WILLIAM HALL V ALLSTATE INSURANCE CO
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STATE OF MICHIGAN
COURT OF APPEALS
WILLIAM HALL,
UNPUBLISHED
December 22, 2009
Plaintiff-Appellant,
v
No. 288345
Oakland Circuit Court
LC No. 04-057715-CK
ALLSTATE INSURANCE COMPANY, and
REBECCA BAILEY,
Defendants-Appellees.
Before: Meter, P.J., and Borrello and Shapiro, JJ.
PER CURIAM.
This case arose from a claim made by plaintiff to defendant Allstate Insurance Company
for damages related to the theft of his automobile, a 1995 Mercedes Benz S500, on December
24, 2002. Plaintiff appeals as of right the trial court’s grant of partial summary disposition to
defendants pursuant to MCR 2.116(C)(8) and (10). We affirm.
I. Summary of Facts and Proceedings
In 2001 and 2002, plaintiff worked part-time as a general helper at Page Toyota. During
his employment, plaintiff became interested in a used 1995 S500 Mercedes. Plaintiff ultimately
purchased the Mercedes on December 19, 2002 for $35,000. According to plaintiff, the vehicle
was covered by a full 24-month warranty under an extended warranty from Page Toyota. In
addition, at the time he purchased the vehicle, he also purchased an insurance policy through the
dealer that “in the event of a Total Loss, Constructive Total Loss, or Unrecovered Theft, The
Seller/Lender/Lessor will apply the proceeds of the GAP coverage against the outstanding
loan/lease balance.” Plaintiff insured the vehicle under a policy issued by defendant Allstate.
On December 24, 2002, plaintiff reported the vehicle stolen, filing a police report and notifying
defendant of the theft. The vehicle was recovered shortly after being stolen. The vehicle’s
engine had been completely removed. Plaintiff stated in his initial recorded statement that when
the vehicle was returned, the “ignition was messed up.”
Plaintiff’s claim was originally reviewed by a representative in its claims department who
flagged the claim as suspicious and referred it to Rebecca Bailey, an agent in Allstate’s Special
Investigations Unit. Bailey conducted an investigation to determine whether the claim was valid
or fraudulent. The investigation included obtaining a recorded statement on January 7, 2003,
taking plaintiff’s examination under oath (EUO) on March 19, 2003, obtaining records related to
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the purchase of the car, obtaining records related to the maintenance history of the car and a
review and analysis of those records by a certified master mechanic.
Allstate ultimately denied the claim. On April 17, 2003, Bailey sent a denial letter to
plaintiff in care of his attorney.
The letter was captioned “PERSONAL AND
CONFIDENTIAL TO BE OPENED AND READ BY ADDRESSEE ONLY.” The letter
stated that the claim was being denied because Allstate had concluded that plaintiff’s claim fell
within a policy exclusion that bars coverage for “loss caused intentionally by or at the direction
of an insured person.” The letter went on to specify the grounds for denial as follows:
You are not entitled to recovery under the policy of insurance for the following reasons:
1. The loss of the 1995 Mercedes S500 did not occur as claimed and was caused
intentionally by you or others at your direction or acquiescence.
2. In your Affidavit of Automobile Total Theft, your Sworn Statement in Proof of
Loss and in your testimony during your Examination under Oath, you have
committed fraud and false swearing and have misrepresented the facts and
circumstances concerning the loss, the condition of the vehicle prior to and at the
time of loss, the nature of the loss and the extent of the loss, with the intent that
Allstate rely upon said representations in honoring your claim, all contrary to the
provisions of the policy and Michigan common law.
3.
You have failed to provide the Company with full and complete
documentation concerning your financial condition, income and credit history,
contrary to the conditions precedent in the policy of insurance set forth above,
thereby denying it an opportunity to determine if there are other bases upon which
the Company has a right to deny your recovery under the policy of insurance.
4. The amount claimed to be the actual cash value of the vehicle at the time of the
loss is greatly in excess of the real actual cash value of the vehicle.
The letter also stated that the letter was being provided to plaintiff “in confidence.”
On April 21, 2004, plaintiff filed suit against Allstate for breach of contract, declaratory
relief that payment was due under the policy, intentional infliction of emotional distress,
violation of the Michigan Consumer Protection Act, MCL 445.901 et seq. (MCPA), and
violation of MCL 500.2006 under the Michigan Insurance Code. On October 27, 2004, plaintiff
filed an amended complaint, adding Bailey as a defendant and adding counts of tortious
interference with a contract and tortious interference of an expectancy interest against Bailey and
vicarious liability against Allstate.
In August 2005, Allstate filed for summary disposition on all counts except for plaintiff’s
breach of contract and declaratory relief. Plaintiff agreed to the dismissal of the vicarious
liability count and the claim to attorney fees under the insurance code, but denied that summary
disposition was appropriate as to any other counts. The trial court held a hearing and granted
Allstate’s motion at its conclusion.
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The breach of contract claim proceeded to trial. The jury concluded that the loss of the
vehicle was not caused intentionally by or with the consent or knowledge of plaintiff and
awarded him $15,000 for his breach of contract claim. Allstate moved for a judgment
notwithstanding the verdict or, alternatively, a new trial on damages because, under the policy,
Allstate’s liability was limited to “the least of” either “the actual cash value of the property or
damages part of the property at the time of loss, which may include a deduction for depreciation”
or “the cost to repair or replace the property or part to its physical condition at the time of the
loss . . . .” Allstate argued that plaintiff failed to provide any evidence regarding the cost or
value of a like-kind engine for the vehicle, instead arguing that he was entitled to the full value
of the vehicle or an amount in the good judgment of the jury. Defendant argued that by failing to
provide the jury with any evidence of what it would cost to replace the engine, the plaintiff
required the jury to determine damages based on speculation.
Judgment was originally entered on June 2, 2006, for $16,936.01, inclusive of interest
and costs. However, on June 6, 2006, the trial court agreed with Allstate that the jury’s
allocation of damages “was based on speculation” and granted a new trial as to damages. On
September 26, 2008, the parties entered into a settlement and order that entered judgment for
plaintiff in the amount of $8,000 as to the breach of contract claim. Plaintiff now appeals the
trial court’s dismissal of his non-contract claims.
II. Standard of Review
“We review de novo a trial court’s determination regarding a motion for summary
disposition.” Odom v Wayne Co, 482 Mich 459, 466; 760 NW2d 217 (2008). For a motion
brought under MCR 2.116(C)(10), we review the pleadings, admissions, and other evidence in
the light most favorable to the nonmoving party and, if there are no genuine issues of material
fact, the moving party is entitled to judgment as a matter of law. Id. at 466-467. For a motion
brought under MCR 2.116(C)(8), we consider only the pleadings. MCR 2.116(G)(5); Maiden v
Rozwood, 461 Mich 109, 119-120; 597 NW2d 817 (1999). Such a motion tests the legal
sufficiency of the complaint, taking all well-pleaded factual allegations as true and in the light
most favorable to the nonmoving party. Id. at 119. A motion under MCR 2.116(C)(8) is granted
“only where the claims alleged are ‘so clearly unenforceable as a matter of law that no factual
development could possibly justify recovery.’” Id., quoting Wade v Dep’t of Corrections, 439
Mich 158, 163; 483 NW2d 26 (1992).
III. Intentional Infliction of Emotional Injury
Plaintiff alleged that the actions of Allstate and Bailey in denying his claim and accusing
him of having been involved in the theft and lying about it were, “extreme and outrageous and
taken with the explicit intent of denying plaintiff the benefits due him pursuant to the insurance
agreement and to cause his reputation to be besmirched in the community including his loss of
esteem, the loss of this credit and humiliation and embarrassment.”
“To establish a prima facie claim of intentional infliction of emotional distress, the
plaintiff must present evidence of (1) the defendant’s extreme and outrageous conduct, (2) the
defendant’s intent or recklessness, (3) causation, and (4) the severe emotional distress of the
plaintiff.” Walsh v Taylor, 263 Mich App 618, 634; 689 NW2d 506 (2004). The trial court
concluded that plaintiff did not offer sufficient evidence to create a question of material fact as to
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defendant’s extreme and outrageous conduct or as to defendant’s intent or recklessness. We
agree.
Taking the facts in the light most favorable to plaintiff we find no evidence in the record
of harassment or an attempt to besmirch plaintiff’s reputation. Defendants’ letter made
accusations against plaintiff that could reasonably cause a person innocent of those accusations1
to experience emotional distress or even severe emotional distress. However, there is no
evidence that this letter was sent to or published to any person other than plaintiff and his
attorney. This fact weighs strongly against a finding of extreme and outrageous conduct in the
issuance of the denial itself.
Having said that, however, we must consider not only whether plaintiff’s reputation was
besmirched by the investigation’s conclusion, but also whether defendant’s conduct during the
investigation could reasonably be found to be extreme and outrageous. After a review of the
entire record, we find no evidence of such conduct and conclude that a reasonable trier of fact
could not conclude that such conduct took place.
Plaintiff argues that there was at least a fact question as to whether the conduct was
outrageous, citing McCahill v Commercial Union Ins Co, 179 Mich App 761; 446 NW2d 579
(1989). However, the conduct complained of in McCahill went well beyond the insurer’s denial
of the claim or its denial letter asserting that the claimant had engaged in “arson, fraud, and false
swearing.” In McCahill, the defendant’s agents engaged in the following activities: sent copies
of the policy and proof of loss forms to the address of the burned residence rather than to the
address that it knew the claimant had moved to; entered plaintiff’s property on several occasions
without the plaintiff’s knowledge, consent, or presence; altered the fire scene without plaintiff’s
consent or knowledge; contacted the plaintiff at or near midnight and demanded that the plaintiff
provide a proof of loss statement over the telephone; and the defendant procured a report that
arson was the cause of fire when there was an internal document that indicated the cause and
origin investigator found no evidence of arson. Id. at 769-770.
An insurer need not engage in conduct identical to or as egregious as was present in
McCahill to reach the “extreme and outrageous” threshold. However, we do not believe that the
confidential letter sent by defendants could be reasonably said to do so. Plaintiff has not argued
that there was any other action by defendants that alone, or in combination with the letter, met
the standard. Plaintiff does point out that defendants were aware that plaintiff had suffered a
brain injury several years before and that this should have put defendants on notice that plaintiff
was particularly vulnerable to emotional injury. We do not dispute that such knowledge may be
relevant to the determination of the nature of defendant’s conduct and intent. However, the mere
fact that defendants investigated the case and reached the conclusion (ultimately determined by
the jury to be erroneous) that the claim was fraudulent, without evidence of harassment or the
absence of a good faith basis upon which to deny the claim,2 does not constitute extreme or
1
Which, after hearing all the evidence at trial, the jury found that plaintiff was.
2
As noted, there was no evidence of harassment in the instant case and defendants brought forth
substantial evidence of a good faith basis for its findings. For example, the vehicle was designed
(continued…)
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outrageous conduct or an intent to cause emotional injury. Accordingly, we conclude that the
trial court properly granted summary disposition on plaintiff’s intentional infliction of emotional
injury claim.
IV. Tortious Interference
Plaintiff alleged both tortious interference with a contractual relationship and tortious
interference with a business expectancy against Bailey. “The elements of tortious interference
with a contract are (1) the existence of a contract, (2) a breach of the contract, and (3) an
unjustified instigation of the breach by the defendant.” Health Call of Detroit v Atrium Home &
Health Care Services, Inc, 268 Mich App 83, 89-90; 706 NW2d 843 (2005).
“The elements of tortious interference with a business relationship are the
existence of a valid business relationship or expectancy, knowledge of the
relationship or expectancy on the part of the defendant, an intentional interference
by the defendant inducing or causing a breach or termination of the relationship or
expectancy, and resultant damage to the plaintiff. To establish that a lawful act
was done with malice and without justification, the plaintiff must demonstrate,
with specificity, affirmative acts by the defendant that corroborate the improper
motive of the interference. Where the defendant’s actions were motivated by
legitimate business reasons, its actions would not constitute improper motive or
interference.” [Mino v Clio School Dist, 255 Mich App 60, 78; 661 NW2d 586
(2003), quoting BPS Clinical Laboratories v Blue Cross & Blue Shield of
Michigan, 217 Mich App 687, 698-699; 552 NW2d 919 (1996) (citations
omitted).]
This Court, in Reed v Michigan Metro Girl Scout Council, 201 Mich App 10, 13; 506
NW2d 231 (1993), dealt with a tortious interference with economic relations claim and noted
that “[i]t is now settled law that corporate agents are not liable for tortious interference with the
corporation’s contracts unless they acted solely for their own benefit with no benefit to the
corporation.” Plaintiff has provided no evidence that Bailey acted solely for her own benefit and
there is no evidence that she received any additional compensation or employment benefit for
denying the claim. Therefore, the trial court properly granted summary disposition as to the
tortious interference claims.
(…continued)
with an anti-theft alarm system and a start lockout system that required a specifically
programmed transmitter and an infrared key to open the doors and engage the starter. Plaintiff
testified at his EUO that he was given two keys for the vehicle at the time of purchase, both of
which remained in his possession at all times, even at the time of the theft. However, the
responding police found no glass at or near where the Mercedes was parked prior to the theft and
all of the windows were intact when it was ultimately recovered. Thus, there was no evidence of
forced entry, and defendant’s investigation concluded that the ignition cylinder, steering column
and gearshift selector were all intact and remained in the locked position. Allstate also
discovered that this claim was plaintiff’s third stolen vehicle claim during a five-year period.
Finally, Allstate obtained sale and repair records for the vehicle that its expert concluded
evidenced a history of serious engine problems.
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V. Consumer Protection Act
Plaintiff’s final claim on appeal is that the trial court improperly granted summary
disposition as to his claim that Allstate violated the MCPA by failing to make any payments to
plaintiff without legal justification. Plaintiff relies on Smith v Globe Life Ins Co, 460 Mich 446;
597 NW2d 28 (1999). In Smith, our Supreme Court considered MCL 445.904 of the MCPA.
MCL 445.904(1) provides that the MCPA does not apply to:
(a) A transaction or conduct specifically authorized under laws administered by a
regulatory board or officer acting under statutory authority of this state or the
United States.
Our Supreme Court held that this provision exempted insurance sales from the MCPA because
such transactions were “specifically authorized” as provided. At the time the Court decided
Smith, however, MCL 445.904(2) provided:
Except for the purposes of an action filed by a person under [MCL 445.911],
this act does not apply to an unfair, unconscionable, or deceptive method, act,
or practice that is made unlawful by:
(a) Chapter 20 of the insurance code of 1956, Act No. 218 of the Public Acts
of 1956, as amended, being sections 500.2001 to 500.2093 of the Michigan
Compiled Laws.
Relying on this exception, the Court concluded:
Although [MCL 445.904(1)(a)] generally provides that transactions or conduct
“specifically authorized” are exempt from the provisions of the MCPA, [MCL
445.904(2)] provides an exception to that exemption by permitting private actions
pursuant to [MCL 445.911] arising out of misconduct made unlawful by chapter
20 of the Insurance Code. Therefore, the exemptions provided by [MCL
445.904(1)(a) and (2)(a)] are inapplicable to plaintiff’s MCPA claims to the
extent that they involve allegations of misconduct made unlawful under chapter
20 of the Insurance Code. [Smith, supra at 467.]
Thus, plaintiff is correct that under Smith, MCPA claims were permissible under MCL 445.911.
Id. at 467-468. However, after Smith was decided, the Legislature amended MCL 445.904,
pursuant to 2000 PA 432, effective March 28, 2001, and eliminated the ability to bring an MCPA
claim against an insurance company. That amendment added MCL 445.904(3), which provides:
This act does not apply to or create a cause of action for an unfair,
unconscionable, or deceptive method, act, or practice that is made unlawful
by chapter 20 of the insurance code of 1956, 1956 PA 218, MCL 500.2001 to
500.2093.
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Thus, the Legislature’s amendment statutorily overruled the exception set forth in Smith upon
which plaintiff seeks to rely.
Affirmed.
/s/ Patrick M. Meter
/s/ Stephen L. Borello
/s/ Douglas B. Shapiro
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