v. Genesee County Board of Commissioners; Deborah Cherry

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 22a0250p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
SAFETY SPECIALTY INSURANCE COMPANY; SAFETY
NATIONAL CASUALTY COMPANY,
Plaintiffs-Appellees (22-1189),
Plaintiffs-Appellants (22-1196),
v.
GENESEE COUNTY BOARD OF COMMISSIONERS;
DEBORAH CHERRY,
Defendants-Appellants (22-1189),
THOMAS A. FOX; TAMMY PUCHLAK, as Trustee of the
Walter Puchlak Revocable Trust Agreement dated
February 24, 2010,
Defendants-Appellees (22-1196).
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Nos. 22-1189/1196
Appeal from the United States District Court for the Eastern District of Michigan at Bay City.
No. 1:20-cv-13290—Thomas L. Ludington, District Judge.
Argued: October 19, 2022
Decided and Filed: November 21, 2022
Before: SUTTON, Chief Judge; BOGGS and KETHLEDGE, Circuit Judges.
_________________
COUNSEL
ARGUED: Jeffrey C. Gerish, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Genesee
County and Deborah Cherry. John D. Hackett, CASSIDAY SCHADE, LLP, Chicago, Illinois,
for Safety Specialty Insurance Company and Safety National Casualty Company. Philip L.
Ellison, OUTSIDE LEGAL COUNSEL PLC, Hemlock, Michigan, for Thomas Fox and Tammy
Puchlack. ON BRIEF: Jeffrey C. Gerish, PLUNKETT COONEY, Bloomfield Hills, Michigan,
for Genesee County and Deborah Cherry. John D. Hackett, Adam H. McCabe, CASSIDAY
SCHADE, LLP, Chicago, Illinois, Richard C.O. Rezie, GALLAGHER SHARP LLP, Cleveland,
Ohio, for Safety Specialty Insurance Company and Safety National Casualty Company.
Philip L. Ellison, OUTSIDE LEGAL COUNSEL PLC, Hemlock, Michigan, for Thomas Fox and
Tammy Puchlack.
>

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_________________
OPINION
_________________
BOGGS, Circuit Judge. This insurance-coverage dispute springs from two class-action
lawsuits against several Michigan counties that retained surplus proceeds from the tax-
foreclosure sales of private property. Genesee County was named as a defendant in the lawsuits
and claimed coverage under two liability-insurance policies. The County’s insurers, Safety
National Casualty Company and Safety Specialty Insurance Company (together, “Safety”),
denied the claim and filed this declaratory-judgment action in federal court against both the
County and the underlying class representatives. The district court agreed with Safety that it has
no duty to defend or indemnify the County from the lawsuits, but dismissed Safety’s case against
the class representatives for lack of federal jurisdiction. We affirm.
I. BACKGROUND
A. The Fox and Puchlak Lawsuits
In November 2018, Tammy Puchlak filed a class-action complaint in Michigan state
court against five Michigan counties and their treasurers, including Genesee County and
Deborah Cherry. She alleges that St. Clair County seized trust property to satisfy a $9,600
property-tax delinquency, sold the property at auction for $150,000—far below its fair-market
value—and then kept the $140,400 difference. Seeking to represent a class of property owners
who had their property seized and sold without receiving the surplus proceeds, Puchlak asserts
that these counties committed takings without just compensation or imposed excessive fines in
violation of the Michigan and federal constitutions.
In June 2019, Thomas A. Fox filed a class-action complaint in federal district court
against fourteen Michigan counties and their treasurers. He later amended his complaint to add
thirteen more counties and their treasurers, including Genesee County and Deborah Cherry. Fox
claims that Gratiot County seized his property to satisfy a property-tax delinquency of $3,091.23,
sold the property at auction for $25,500.00, then kept the $22,408.77 difference between what

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Fox owed and what Gratiot County received. Like Puchlak, Fox asserts that the counties named
in his lawsuit committed takings without just compensation and imposed excessive fines; he also
alleges unjust enrichment and violations of substantive and procedural due process. In October
2020, the district court certified Fox’s class. Fox v. County of Saginaw, 2020 WL 6118487, at
*11 (E.D. Mich. 2020).
B. The Insurance Policies
In 2018, Safety issued a Public Officials and Employment Practices Liability policy
(“PO&EPL Policy”) to Genesee County. The insurance policy is subject to a $2,000,000
liability limit and a $350,000 retention. Under the policy, Safety agreed to defend and indemnify
Genesee County and its employees from covered claims alleging certain “wrongful acts.” The
policy includes two exclusions, among others. One precludes coverage for claims “[a]rising out
of . . . [t]ax collection, or the improper administration of taxes or loss that reflects any tax
obligation.” The second excludes claims “[a]rising out of eminent domain, condemnation,
inverse condemnation, temporary or permanent taking, adverse possession, or dedication by
adverse use.”
Safety also issued Genesee County a separate Commercial General Liability (“CGL
Policy”) to cover liability for bodily injury and medical expenses, property damage, and
“personal and advertising injury.”
C. Procedural History
Genesee County claimed coverage from Safety for Fox’s and Puchlak’s lawsuits, which
Safety denied. Safety then filed a declaratory-judgment action in federal court against Genesee
County, Fox, and Puchlak, seeking a ruling that, under its insurance policies, it owes no duty to
defend Genesee County from the lawsuits or to indemnify it from any subsequent damages.
Genesee County and Cherry counterclaimed, seeking both a declaration that they are covered
under the policies and damages for a breach of contract based on Safety’s refusal to defend them.
The parties filed cross-motions for summary judgment, with Fox and Puchlak arguing separately
that Safety lacked standing to sue them.

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The district court granted two motions for summary judgment: Fox and Puchlak’s motion
against Safety, and Safety’s motion against Genesee County. The court found no Article III case
or controversy between Safety and Fox and Puchlak. The court acknowledged that much of the
relevant caselaw suggests that, in coverage disputes, “the insurer typically has standing to pursue
a declaration against the injured party.” However, the court distinguished this case on the
ground that, here, “the alleged wrongdoers are not the [County] Defendants but two nonparties—
Gratiot County and St. Clair County.” Fox and Puchlak had joined Genesee County in their
lawsuits only for class-representation purposes. Noting the uncertainty of 1) whether Fox and
Puchlak would prevail in their lawsuits and 2) what damages, if any, they could recover from
Genesee County, the court found that no “substantial controversy” of “sufficient immediacy and
reality” exists between Safety and Fox and Puchlak. Safety timely appealed.
The court also held that Safety owes Genesee County no duty to defend under either
insurance policy. The court held that the CGL Policy does not cover the Fox and Puchlak
lawsuits. The court also assumed that the PO&EPL Policy arguably covers the lawsuits and their
indemnification but held that two of the policy’s exclusions applied: one for claims arising out of
tax collection, another for claims arising out of condemnation, inverse condemnation, or taking.
Genesee County timely appealed.
II. ANALYSIS
This court reviews de novo a district court’s grant of summary judgment. Bondex Int’l,
Inc. v. Hartford Accident & Indem. Co., 667 F.3d 669, 676 (6th Cir. 2011). Summary judgment
is proper “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). A genuine dispute of
material fact exists if “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court does
not weigh evidence but rather “view[s] [the evidence] in the light most favorable to the party
opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)). This
standard does not change when the parties present cross-motions for summary judgment;

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we evaluate each motion on its own merits. Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503,
506 (6th Cir. 2003).
Below, we address Fox and Puchlak’s summary-judgment motion against Safety, then
turn to Safety’s summary-judgment motion against Genesee County.
A. Article III Case or Controversy
1. Legal Framework
The U.S. Constitution limits the jurisdiction of federal courts to “Cases” and
“Controversies.” U.S. Const. art. III, § 2. Federal courts cannot issue advisory opinions. Arnett
v. Myers, 281 F.3d 552, 562 (6th Cir. 2002). Article III’s case-or-controversy requirement
allows federal courts to resolve concrete disputes, but prohibits them from passing “judgments
on theoretical disputes that may or may not materialize.” Saginaw County v. STAT Emergency
Med. Servs. Inc., 946 F.3d 951, 954 (6th Cir. 2020) (citing Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 101–03 (1998)).
The Supreme Court has delineated these limits with a number of justiciability doctrines,
including standing and ripeness. See Nat’l Rifle Ass’n of Am. v. Magaw, 132 F.3d 272, 279–80
(6th Cir. 1997). To have standing, plaintiffs “must allege (1) an injury in fact (2) that’s traceable
to the defendant’s conduct and (3) that the courts can redress.” Gerber v. Herskovitz, 14 F.4th
500, 505 (6th Cir. 2021) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 559–61 (1992)).
Plaintiffs “must show an imminent or actual injury before [entering] the federal courts.” STAT
Emergency, 946 F.3d at 954. They “cannot sue simply to avoid a ‘possible future injury.’” Id. at
954–55 (quoting Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013)). Suits based solely on
the “mere risk of future harm” cannot establish an injury sufficient for standing. See TransUnion
LLC v. Ramirez, 141 S. Ct. 2190, 2211 (2021). Moreover, a claim is not ripe if it turns on
“contingent future events that may not occur as anticipated, or indeed may not occur at all.”
Trump v. New York, 141 S. Ct. 530, 535 (2020) (quoting Texas v. United States, 523 U.S. 296,
300 (1998)); see Bigelow v. Mich. Dep’t of Nat. Res., 970 F.2d 154, 157 (6th Cir. 1992).
“Ripeness separates those matters that are premature because the injury is speculative and may
never occur from those that are appropriate for the court’s review.” Magaw, 132 F.3d at 280.

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The Declaratory Judgment Act “does not alter these rules or otherwise enable federal
courts to deliver ‘an expression of opinion’ about the validity of laws.” STAT Emergency,
946 F.3d at 954 (quoting Muskrat v. United States, 219 U.S. 346, 362 (1911)). The Act offers
only an “alternative remedy—a declaratory judgment—for existing cases or controversies.” Ibid.
When a party sues for declaratory relief, “he must satisfy the prerequisites of the Declaratory
Judgment Act and Article III’s standing baseline.” Ibid. In particular, he must show
“a substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.” Ibid. (quoting
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)); see Friends of Tims Ford v.
Tenn. Valley Auth., 585 F.3d 955, 971 (6th Cir. 2009) (explaining that a declaratory judgment
must “affect[] the behavior of the defendant towards the plaintiff” (quoting Hewitt v. Helms,
482 U.S. 755, 761 (1987))). The difference between an abstract question and a controversy
suitable for judgment is largely a one of degree. Maryland Cas. Co. v. Pac. Coal & Oil Co.,
312 U.S. 270, 273 (1941).
2. Analysis
In pursuing its declaratory judgment, Safety seeks to redress possible injuries that could
stem from an improper invocation of two of its duties as an insurer: the duty to defend and the
duty to indemnify. See Farmers & Merchants Mut. Fire Ins. Co. v. LeMire, 434 N.W.2d 253,
255 (Mich. Ct. App. 1988). The former requires insurers to pay for the insured’s legal counsel
and litigation costs when the policy arguably covers the alleged liability; the latter requires them
to pay the injured party any damages awarded against the insured for the covered loss. Ibid.
With respect to Fox and Puchlak, each claim fails to satisfy the requirements of Article III and
the Declaratory Judgment Act. The duty to defend is ripe for adjudication between Safety and
Genesee County, but has little to do with Fox or Puchlak. The duty to indemnify, to the extent
that it reflects a controversy between Safety and Fox and Puchlak, is not immediate enough to
warrant declaratory judgment.
Duty to Defend. Safety cannot litigate its duty to defend against Fox and Puchlak
because this duty does not involve them. The duty to defend is a “right affecting only the

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obligations of the insurer vis-a-vis the insured.” Allstate Ins. Co. v. Wayne County, 760 F.2d
689, 695 (6th Cir. 1985). Fox and Puchlak have not asked Safety to “prosecute or defend” them
in any lawsuit. Safety can properly sue Genesee County over this duty, and did, but Fox and
Puchlak have no stake in who wins that fight. To the extent that they have any interest in
Safety’s duty to defend Genesee County, it would seem to align with Safety’s. Fox and Puchlak
argue that they would “strategically prefer that there be no duty to defend” so that Genesee
County would stop the “current foot-dragging in the [underlying] litigation.” From its duty to
defend Genesee County, then, Safety cannot allege an “injury in fact . . . traceable” to Fox and
Puchlak’s conduct. Gerber, 14 F.4th at 505 (citing Lujan, 504 U.S. at 559–61).
Safety rejects the district court’s characterization of Fox and Puchlak as “complete
strangers” to the coverage dispute between Safety and Genesee County. It asserts that, for
Article III purposes, Fox and Puchlak are injured parties. We disagree. As discussed above, Fox
and Puchlak are not signatories to the insurance contracts between Safety and Genesee County.
Were we to declare a duty to defend Genesee County, that judgment would not affect the
behavior of Fox and Puchlak towards Safety. Friends of Tims Ford, 585 F.3d at 971. While a
dispute exists between Safety and Genesee County over Safety’s duty to defend, it has no
connection to Fox and Puchlak.
Safety argues that it included Fox and Puchlak in its lawsuit to avoid relitigating its
coverage obligations. Michigan law, notes Safety, requires it to include all “interested parties” in
a declaratory-judgment action. See Cincinnati Ins. Co. v. Vill. Plaza Holdings, LLC, 2020 WL
4200978, at *4 (E.D. Mich. July 22, 2020). Failing to add Fox and Puchlak means that any no-
coverage judgment would lack preclusive effect against the other members of their putative
classes. See Allstate Ins. Co. v. Hayes, 499 N.W.2d 743, 748 n.12 (Mich. 1993).
We share the district court’s conclusion that Fox and Puchlak are not “interested parties”
to whom Michigan law applies in this context. Even if Fox and Puchlak were interested parties,
Safety’s reliance on Michigan caselaw is misplaced. Those decisions concern the preclusive
effect of a declaratory-judgment action; they do not speak to federal courts’ jurisdiction over the
parties in these actions. While Hayes may explain Safety’s interest in joining Fox and Puchlak

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as parties to its lawsuit, it does not grant this court the jurisdiction to hear the dispute between
them. No doubt Safety has strong reasons for seeking finality from a binding judgment against
Fox, Puchlak, and their respective classes. But the “practical value” of its action “cannot
overcome” Article III’s requirements. Trustgard Ins. Co. v. Collins, 942 F.3d 195, 201 (4th Cir.
2019).
Duty to Indemnify. Even if Safety could seek declaratory relief against Fox and Puchlak
over its duty to indemnify, ripeness would keep us from adjudicating this dispute. Fox’s and
Puchlak’s lawsuits are both pending. For Safety to indemnify Fox and Puchlak, several events
must occur. First, Fox and Puchlak must secure judgments against Genesee County. Second,
Fox and Puchlak must establish damages against Genesee County; merely winning their claim or
establishing damages against other counties is not enough. Even then, Genesee County must
refuse, or declare itself unable, to satisfy any judgment before Fox and Puchlak could ask Safety
to pay them for their injuries. Although our recent decision in Hall v. Meisner, 51 F.4th 185 (6th
Cir. 2022), may signal merit to Fox’s and Puchlak’s lawsuits, the strength of their underlying
claims is but one link in a chain of “contingent future events” that illustrates how resolving
Safety’s duty to pay them damages would prove a costly and time-consuming hypothetical.
Trump, 141 S. Ct. at 535.
Safety argues that the Supreme Court’s decision in Maryland Casualty demands a
contrary holding. There, an insurer sued an insured and the injured party for a declaratory
judgment that it had no duty to defend or indemnify the insured for the injured party’s pending
lawsuit in state court. Maryland Cas., 312 U.S. at 271–72. The Court held that a “substantial
controversy” of “sufficient immediacy and reality” existed under the Declaratory Judgment Act.
Id. at 273.
On its face, Maryland Casualty would seem to govern this case. The Maryland Casualty
Court rested its holding on three factors: Ohio law allowed the injured party to proceed against
the insurer to satisfy any final judgment unpaid by the insured party after thirty days; the injured
party could prevent the policy from lapsing by performing its notice conditions; and different
courts could reach conflicting interpretations of the policy. Id. at 273–74. Here, Michigan law

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would allow Fox and Puchlak to proceed against Safety to satisfy an unpaid judgment against
Genesee County. Mich. Comp. L. § 500.3006. The PO&EPL Policy suggests that Fox and
Puchlak do not need to prevent its lapse before collecting on a judgment. And Puchlak’s lawsuit
awaits resolution in a state court, which could eventually reach an opposite interpretation of
Genesee County’s PO&EPL Policy.
However, unlike the insured party in Maryland Casualty, Genesee County is not the
“alleged tortfeasor” that supposedly injured Fox and Puchlak. That distinction belongs to two
nonparties, Gratiot County and St. Clair County, where Fox and Puchlak live. Even though the
Sixth Circuit has previously allowed an insurer to bring a declaratory-judgment action against
both the insured and injured parties, it has recognized that often the “real dispute is between the
injured third party and the insurance company, not between the injured and an often-times
impecunious insured.” Allstate Ins. Co. v. Green, 825 F.2d 1061, 1064 (6th Cir. 1987) (citing 6A
Moore’s Federal Practice ¶ 57.19 (2d ed. 1983)); see ibid. (citing Maryland Cas., 312 U.S. at
274). Here, no real dispute exists—at least, for now—between Safety and Fox and Puchlak. The
possibility that Fox and Puchlak might look to Safety for indemnification is more attenuated than
it was for the parties in Maryland Casualty. Fox and Puchlak have not asked Safety to pay them
for their injuries. As the district court noted, “[b]y all appearances, [Fox and Puchlak] joined
[Genesee County] in the underlying lawsuits for class-representation purposes only.” Safety
cannot derive from this arrangement a dispute with Fox and Puchlak, who, as the purportedly
injured parties, are adverse to Genesee County “only insofar as they have different stakes in the
outcome of the underlying lawsuits.” Even if Fox and Puchlak prevail in their lawsuits, Genesee
County might not be held liable for damages. While ripeness is largely a question of degree,
Maryland Cas., 312 U.S. at 273, we require more certainty of the necessity of indemnification
before allowing Safety to hale Fox and Puchlak into federal court.
Safety also contends that this case is ripe under Sixth Circuit precedent. The Sixth
Circuit considers several factors when deciding whether the issues presented are ripe for review.
United Steelworkers of America, Local 2116 v. Cyclops Corp., 860 F.2d 189, 194 (6th Cir.
1988). First is the hardship that “refusing to consider [Safety’s] prospective claims would
impose upon the parties.” Id. at 195. Second is the likelihood that the harm alleged by Safety

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“will ever come to pass.” Id. at 194. Third is whether the factual record is developed enough for
a fair adjudication on the merits of the parties’ claims. Id. at 195. Safety argues that each of
these factors tilts towards ripeness.
We disagree. On the first factor, Safety argues that “insulat[ing] Fox and Puchlak (and
the class members they represent)” from a coverage determination would leave Safety vulnerable
to “multiple declaratory judgment actions” from Fox’s and Puchlak’s class members and expose
it to the risk of “inconsistent coverage rulings.” Had Safety sought its judgment in state court, it
may have been able to join Fox and Puchlak as parties and secure a binding judgment without
running into the limits of Article III. On the second factor, Safety notes that Fox and Puchlak
have filed class-action lawsuits, for which Genesee County claims coverage and seeks an
immediate defense from Safety. As discussed above, to the extent that the duty to defend reflects
immediate harm, it does not involve Fox and Puchlak. Meanwhile, harm from Safety’s duty to
indemnify is less likely to occur. Fox and Puchlak must prevail in their lawsuits against Genesee
County; Genesee County must be held liable to them for damages; and Genesee County must
prove unwilling or unable to satisfy any judgment before Fox and Puchlak can ask Safety to
indemnify them. On the third factor, Safety argues that the factual record is sufficiently
developed and that Fox and Puchlak had an opportunity to weigh in. We agree with Safety on
this point. On balance, however, Safety’s duty to indemnify is not ripe for adjudication between
Safety and Fox and Puchlak.
Because Safety lacks standing to sue Fox and Puchlak over its duty to defend and its
claim for the duty to indemnify lacks ripeness, we affirm the district court’s holding that no
substantial controversy of sufficient immediacy and reality exists between Safety and Fox and
Puchlak.
B. The PO&EPL Policy Exclusions
1. Interpretation of Insurance Contracts Under Michigan Law
We focus here on the insurer’s duty to defend, which is broader under Michigan law than
its duty to indemnify. Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 550 N.W.2d 475, 481
(Mich. 1996). If the allegations of a third party against an insured party “even arguably come

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within the policy coverage, the insurer must provide a defense . . . even where the claim may be
groundless or frivolous.” Ibid. Even if a policy excludes some claims, the duty to defend applies
“if there are any theories of recovery that fall within the policy.” Protective Nat’l Ins. Co. v. City
of Woodhaven, 476 N.W.2d 374, 376 (Mich. 1991) (quoting Detroit Edison Co. v. Mich. Mut.
Ins. Co., 301 N.W.2d 832, 835 (Mich. Ct. App. 1981)). But “the duty to defend is not an
unlimited one,” and insurers are not required to defend “against claims for damage expressly
excluded from policy coverage.” Meridian Mut. Ins. Co. v. Hunt, 425 N.W.2d 111, 114 (Mich.
Ct. App. 1988).
In Michigan, the interpretation of an insurance policy is a question of law that a court can
resolve at summary judgment. See Henderson v. State Farm Fire & Cas. Co., 596 N.W.2d 190,
193 (Mich. 1999); see also B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 595 (6th Cir.
2001). The court interprets insurance contracts in two steps: it first determines coverage under
the general insurance agreement, then it decides whether an exclusion applies to negate
coverage. Auto-Owners Ins. Co. v. Harrington, 565 N.W.2d 839, 841 (Mich. 1997).
While the burden of proving coverage rests on the insured party, the insurer bears the
burden of proving that an exclusion precludes coverage. See Pioneer State Mut. Ins. Co. v.
Dells, 836 N.W.2d 257, 263 (Mich. Ct. App. 2013); Am. Tooling Ctr., Inc. v. Travelers Cas. &
Sur. Co. of Am., 895 F.3d 455, 459 (6th Cir. 2018) (applying Michigan law). Under Michigan
law, we read an exclusion independently of other exclusions. Farm Bureau Mut. Ins. Co. v.
Blood, 583 N.W.2d 476, 478 (Mich. Ct. App. 1998). Although exclusions are “strictly construed
in favor of the insured . . . [c]lear and specific exclusions must be given effect.” Auto-Owners
Ins. Co. v. Churchman, 489 N.W.2d 431, 434 (Mich. 1992). Courts must give policy provisions
their “plain and ordinary meaning” to avoid “technical and strained constructions.” Ann Arbor
Pub. Schs. v. Diamond State Ins. Co., 236 F. App’x 163, 166 (6th Cir. 2007) (quoting Century
Sur. Co. v. Charron, 583 N.W.2d 486, 488 (Mich. Ct. App. 1998)).
2. Analysis
Assuming, as the district court did, that the PO&EPL Policy would otherwise cover the
Fox and Puchlak lawsuits, we hold that at least one exclusion negates coverage. The PO&EPL

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Policy contains thirty-one exclusions, and Safety relies on six. Of those, the district court
addressed the two “most fitting” exclusions—Exclusions 9B and 12—holding that either was
sufficient to deny coverage. While Exclusion 12 may present a close case, Exclusion 9B does
not; it excludes coverage of the Fox and Puchlak lawsuits.
Exclusion 9B excludes claims “[a]rising out of . . . [t]ax collection, or the improper
administration of taxes or loss that reflects any tax obligation.” The first issue is the meaning of
the phrase “arising out of.” In the insurance-contract context, the Michigan Supreme Court has
held that the phrase “requires a ‘causal connection’ that is ‘more than incidental.’” People v.
Johnson, 712 N.W.2d 703, 706 (Mich. 2006) (quoting Pac. Emps. Ins. Co. v. Mich. Mut. Ins.
Co., 549 N.W.2d 872, 875 (Mich. 1996)). Applying Michigan law, we understand “arising out
of” to mean something that “springs from or results from something else, has a connective
relationship, a cause and effect relationship, of more than an incidental sort with the [underlying]
event.” Ibid. The language demands more than a “but-for causal connection, but does not
require direct or proximate causation.” Great Am. Fid. Ins. Co. v. Stout Risius Ross, Inc.,
438 F. Supp. 3d 779, 785 (E.D. Mich. 2020) (quoting Scott v. State Farm Mut. Auto. Ins. Co.,
751 N.W.2d 51, 56 (Mich. Ct. App. 2008)).
The claims in the Fox and Puchlak lawsuits are excluded from coverage because they
arise out of tax collection. The Michigan Supreme Court’s recent case in Rafaeli, LLC v.
Oakland County, 952 N.W.2d 434 (Mich. 2020), illustrates the cause-and-effect relationship
between tax collection and the alleged withholding of surplus proceeds at issue in the Fox and
Puchlak lawsuits. The court summarized the practice by which counties, under Michigan’s
General Property Tax Act (“GPTA”), Mich. Comp. Laws § 211.1 et seq., retained surplus
proceeds from the tax-foreclosure sales of private property. Rafaeli, 952 N.W.2d at 443–46.
Real-property taxes are first assessed and collected by the municipality where the property is
located. Id. at 443. When property taxes become delinquent, “collection is turned over to the
foreclosing governmental unit,” usually the county, whose treasurer attempts to collect the
delinquent taxes by seeking to foreclose on the associated property and then sell it at a public
auction. Id. at 443–44. Upon sale, the county treasurer deposits the proceeds into an account
containing the proceeds from all of the county’s delinquent-tax property sales for that year. Id. at

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445. Where the proceeds from individual sales exceed the tax delinquency, the surplus is first
used to offset the costs of the county’s foreclosure proceedings and sales. Id. at 446. Any
leftover money may then be transferred to the county’s general fund. Ibid. The Michigan
Supreme Court stressed that “the GPTA does not provide for any disbursement of the surplus
proceeds to the former property owner” but rather “requires the foreclosing governmental unit to
disperse the surplus proceeds to someone other than the former owner.” Ibid. (citing Jenna
Christine Foos, Comment, State Theft In Real Property Tax Foreclosure Procedures, 54 Real
Prop. Tr. & Est. L.J. 93, 101–02 & n.56 (2019)).
The overview in Rafaeli confirms that the process of tax collection is what causes Fox’s
and Puchlak’s claims—the retention of their surplus tax-auction proceeds—to occur. Great Am.
Fid. Ins. Co., 438 F. Supp. 3d at 785. The underlying conduct at issue in the Fox and Puchlak
lawsuits—that the defendant counties retained too much money from the sale of property at tax-
delinquency auctions—“springs from” tax collection, if it is not substantively an act of tax
collection itself. Johnson, 712 N.W.2d at 706. In other words, a “cause and effect relationship”
exists between the counties’ method of property-tax collection and the injury for which Fox and
Puchlak seek to recover. Ibid. Therefore, Exclusion 9B precludes coverage for these claims.
Genesee County argues for a narrow construction of “tax collection” that renders the
exclusion inapplicable. Genesee County contends that the “process of ‘collection’ could
reasonably be understood as not including the post-foreclosure decision to retain funds
previously collected.” They characterize this case as involving “what happens after the taxation
process is completed.” We disagree. The post-foreclosure retention of funds previously
collected cannot reasonably be understood as a separate decision that counties or their treasurers
make. As the Michigan Supreme Court describes, the GPTA contains an “exhaustive”
reimbursement scheme that dictates where delinquent-tax property-sale proceeds must go.
Rafaeli, 952 N.W.2d at 446. The retention of surplus proceeds is part of the multi-step process
that is “tax collection,” as established by the GPTA, rather than a separate and independent
decision.

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Nos. 22-1189/1196 Safety Specialty Ins. Co., et al. v.
Genesee Cnty. Bd. of Comm’rs, et al.
Page 14
Even if we accepted Genesee County’s point that the allegedly withheld surplus proceeds
are not tax revenues, claims based on the failure to return those sums would still fall under the
exclusion. Construing “tax collection” narrowly to refer only to the gathering of taxes owed
does not affect the exclusion’s “arising out of” language, which sweeps in the complained-of
activity. Whether or not surplus proceeds amount to tax revenue, their retention directly resulted
from—and was part of—the tax-collection process outlined by the GPTA.
Genesee County also argues that, even if Exclusion 9B precludes claims arising out of tax
collection, it does not apply to other damages claims asserted in the underlying lawsuits. See
City of Woodhaven, 476 N.W.2d at 376 (noting that an insurer must defend against a lawsuit “if
there are any theories of recovery that fall within the policy” (quoting Detroit Edison, 301
N.W.2d at 835)). Genesee County asserts that Fox and Puchlak “allegedly ‘suffered two kinds
of’ damages: those arising from the retention of the excess funds and those arising from the
claimed due process violations.” To support the premise that the latter claims are not claims
arising out of tax collection to which the exclusion would apply, Genesee County relies on
Assurance Co. of America v. J.P. Structures, Inc., 1997 WL 764498 (6th Cir. Dec. 3, 1997).
There, the court held that an insurance-coverage exclusion for claims arising out of a breach of
contract did not preclude coverage for a trademark-infringement claim. See id. at *5. As
Genesee County sees it, the J.P. Structures court reached its holding because the underlying
claimant’s trademark-infringement claim was “of a different character” than its breach-of-
contract claim. Because claims arising from the retention of excess funds are of a different
character than claims for violations of due process and claims for excessive fines, Genesee
County would have us similarly recognize, and require the defense of, those other claims that do
not implicate a given exclusion.
We read J.P. Structures differently. The court’s decision focused on the lack of a causal
relationship between the two claims, not on whether the claims were different. It noted that the
insured party’s “breach of the contract caused its termination” while its “intentional unauthorized
use of the mark caused the trademark infringement.” Ibid. The only connection between the
contract breach and the trademark infringement was that the post-breach termination of the
contract “withdrew the authorization to use” the trademark, a connection that the court found

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Nos. 22-1189/1196 Safety Specialty Ins. Co., et al. v.
Genesee Cnty. Bd. of Comm’rs, et al.
Page 15
“too remote.” Ibid. In our case, however, the causal link between the excluded conduct—tax
collection—and the subsequent claims is more direct. As the district court put it, “all 11 counts
across both complaints rely on the same allegation: that county governments seized tax-
delinquent property, sold it at auction, and kept the surplus proceeds.” We agree with Genesee
County that an insurer must prove more than but-for causation when construing “arising out of”
language in an exclusion. Stout Risius Ross, Inc., 438 F. Supp. 3d at 785. But that higher
standard is met here, where the alleged tax-collection process directly caused the injuries
underlying each of Fox’s and Puchlak’s claims.
Because one exclusion—Exclusion 9B—is enough to deny coverage, we affirm.
III. CONCLUSION
For the reasons above, we affirm the district court’s grant of summary judgment to Fox
and Puchlak against Safety, and its grant of summary judgment to Safety against Genesee
County.

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