GENERAL AGENCY COMPANY V HURON OIL COMPANY LLC
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STATE OF MICHIGAN
COURT OF APPEALS
GENERAL AGENCY COMPANY,
UNPUBLISHED
April 27, 2010
Plaintiff/Counter-DefendantAppellee,
v
HURON OIL COMPANY, L.L.C., PEARSONS,
INC., HURON TRANSPORTATION, L.L.C., and
ERWIN J. LEWANDOWSKI,
No. 288663
Presque Isle Circuit Court
LC No. 07-002769-CZ
Defendants/Counter-PlaintiffsAppellants.
Before: SERVITTO, P.J., and FITZGERALD and BECKERING, JJ.
PER CURIAM.
Defendants appeal as of right the judgment awarding plaintiff damages of $70,000 in
accordance with the jury’s verdict, plus costs and interest of $6,525.71 against all three corporate
defendants, jointly and severally,1 in this breach of contract action to recover the balance owed
for insurance coverage procured by plaintiff on behalf of defendants. We affirm.
Plaintiff is an independent insurance agency and was endorsed by the Michigan
Petroleum Association (“MPA”) to market insurance to MPA members. Defendants Huron Oil
Company, L.L.C., Pearsons, Inc., and Huron Transportation, L.L.C. are related corporations
connected to the petroleum industry. Defendant Erwin Lewandowski owns both Huron Oil and
Huron Transportation, and his son, Richard Lewandowski, owns Pearsons.
Plaintiff ’s agent, John Olson, began writing insurance policies for defendants in 2002.
At that time, defendants had coverage through the MPA’s endorsed insurer, Employers Mutual
Casualty Company (“Employers Mutual”). Defendants’ account with plaintiff was kept current
through approximately August 2005. In 2006, Employers Mutual canceled defendants’ policies
due to excessive claims. According to plaintiff, because of defendants’ loss history, the only
comparable coverage it could obtain for defendants was through Empire Fire & Marine
1
The jury found that individual defendant Erwin Lewandowski was not liable.
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Insurance Company (“Empire”). Although Empire’s coverage was more costly, Olson testified
that defendants authorized him to obtain the coverage because defendants did not have any other
alternatives. Plaintiff also obtained other necessary coverages for defendants through other
insurance carriers. Because Empire did not offer a billing program, plaintiff paid the premium
amount directly to Empire and then billed defendants on an installment basis for the amount of
the premiums.
After August 2005, defendants began to accumulate a balance on their account with
plaintiff. Although coverage changes were made to lower the cost, plaintiff claimed that
defendants owed more than $90,000 in past-due premiums by January 2007. At that point,
plaintiff could not carry the balance any longer and the policies were cancelled. Plaintiff then
filed this action to collect the past-due premiums. Defendants filed a counterclaim.
I. SUMMARY DISPOSITION OF DEFENDANTS’ COUNTERCLAIM
Defendants first argue that the trial court erred in granting plaintiff’s motion for summary
disposition of their counterclaim in which they alleged that plaintiff breached its fiduciary duties
as their insurance agent. Defendants alleged that plaintiff represented that it would work
diligently to obtain the best appropriate insurance coverage at the best premium reasonably
available in the market, and that they reasonably relied on plaintiff’s representations, but
subsequently discovered that plaintiff obtained coverage at “unrealistically high premium
charges for the coverage,” “grossly and intentionally overstated values of [the] insured assets,”
and made “numerous mistakes in the coverage and premium credits.” The trial court granted
plaintiff’s motion for summary disposition of defendants’ counterclaim because the evidence did
not establish a special relationship or contract to impose a fiduciary duty on plaintiff.
This Court reviews a trial court’s summary disposition decision de novo. Spiek v Dep’t
of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). Although plaintiff requested summary
disposition under both MCR 2.116(C)(8) and (10), it appears that the trial court granted the
motion under MCR 2.116(C)(10) because it considered evidence beyond the pleadings. A
motion under MCR 2.116(C)(10) tests the factual support for a claim. The trial court must
consider the pleadings, affidavits, depositions, admissions, and other documentary evidence
submitted by the parties, and view that evidence in the light most favorable to the nonmoving
party. MCR 2.116(G)(5); Maiden v Rozwood, 461 Mich 109, 119-120; 597 NW2d 817 (1999).
Summary disposition should be granted if there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law. Maiden, 461 Mich at 120. “Whether a
duty exists is a question of law that is solely for the court to decide.” Harts v Farmers Ins Exch,
461 Mich 1, 6; 597 NW2d 47 (1999).
In Harts, our Supreme Court recognized that an insurance agent has no duty to advise an
insured regarding the adequacy of insurance coverage. Id. at 7-8. The agent’s principal is the
insurance company, and therefore, the agent’s job is merely to present the product of his
principal and take orders from those who want to purchase coverage. Id. at 8. Furthermore, this
state has recognized a distinction between insurance agents and insurance counselors. Insurance
agents are essentially “order takers,” whereas insurance counselors primarily function as advisors
on insurance coverage. Id. at 8-9.
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Nonetheless, the Court in Harts recognized that there can be exceptions to the limited
role of insurance agents if the relationship between the insured and the agent is altered into “a
‘special relationship’ that gives rise to a duty to advise on the part of the agent.” Id. at 9-10. In
Harts the Court explained that a special relationship sufficient to impose a duty on an agent
arises 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 10-11 (footnotes
omitted).]
Defendants’ counterclaim alleges that plaintiff “represented that it would work diligently
to obtain the best appropriate insurance coverage for the best premium reasonably available in
the market.” Defendants alleged that they reasonably relied on plaintiff ’s representations until
they discovered in 2006 that the premiums were “unrealistically high” for the coverage provided.
Furthermore, defendants claimed that plaintiff “intentionally overstated [the] values of [the]
insured assets” and made mistakes regarding coverage and credits for changes in coverage.
After reviewing the record, we agree with the trial court that the evidence failed to
establish a genuine issue of material fact regarding the existence of a special relationship to
support the allegations in defendants’ counterclaim for breach of a fiduciary duty. Plaintiff’s
promotional materials and Olson’s statements when he solicited defendants’ business did not
establish that plaintiff was assuming some special or additional duty to defendants. The crux of
defendants’ allegations is their dissatisfaction with the increase in their premiums when they
switched insurers. Although defendants argue that plaintiff made errors that caused the increase
in premiums, defendants have not shown that this involved special expertise or advice to
defendants. Defendants’ overall complaint was not that they were offered improper advice about
coverage issues, but that they were charged too much or that plaintiff did not seek enough
competitive bids. Under Hart, this is insufficient to support defendants’ cause of action.
Accordingly, the trial court did not err in granting plaintiff’s motion for summary disposition of
the counterclaim.
II. DEFENDANTS’ RIGHT TO CREDITS AND OFFSETS
Defendants next argue that the trial court erred in granting plaintiff ’s motion in limine to
preclude defendants from offering evidence of the parties’ relationship, including claims for
offsets and credits, before August 1, 2005. This Court reviews a trial court’s ruling on a motion
in limine for an abuse of discretion. Bartlett v Sinai Hosp of Detroit, 149 Mich App 412, 418;
385 NW2d 801 (1986). We find no error.
This case was presented to the jury on plaintiff’s claim for breach of contract. More
specifically, it involved a claim based on a revolving account. According to defendants, they had
an open or fluctuating account with plaintiff; they have always denied owing plaintiff the full
amount claimed; their briefs in opposition to plaintiff’s motion for summary disposition and
motion in limine, as well as the affidavit of defendant Erwin Lewandowski, establish that they
were entitled to specific “set-offs” pre-August 2005; the trial court’s denial of their counterclaim
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should not have precluded them from presenting that “set-off” evidence at trial, especially
considering that the court permitted them to present evidence of post-August 2005 “set-offs”;
and whether there was a zero balance as of August 2005 was in dispute, so the August 2005 cutoff date was completely arbitrary.
The trial court did not set the August 2005 cut-off date arbitrarily. It selected that date
based on the parties’ representation that there was a zero balance at that point, i.e., plaintiff was
not claiming that defendant owed them any money prior to that date, only from that point
forward. As plaintiff’s attorney pointed out at oral arguments on appeal, defendants attached an
account activity sheet to its brief in opposition to plaintiff’s motion in limine, which indicated
that there was a zero balance in August 2005 (granted, in n 1 of the brief, defendants stated that
the sheet was one of many different accountings prepared by plaintiff). It was after that time,
when Employers Mutual cancelled its coverage and new coverage was obtained through Empire,
that an unpaid balance began to accrue and defendants began to question the amounts that were
billed. At the hearing on the motion in limine, defense counsel first stated that defendants
contested that there was a zero balance in August 2005, but later stated that he was unsure of
when there was a zero balance and that it was approximately August 2005. Defendants have not
presented any evidence to indicate that there was not a zero balance at that time.
The heart of defendants’ argument is that even if there was a technical zero balance in
August 2005, they were overcharged, and thus, overpaid, before that date and do not owe
plaintiff as much because of those overpayments. Defendants call it a “set-off”, but they are
essentially arguing that they are entitled to credits because they were overcharged and they
overpaid in the past. At oral arguments on appeal, defense counsel stated that defendants were
entitled to approximately $60,000 in “set-offs”, including pre-August 2005 “set-offs”, and that
those “set-offs” were listed in their brief in opposition to plaintiff’s motion for summary
disposition, Lewandowksi’s affidavit, and their brief in opposition to plaintiff’s motion in limine
(which states that defendants are entitled to “credits” for credits not properly applied, premiums
for non-existent locations and vehicle charges, excess premiums resulting in inflated vehicle
values, and unearned penalties, totaling approximately $60,000). But what defendants fail to
acknowledge on appeal is that all of the “set-offs” or “credits” they claim are entitled to overlap
with what they claimed in their counterclaim, which the trial court dismissed in granting plaintiff
summary disposition.
Defendants argue that because they were permitted to present evidence of post-August
2005 “set-offs” at trial, they should have been permitted to present pre-August 2005 evidence.
The key distinction, however, is that plaintiff only claimed that defendants had an outstanding
balance after August 2005. The amount of that balance was to be determined by the jury.
Therefore, the court was within its discretion in concluding that the admission of pre-August
2005 evidence would have been irrelevant and would only have confused the jury. MRE 401,
403. Accordingly, the trial court did not abuse its discretion in granting plaintiff ’s motion in
limine. See Bartlett, 149 Mich App at 416-417.
III. JOINT AND SEVERAL LIABILITY
Defendants next argue that the trial court erred in giving the jury a supplemental
instruction that allowed it to find defendants jointly and severally liable. The trial court’s
instructions allowed the jury to apportion damages among the defendants individually, or to find
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that defendants were jointly and severally liable. The jury awarded plaintiff $70,000 against the
three corporate defendants, jointly and severally.
Claims of instructional error are ordinarily reviewed de novo. Ward v Consolidated Rail
Corp, 472 Mich 77, 83; 693 NW2d 366 (2005). But as explained in Guerrero v Smith, 280 Mich
App 647, 660; 761 NW2d 723 (2008), this Court applies an abuse-of-discretion standard when
reviewing a trial court’s decision regarding supplemental jury instructions. A trial court is
entitled to some deference in deciding whether the evidence supports an instruction. Keywell &
Rosenfeld v Bithell, 254 Mich App 300, 339; 657 NW2d 759 (2002).
The abolition of joint and several liability in tort cases, or cases involving “another legal
theory seeking damages for personal injury, property damage, or wrongful death,” MCL
600.2956, does not apply to contract actions. Zahn v Kroger Co of Michigan, 483 Mich 34, 3840; 764 NW2d 207 (2009); Laurel Woods Apartments v Roumayah, 274 Mich App 631, 641642; 734 NW2d 217 (2007). In a contract action, if the parties agreed that the defendants would
be jointly and severally liable for any damages caused by any one or all of them, joint and
several liability can apply. Laurel Woods, 274 Mich App at 642.
In this case, the evidence showed that a single application for insurance was submitted
jointly in the names of all three corporate defendants, and defendants were jointly listed on the
policies. These facts support the trial court’s decision to instruct the jury that defendants could
be jointly and severally liable for the policy premiums.
Affirmed.
/s/ Deborah A. Servitto
/s/ E. Thomas Fitzgerald
/s/ Jane M. Beckering
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