“Faulty workmanship” policy exclusion; Insurance policy interpretation; Hunt v. Drielick; Defining the phrase “direct physical loss”; Universal Image Prods., Inc. v. Chubb Corp. (ED MI); Radenbaugh v. Farm Bureau Gen. Ins. Co.; Reliance on foreign authority for the argument to limit the exclusion to authorized actions; Husband v. Lafayette Ins. Co. (LA App.); Home Sav. of Am. v. Continental Ins. Co. (CA App.); Dismissal for failure to preserve the mold; The trial court’s inherent power to sanction a party for failing to preserve evidence; Bloemendaal v. Town & Country Sports Ctr., Inc.; Express policy language making preserving samples of the mold for the defendant-insurer’s testing a condition precedent to recovery for remediation of the mold; Tenneco Inc. v. Amerisure Mut. Ins. Co.; Plaintiffs’ burden to show compliance with & the right to recover under the policy; Helmer v. Dearborn Nat’l Ins. Co.; General spoliation principles; Brenner v. Kolk; North v. Department of Mental Health

Rejecting the plaintiffs’ argument that “a covered loss occurred as a result of their contractor’s unauthorized removal of water-damaged material and that such a peril was not excluded by the faulty workmanship” exclusion in their homeowners’ policy, the court affirmed the trial court’s order granting the defendant-insurer summary disposition. During the demolition phase of a renovation project, “the contractor discovered water damage and what he believed to be mold.” Attributing the damage to improper roof installation and leaks, the “contractor executed an extensive demolition of what he said were the water-damaged portions of the home.” Plaintiffs filed a claim with defendant “for both mold and ‘over-demolition.’” When the adjuster inspected the home, “none of the alleged mold affected material was on-site.” The contractor “managed the material” and it “was disposed of after the claim was filed.” The policy stated that it covered “perils that cause ‘direct physical loss to property,’ absent an applicable exclusion.” Where the policy, as here, “does not define the phrase ‘direct physical loss,’” it is “consistent with Michigan law to define the phrase as indicating an ‘immediate or proximate cause, as distinct from one that is remote or incidental.’” The demolition “was done either due to the contractor’s error or his faulty workmanship, or due to the contractor correctly addressing faulty workmanship of the persons responsible for the roof and window installation. The contractor was not an unknown interloper. He was plaintiffs’ agent.” While they presented “evidence that he acted in error and without” their permission, even if true, “such action equates to faulty workmanship on his part and is excluded from recovery under the homeowners policy.” They offered “no Michigan authority to support their argument to limit the exclusion to authorized actions” and the foreign authority was not persuasive. The court also rejected their claim that the trial court erred in dismissing the case based on their failure to preserve evidence of the mold, noting that “express language in the policy made preserving samples of the mold for defendant’s testing a condition precedent to recovery for the remediation of the mold.”