Opera Block Properties Inc v. Auto-Owners Insurance Company ( 2024 )

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
OPERA BLOCK PROPERTIES, INC., FOR PUBLICATION
August 22, 2024
Plaintiff-Appellee/Cross-Appellant, 9:45 a.m.
v No. 365213
Ionia Circuit Court
AUTO-OWNERS INSURANCE COMPANY, LC No. 2019-034154-CK
Defendant-Appellant/Cross-Appellee,
and
CHRISTOPHER T. FISHER, LLC, doing business
as KIEBLER INSURANCE AGENCY,
Defendant-Appellee.
OPERA BLOCK PROPERTIES, INC.,
Plaintiff-Appellant,
v No. 365215
Ionia Circuit Court
AUTO-OWNERS INSURANCE COMPANY, LC No. 2019-034154-CK
Defendant,
and
CHRISTOPHER T. FISHER, LLC, doing business
as KIEBLER INSURANCE AGENCY,
Defendant-Appellee.
Before: CAMERON, P.J., and M. J. KELLY and YATES, JJ.
CAMERON, P.J.
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In Docket No. 365213 of these consolidated1 appeals, defendant, Auto-Owners Insurance
Company (Auto-Owners), appeals by right the order granting summary disposition under MCR
2.116(C)(10) (no genuine question of material fact) in favor of plaintiff, Opera Block Properties,
Inc. (Opera Block). In Docket No. 365215, Opera Block appeals by right the same order which
granted summary disposition in favor of defendant, Christopher T. Fisher, LLC, doing business as
Kiebler Insurance Agency (Kiebler Insurance). Because the parties have failed to identify any
errors warranting relief, we affirm.
I. BACKGROUND FACTS AND PROCEDURAL HISTORY
These appeals involve an insurance dispute arising from a drain backup in February 2019.
Timothy Fuller owned Opera Block, and Opera Block owned a group of five buildings on Kent
Street in Portland, Michigan. Two of the buildings were located at 140 and 136 Kent Street. The
remaining buildings were located at 128 A, 128 B, and 128 C Kent Street.
Fuller first purchased insurance for the buildings in 2017 from Auto-Owners through
Kiebler Insurance. On January 31, 2019, Fuller contacted Kiebler Insurance agent, Lydia
McCauley, about increasing the coverage on the buildings and to inquire about the existing
coverage. Fuller again discussed the changes with McCauley on February 5, 2019, telling her he
wanted the best possible coverage for the buildings. McCauley changed the existing policy to
include Auto-Owners’s “premier, property-plus endorsement,” which provided Opera Block with
$50,000 in coverage for drain backups per location. Opera Block’s existing policy did not include
coverage for drain backups. McCauley formally made the requested changes at 10:11 a.m., on
February 6, 2019. McCauley backdated the changes to 12:01 a.m., February 5, 2019, because that
was the day that Fuller requested the changes.
In the early morning hours of February 6, 2019, Fuller inspected the basements of Opera
Block’s properties. He observed water spraying up through the drain at 140 Kent Street. There
was a similar problem at 136 Kent Street, and water had begun to back up through the drain at 128
A Kent Street. Eventually, all five basements were flooded by backups through the drains, which
caused extensive damage.
Fuller submitted claims for the damage caused by the water backups. Auto-Owners denied
the claims because the backups occurred on February 6, 2019, before McCauley sent in the request
to change Opera Block’s coverage. Opera Block sued Auto-Owners for breach of contract and
sued Kiebler Insurance for negligently handling the insurance requests. After lengthy discovery,
the parties filed competing motions for summary disposition. The trial court determined there was
no issue of fact that McCauley bound Auto-Owners to the changes in coverage on February 5,
2019. Because the water-backup coverage was in place before the loss at issue, the trial court
determined that Auto-Owners breached its duty to cover the loss to the policy’s limit of $50,000
per location as a matter of law. The trial court also determined that Opera Block failed to establish
a question of fact as to whether Kiebler Insurance negligently caused Opera Block to have less
1
Opera Block Props, Inc. v Auto-Owners Ins Co, unpublished order of the Court of Appeals,
entered April 6, 2023 (Docket Nos. 365213 and 365215).
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coverage than it should have had for the loss at issue. Thus, it granted Kiebler Insurance’s motion
for summary disposition.
The trial court later entered judgment in favor of Opera Block against Auto-Owners for
$150,000 in damages, plus $65,828.85 in interest. This appeal followed.
II. STANDARD OF REVIEW
This Court reviews de novo a trial court’s decision on a motion for summary disposition.
See Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). A motion under MCR
2.116(C)(10) tests the factual sufficiency of a claim. Id. at 120. A trial court may grant summary
disposition under MCR 2.116(C)(10) when, “[e]xcept as to the amount of damages, there is no
genuine issue as to any material fact, and the moving party is entitled to judgment or partial
judgment as a matter of law.”
The moving party has the initial burden to identify the elements for which there are no
genuine issues as to any material fact. Barnard Mfg Co, Inc v Gates Performance Engineering,
Inc, 285 Mich App 362, 369; 775 NW2d 618 (2009); MCR 2.116(G)(4). “[T]he moving party
must support its motion with affidavits, depositions, admissions, or other documentary evidence
in support of the grounds asserted.” Barnard Mfg Co, 285 Mich App at 369. “If the moving party
properly supports its motion, the burden then shifts to the opposing party to establish that a genuine
issue of disputed fact exists.” Id. at 370 (quotation marks and citation omitted). A trial court may
not weigh the evidence or make credibility determinations when examining the evidence presented
in support of and in opposition to a motion for summary disposition. Franks v Franks, 330 Mich
App 69, 85; 944 NW2d 388 (2019). It must also view the evidence in the light most favorable to
the nonmoving party. Id. “A genuine issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” Id. (citation omitted).
This Court also reviews de novo whether the trial court properly interpreted and applied
the applicable statutes and court rules. Ligons v Crittenton Hosp, 490 Mich 61, 70; 803 NW2d
271 (2011).
The paramount rule of statutory interpretation is that we are to effect the
intent of the Legislature. To do so, we begin with the statute’s language. If the
statute’s language is clear and unambiguous, we assume that the Legislature
intended its plain meaning, and we enforce the statute as written. In reviewing the
statute’s language, every word should be given meaning, and we should avoid a
construction that would render any part of the statute surplusage or nugatory.
[Wickens v Oakwood Healthcare Sys, 465 Mich 53, 60; 631 NW2d 686 (2001)
(citations omitted).]
III. AUTO-OWNERS’S APPEAL IN DOCKET NO. 365213
Auto-Owners argues the trial court erred in denying its motion for summary disposition.
It maintains that the undisputed evidence shows that the losses at issue were complete or in
progress before McCauley applied for the change in coverage. Thus, the losses were barred under
the completed-loss or loss-in-progress doctrines. We disagree.
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The issue below was whether the loss was uninsurable at the moment Fuller entered into
an agreement with Auto-Owners to change his policy to include coverage for drain and sewer
backups because the loss had already occurred or was in progress before the contract came into
effect. As Auto-Owners explains, these arguments implicate the completed-loss and loss-in-
progress doctrines.
“Insurance policies are contracts to indemnify against contingent losses.” Nash v New York
Life Ins Co, 272 Mich 680, 682; 262 NW 441 (1935). Generally, a party cannot purchase insurance
for a contingency that has already occurred; the contingency must be unknown at the time the
parties enter into the insurance agreement. See Gauntlett v Sea Ins Co, 127 Mich 504, 511; 86
NW 1047 (1901). It is also contrary to public policy to allow an insurance agent to bind an
insurance company to insure a loss that has already occurred. See Harper v Mich Mut Tornado,
Cyclone & Windstorm Ins Co, 173 Mich 459, 463; 139 NW 27 (1912). Accordingly, a “completed
loss” cannot be covered “under an after-acquired insurance policy.” American Bumper and Mfg
Co v Hartford Dire Ins Co, 452 Mich 440, 459; 550 NW2d 475 (1996).
The loss-in-progress doctrine recognizes that, once a loss is in progress, “the event is no
longer fortuitous and the risk has also been realized.” Id. Relying on the decision in Inland Waters
Pollution Control, Inc v Nat’l Union Fire Ins Co, 997 F2d 172 (CA 6, 1993),2 this Court identified
the elements of the loss-in-progress doctrine:
The loss-in-progress doctrine defeats an insured’s claim against an insurer
under a policy only where the insured is aware of a threat of loss so immediate that
it might fairly be said that the loss was in progress and that the insured knew it at
the time the policy was issued or applied for. Thus, application of the doctrine
requires foreknowledge of loss or an awareness of an immediate threat of loss on
the part of the insured. [South Macomb Disposal Auth v American Ins Co, 225
Mich App 635, 693-694; 572 NW2d 686 (1997) (quotation marks and citations
omitted).]
The loss-in-progress doctrine “has its roots in the prevention of fraud.” Inland Waters, 997 F2d at
179. An insurer may assert the loss-in-progress doctrine as an affirmative defense to coverage.
See Koppers Co, Inc v Aetna Cas & Surety Co, 98 F3d 1440, 1446-1447 (CA 3, 1996) (a loss must
be fortuitous—not expected—to be insurable; the insurer bears the burden to prove the insured
knew about the loss or expected it to occur before procuring the insurance).
The loss at issue in this case involved water backing up through the drains in Opera Block’s
buildings. There was no factual dispute that the water was backing up through the drains by 3:49
a.m. on February 6, 2019. Indeed, Fuller videotaped the backup at that time in the building on 140
Kent Street, and testified that 136 Kent Street had a similar problem at the time. He also observed
water backing up in 128 A Kent Street, though 128 B and C were still dry for the time being.
Nevertheless, Fuller admitted that the basements in 128 A, B, and C were all connected, and that
2
“Although state courts are bound by the decisions of the United States Supreme Court construing
federal law there is no similar obligation with respect to decisions of the lower federal courts.”
Abela v Gen Motors Corp, 469 Mich 603, 606; 677 NW2d 325 (2004) (citation omitted).
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a backup in one would spread to the others. Accordingly, there was no genuine dispute that, either
the loss was complete by the early morning hours of February 6, 2019, or it was in progress, and
Opera Block knew it was, through Fuller.
Auto-Owners suggests the water backup occurred or was in progress on February 5, 2019,
but the evidence does not support this contention. Fuller testified he observed a little water in the
basements of 140 Kent Street and 128 B Kent Street on February 5, 2019, probably about midday.
He did not know how the water got into the basements even though he characterized them as
backups. It was undisputed that Fuller met with McCauley earlier than midday. Indeed, McCauley
sent Fuller a follow-up e-mail at 9:03 a.m., in which she asked Fuller for more information on his
requested coverage change. Fuller also testified that he checked the basements before he went to
bed on February 5, 2019, and did not see any water backing up at the time.
The evidence did not permit an inference that the loss had already occurred on February 5,
2019, or that it was in progress. Even assuming that Fuller might have been on notice of the
possibility that the little bit of water he found on February 5, 2019 came from the drains, the
evidence demonstrated it was not a significant amount of water, and Fuller was able to remedy it
immediately. On these facts, there was no dispute that the loss at issue had not yet begun on
February 5, 2019. Consequently, on the evidence presented at the summary-disposition phase, it
was undisputed that the loss at issue occurred, or was in the process of occurring—at the earliest—
on February 6, 2019 at 3:49 a.m. It was also undisputed that Opera Block knew the loss was
occurring at the time. Because the timing of the loss was not in dispute, whether the certain loss
and loss-in-progress doctrines applied depended on when Auto-Owners committed to providing
Opera Block with the additional coverage contained in the “premier, property-plus endorsement.”
Auto-Owners asserted below that the certain loss and loss-in-progress doctrines applied to
this case because McCauley did not request the change in coverage until 10:11 a.m. on February
6, 2019. Auto-Owners, in effect, treated McCauley’s e-mail informing Auto-Owners of the
changes in coverage for Opera Block as though it were an application for a change in coverage
that did not become effective until approved. See GP Enterprises, Inc v Jackson Nat’l Life Ins Co,
202 Mich App 557, 562; 509 NW2d 780 (1993) (stating that, for certain insurance applications,
an insurance policy does not become effective until approved even though the application provides
the effective date as the application’s date). If this were the case, the certain-loss doctrine would
apply, because McCauley did not send the changes until after the loss occurred. Auto-Owners’s
position, however, ignores the evidence that McCauley had the authority as Auto-Owners’s duly-
authorized agent to bind Auto-Owners to an insurance agreement without first getting its approval.
In a typical insurance transaction, an insurance agent facilitates the sale of the insurance
product on behalf of the parties. See Genesee Foods Servs, Inc v Meadowbrook, Inc, 279 Mich
App 649, 654; 760 NW2d 259 (2008). An insurance agent can either be independent or captive—
also known as exclusive. Id. An exclusive or captive insurance agent’s principal is the insurance
company; their 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.” Harts v Farmers Ins Exch,
461 Mich 1, 8; 597 NW2d 47 (1999). By contrast, an independent insurance agent has “the power
to place insurance with various insurance companies,” Mate v Wolverine Mut Ins Co, 233 Mich
App 14, 21; 592 NW2d 379 (1998), but is an agent for the insured. Genesee Foods Servs, 279
Mich App at 654.
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In this case, it was undisputed that Kiebler Insurance was an independent insurance agency
with the authority to place insurance with various insurers. This fact, however, does not preclude
Kiebler Insurance from being an agent for Auto-Owners as well. It is well-settled that a single
person may “occupy different roles at successive points in an ongoing interaction among the same
parties.” Restatement Agency, 3d, § 3.14, comment c. See also Vargo v Sauer, 457 Mich 49, 68-
69; 576 NW2d 656 (1998) (citing the Restatement and recognizing that a dual agency occurs when
two persons or entities share the services of an agent for a single act). This is particularly true for
the sale of insurance products:
In the insurance industry in particular, statutes and common practice often
reflect well-settled understandings about agency relationships. An insurance
intermediary who applies for or procures insurance coverage on behalf of a
prospective insured is generally termed an insurance “broker” and characterized as
the agent of the prospective insured in the insurance application. Additionally, an
insurance broker may subsequently be treated as the insured’s agent for purposes
of receiving and giving notice. A broker owes no special allegiance to any
particular insurer. However, when an insurance policy is issued by an insurer
through a broker, the broker is treated as the insurer’s agent who may bind the
insurer within the scope of the broker’s authority. . . . [Restatement Agency, 3d,
§ 3.14, comment c.]
It is also well-settled that an insurer may be bound by the acts of a duly-authorized agent
acting within the scope of his or her authority. See Pastucha v Roth, 290 Mich 1, 11-12; 287 NW
355 (1939) (an insurer’s general agent has the authority to waive strict conditions); Dobranski v
Lincoln Mut Cas Co, 275 Mich 1, 7; 265 NW 507 (1936) (agent only had authority to bind insurer
because insurer granted agent the power to do so); Rice v Fidelity & Cas Co of New York, 250
Mich 398, 400-402; 230 NW 181 (1930) (evidence that insurer’s authorized agent represented to
insured that the policy had been renewed was sufficient to bind insurer); cf. House v Billman, 340
Mich 621, 626-627; 66 NW2d 213 (1954) (agent had limited authority and could not waive
conditions stated in the policy). An insurer may even grant its agent the authority to bind it to an
insurance commitment through the agent’s oral communications. See GRP, Ltd v United States
Aviation Underwriters, Inc, 402 Mich 107, 108-112; 261 NW2d 707 (1978). The Legislature has
also regulated who can serve as an agent for an insurer with the power to bind coverage. See MCL
500.1208a(2) (“An insurance producer shall not bind coverage for an insurer unless the insurance
producer is appointed by the insurer.”).
When an independent agent has been given binding authority, the agent has a limited
fiduciary relationship with the insurer. See Genesee Foods Servs, 279 Mich App at 656.
Nevertheless, the independent agent’s primary fiduciary duty rests with the insured. See id. This
primary duty does not negate the contractual duty the independent agent owes the insurer, nor does
it negate or override the duty it owes to the insured. See Al-Hajjaj v Hartford Accident and
Indemnity Co, 345 Mich App 361, 376; 5 NW3d 353 (2023).
If an agent has the authority to bind an insurer, then it has the authority to effect an
insurance binder—a temporary insurance contract that lasts until the insurer issues a formal policy
or declines the risk. State Auto Mut Ins Co v Babcock, 54 Mich App 194, 204; 220 NW2d 717(1974). “Like all contracts, a binder requires agreement of the minds of the parties and must have
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in contemplation the terms to be incorporated later in the written policy.” Id. (quotation marks
and citation omitted). “A binder may be written or oral and founded upon the words or deeds of
an agent.” Id. A statement such as “you are covered” may be sufficient to effect a binder. Id.“The rights and liabilities of parties to these informal preliminary contracts are determined by
reference to the conditions of the policy expected, although that policy may never issue.” Id.
at 205. A binder remains in force until properly rejected by the insurer. Id.Although Kiebler Insurance was an independent insurance agent that sold insurance
policies for various insurers, it is undisputed that Auto-Owners entered into an agency agreement
with Kiebler Insurance. The agreement gave Kiebler Insurance the “authority to receive
applications for contracts of insurance written by [Auto-Owners] and to bind coverage[,]” subject
only to certain limitations not relevant here. McCauley testified she had the authority to bind
Auto-Owners, and Auto-Owners’s own commercial underwriter, Geoffrey Mack, also agreed that
McCauley had binding authority. Mack stated that binding authority gave the agent the ability to
“place coverage with [Auto-Owners] prior to [Auto-Owners] reviewing it.” Accordingly, it was
undisputed that, as an independent insurance agent, McCauley—acting on behalf of Kiebler
Insurance—was Opera Block’s agent for procuring insurance, but was also an Auto-Owners
limited agent by virtue of her authority to bind it to an insurance agreement without first obtaining
its permission. The dispositive questions were thus whether McCauley exercised her authority to
bind Auto-Owners, and, if so, when she did.
Auto-Owners argues the evidence showed that McCauley did not bind Auto-Owners at any
point before submitting Opera Block’s request for changes in coverage on February 6, 2019. This
position does not comport with the evidence.
Fuller testified that he wanted to change his coverage for some time before February 5,
2019; though, the evidence demonstrates he first spoke to McCauley about specific changes in
coverage on January 31, 2019. McCauley testified that, at the first meeting, Fuller only spoke
about changing the coverage levels for Opera Block’s buildings. He did, however, ask her about
the nature of his coverage at that time, and she spoke to someone at Auto-Owners about his
inquiries.
Both Fuller and McCauley testified they had a second meeting in which Fuller came to pay
a bill early in the morning on February 5, 2019; they discussed the specific changes in more detail
at this time. McCauley related that Fuller made specific changes to his coverage at this time as
well. McCauley said that, because Fuller wanted the best possible coverage, she decided to add
the “premier, property-plus endorsement” to his coverage. This endorsement was an economical
way to increase Opera Block’s coverage because it included numerous additional covered items.
Fuller similarly testified that McCauley told him she had a “super duper, fancy all this and
that policy” that would meet his needs; though she did not explain what was actually covered. He
stated that McCauley told him he would have $50,000 in water-backup coverage for each building
after the change.
McCauley testified that she wanted to send the request for a change in coverage on
February 5, 2019, but she needed more information from Fuller. This extra information would be
needed by Auto-Owners’s underwriting department to process the requested changes. McCauley
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sent Fuller an e-mail requesting the additional information at 9:03 a.m. on February 5, 2019,
demonstrating that their meeting about the coverage changes occurred before then.
The evidence shows that Fuller and McCauley had a meeting of the minds on the changes
to Opera Block’s coverage during their morning meeting on February 5, 2019, in which they
discussed specific coverage changes. McCauley testified that Fuller wanted the best possible
coverage, and she felt the “premier property-plus endorsement” would satisfy this request. Fuller
confirmed McCauley identified a “super duper” endorsement that would give him the extra
coverage he wanted, including $50,000 in drain-backup coverage. Fuller also testified that, when
he left McCauley that morning, he felt he had effected a coverage change, “[a]nd it was [his]
understanding that they provided [him] as much and the best coverage that was possible,” which
included $50,000 in water-backup coverage. Moreover, McCauley suggested that she too felt the
meeting ended with a change in coverage:
Q. And from your perspective, when as—again, as an Auto-Owners-
appointed agent and producer, from your perspective, when Mr. Fuller left your
office on February 5, 2019, he had—that change request from your perspective was
effective, was active, right?
A. Yes.
On appeal, Auto-Owners cites McCauley’s testimony that she could not complete the
request for changes to Opera Block’s policy on February 5, 2019 as evidence that McCauley did
not bind Auto-Owners on that date. McCauley, however, testified that there was a distinction
between when she bound a policy and when Auto-Owners processed the change to the policy on
her instructions. Auto-Owners’s commercial underwriter agreed that processing the request was
a mere formality because McCauley had binding authority. Accordingly, the fact that McCauley
did not have enough information to submit the requested change for processing on February 5,
2019 does not negate the fact that she bound Auto-Owners to provide the requested coverage at
the meeting held earlier that day.
Auto-Owners also relies on McCauley’s testimony that she did not specifically tell Fuller
he had water-backup coverage before February 6, 2019, as well as her statement that she “didn’t
have everything [she] needed to make it effective on the 5th.” Neither of these statements establish
that McCauley did not intend to bind Auto-Owners on February 5, 2019. McCauley’s statement
that she did not tell Fuller that Opera Block had backup coverage on February 5, 2019 does not
establish that she did not intend to effect a binding change in Opera Block’s policy by adding the
“premier, property-plus endorsement” it merely permits the inference that she did not discuss the
specific changes she made. Additionally, although the timing was unclear, Fuller’s testimony
indicated that McCauley mentioned the coverage at some point. McCauley and Fuller also both
testified that they thought Fuller’s requested changes became effective on February 5, 2019.
McCauley stated this was why she wrote that the changes were effective February 5, 2019 in her
February 6, 2019 e-mail requesting that the changes be made.
The evidence cited by the parties shows that McCauley and Fuller reached an agreement
on the coverage change for Opera Block’s properties on February 5, 2019, and that McCauley
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committed Auto-Owners to the change by her words and actions. See State Auto Mut Ins Co, 54
Mich App at 204. Auto-Owners failed to present any evidence that McCauley intended to bind
Auto-Owners on February 6, 2019, other than the fact that she did not send the formal request for
the change until that date. That McCauley sent the formal request on this date does not create a
question of fact as to whether she acted to bind Auto-Owners at the meeting the day before. Given
the evidence in the record, it is clear that McCauley bound Auto-Owners on February 5, 2019.
Auto-Owners relies on several authorities for its proposition that an insured cannot defeat
the completed-loss and loss-in-progress doctrines through a backdated policy. See, e.g.,
Merchant’s Mut Ins Co v Lyman, 82 US 664; 21 L Ed 246 (1872); American Bumper and Mfg Co,
452 Mich at 459; Gauntlett, 127 Mich at 504; Inland Waters, 997 F2d at 178. These authorities,
however, are inapposite, because the undisputed evidence in this case shows that McCauley bound
Auto-Owners on February 5, 2019; before the loss began or was complete. McCauley’s statement
in the request to effect the change merely reflected the fact that the coverage was extended on
February 5, 2019. The backdating was not intended to cover a completed loss or a loss-in-progress.
Because the loss occurred after the effective date of the binder, the completed-loss and loss-in-
progress doctrines did not bar Opera Block’s claims.
The trial court did not err when it denied Auto-Owners’s motion for summary disposition
premised on the completed-loss or loss-in-progress doctrines, nor did it err when it determined that
Opera Block was entitled to summary disposition on its claim for breach of contract against Auto-
Owners. See MCR 2.116(C)(10).
IV. OPERA BLOCK’S CROSS-APPEAL IN DOCKET NO. 365213
On cross-appeal in Docket No. 365213, Opera Block argues that the trial court erred when
it interpreted the policy with the “premier, property-plus endorsement” only provided $50,000 in
coverage for water backups for three locations. It maintains that the coverage is per building, not
location. It therefore argues that the trial court should have entered judgment in its favor against
Auto-Owners for $250,000, rather than $150,000. We disagree.
In response to Auto-Owners’s motion for summary disposition, Opera Block denied Auto-
Owners’s claim that Opera Block did not have water-backup coverage on the date of the loss.
Opera Block asserted it was entitled to $250,000 in coverage under the endorsement—$50,000 for
each of its five buildings. It did not, however, specifically argue in the trial court that the policy
language actually covered all five buildings as locations or sublocations.
The failure to raise an issue in the trial court waives that issue for appellate review. See
Tolas Oil & Gas Exploration Co v Bach Servs & Mfg, LLC, ___ Mich App ___, ___; ___ NW3d
___ (2023) (Docket No. 359090); slip op at 3. Although this Court has discretion to review
unpreserved claims of error, our Supreme Court has cautioned we do so only sparingly, and only
to prevent the miscarriage of justice. See Napier v Jacobs, 429 Mich 222, 233-234; 414 NW2d
862 (1987). An erroneous jury verdict resulting in a financial loss does not constitute a miscarriage
of justice warranting review of this unpreserved claim. Id. We therefore decline to exercise our
discretion to review it. See id.-9-
V. OPERA BLOCK’S APPEAL IN DOCKET NO. 365215
In Docket No. 365215, Opera Block appeals the trial court’s order dismissing its claims
against Kiebler Insurance. Opera Block argues it presented evidence that established a question
of fact as to each element of its negligence claims against Kiebler Insurance. We disagree.
To establish a claim against Kiebler Insurance for professional negligence, Opera Block
had to show Kiebler Insurance owed it a duty of care, which it breached, and that the breach caused
Opera Block to suffer damages. Pressey Enterprises, Inc v Barnett-France Ins Agency, 271 Mich
App 685, 687; 724 NW2d 503 (2006). An insurance agent has the duty to procure the insurance a
person specifically requests and may be liable in tort for failing to do so. See Haji v Prevention
Ins Agency, Inc, 196 Mich App 84, 87; 492 NW2d 460 (1992), citing, in relevant part, Khalaf v
Bankers & Shippers Ins Co, 404 Mich 134, 142-143; 273 NW2d 811 (1978). The agent must
strictly comply with the client’s “clear, explicit, absolute, and unqualified[]” instructions.
Zaremba Equip, Inc v Harco Nat’l Ins Co, 280 Mich App 16, 38; 761 NW 2d 151 (2008). The
agent does not, however, have the duty to procure insurance that exceeds the client’s expectations.
Id.An independent insurance agent owes its client a duty of good faith and loyalty, see
Genesee Foods Servs, 279 Mich App at 656, but, as a general rule, it does not have a duty to advise
the client about the adequacy of a policy’s coverage, see Mate, 233 Mich App at 22. “Instead, the
insured is obligated to read the policy and raise questions concerning coverage within a reasonable
time after issuance.” Id. at 23 (citation omitted). The parties agree that Harts applies to Kiebler
Insurance notwithstanding the fact that Kiebler Insurance was an independent insurance agent.
This Court has applied the rule in Harts to an independent insurance agent without specifically
holding that the limits on the duty to advise identified in Harts applied to all agents. See Pressey
Enterprises, 271 Mich App at 687-688.
In Harts, our Supreme Court addressed the duty a captive insurance agent owed to a
customer who purchased an insurance product from the captive agent’s insurer. See Harts, 461
Mich at 6 (“It is uncontested, indeed it is essential to the cause of action pleaded by plaintiffs, that
[the licensed insurance agent selling insurance exclusively for Farmers] was Farmers’ agent.”).
The Court noted that, under the common law, a captive agent had no duty to advise a customer
about his or her coverage. Id. at 7-8. But, it did recognize an exception to this general rule:
However, as with most general rules, the general no-duty-to-advise rule,
where the agent functions as simply an order taker for the insurance company, is
subject to change when an event occurs that alters the nature of the relationship
between the agent and the insured. . . . We thus modify the “special relationship”
test . . . so that the general rule of no duty changes when (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 9-11.]
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A. PROCURING COVERAGE
Opera Block first argues the trial court erred when it dismissed Opera Block’s claim that
Kiebler Insurance failed to procure the insurance Fuller requested. Kiebler Insurance moved for
summary disposition, arguing the undisputed evidence showed it did not breach any duty to
procure insurance for Opera Block
In its motion for summary disposition, Kiebler Insurance focused on the evidence
demonstrating that Fuller, Opera Block’s representative, met with McCauley, Kiebler Insurance’s
representative, on February 5, 2019,3 and discussed the coverage he wanted for Opera Block’s
buildings. Kiebler Insurance noted a handwritten notation on the back of the policy summarizing
what Fuller wanted. The notations showed, in relevant part, that he wanted “175k” in coverage
for “Building” “140”; “125” for building “136” and “450k” for building “128-128 1/2.” It also
cited testimony that Fuller wanted the “best of the best” coverage. Kiebler Insurance cited
evidence that McCauley made the requested changes and included the “premier property-plus
endorsement” with the highest coverage level offered by Auto-Owners, which included $50,000
in coverage for water backups. Kiebler Insurance also presented an affidavit by an insurance
expert, David Walker, who averred that $50,000 in coverage for water backups was the best
available coverage on the market at the time. Kiebler Insurance argued that this evidence
established there was no question of fact that it procured a policy which complied with Fuller’s
request.
In response, Opera Block argued there was evidence that McCauley did not procure the
requested insurance because she insured the five buildings as three locations, not five, which
resulted in Opera Block having $100,000 less in coverage for the damage caused by the water
backup. It relied on a June 2017 e-mail exchange between Fuller and his prior Kiebler Insurance
agent, Lauri Adcock, in which, Fuller noted that the addresses listed on the policy for the buildings
were 140, 136, and 128 Kent Street. As for 128 Kent Street, there were “three buildings” at this
address, and Fuller wanted to “make sure despite the fact that it’s only one address, [Opera Block
was] covered on all 3 buildings.” Adcock responded immediately: “Yes, [a]ll 5 are covered, but
due to occupancy types we have them grouped into 3 locations on the policy. All buildings make
up the 3 locations.”
This e-mail exchange does not establish a question of fact as to whether McCauley
complied with Fuller’s request on February 5, 2019. The e-mails involved interactions from over
a year before and did not address the coverage Fuller requested on February 5, 2019. Moreover,
although Fuller expressed a desire to have all five buildings covered in his 2017 e-mail, he did not
state he wanted them covered individually, with separate applicable coverage limits. His
comments only showed that he wanted to be sure the properties were all covered by the policy at
issue. Adcock responded they were, in fact, all covered, but clarified that they were covered as
3
Opera Block also argued the evidence showed that Fuller requested the changes in coverage
weeks earlier than February 5, 2019. But, even assuming there was a question of fact as to whether
Fuller requested the changes earlier, Opera Block has not identified any harm occasioned by this
alleged failure. As such, the question remains whether the insurance McCauley actually procured
satisfied Fuller’s request.
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three locations. The evidence further demonstrates that the policy did in fact cover all three
addresses at 128 Kent Street as one location. There is no indication that Fuller objected to this
form of coverage in 2017, and the handwritten notes from February 5, 2019 show that Fuller and
McCauley operated on the assumption that listing three locations was still a proper way to insure
the buildings.
Kiebler Insurance provided the trial court with additional proof that 128 Kent Street was
one location in its supplemental brief. It noted Mack’s testimony that a single building with
multiple addresses would be insured by Auto-Owners as a single location. Auto-Owners would
insure a building as a sublocation even if it shared an address with another building, but only if the
two buildings were not attached. Auto-Owners’s senior claim representative, Benjamin Barnes,
testified similarly. Kiebler Insurance also cited evidence that the taxing authority and local utility
company treated 128 Kent Street as a single property.
In its supplemental brief, Opera Block cited its expert’s, Michael Hale’s, affidavit, in which
he opined that Kiebler Insurance negligently wrote the policy as covering three locations rather
than one location with five sublocations. He further opined that, from his experience with Auto-
Owners, Kiebler Insurance inaccurately wrote the policy to cover three locations, not five.
Hale’s affidavit does not create a question of fact as to whether Kiebler Insurance
negligently listed the insured properties as three locations rather than five. Notably, Hale did not
offer any opinion about the meaning of the terms “location” or “sublocation,” and did not offer
any indication as to how Auto-Owners utilized these terms in its policies. Instead, Hale’s affidavit
simply asserted, in a conclusory manner, that Kiebler Insurance should have requested insurance
for five separate locations without providing any basis to support a finding that Auto-Owners
would have even issued such a policy. His averments were, therefore, inadequate to refute
Barnes’s and Mack’s testimony to establish a genuine issue of fact as to whether Kiebler Insurance
could have insured the five buildings as five sublocations even though three of the buildings shared
an address and were attached to each other. See Quinto v Cross and Peters Co, 451 Mich 358,
371-372; 547 NW2d 314 (1996) (a conclusory affidavit is not sufficient to establish a question of
fact for purposes of summary disposition).4
Kiebler Insurance also presented evidence that McCauley procured the highest level of
water-backup coverage then-available to Opera Block through Auto-Owners, as well as evidence
demonstrating that Auto-Owners’s coverage was the best available. As to the latter point, it relied
on Walker’s affidavit. In contrast, Opera Block relied on Hale’s assertion that he reviewed the
insurers available to Kiebler Insurance and conclusion that two insurers had policies available at
4
Opera Block complains that the trial court improperly weighed the credibility of the competing
experts when it considered the motions for summary disposition. See Franks, 330 Mich App at 85.
The record does not support this contention. The trial court characterized Hale’s statements as
“speculative” because he merely asserted that another insurer might have insured Opera Block for
more without providing any context to support his assertion. The trial court’s assessment was
accurate and did not amount to an improper weighing of credibility. See Quinto, 451 Mich at 371-
372.
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the time which would have provided greater water-backup coverage, and that these insurers “might
have considered writing a policy for Plaintiff.”
Hale’s opinion that two insurers might have insured Opera Block for a higher level of
water-backup coverage does not establish a question of fact as to whether Kiebler Insurance
breached its duty to procure the best coverage possible for Opera Block. Hale did not provide any
details suggesting that the other insurers would have, in fact, insured Opera Block at the time with
more coverage. Although Walker’s affidavit was similarly devoid of sufficient detail to support
the claim that Auto-Owners had the highest available coverage, Kiebler Insurance did not have to
prove that Auto-Owners’s policy was, in fact, the best policy. Opera Block had the burden of
proof at trial. As such, Kiebler Insurance only had to argue that Opera Block could not show there
was a better policy available. Once it did so, the burden shifted to Opera Block to introduce
evidence demonstrating a genuine issue of material fact. See Lowrey v LMPS & LMPJ, Inc, 500
Mich 1, 7-8; 890 NW2d 344 (2016). Hale’s statements only established it was theoretically
possible that some insurer might have insured Opera Block for more than $50,000 in water-backup
coverage, or insured the buildings as more than three locations. Hale’s speculation was insufficient
to create a question of fact. See Quinto, 451 Mich at 371-372.
On appeal, Opera Block relies heavily on its claim that McCauley must have
misunderstood the nature of the insurance she procured for Opera Block, because, after the loss,
she sent Fuller an e-mail in which she indicated that Opera Block had $50,000 in water-backup
coverage for each building. Excluding the possibility that McCauley imprecisely used the term
“building” as a substitute for “location,” her e-mail establishes, at best, she misunderstood that the
policy limits applied to locations rather than building addresses. McCauley’s e-mail did not
demonstrate that she could have insured the five addresses as five sublocations or that there was
better insurance available.
The trial court did not err when it determined there was no genuine issue of material fact
that Kiebler Insurance properly insured the buildings as three locations when it procured the
coverage changes on February 5, 2019. It also did not err when it determined that there was no
genuine issue of material fact that the Auto-Owners policy was the best available policy for Opera
Block.
B. DUTY TO ADVISE
Opera Block lastly argues on appeal that there was a question of fact as to whether Kiebler
Insurance breached a duty to advise arising from its special relationship with Opera Block. More
specifically, Opera Block believes that (1) the evidence showed Kiebler Insurance misrepresented
the nature and extent of the coverage; (2) Fuller made an ambiguous request for insurance and
Kiebler Insurance breached its duty to clarify the nature of the request; and (3) Kiebler Insurance
offered inaccurate advice on its own initiative. See Harts, 461 Mich at 10. Finally, Opera Block
argues the evidence showed that these breaches proximately caused Opera Block’s harm by
depriving it of adequate coverage for each of its five buildings as separate locations or
sublocations.
As Kiebler Insurance notes on appeal, Opera Block failed to present evidence to establish
that Kiebler Insurance could have insured 128 Kent Street as three separate sublocations rather
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than as one location in an Auto-Owners policy. To the contrary, and as already explained, the
evidence demonstrates that Auto-Owners would not have treated the five buildings as one location
with five sublocations. Moreover, there was no evidence that any other insurer would have insured
the five addresses as five separate locations. There was also no evidence that any insurer would
have insured the buildings against water backups for more than what Auto-Owners did. In the
absence of such evidence, Opera Block could not establish that any breach of a duty to advise
Kiebler Insurance may have owed Opera Block as a result of their special relationship caused
Opera Block to have less coverage for water backups than it would have had but for the breach.
To survive a motion for summary disposition, Opera Block had to establish a genuine issue of
material fact on the matter of causation. See Pressey Enterprises, 271 Mich App at 687. It failed
to do so. Therefore, the trial court properly dismissed Opera Block’s claim of a breach of the duty
to advise on that basis alone. See MCR 2.116(C)(10).
Opera Block failed to establish a genuine issue of material fact on its claims against Kiebler
Insurance. Accordingly, the trial court properly dismissed Opera Block’s claims against Kiebler
Insurance.
Affirmed.
/s/ Thomas C. Cameron
/s/ Michael J. Kelly
/s/ Christopher P. Yates
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