Cloverleaf Car Company v. Cascade Underwriters Inc ( 2022 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CLOVERLEAF CAR COMPANY, doing business UNPUBLISHED
as CLOVERLEAF RV AND RV OUTFITTERS, June 16, 2022
JILL E JOHNSON, and JOHN M JOHNSON,
Plaintiffs-Appellants,
v No. 357435
Kalamazoo Circuit Court
CASCADE UNDERWRITERS INC and JOHN LC No. 2020-000053-NZ
LAWRENCE HIERONYMUS,
Defendants-Appellees.
Before: RONAYNE KRAUSE, P.J., and M. J. KELLY and YATES, JJ.
PER CURIAM.
Plaintiffs appeal by right the trial court order granting defendants’ motion for summary
disposition under MCR 2.116(C)(10). Because the trial court did not err by granting summary
disposition, we affirm.
I. BASIC FACTS
Plaintiff, Cloverleaf Car Company, is a business that sells, repairs, and refurbishes
recreational vehicles. Until May 2009, Cloverleaf was owned by plaintiff Jill Johnson’s father.
When Jill’s father passed away, his wife became owner of the business. Approximately five
months later, in October 2009, Jill became the sole owner of Cloverleaf.
As relevant to this case, Jill began looking for business insurance for Cloverleaf in January
or February of 2010. She explained that, in May 2009, the business had been covered by a policy
issued by Auto-Owners; however, because Cloverleaf made a claim for a substantial loss caused
by a tornado/storm, Auto-Owners declined to renew that policy. Jill recounted that she called a
few insurance agents to insure Cloverleaf, but after disclosing the substantial loss the business had
just sustained, she was unsuccessful. Eventually, she remembered that her father had previously
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obtained insurance policies for Cloverleaf through defendant Cascade Underwriters, Inc, 1 so she
contacted Cascade’s owner, John Hieronymus, and set up a meeting to discuss whether he could
procure insurance for the business.
In early 2011, Jill and her husband, John Johnson, met with Hieronymus for at least one
hour to discuss acquiring insurance for Cloverleaf. John recalled that Hieronymus asked him to
take photographs of his tools, but otherwise had no recollection of what was discussed at the
meeting. Jill, on the other hand, recalled some details. Relevant here, Jill stated that Hieronymus
told them that they needed “all kinds of insurance” and that he promised that he was going to try
to get them insured. As it relates to Commercial Property insurance, Jill testified that she discussed
coverage for personal property inside the building she leased; she added that Hieronymus asked
her husband to take photographs of his tools. Moreover, Jill indicated that Cloverleaf had leased
the building, and she stated that she showed Hieronymus a copy of the lease. Although a copy of
the lease has not been included in the lower court record, Jill testified that the lease indicated the
insurance that she “had to have,” and Hieronymus averred that the lease she showed him indicated
that Cloverleaf “was responsible for obtaining contents insurance for its property at the premises
it was leasing.” Hieronymus stated in his affidavit that, based on the initial meeting with plaintiffs,
he attempted to obtain Commercial Property insurance that would cover the contents of the
buildings that Cloverleaf was leasing.
Hieronymus and Jill offer differing accounts of what followed. Jill testified Hieronymus
returned to the business and gave her a binder with the insurance proposal. She did not remember
any details of the proposal; however, she stated that he did not go through the proposal with them.
Instead, she flipped through the proposal and then gave him a check for the premium. However,
in support of their motion for summary disposition, defendants submitted a note from another
insurance agent’s file indicated that, as of February 14, 2011, Hieronymus got coverage for the
“inventory” and the “garage keeps,” but that he “needs to still get building covered.” Hieronymus
averred that he “specifically advised Mrs. Johnson that Cascade could not find a quote for any
insurance for Cloverleaf RV in the standard market, that [he] could not find a quote for
Commercial Property insurance in the surplus market and that the proposal did not include
Commercial Property insurance for the contents of the buildings occupied by Cloverleaf.”
Although he did not have a copy of the proposal he gave to Cloverleaf in 2011, he had a copy of
the proposal he gave for every year thereafter.2
1
Cascade Underwriters Inc had insured Cloverleaf between 1997 and 2007. Thereafter, Cloverleaf
switched insurance agents in order to secure a lower premium.
2
According to Hieronymus, the proposals all indicated that a quote for “tools and equipment,”
“employee tools,” and “miscellaneous property” would be available upon request. Likewise, under
optional coverage, they stated that a quote for “business income coverage” was also available upon
request. The proposals also included a warning that Cascade did “not profess or guarantee the
adequacy of the amounts of insurance contained in this proposal,” and advised that plaintiffs
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The record reflects that plaintiffs considered a proposal from Sentry Insurance in 2014.
Specifically, Jill faxed a copy of a February 27, 2014 business insurance protection plan proposal
prepared by Jason Visser from Sentry Insurance. The facsimile transmittal sheet indicated that the
fax was from Jill to Hieronymus (Fax). Jill made the following handwritten notation on the
transmittal sheet: “John thinks this is better[.] Please let me know. Thanks Jill[.]” Unlike the
proposal offered by defendants, the Sentry proposal included coverage for the contents of the
building. Hieronymus averred that he spoke with Jill about the differences between the proposal
defendants’ had given her and the proposal submitted by Sentry. He stated that after the discussion,
plaintiffs decided to renew their policy rather than accept the Sentry proposal. Jill testified at her
deposition that she had never looked for other insurance or received any proposals from other
insurance agents while she was defendants’ client. When presented with the Sentry proposal, she
testified that it did not look familiar “at all” and that she did not recall receiving the proposal from
Sentry in 2014.3
On February 16, 2017, there was a fire at Cloverleaf. Plaintiffs filed a claim, but learned
that they did not have insurance coverage for the contents of the building or any losses associated
with business interruption or business relocation. Thereafter, on February 5, 2020, they filed a
complaint against defendants, alleging that defendants had breached its fiduciary duty to plaintiffs,
had made “errors and omissions,” and had committed silent fraud. Following discovery,
defendants moved for summary disposition under MCR 2.116(C)(8) and (C)(10). The trial court
denied the (C)(8) motion because it found that defendants owed a fiduciary duty to plaintiffs.
However, it granted summary disposition under MCR 2.116(C)(10) because plaintiffs had not
shown there was a genuine question of material fact with regard to whether defendants had
breached that duty. This appeal follows.
II. SUMMARY DISPOSITION
A. STANDARD OF REVIEW
Plaintiffs argues that the trial court erred by granting defendants’ motion for summary
disposition under MCR 2.116(C)(10). We review de novo a trial court’s decision on a motion for
should “carefully review the amounts of insurance, locations, limits, and notify us of any difference
or changes.”
3
In contrast, the case notes from Sentry include several entries related to Cloverleaf. For example,
the notes indicate that on December 15, 2010, John was interested in Sentry’s “review of their
current policies.” Thereafter, the agent spoke with Jill and discussed her current coverage;
significantly, the notes indicated that “Jill feels she has moral obligation to stick with the current
agent despite the suspected coverage deficiencies.” (Emphasis added). Nevertheless, Sentry
provided a quote on January 27, 2014. And, as of March 5, 2014, John told Sentry that “they don’t
just drop people over dollars and cents,” that their current provider “has done everything they
expect of him,” and that they would not change “just to save a little money.”
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summary disposition. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich App
362, 369; 775 NW2d 618 (2009).
B. ANALYSIS
“In a negligence action, a plaintiff must show that the defendant owed the plaintiff a duty,
that the defendant breached that duty, causation, and damages.” Pressey Enterprises, Inc v
Barnett–France Ins. Agency, 271 Mich App 685, 687; 724 NW2d 503 (2006). Here, plaintiffs
argue that because defendants were independent insurance agents, “their primary duty of loyalty
rested with plaintiffs, who could depend on this duty of loyalty to ensure that defendants were
acting in their best interests both in terms of finding an insurer that could provide them with the
most comprehensive coverage and in ensuring that the insurance contract properly addressed their
needs.” Genesee Foods Servs, Inc v Meadowbrook, Inc, 279 Mich App 649, 656; 760 NW2d 259
(2008). They contend that defendants breached that duty because they did not “inform” plaintiffs
that the policy they purchased did not provide casualty coverage for Cloverleaf’s personal property
on the premises. In essence, then, plaintiffs posit that defendants’ breached their fiduciary duty to
advise them as the adequacy of the coverage provided.
The lead case on an insurance agent’s duty to advise an insured as to the adequacy of the
coverage provided is Harts v Farmers Ins Exch, 461 Mich 1; 597 NW2d 47 (1999). In Harts the
issue was whether a “licensed insurance agent owes an affirmative duty to advise or counsel an
insured about the adequacy or availability of coverage.” Id. at 2. The plaintiffs in Harts had
obtained a Farmers Insurance policy through their insurance agent, who sold insurance exclusively
for Farmers. Id. at 3. The policy did not include uninsured motorist coverage. Id. The plaintiffs
contended that the agent was negligent in selling them a policy that was inadequate because it did
not include uninsured motorist coverage. Id. Our Supreme Court, however, concluded that the
insurance agent did not have a duty to advise the plaintiffs as to the adequacy of the coverage. Id.
at 2-3.
The Harts Court held that because the insurance agent was Farmers’ agent, “under the
common law, he had a duty to comply with the various fiduciary obligations he owed to Farmers
and to act for its benefit” but he did not have a “common-law duty to advise plaintiffs.” Id. at 6–
7. Additionally, the Court also noted the general rule that insurance agents have no duty to advise
an insured regarding the adequacy of insurance coverage. Id. at 7. The Harts Court explained that
a contrary rule, i.e., one requiring an insurance agent to advise the insured about the adequacy of
the coverage,
(1) would remove any burden from the insured to take care of his or her own
financial needs and expectations in entering the marketplace and choosing from the
competitive products available, (2) could result in liability for a failure to advise a
client of every possible insurance option, or even an arguably better package of
insurance offered by a competitor, and (3) could provide an insured with an
opportunity to self-insure after the loss by merely asserting they would have bought
the additional coverage had it been offered. [Id. at 7–8 (quotation marks and citation
omitted.]
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The court concluded that, as a result, “under the common law, an insurance agent whose principal
is the insurance company owes no duty to advise a potential insured about any coverage. Such an
agent’s job is to merely present the product of his principal and take such orders as can be secured
from those who want to purchase the coverage offered.” Id. at 8
The Court also noted that, “[o]ur Legislature also recognizes the limited nature of the
agent’s role.” Id. Specifically, under Michigan’s insurance statutes, there is a difference between
insurance agents and insurance counselors, “with agents being essentially order takers” and
insurance counselors functioning as advisors. Id. at 8–9. The Court determined “an insurance
agent may, but is not required or under any duty to, give ‘customary advice.’ ” Id. at 9 n 10, citing
MCL 500.2116 and MCL 500.1232.
The Harts Court recognized that there is an exception to the no-duty-to-advise rule under
certain circumstances. Harts, 461 Mich at 9-10. Thus, a duty to advise may arise if “an event
occurs that alters the nature of the relationship between the agent and the insured.” Id. at 10, citing
Bruner v League Ge. Ins Co, 164 Mich App 28; 416 NW2d 318 (1987) (quotation marks omitted).
The Court described four situations that give rise to a special relationship and a duty to advise on
the part of the agent:
(1) the agent misrepresents the nature or extent of the coverage offered or provided,
(2) an ambiguous request is made that requires a clarification, (3) an inquiry is made
that may require advice and the agent, though he need not, gives advice that is
inaccurate, or (4) the agent assumes an additional duty by either express agreement
with or promise to the insured. [Id. at 10–11.]
On appeal, plaintiff argue that defendants’ duty of loyalty is stated in Genesee Foods and
that Harts only applies to captive insurance agents, not to independent insurance agents. Yet, in
several unpublished opinions, this Court has rejected similar arguments. See Janovski v S J Ferrari
Ins Agency, Inc, unpublished per curiam opinion of the Court of Appeals, issued May 24, 2016
(Docket No. 326457) (collecting cases). In Janovski, this Court reasoned:
Although Harts was clearly focused on insurance agents whose principal
was the insurer, it spoke generally about whether there is any duty owed by
insurance agents as to the limited issue of advising about the adequacy or
availability of coverage. We concur with the reasoning employed in the above cited
cases in concluding that the duty to advise rule from Harts, regarding the adequacy
or availability of coverage, also applies to an independent agent. While the
defendant in Harts was a captive rather than an independent insurance agent, Harts
did not differentiate when framing the issue and rendering its ruling:
We granted leave in this case to determine whether a licensed
insurance agent owes an affirmative duty to advise or counsel an insured
about the adequacy or availability of coverage. We hold that, except under
very limited circumstances not present in this case, an insurance agent owes
no such duty to the insured. [Harts, 461 Mich at 2].
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The Court also made the following public policy argument:
plaintiffs encourage this Court to eliminate the general no-duty-to-advise
rule and replace it with a rule that would impose a duty to advise in cases
such as the one at bar, which, to be perfectly clear, would apparently be all
cases concerning the purchase of insurance. However, we decline this
invitation in light of the public policy established by the Legislature’s active
role in this area and the previously noted compelling reasons that militate
against the imposition of such a duty. Rather, we agree with the Wisconsin
Supreme Court, . . . which, when faced with such an issue, stated that “if
such a duty is to be imposed on the [insurance agent], it should be imposed
as a statutory one and not an implied judicial one. [Harts, 461 Mich at 11–
12.]
Further, the Court discussed MCL 500.2116 and how it treats captive agents
the same as independent agents with regard to order-taking functions, as well as
MCL 500.1232, which restricts those who can give advice about insurance policies
to licensed insurance counselors, aside from “the customary advice offered by a
licensed insurance agent.” See also Harts, 461 Mich at 8–9. Hence, the Court in
Harts concluded, a licensed insurance agent may give “customary advice,” but is
not under any duty to do so. Id. at 9 n 10. Additionally, we note [that] nothing in
the Court’s opinion in Harts specifically indicated that the Court only intended to
address captive agents, rather than independent agents, with regard to the duty at
issue. And, although plaintiffs cite cases such as Genesee Foods Servs, for the idea
that independent agents owe a fiduciary duty to the insured, those cases do not
expressly mention a duty to advise the insured about the adequacy of coverage.
Accordingly, we conclude that Harts applies to the issue before us.
We find the Janovski Court’s reasoning to be persuasive and, likewise, conclude that Harts applies
to the issue before us. See Paris Meadows, LLC v City of Kentwood, 287 Mich App 136, 145 n 3;
783 NW2d 133 (2010) ( noting that although unpublished opinions are not binding, this Court may
consider them as persuasive authority).
Here, plaintiffs argue that a special relationship exists between them and defendants
because (1) Cloverleaf had a long history with defendants, (2) Hieronymus is credentialed as a
CPCU, i.e., a Chartered Property Casualty Underwriter, which means he specializes in property-
casualty insurance and risk management, (3) defendants “had complete knowledge” of plaintiffs
business and insurance needs, and (4) defendants indicated that they would help obtain all the
coverage that plaintiffs needed. Yet, although there is record evidence that Cloverleaf has a long
history with defendants and that Hieronymus is a CPCU, the record does not support a finding that
defendants had “complete knowledge” of the insurance plaintiffs needed. Rather, Hieronymus
provided evidence as to what insurance was required by law and what insurance plaintiffs sought
because their lease indicated that it was their responsibility, but that does not equate to a finding
that defendants therefore had “complete knowledge” of plaintiffs’ insurance needs. Nor does the
record allow for an inference that defendants promised to provide all coverage needed. Instead, it
appears that defendants agreed to try and procure specific coverage, but were unable to find an
insurer that would cover the contents of the buildings.
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Moreover, plaintiffs do not direct this Court to any record evidence indicating that
defendants misrepresented the nature or extent of the coverage offered. Indeed, plaintiffs were
provided with proposals that indicated that a quote was available upon request for coverage of
tools, equipment, miscellaneous property, and business income. Further, the uncontradicted record
indicates that they were mailed a copy of their insurance policies each year. Although neither Jill
nor John fully read the policies, Jill stated that, based on her reading of the language in the policy,
she believed that the contents of the buildings was covered (Jill Dep, pp 63, 75-76, 92; John Dep,
24). She has not directed this Court to any affirmative act by defendants that led her to reach that
conclusion. Therefore, viewing this record in the light most favorable to plaintiffs, there are no
facts indicating that defendants misrepresented to plaintiffs the nature or extent of the coverage.
Nor is there evidence that an ambiguous request was made that required a clarification.
Indeed, although plaintiffs desired “full coverage” for their property and although Hieronymus
attempted—and failed—to procure coverage for the contents of the buildings, neither Jill nor John
recall asking Hieronymus any questions regarding the adequacy of the coverage. For the same
reasons, the third scenario under which a special relationship may arise is also not present.
Plaintiffs did not request advice as to the adequacy of their coverage, and they have directed this
Court to no evidence indicating that defendants provided them with inaccurate advice. Finally,
the record is devoid of any evidence indicating that defendants assumed a duty to advise plaintiffs
regarding the adequacy of the coverage.
Because there is no special relationship between defendants and plaintiffs, we conclude
that defendants did not have a duty to advise plaintiffs as to the adequacy of their coverage.
Summary disposition, therefore, was warranted.
Moreover, assuming arguendo that defendants did have a duty to advise plaintiffs that the
policy procured did not provide coverage for the contents of the building (or for business
interruption/relocation), we conclude that the trial court did not err by determining that the duty
was not breached. Defendants presented documentary evidence showing: (1) they attempted to
procure a policy that would cover the contents of the buildings, (2) they were unable to do so
because of Cloverleaf’s prior loss history, (3) they submitted a written proposal to plaintiffs
annually between 2011 and 2016, (4) Hieronymus discussed the proposal with plaintiffs each year,
(5) Hieronymus never told plaintiffs that they had coverage for the contents of the buildings they
leased, (6) plaintiffs received a copy of their insurance policy in the mail each year, (7) plaintiffs
did not read the policies, (8) plaintiffs relied on another insurance agent to secure a surety bond
for Cloverleaf, (9) plaintiffs received a proposal for business insurance from Sentry Insurance in
2014, (10) the Sentry proposal included coverage for contents, (11) Hieronymus discussed
differences between the two 2014 proposals with Jill, (12) Jill chose to renew her existing policy
rather than switch to the Sentry proposal, and (13) a note from Jill to another insurance agent
indicated that she as aware, in 2011, that the contents of the buildings were not covered.
The evidence relating to the 2011 proposal and discussion of the coverage offered was
contradicted. Specifically, Jill testified at her deposition that Hieronymus dropped off a binder,
she flipped through it, and then gave him a check. Contrary to his testimony, she stated that he
did not discuss the matter with her. Moreover, as noted by plaintiffs on appeal, the 2011 note from
Jill indicating that she was aware that Hieronymus had not obtained coverage for the contents of
the building was dated prior to when the policy was issued. Thus, viewing that document in the
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light most favorable to plaintiffs, it does not support an inference that, at the time she accepted the
2011 policy, she was aware that it lacked coverage for the contents of the building.
Yet, at her deposition, she denied receiving insurance proposals from any other insurance
agents while she was a client of defendants. When confronted with a facsimile transmittal sheet
indicating that John believed a policy from Sentry was better and asking for advice, she admitted
to having no memory of the Sentry policy.4 Hieronymus, in contrast, remembered the details of
the Sentry policy, and he averred that he discussed the differences between the policies with her.
Again, the Sentry policy, unlike the Pro-Century policy that defendants had presented for renewal,
included coverage for the contents of the buildings. In light of defendants uncontradicted evidence
as to the discussion on the 2014 competing proposals, the record does not support plaintiffs’ claim
that there is a question of fact as to whether defendants ever discussed the nature and extent of the
insurance coverage they were proposing. Further, the Sentry Insurance case notes indicate that the
Sentry agent spoke with Jill, who opted to stay loyal to Hieronymus despite concerns regarding
the adequacy of the coverage. Therefore, on this record, given that there is no evidence suggesting
that, as of 2016, plaintiffs were unaware that they did not have coverage for the contents of the
buildings that they were leasing. Moreover, there is no evidence supporting an inference that
plaintiffs wanted coverage for business interruption or relocation. On this record, plaintiffs cannot
show that there was a genuine issue of material fact as to whether defendants’ breached their
alleged duty to advise as to the adequacy of the coverage provided.
4
In response to the motion for summary disposition, Jill submitted an affidavit stating that
Hieronymus “did not advise that he would not attempt to provide any of the insurance we needed,”
and that he instead “indicated we would be fully covered.” She added that she did provide him
with any indication as to the amount of coverage she needed for the contents, but instead left it up
to him to secure adequate coverage. She also stated that Hieronymus never told her that any
proposal or insurance that he provided “year after year did not include insurance for our building
contents,” and that, if he had told her that, it would have been “a deal breaker because of the terms
of our lease.” She averred that he also never told her that the coverage provided did not include
insurance for business interruption or relocation expenses.” Her affidavit, however, contradicts
her deposition testimony. At her deposition, the only conversation that she recounted details from
was the initial meeting and Hieronymus’s failure to advise her that there was no contents coverage
in the 2011 proposal. She did not testify as to what he did or did not advise her in the subsequent
years, and she provided no testimony that she ever requested business interruption or business
relocation insurance. She also contradicted her deposition testimony that she had no recollection
of the Sentry insurance proposal; she averred in her affidavit that he “did not state anything about
us not having contents coverage that that time.” Plaintiffs cannot create a genuine issue of material
fact by submitting an affidavit that contradicts the affiant’s prior deposition testimony. See
Kaufman & Payton, PC v Nikkila, 200 Mich App 250, 256-257; 503 NW2d 728 (1993).
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III. MOTION TO AMEND PLEADINGS
Plaintiffs argue that the trial court err by not providing them with an opportunity to amend
their pleadings. However, they made no such motion. We discern no error in the trial court’s
failure to sua sponte provide plaintiffs with an unrequested opportunity to amend their complaint.
Affirmed. Defendants may tax costs as the prevailing parties. MCR 7.219(A).
/s/ Amy Ronayne Krause
/s/ Michael J. Kelly
/s/ Christopher P. Yates
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