Michael F. Schmidt Wins $10 Million Insurance Coverage Arbitration

Machining Enterprises, Inc. v Wausau Business Insurance Company, Oakland County Circuit Court number 04—056494—CK, claim by Machining Enterprises, Inc. for insurance coverage for underlying claims made against Machining Enterprises, Inc. (“MEI”) based on a General Motors recall, in which MEI sought in excess of $10,000,000 for indemnification and defense costs.  After the case pended in Oakland County Circuit Court for a year, the case was sent to binding arbitration.  After a week long arbitration hearing, the arbitrators ruled in a 2—1 written decision that Wausau had no duty to provide coverage or a defense to MEI for the underlying claims, that there was no “occurrence”, that there was no “property damage”, that coverage was barred by the “work/product” exclusions (k), (l), (m) and (n), that the only damage referred to was to MEI’s own product and for repair and replacement of MEI’s own product, that there was never any claim for “property damage” as defined by the policy, that MEI’s conduct in regard to Wausau’s investigation showed that MEI did not believe that the claims were covered and that MEI breached its obligation to cooperate and provide notice to Wausau regarding the underlying claims.  Following entry of the arbitration award, Wausau filed a motion to enter judgment on the award and MEI filed a motion to vacate the award.  After the parties submitted briefs and argued the motions, Judge Goldsmith entered his opinion and order granting Wausau’s motion to enter judgment on the arbitration award and denying MEI’s motion to vacate the arbitration award, holding that the arbitration panel correctly cited and applied controlling principles of insurance law and that the arbitrators did not refuse to hear material evidence submitted by MEI.