PER CURIAM.
This insurance coverage dispute arose in 2003, when a fire consumed the primary building occupied by plaintiff Zaremba Equipment, Inc. Defendant Harco National Insurance Company sold Zaremba the insurance policy in effect at the time of the fire. The policy stated limits of $525,000 for the building and $700,000 for its contents. After the loss, Zaremba learned that it would cost far more than those limits to replace the building and its contents.
Zaremba brought suit, complaining that defendant Patrick Musall, an insurance agent employed solely by Harco, negligently advised Zaremba regarding the appropriate amount of replacement coverage for the business and misrepresented the nature and extent of the coverage purchased. Zaremba further alleged that Musall improperly appraised the building at a value far lower than its actual replacement cost, and committed fraud. Defendants denied that Musall performed an appraisal and asserted that had Zaremba bothered to read its policy, it would have understood its clearly stated coverage limits. In 2009, an Otsego County jury found in Zaremba's favor and awarded the corporation $2,353,778 exclusive of costs, attorney fees, interest, and case evaluation sanctions.
This Court reversed and remanded for a new trial, holding that the trial court had erroneously refused to instruct the jury that Zaremba bore a duty to read its insurance policy. Zaremba Equip., Inc. v. Harco Nat'l Ins. Co., 280 Mich.App. 16, 761 N.W.2d 151 (2008) (Zaremba I). Our opinion explained that Zaremba's admitted failure to read its policies could constitute comparative negligence. We directed that a second jury assess the comparative fault of both Zaremba and Musall when considering Zaremba's negligence claims.
A properly instructed jury found Musall negligent and determined that Musall had made an innocent misrepresentation, but rejected Zaremba's fraud claim. The jury further determined that Zaremba's comparative negligence constituted a proximate cause of its damages. The trial court entered judgment for Zaremba in the amount of $1,245,264.40 plus interest, and subsequently awarded $134,739.33 in costs and attorney fees.
Defendants raise a number of appellate challenges to the verdict and postverdict awards. Defendants insist that Zaremba's failure to read the policy should have operated as a complete bar to recovery, that Musall owed Zaremba no duty of care, and that Zaremba's counsel repeatedly distracted the jury by injecting irrelevancies, including the length and interpretive difficulty of the insurance policy. Zaremba cross-appeals, arguing that the jury should not have been permitted to consider Zaremba's
The law of the case disposes of defendants' first two arguments, and the trial court's oft-repeated instruction that the lawyers' comments were not evidence defeats the third. Because facts emerged during the second trial substantiating defendants' argument that Zaremba bore responsibility for Musall's innocent misrepresentation, the trial court correctly ruled that a comparative negligence analysis applied to this claim. Although the trial was far from perfect, we find no errors warranting reversal.
The evidence developed during the second trial generally duplicated our previous description of the relationship between Zaremba and Musall:
Based on these facts, we held that Zaremba established that Musall and Zaremba shared a "special relationship" pursuant to Harts v. Farmers Ins. Exch., 461 Mich. 1, 10-11, 597 N.W.2d 47 (1999). Using Harts as our guide, we described the parties' respective duties of care as follows: "[W]hen an insurance agent elects to provide advice regarding coverage and policy limits, the agent owes a duty to exercise reasonable care. The insured has a duty to read its insurance policy and to question the agent if concerns about coverage emerge." Zaremba I, 280 Mich.App. at 36, 761 N.W.2d 151.
Given our holding, we anticipated that the second trial would generally focus on whether: (1) Musall negligently appraised the replacement costs of Zaremba's building and contents, (2) Musall misrepresented that the Zaremba policy included "replacement coverage," (3) Musall negligently failed to provide Zaremba with the replacement coverage it had ordered, and (4) Zaremba was comparatively negligent. With regard to the last issue, we stated, "A jury could reasonably conclude that plaintiff's failure to read its 2002-2003 policy qualified as a proximate cause of its failure to obtain clarification regarding the Harco policy limits before the February 2003 fire." Id. at 35, 761 N.W.2d 151.
Our opinion drew a distinction between Zaremba's claims arising from Musall's advice and representations and Musall's appraisal of the building and its contents. Regarding the appraisal allegation, we found Zaremba's duty to read the policy inapplicable. We explained, "Plaintiff's policy and related documents do not contain... any information that might have called into question the accuracy of the Marshall & Swift computation or Musall's allegedly negligent representation that plaintiff could replace its building within the limits of the policy." Id. We pointed out that logically, Zaremba's failure to read its insurance policy "does not represent a proximate cause" of any damages awarded under the negligent appraisal theory of liability. Id.
In the second trial, the court's comparative fault and proximate cause instructions tracked the Model Civil Jury Instructions. Neither party objected to the substance of the instructions.
Defendants first contend that the trial court should have granted their motion
Defendants' arguments fly in the face of the law of the case. Our central holding in Zaremba I identified Zaremba's failure to read its policy as comparative fault to be weighed against Musall's negligence. This determination constituted the law of the case. It governed the retrial, and it governs this appeal. Defendants have offered no reason that we should disregard the law of the case, and we decline to do so.
Under the law of the case doctrine, "if an appellate court has passed on a legal question and remanded the case for further proceedings, the legal questions thus determined by the appellate court will not be differently determined on a subsequent appeal in the same case where the facts remain materially the same." CAF Investment Co. v. Saginaw Twp., 410 Mich. 428, 454, 302 N.W.2d 164 (1981). Defendants invite us to adopt precisely the same argument they made in Zaremba I, that failure to read the policy doomed Zaremba's negligence claims. We need not rehash the reasons we rejected that view; they are plainly spelled out in the first opinion.
Similarly, we decline to revisit our holding regarding Zaremba's innocent misrepresentation claim. We previously explained that Zaremba "cannot prevail on a fraud or innocent misrepresentation theory premised on Musall's representations regarding the policy limits" because the policy unambiguously set forth those limits. Zaremba I, 280 Mich.App. at 40, 761 N.W.2d 151. However,
Our review of the record reveals that the parties litigated Zaremba's innocent misrepresentation claim in accordance with our analysis; we detect no error.
Next, defendants assert that Zaremba failed to prove that Musall and Jimmy had a special relationship under Harts, and that the trial court should have granted JNOV on this ground. According to defendants, the special relationship theory
The trial court rejected defendants' sufficiency of the evidence challenge, finding that viewed in the light most favorable to Zaremba, "Musall held himself out to be an expert who could advise Zaremba as to the proper coverage," and having done that, "Musall assumed a duty ... to provide such proper coverage as was requested...." We agree with the trial court.
"[U]nder the common law, an insurance agent whose principal is the insurance company owes no duty to advise a potential insured about any coverage." Harts, 461 Mich. at 8, 597 N.W.2d 47. Insurance agents, who function "essentially" as "order takers," should be distinguished from insurance counselors, who function as advisors. Id. at 9, 597 N.W.2d 47, citing MCL 500.1232. However, the Supreme Court carved out an exception to the general "no duty" rule "when an event occurs that alters the nature of the relationship between the agent and the insured." Id. at 9-10, 597 N.W.2d 47. A special relationship may arise, pursuant to which an agent acquires greater duties to the customer, when
In this case, abundant evidence supported that Musall stepped from the role of order taker into that of insurance advisor. Musall admitted that he was "an expert in insuring truck and auto dealerships" such as Zaremba, and that he "specifically made recommendations to Jim Zaremba as to what he needed ... in terms of insurance to be fully insured[.]" Musall conceded that Jimmy had requested enough insurance to replace the building, and the "[t]he intent was there" to cover "the cost of replacement of the building." To that end, Musall agreed that Jimmy asked him to perform an "appraisal." Instead, Musall performed a "cost estimate" using the Marshall & Swift computer program, which calculated the replacement cost at just under $525,000. This evidence, supplied by Musall himself, supports that Musall assumed a duty to advise Zaremba regarding the coverage needed to replace its building, thereby creating a special relationship.
Jimmy explained that his "replacement coverage" discussion with Musall began when Jimmy presented Musall with an insurance quotation from John Deere. According to Jimmy, the Deere quotation characterized the coverage as "guaranteed replacement costs." Jimmy asked Musall to "meet or beat" the Deere coverage, which Musall agreed to do. Jimmy testified that Musall then undertook a "survey" of Zaremba's building, which he witnessed someone accomplish by touring the facility and taking measurements and photos. Musall's correspondence with Harco supports
Jimmy recalled asking Musall whether Zaremba was insured for full replacement coverage in the event of a total loss, and that Musall reassured him that full replacement coverage was in place. This evidence buttressed Zaremba's "special relationship" claim by supporting that Musall misrepresented the nature and extent of the coverage. See Harts, 461 Mich. at 10-11, 597 N.W.2d 47. By making coverage recommendations, misrepresenting the coverage provided in the policy, and assuming the obligation to "appraise" or "survey" the property to calculate its replacement value, Musall established a duty of care quite different from that of an ordinary insurance agent.
Defendants insist that pursuant to Casey v. Auto Owners Ins. Co., 273 Mich.App. 388, 729 N.W.2d 277 (2006), "the Duty to Read trumped whatever subjective hopes the insured might have about different coverage amounts after their initial purchasing decision proved to be inadequate." Defendants' reliance on Casey is misplaced. In Casey, this Court rebuffed an insured's argument that the insurer bore an obligation to determine the correct amount of insurance for the dwelling in question. Casey explained that even if the insured "reasonably expected that such a duty or guarantee would be imposed by the policy, that expectation cannot overcome the actual terms of the policy." Id. at 397, 729 N.W.2d 277.
Notably, the insurance agent in Casey neither rendered coverage advice nor misrepresented coverage terms. Rather, Casey presented a garden-variety relationship between an insurance agent and his client. This Court specifically noted that "the policy did not impose any duty on Auto-Owners to accurately appraise the property, nor did it include any guarantee that the coverage provided would be adequate to cover any loss that might occur." Id. Unlike the plaintiffs in Casey, Zaremba enjoyed a special relationship with its insurance agent, Musall, that gave rise to different obligations. Accordingly, we reject the argument that Zaremba's "special relationship" proofs were insufficient to establish Musall's duty to advise with due care.
Defendants next argue that Michael Wais, Zaremba's attorney, committed misconduct that denied defendants a fair trial. Defendants describe Wais's misconduct as "speaking objections,"
We review for an abuse of discretion a trial court's general conduct of a trial. See In re King, 186 Mich.App. 458, 466, 465 N.W.2d 1 (1990). This standard
Defendants correctly observe that Wais engaged in speaking objections, commented occasionally on the evidence, and proposed an incorrect legal theory concerning Zaremba's duty to read its insurance policy. Defense counsel also engaged in speaking objections, commented negatively on the trial court's handling of the case, and vigorously argued a patently incorrect legal theory regarding the admissibility of the Deere proposal.
Defendants have directed us to a number of places in the transcript where, in defendants' estimation, Wais engaged in improper and prejudicial conduct. Many of the record citations involve argument conducted outside the presence of the jury. We decline to find that arguments made only to the trial court deprived defendants of a fair trial.
We first address defendants' complaint concerning speaking objections. Evidentiary objections that go beyond recitation of the pertinent rule of evidence being invoked risk prejudice. See MRE 103(c) ("In jury cases, proceedings shall be conducted, to the extent practicable, so as to prevent inadmissible evidence from being suggested to the jury by any means, such as making statements or offers of proof or asking questions in the hearing of the jury."). Both sides engaged in speaking objections. The trial court admonished both counsel to avoid speaking objections. We have reviewed each and every alleged speaking objection identified by defendants and find no comments or arguments rising to the level of professional misconduct, or that likely engendered unfair prejudice. Moreover, the trial court recognized the problem and dealt with it
After admonishing counsel, the trial court instructed the jury as follows:
The trial court repeated this instruction at the conclusion of the case:
"Jurors are presumed to follow their instructions, and instructions are presumed to cure most errors." People v. Abraham, 256 Mich.App. 265, 279, 662 N.W.2d 836 (2003). Given the forceful manner in which the trial court handled the "speaking objection" problem, we find no merit in defendants' claim that speaking objections tainted the jury's ability to fairly decide this case.
Defendants next challenge as misconduct Wais's frequent allegations that defense witnesses "lied" or were "liar[s]." Credibility was very much at stake in this case. Musall denied appraising Zaremba's property, denied that he promised to procure replacement coverage, and recollected several pertinent conversations differently than Jimmy. Throughout Wais's cross-examination of Musall, Wais successfully impeached Musall with trial exhibits and the testimony Musall gave during the first trial. The record confirms that Musall was less than entirely truthful and forthcoming when answering some of Wais's questions. The trial court observed that Musall's testimony had not been wholly consistent and concluded that Wais's comments on Musall's truthfulness did not constitute an unsubstantiated attack. The trial court's reasoning was sound and we decline to disturb it.
Defendants' most substantial argument relates to Wais's insistence during the trial that Zaremba's failure to read the policy did not qualify as comparative negligence because the policy was difficult to understand. Wais introduced this theme in his opening statement, without objection:
In Zaremba I, we emphasized that Zaremba bore a legal duty to read its policy, and that its failure to do so could qualify
To the extent Wais referred to the appraisal theory when calling into question the jury's ability to "figure [the policy] out," he did not run afoul of this Court's ruling. At other times, however, Wais crossed the line. For example, later in his opening statement Wais declared, "This is the insurance policy other than the pictures. It is double-sided. It goes on and on for lots of pages. If you can figure this out, the next time I do a case I may hire you. Because I'll tell you, I couldn't figure it out." On another occasion, Wais told the court (in the jury's presence) that he intended to argue that because Harco's claims adjuster had conceded that the "lawn and garden" portion of the policy was difficult to understand, Zaremba "wasn't comparatively negligent for not reading it because if he would have read it he wouldn't understand it any better[.]" This argument was improper for two reasons. First, the lawn and garden coverage had nothing to do with the issues presented during the second trial. Second, this Court instructed that, with regard to the relevant policy provisions, the policy limits were clearly stated without ambiguity.
Despite his announced intention to argue that the policy was too confusing to be understood by Zaremba, Wais apparently thought better of it by the time of the closing arguments. The only comment that referred to the policy was an accurate and unobjectionable statement: "There's not a single document that if you read it a hundred times, if you hire the smartest brains in the world ..., nobody could find a single document that says, if you read this, you'll see that you were not fully insured. The document doesn't exist." Wais refrained from arguing that the policy was generally confusing or overly long. Moreover, Jimmy admitted during cross-examination that defendants had provided the coverage stated in the policy.
At the conclusion of the case the trial court properly instructed the jury:
Although Wais had succeeded in suggesting to the jury that the policy was difficult to understand, the trial court's instructions did not permit the jury to adopt this excuse for failing to read and understand it.
Wais's incursions into improper territory do not warrant a new trial. His comments were isolated, brief, and appear to have played no part in the jury's verdict. Even assuming that Wais deliberately mischaracterized our previous opinion while making arguments to the trial court or questioning witnesses, his comments constituted harmless error.
Next, defendants challenge as "completely [i]nconsistent" the jury's verdict that Zaremba was 30 percent comparatively negligent as to the general negligence count and only 20 percent comparatively negligent with regard to the innocent misrepresentation claim. Defendants contend that these verdicts cannot be logically reconciled except by assigning the higher comparative negligence
The trial court properly rejected defendants' objection to the proposed judgment based on the differing percentages of comparative negligence assigned to Zaremba's differing theories of liability. By harmonizing the jury's comparative fault verdicts, the trial court abided by the fundamental principle that "[o]nly where verdicts are so logically and legally inconsistent that they cannot be reconciled will they be set aside[.]" Granger v. Fruehauf Corp., 429 Mich. 1, 9, 412 N.W.2d 199 (1987). Moreover, the Court Rules do not provide an avenue to a new trial based on an inconsistency or incongruity in the jury's conclusions. Kelly v. Builders Square, Inc., 465 Mich. 29, 39, 632 N.W.2d 912 (2001).
Zaremba advanced and the jury considered several species of negligence claims. One set of general negligence allegations encompassed whether Musall (a) negligently failed to procure the insurance coverage Zaremba requested and (b) negligently appraised Zaremba's building and contents. A second set of claims, denoted "innocent misrepresentation," concerned whether Musall falsely represented that (a) the coverage stated in the policy was adequate to replace the building and its contents and (b) the Marshall & Swift appraisal constituted a reasonable assessment of the building's replacement cost. With regard to each of these liability theories, defendants countered with comparative negligence arguments. Concerning Musall's representations and his failure to procure enough coverage, defendants contended that Zaremba should have read its policy. Regarding the appraisal, defendants maintained that Jimmy supplied Musall with incorrect information.
Given these distinct arguments concerning comparative fault, we find no inconsistency in the jury's verdict. The jury reasonably could have concluded that Zaremba bore a higher percentage of comparative fault with regard to the general negligence claims based on Zaremba's failure to read its policy, and a lesser percentage for providing Musall with incorrect information for the appraisal. Because the different percentage findings of comparative negligence can be reconciled, the trial court did not err by declining to recognize only the greater of them when entering judgment on the alternative theories of recovery, or in declining to order a new trial for that reason.
Defendants next challenge the trial court's award of case evaluation sanctions in connection with both the original trial and the retrial. Defendants insist that they should be responsible for case evaluation sanctions in connection with the retrial only. We find no error. The trial court followed applicable caselaw by including the first trial in its award of case evaluation sanctions.
MCR 2.403(O)(1) states, "If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party's actual costs unless the verdict is more favorable to the rejecting
In Severn v. Sperry Corp., 212 Mich.App. 406, 417, 538 N.W.2d 50 (1995), this Court held that "fees generated in connection with both trials were `necessitated by the rejection' of the mediation evaluation because they arose after the rejection," adding, "[t]he cost of two trials was part of the risk assumed by [the rejecting party] when it rejected the mediation evaluation." Defendants concede, "binding precedent is currently against our position," but, citing the conflict rule, MCR 7.215(J), urge this Court to initiate the process for overruling itself. We decline this invitation.
Zaremba challenges the jury's verdict in two respects. First, Zaremba argues, the law of the case doctrine precluded the jury from assessing Zaremba's comparative fault related to the innocent misrepresentation claim. Zaremba next contends that even if the jury properly evaluated whether Zaremba bore any comparative fault for Musall's innocent misrepresentation, the 20 percent reduction applied only to the claim for the building itself, and not its contents.
Zaremba has also misapprehended the law of the case doctrine. Because the facts of the second case differed meaningfully from those of the first, the trial court properly submitted the question of Zaremba's comparative fault for Musall's misrepresentation to the jury. Further, Zaremba failed to preserve its challenge to the application of comparative fault to its building contents claim, and for that reason, we reject it.
Zaremba's argument stems from the following portions of Zaremba I:
Zaremba asserts that given this language, the law of the case required the trial court to refrain from submitting to the jury the question of Zaremba's comparative fault for Musall's innocent misrepresentation.
"The law of the case doctrine is a general rule that applies only if the facts remain substantially or materially the same." People v. Phillips (After Second Remand), 227 Mich.App. 28, 31-32, 575 N.W.2d 784 (1997). Unlike in the first trial, evidence presented to the second jury indicated that Jimmy supplied Musall with an incorrect number for the square footage of the building. Musall contended that this erroneous number contributed to his errant calculation of the building's replacement value. This evidence sufficed to support a comparative negligence instruction, and to avoid application of the law of the case doctrine.
While Zaremba objected to submitting the question of comparative fault for any innocent misrepresentation to the jury, Zaremba raised no argument that comparative negligence could not apply to Musall's evaluation of the value of the building contents. Zaremba could have requested a special verdict distinguishing between the damages awarded for the building and those awarded for the contents. It failed to do so. Accordingly, Zaremba has waived any error.
Affirmed.
RONAYNE KRAUSE, P.J., and GLEICHER and BOONSTRA, JJ., concurred.
