construc tion period and they expire by t heir terms more than 80% of the time because the construction project is completed within a yea r. She further averred that a “one-shot” policy is a policy that “is one year unless there ar e affirmative steps taken by the-3- customer to renew coverage beyond the one-year term.” Holden a lso stated that no application
was sent to ACA to extend or r enew the policy at issue, althoug h ACA was willing to renew the policy.

The Rathods’ home was destroyed by a fire on January 28, 2011. At the time of the fire, the home was approximately 95% complete. On February 7, 2011, David Bourdeau, the owner of the Bourdeau Agency, emailed a representative of ACA request ing that ACA “make a determination to allow for a policy Reformation or Agency Accom modation [and] thus, honor this claim for the Policy Holder.” In a subsequent email sent to ACA on February 9, 2011, David Bourdeau explained that an employee copied an existing el ectronic file for Brother, which “[f]atally,” “had a one word not ation (‘Done’) attached designa ting the building as a completed project.” Accordingly, the policy was set up in the system as not needing to be renewed. In “reviewing the September 2010 expi ration/renewal list,” the emp loyee disregarded notices related to Brother’s policy, incorrectly accepting that renewal was not needed. David Bourdeau stated that, in December 2010, neither Gaffner nor Brother knew the policy was not renewed.
David Bourdeau further stated: “ Our expectation and intent was that [ACA] would continue until the home was completed. [ACA] would have renewed the policy; o therwise [ACA] would have sent a notice directly to the policy holder.” On February 16, 2011, ACA sent a letter to Brother and the Rathods indicating that A CA would not provide coverage for their claim because the loss occurred after the policy peri od ended, as the policy expired o n September 9, 2010.

II. PROCEDURAL HISTORY

Brother filed a complaint alleging breach of contract by the R athods and breach of the insurance contract by ACA. The Rathods filed counterclaims of breach of contract and negligence against Brother, a cross-claim of breach of contract against ACA, and a third-party complaint alleging negligence against the Bourdeau Agency. 1 Brother subsequently amended its complaint to add, inter alia , claims of negligence against ACA and the Bourdeau Agency. Th e Rathods also filed an amended complaint. Of relevance to this appeal, the Rathods’ amended complaint alleged negligence against the Bourdeau Agency for fa iling to inform Brother or the
Rathods that ACA did not int end to renew the policy.

The parties filed numerous motions for summary disposition. O f relevance to this appeal are (1) ACA’s, Brother’s, and the Rathods’ cross-motions for su mmary disposition on Brother’s and the Rathods’ breach of contract and negligence claims again st ACA; (2) the Bourdeau Agency’s and Brother’s cross-motions for summary disposition on Brother’s negligence claims against the Bourdeau Agency; and (3) the Bourdeau Agency’s and the Rathods’ cross-motions for summary disposition on the Rat hods’ negligence claim agains t the Bourdeau Agency.

1 The Rathods also asserted third-party claims against Joshi, Ho me-Owners Insurance Company, and Melton Insurance Services, Inc.-4- On December 9, 2013, the circuit court entered an opinion and order (1) granting ACA’s motion for summary disposition, (2) denying in part the Bourdea u Agency’s motion, 2 (3) denying Brother’s motion for summary disposition, and (4) denyi ng the Rathods’ motion for summary disposition. First, rega rding Brother’s and the Rathod s’ claim that ACA breached the contract by failing to provide a notice of nonrenewal of the po licy to Brother, the circuit court held that the plain language of the nonrenewal endorsement only required a notice of nonrenewal
when ACA “decides” not to renew a policy and there was no evide nce that ACA made a decision not to renew Brother’s policy. T he circuit court concluded tha t the June 8, 2010 document sent to the Bourdeau Agency demonstrated that ACA was willing to ren ew the policy and that the February 9, 2011 email from the Bo urdeau Agency also supported this interpretation. The circuit court rejected Brother’s contention that notice was required if ACA was going to allow the policy to expire without automa tically renewing the policy, fin ding instead that t he policy did not require automatic renewal absent notice, and that Brother did n ot apply for a renewal policy or pay any premium in order to accept an offer of renewal.

The circuit court next concluded that genuine issues of materia l fact precluded summary disposition of Brother’s claim o f negligence against the Bourde au Agency for its alleged failure to procure the requested insurance policy, and of alleged failu re to inform Brother that coverage
would not last until the end of construction. Specifically, th e circuit court found that the evidence that the Bourdeau Agency believed the policy would rem ain in effect after expiration because construction had not yet been completed created a genui ne issue of material fact regarding whether the Bourdeau Agency procured the coverage req uested by Brother. The
circuit court also found the exis tence of a genuine issue of ma terial fact regarding whether the Bourdeau Agency misrepresented the nature of Brother’s coverage or promised Brother that coverage would extend until the completion of construction, the reby assuming an additional duty to advise. Finally, the circuit court found there was a questi on of fact regarding whether the Bourdeau Agency’s notation of “Done” caused the Bourdeau Agency not to advise Brother that it would need to renew its policy in order to obtain the covera ge that both Brother and the Bourdeau Agency intended. Accordingly, the circuit court denie d summary disposition on this
claim.

Lastly, regarding the Rathods’ claim that the Bourdeau Agency owes them a duty as foreseeable third-party beneficia ries of the policy with Brothe r, and that this duty was breached by failing to advise Brother of ACA’s intent not to renew the p olicy, the circuit court found the Rathods’ argument unpersuasive. The circuit court held that th e Bourdeau Agency made no promise to the Rathods that established a special relationship and duty to advise; therefore, the Rathods could not establish an independent duty. The circuit c ourt also found that the foreseeability of harm to the R athods due to expiration of cove rage was insufficient to establish a duty on which a claim of negligence could be based. The circui t court stated that, instead, the Rathods’ claim was pr operly based on the alleged breach of cont ract by Brother, an d that Brother

2 The circuit court granted the B ourdeau Agency’s motion for sum mary disposition on Brother’s breach of fiduciary duty claim.-5- may prove that the Bourdeau Agency is liable by proving the exi stence of a special relationship and breach of the agency’s duty to advise.

The Rathods filed a motion for re consideration related to the c laims against ACA, arguing that despite the circuit court’s ruling that the policy did not require notice of nonrenewal before expiration, the circuit court erred by failing to addres s the Rathods’ argument that ACA was required to send a renewal notice.

The circuit court entered an opinion and order denying the Rath ods’ motion for reconsideration as meritless, holding that “the absence of any notice of nonrenewal creates an implied offer to renew that the insured can accept by paying th e required premium before the policy’s expiration; it does not require any notice of the impl ied offer.” The circuit court further found that no provision of the ACA policy required a “notice of renewal” to be sent before the end of the coverage period or that coverage would be automatica lly continued without such
notice.

On March 13, 2014, the circuit cour t entered a stipulation and order of dismissal of Brother’s claims against the Bourdeau Agency. 3 On August 6, 2014, the circuit court entered an order, after stipulation of Brother and the Rathods, dismissing with prejudice all claims between Brother and the Rathods. The stipulation and order was conting ent on the Rathods’ compliance with a settlement agreem ent effective July 1, 2014. 4 This appeal ensued.

III. ANALYSIS

The Rathods first contend that ACA breached the insurance poli cy by failing to send
written notice of nonrenewal or a r enewal certificate. We disa gree.

The circuit court’s decision to grant summary disposition unde r MCR 2.116(C)(10) is
reviewed de novo. McLean v Dearborn , 302 Mich App 68, 72; 836 NW2d 916 (2013). “In reviewing a motion under MCR 2.116(C)(10), the trial court cons iders affidavits, pleadings, depositions, admissions, and other evidence introduced by the p arties to determine whether no genuine issue of material fact exists and the moving party is e ntitled to judgment as a matter of
law.” Id . at 73. The circuit court must consider the evidence submitte d “in the light most favorable to the opposing party.” Id . (citation and quotation marks omitted).

We also review de novo “[t]he p roper interpretation and applic ation of an insurance policy.” Wells Fargo Bank, NA v Null , 304 Mich App 508, 518; 847 NW2d 657 (2014) (citation and quotations marks omitted).

3 The order also dismissed Brother’s claims against Gaffner, whi ch were brought in a separate
action that was consolidat ed with this action below.

4 According to the Rathods’ brief on appeal, Brother assigned it s claims against ACA to the
Rathods.-6- “An insurance policy is much the same as any other contract. It is an agreement between the parties i n which a court will determine w hat the agreement
was and effectuate the intent of the parties.” “[I]nsurance po lic[i]es are subject to the same contract construction principles that apply to any oth er species of

contract.” “ ‘The primary goal in the constr uction or interpretation of a contract is to honor the intent of the parties[.]’ ” “[T]he language of the parties’ contract is the best way to determine wh at the parties intended.”

Accordingly, an insurance contra ct should be read as a whole a nd meaning should be given to all terms. The policy application, decl arations page of policy, and the policy itself construed together constitute the contrac t. The contractual language is to be given its ordinary and plain meaning. An insurance contract must be construed so as to give effect to every word, clause, a nd phrase, and a construction should be avoided that would render any part of th e contract surplusage or nugatory. “[U]nless a contract provision violates law or one of the traditional [contract] defenses to the enforceability of a cont ract applies, a court must construe and apply unambigu ous contract provisions as writ ten.” “[T]he judiciary is without authority to modify unambiguous contracts or rebalance the contractual equities struck by the contracting parties because fundamental principles of contract law pr eclude such subjective post hoc ju dicial determinations of ‘reasonableness’ as a basis upon which courts may refuse to enforce unambiguous contractual provisions.” A provision in a contract is ambiguous if it irreconcilably conflicts with another provision , or when it is equally susceptible to more than a single meaning. [ Royal Prop Group, LLC v Prime Ins Syndicate, Inc , 267 Mich App 708, 714-715; 706 NW2d 426 (2005) (citations omitted; second aleration added).]

The relevant policy language is contained in the endorsement r egarding cancellation and renewal, which provided in part: “If we decide not to renew thi s policy, we will mail or deliver to the first Named Insured’s last mailing address known to us or o ur authorized agent written notice
of the nonrenewal not less than 30 days before the expiration d ate.” The plain and unambiguous language of the endorsement supports the circuit court’s interp retation that a notice of nonrenewal was only required when ACA made a decision not to re new the policy. Although the policy does not define any of the relevant words of the end orsement, the endorsement language is not rendered ambiguous and such terms must be inter preted in accordance with their commonly used meanings. Heath v State Farm Mut Auto Ins Co , 255 Mich App 217, 218-219; 659 NW2d 698 (2002). 5 “Decide” is defined, in relevant part, as “to make a final c hoice or judgment about” and “to sele ct as a course of action.” Merriam-Webster’s Co llegiate Dictionary

5 Because the policy was not ambiguous, the Rathods’ or any part icular individual’s reasonable expectation is irrelevant. See Wilkie v Auto-Owners Ins Co , 469 Mich 41, 62; 664 NW2d 776 (2003) (“[T]he rule of reasonable expectations clearly has no a pplication when interpreting an unambiguous contract because a policyholder cannot be said to h ave reasonably expected something different from the cl ear language of the contract.”).-7- (2014). Accordingly, a notice of nonrenewal is only required t o be sent when ACA chooses or selects not to renew the policy. While the Rathods argue that the def initions of “nonrenew” do not imply any particular reason for the nonrenewal and, therefo re, include nonrenewal by expiration, the term “decide” implies a choice by the insurer. The circuit court properly found
that a notice of nonrenewal is not required when the policy is going to expire and ACA is willing to renew the policy. In this case, there was evidence that ACA was willing to renew the policy. The list sent by ACA to Gaffner expressly stated: “If renewal i s needed, please issue the renewal
endorsement . . . .” Holden al so averred that ACA was willing to renew the policy. The Rathods have failed to present any evidence that ACA was not willing to renew. Moreover, the circuit court properly found that the pla in language of the policy did not require that ACA to provide a
notice of renewal.

The Rathods contend that the ins urer has a duty to provide not ice of nonrenewal if the policy is to nonrenew by expiration. We disagree. In Slaughter , 167 Mich App at 403, the
insurer sent its insureds a not ice of cancellation, including a notice of intent not to renew, but before the notice of cancellation became effective, the insurer reinstated the policy. Id. at 404. Finding no statute governing nonre newal, the Court looked to th e provisions of the policy at issue, which included a nonrenewal clause that provided: “Non- Renewal: If the Company elects not to renew this policy, it shall mail to the insured named in item 1 of the declarations at the address shown in this policy, by first class mail, a written no tice of non-renewal not less than 20 days prior to the expiration date.” Id . This Court concluded that the reinstatement of the policy obligated the insurer to send another notice of nonrenewal in o rder to bring the policy to an end on its expiration date. Id . “[W]hen [the insurer] reinstated the policy after cancelling it (or sending notice of nonrenewal) it be came obligated by its own ag reement to again send notice of
its intent either to cancel or not to renew.” Id . at 405. The Court further concluded that the failure to give the policy-manda ted notice resulted in renewal of the policy. Id . at 405-406. Finally, the Court concluded that even if there was any merit t o the insurer’s “after-the-fact expression of its intent” to rene w the policy, there was insuff icient evidence to support it. Id . at
406.

Given that the insurer in Slaughter sent a notice of cancellation and then reinstated the policy, the facts in Slaughter are distinguishable from the facts in this case. 6 The Slaughter Court suggested both that the rei nstatement in that case obliga ted the insurer to send another notice of nonrenewal, and that the insurer “became obligated by its own agreement to again send
notice.” Id . at 405. It is unclear, therefore, whether Slaughter concluded that notice of nonrenewal was required based on the language of the policy alo ne or whether the fact that the policy was reinstated after cance llation was relevant. Nonethe less, because there was no
evidence in Slaughter of the insurer’s willingness to renew the policy , Slaughter did not decide
whether notice of nonrenewal woul d have been required if the in surer had been willing to renew the policy. In this case, however, there was evidence that ACA was willing to renew the policy.

6 Because Slaughter was decided before November 1, 1990, we are not bound to follo w it, see MCR 7.215(J), but we nevertheless analyze Slaughter here becase it’s facts and holding are instructive as applied in the instant matter.-8- Therefore, under the plain langua ge of the endorsement, a notic e of nonrenewal was not required.

The circuit court also properly rejected the Rathods’ argument that ACA was required to
send them a notice of renewal. While not specifically addressi ng whether notices of renewal were required, this Court’s decision in McCormic v Auto Club Ins Ass’n , 202 Mich App 233, 239-240; 507 NW2d 741 (1993), supports the conclusion that term ination of a policy is automatic at the end of the policy term. The nonrenewal provis ion in that case provided: “We may decline to renew this policy. If we do, we will mail notic e of nonrenewal to the Principal Named Insured at the address last known to us at least 30 days before the end of the policy

term.” Id . at 236. The Court concluded th at this provision was “clear a nd unambiguous regarding nonrenewal of the policy at the option of the insurer or the insured. Failure by the insured to pay the required rene wal premium means that the insu red declined the insurer’s offer of renewal, and the policy autom atically terminated at the end of the policy term.” Id . at 239- 240. The Court further found that although renewal notices wer e sent to the plaintiffs, there was “no suggestion that the defendant waived its right to automatic termination by the sending of the notices offering renewal options.” Id . at 240. Here, there is no dis pute that neither the Rathods nor Brother paid a renewal premium, and, therefore, they declin ed ACA’s implied automatic
offer to renew that was extended absent a notice of nonrenewal. In conclusion, the circuit court correctly held that ACA was not required to provide notice of r enewal or nonrenewal. Additionally, because ACA lacked any duty to send notice of exp iration or nonrenewal, it also lacked a duty to discharge to the Bourdeau Agency and ACA is no t liable for the Bourdeau Agency’s alleged failure to provide such notice. Thus, the cir cuit court properly granted summary disposition in favor of ACA.

The Rathods also contend that the circuit court erred in rulin g that they were not foreseeable third-party beneficiaries of Brother’s direction to the Bourdeau Agency to provide a policy that would cover the enti re period of con struction. We disagree.

As discussed above, the circuit court granted summary disposit ion on the Rathods’ claim that the Bourdeau Agency owed t hem a duty as foreseeable third- party beneficiarie s of the policy with Brother and that this duty was breached by failing to advi se Brother of ACA’s intent not to renew the policy. The circuit court found that the foreseeabil ity of harm to the Rathods due to expiration of coverage was insufficient to establish a duty on which a claim of negligence could
be based.

The Rathods’ argument on appeal, however, that they were fores eeable third-party beneficiaries of Brother’s direction to the Bourdeau Agency to provide a policy that would cover the entire period of constructi on, differs from the claim made in their complaint and actually ruled on by the circuit court. Thus, we decline to address thi s question which the trial court also had no obligation to address. See MCR 2.116(G)(4) (“A motion u nder subrule (C)(10)

must specifically identify the issues as to which the moving party believes ther e is no genuine issue as to any material fact.”) (emphasis added); Barnard Mfg Co, Inc v Gates Performance Engineering, Inc , 285 Mich App 362, 377; 775 NW2d 618 (2009) (noting that the m oving party bears the burdens of proof and persuasion regarding a motion fo r summary disposition and that
there is no “burden on the trial court to scour the lower court record in search of” grounds for granting or denying such a motion); Smit v State Farm Mut Auto Ins Co , 207 Mich App 674, 685;-9- 525 NW2d 528 (1994) (“As a general rule, this Court declines to consider an issue that was not decided by the trial court.”).

Affirmed. ACA and the Bourdeau Agency, being the prevailing p arties, may tax costs pursuant to MCR 7.219.

/s/ Douglas B. Shapiro
/s/ Peter D. O’Connell
/s/ Kurtis T. Wilder