EASTSIDE WHOLESALE SUPPLY CO V LUMBER MUTUAL INSURANCE CO
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STATE OF MICHIGAN
COURT OF APPEALS
EASTSIDE WHOLESALE SUPPLY CO., d/b/a
SIDING WORLD,
UNPUBLISHED
April 8, 1997
Plaintiff-Appellant,
v
No. 186992
Wayne Circuit Court
LC No. 94-421065
LUMBER MUTUAL INSURANCE CO.,
Defendant-Appellee.
Before: Holbrook, Jr., P.J., and White and S. J. Latreille*, JJ.
PER CURIAM.
Plaintiff appeals as of right from the order granting summary disposition in favor of defendant in
this breach of contract and negligence action. We affirm.
On January 1, 1990, defendant issued a policy of insurance to plaintiff that provided coverage
for loss of, and damage to, plaintiff's real and personal property in relation to plaintiff's lumber and
building supply business. Accompanying this policy was an endorsement that rendered plaintiff a
member of the Safety Group Plan, which was developed exclusively for the building materials dealers
industry. In 1992, plaintiff discovered a loss of inventory as a result of employee theft. Plaintiff filed a
timely proof of loss with defendant. The claim was denied on the basis that the contract of insurance
excluded payment of benefits for loss caused by dishonest acts of employees. Thereafter, plaintiff filed
this action against defendant for breach of contract and negligence. The trial court granted summary
disposition, dismissing plaintiff's action in its entirety pursuant to MCR 2.116(C)(8) and (10).
On appeal, plaintiff first contends that the trial court erred in granting summary disposition with
regard to its breach of contract claim because an endorsement placed plaintiff in the Safety Group Plan,
thus rendering the contract ambiguous because the Safety Group Plan was not defined in the contract.
Plaintiff claims that this Court must look to the extrinsic evidence/promotional material to define the
Safety Group Plan, and that these materials constitute promises and undertakings on the part of
defendant on which plaintiff relied.
* Circuit judge, sitting on the Court of Appeals by assignment.
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An insurance policy must be enforced in accordance with its terms. Arco Industries v
American Motorists Insurance Co, 448 Mich 395, 402; 531 NW2d 168 (1995). Courts will not
hold an insurance company liable for a risk it did not assume. Id. If an insurance contract’s language is
clear, its construction is a question of law for the court. Taylor v B Cross & Blue Shield of
lue
Michigan, 205 Mich App 644, 649; 517 NW2d 864 (1994). Generally, an endorsement to an
insurance contract becomes part of the contract. Tiano v Aetna Casualty & Surety, 102 Mich App
177, 184; 301 NW2d 476 (1980). Under Michigan law, when a conflict arises between the terms of
an endorsement and the form provisions of an insurance contract, the terms of the endorsement prevail.
Hawkeye-Security Ins. Co v Vector Construction, 185 Mich App 369, 380; 460 NW2d 329
(1990).
On its face, the endorsement does not conflict with the provision excluding coverage for
employee theft. Therefore, looking to the plain language, there is no conflict and the exclusion for
employee theft contained in the contract would apply. However, plaintiff also argues that this Court
should look to the promotional materials for interpretation of the Safety Group Plan.
If a term of a contract is unambiguous, extrinsic evidence is not admissible to contradict its
meaning. Michigan Millers Insurance v Bronson Plating, 197 Mich App 482, 494; 496 NW2d 373
(1992). However, extrinsic evidence is admissible to show the existence of an ambiguity. Id. at 495.
Here, plaintiff claims an ambiguity exists because the contract does not define the Safety Group Plan.
Even if we look to the promotional material to determine whether an ambiguity exists, plaintiff’s
argument still fails. The promotional material does not create an ambiguity. It does not state anything
about employee theft. Moreover, it provides no guarantees about the coverage included in the
insurance policy. Plaintiff purchased a policy that specifically defined the terms of plaintiff's insurance
coverage and employee theft was expressly precluded from coverage. As such, defendant did not
breach the terms of the existing contract by failing to provide benefits for employee theft.
Plaintiff also contends that the trial court erred in granting summary disposition with regard to
plaintiff's breach of contract claim because the promotional material distributed by defendant, in which
defendant represented that it specialized in insurance to lumber supply companies and was
knowledgeable in that area of insurance, and that it would make certain services available, was a part of
the contract for the purposes of interpretation. Even if we were to follow Craver v Union Fidelity
Life Insurance Co, 307 NE2d 265, 269 (Ohio App, 1973), which plaintiff cites for the proposition
that when an insurance company advertises certain coverage or makes representations in its promotional
material, such promises and representations may become part of the contract, plaintiff is not entitled to
relief. Here, the promotional material only contained representations that defendant would provide
plaintiff with knowledgeable personnel and certain loss prevention services and expertise, and that
defendant had experience in lumber supply insurance. There were no promises regarding the terms of
plaintiff's insurance coverage. Unlike Craver, there were no representations made about the coverage
that would become part of plaintiff's contract of insurance. Therefore, the promotional material does not
support plaintiff's claim. Further, the exclusion is clear and explicit and had the contract been read,
plaintiff would have been aware that it was not covered for employee theft. One who signs a contract
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cannot seek to avoid it on the basis that he did not read it or that he supposed it was different in its
terms. Stopczynski v Ford, 200 Mich App 190, 193; 503 NW2d 912 (1993). Finally, plaintiff has
not shown that it would have obtained the coverages or avoided the loss had defendant performed the
services plaintiff maintains defendant promised to perform.
Next, plaintiff argues that the trial court erred in dismissing its negligence claim on the basis that
a special relationship did not exist between the parties. We disagree. Generally, an insurance agent
does not have an affirmative duty to advise a client regarding the adequacy of a policy’s coverage.
Bruner v League General Insurance, 164 Mich App 28, 31; 416 NW2d 318 (1987). Instead, the
insured is obligated to read the policy and raise questions concerning coverage. Id. “However, a duty
to advise may arise when a ‘special relationship’ exists between the insurance company or its agent and
the policyholder. Where such a duty has been breached, liability may be based thereon.” Id. at 31-32.
The existence of a special relationship is a question of fact. Stein v Continental Casualty, 110 Mich
App 410, 417; 313 NW2d 299 (1981).
To determine whether a special relationship exists each case must be decided on its own facts.
Id. at 417 (quoting Hardt v Brink, 192 F Supp 879, 880 (WD Wash 1961)). In Bruner, supra, 164
Mich App 34, the Court noted:
[I]t is apparent that something more than the standard policyholder-insurer relationship
is required in order to create a question of fact as to the existence of a “special
relationship” obligating the insurer to advise the policyholder about his or her insurance
coverage. There must be, in a long-standing relationship, some type of interaction on a
question of coverage, with the insured relying on the expertise of the insurance agent to
the insured’s detriment.
Here, plaintiff had recently switched insurance agents and companies and had only been with
defendant for 1 1/2 years. This does not constitute a long-standing relationship as required under the
above stated test. In addition, there is no indication that there was any interaction between the parties
regarding the specifics of coverage with regard to employee theft, or that plaintiff previously had this
coverage. Although plaintiff does provide evidence that defendant advertised its expertise in this type of
insurance and that plaintiff relied on the expertise, this factor alone does not satisfy the criteria set forth
in Bruner. Summary disposition was properly granted.
Affirmed.
/s/ Donald E. Holbrook, Jr.
/s/ Helene N. White
/s/ Stanley J. Latreille
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