Opinion
No. 334108
10-17-2017
PANTOS INVESTMENT COMPANY, Plaintiff-Appellant, v. PEERLESS INDEMNITY INSURANCE COMPANY, Defendant-Appellee and STERLING GROUP, INCORPORATED, Defendant.
UNPUBLISHED Wayne Circuit Court
LC No. 12-010100-CK Before: SAAD, P.J., and CAVANAGH and CAMERON, JJ. PER CURIAM.
Plaintiff appeals as of right from an order dismissing the final adverse party, defendant Sterling Group, Incorporated (Sterling), but challenges the trial court's order granting summary disposition to defendant Peerless Indemnity Insurance Company (Peerless). We affirm.
Plaintiff is the owner of a strip mall located in the City of Westland. Plaintiff initially utilized Bosquett & Company, an insurance agency, to obtain insurance for its strip mall in 2007. In May 2009, plaintiff's insurer for the strip mall, CNA Insurance, cancelled its insurance policy. As a result, Bosquett began the process of obtaining a new insurance policy from Peerless in May 2009.
Bosquett completed an application for insurance on behalf of plaintiff on May 13, 2009. In the application for the insurance policy, which was submitted online, Bosquett indicated that plaintiff's strip mall was equipped with a centrally monitored fire alarm. As a result, the insurance policy that was issued to plaintiff by Peerless was automatically configured to include a protective safeguard endorsement, which required that plaintiff maintain its centrally monitored fire alarm while the insurance policy was in effect. Subsequently, in August 2009, Bosquett sold its book of insurance business to Sterling.
On March 26, 2010, Peerless sent plaintiff and Sterling an insurance policy pertaining to a term of insurance commencing on May 13, 2010 and concluding on May 13, 2011. As with the 2009 to 2010 policy, the 2010 to 2011 policy contained a protective safeguard endorsement, which specifically required plaintiff to maintain a "P-2" automatic fire alarm that was either connected to a "central station" or that reported to "a public or private fire alarm system." According to Allison Kathryn Sidnam, an employee of Peerless, the insurance policy for May 2010 to May 2011 was automatically renewed.
On June 11, 2010, Karen Walters, an employee of Sterling, sent plaintiff's president, Dr. Theodore G. Pantos (Pantos), a copy of the 2010 to 2011 insurance policy. He read the policy and subsequently called Walters to inform her that he did "not have any automatic fire alarm in [his] building." According to Pantos, plaintiff's strip mall never had a fire alarm at any point in time. He told Walters to remove the protective safeguard endorsement. Pantos was not aware that the 2009 to 2010 policy from Peerless had contained the same protective safeguard endorsement.
On March 14, 2011, a fire occurred in plaintiff's strip mall at a Domino's Pizza. Plaintiff filed a claim with Peerless relating to the fire on March 14, 2011. According to Paul Mattes, an employee of Sterling, on March 28, 2011, he sent a request to Peerless to remove the protective safeguard endorsement from plaintiff's insurance policy. Ultimately, on June 9, 2011, Peerless sent Pantos a letter denying plaintiff's claim arising from the fire because, after an inspection of the premises, it was determined that plaintiff's strip mall lacked an automatic fire alarm as required by the protective safeguard endorsement. Thereafter, plaintiff filed this lawsuit asserting, in relevant part, that plaintiff was entitled to reformation of the insurance contract because of a mutual mistake and that Peerless had breached the parties' insurance contract. Eventually, Peerless prevailed on its motion for summary disposition and plaintiff's claims against it were dismissed.
On appeal, plaintiff first contends that the trial court erred when it granted Peerless's motion for summary disposition on its claim for reformation of the insurance policy. We disagree.
"An issue is preserved for appellate review if it was raised in, and decided by, the trial court." Nat'l Wildlife Federation v Dep't of Environmental Quality (No 2), 306 Mich App 369, 380; 856 NW2d 394 (2014). Plaintiff argued in its responses to defendant's motion for summary disposition that the protective safeguard endorsement was only included in the insurance contract because of a mutual mistake, and that both parties intended to provide coverage for plaintiff's strip mall. Therefore, this issue is preserved to the extent that plaintiff raises these arguments on appeal.
However, plaintiff also contends on appeal that the insurance policy must be reformed to prevent Peerless from being unjustly enriched. This claim was not raised in the trial court and is unpreserved. And plaintiff argues for the first time on appeal that the trial court erred when it included a fact in its opinion that was not alleged in plaintiff's second amended complaint. Because that argument was not presented or considered below, it is unpreserved. Moreover, that argument is untimely because, per MCR 7.212(G), reply briefs may only contain rebuttal arguments. See Blazer Foods, Inc v Restaurant Props, Inc, 259 Mich App 241, 252; 673 NW2d 805 (2003) (stating that an argument first raised in an appellate reply brief is untimely and insufficient to present the issue for appeal).
"This Court reviews de novo a trial court's decision on a motion for summary disposition." Gillie v Genesee Co Treasurer, 277 Mich App 333, 344; 745 NW2d 137 (2007). A motion for summary disposition brought under MCR 2.116(C)(8) tests the legal sufficiency of a claim on the pleadings alone to determine if the plaintiff has stated a claim on which relief may be granted. Id. The decision whether to grant equitable relief is reviewed de novo as a question of law. Johnson Family Ltd Partnership v White Pine Wireless, LLC, 281 Mich App 364, 371; 761 NW2d 353 (2008). But we review unpreserved issues for plain error affecting substantial rights, i.e., prejudice. Nat'l Wildlife Federation, 306 Mich App at 373.
"Michigan courts sitting in equity have long had the power to reform an instrument that does not express the true intent of the parties as a result of fraud, mistake, accident, or surprise." Johnson Family, 281 Mich App at 371-372. "Courts will reform an instrument to reflect the parties' actual intent where there is clear evidence that both parties reached an agreement, but as the result of mutual mistake, or mistake on one side and fraud on the other, the instrument does not express the true intent of the parties." Mate v Wolverine Mut Ins Co, 233 Mich App 14, 24; 592 NW2d 379 (1998) (quotation marks and citations omitted). However, a unilateral mistake or a mistake in law regarding the legal effect of an agreement is not a basis for reformation. Casey v Auto Owners Ins Co, 273 Mich App 388, 398; 729 NW2d 277 (2006).
Plaintiff contends that Peerless was not entitled to summary disposition on its reformation claim because a mutual mistake of fact resulted in the insurance policy not reflecting the intent of the parties. The mutual mistake of fact identified by plaintiff is that "both the parties intended that the appropriate form of Policy be issued to insure the Property[.]" But in plaintiff's second amended complaint, plaintiff alleged two separate and distinct unilateral mistakes of fact related to the insurance policy: (1) Peerless mistakenly believed that plaintiff's strip mall was protected by an automatic centrally monitored fire alarm, and (2) plaintiff mistakenly believed the insurance policy did not require it to maintain an automatic centrally monitored fire alarm. The parties did not have a mistaken belief of fact in common related to the issuance of the insurance policy. Plaintiff's contention—that both parties intended the insurance policy to cover plaintiff's strip mall for property damage—merely presents a mistake of law with regard to the extent of the insurance policy's coverage and a mistake in law is not a basis for reformation. See id. Therefore, plaintiff failed to state a claim upon which relief could be granted and the trial court properly granted summary disposition in favor of Peerless under MCR 2.116(C)(8).
We also reject plaintiff's argument that the insurance policy should be reformed to prevent unjust enrichment by Peerless. In support of its claim, plaintiff relies on Schwaderer v Huron-Clinton Metro Auth, 329 Mich 258, 271; 45 NW2d 279 (1951), where our Supreme Court held that reformation of a contract was appropriate to prevent unjust enrichment by the defendant because of either mutual mistake or a mistake on the part of the plaintiff and inequitable conduct on the part of the defendant. In this case, plaintiff failed to allege either a mutual mistake or inequitable conduct on the part of Peerless.
And we reject plaintiff's argument that the trial court improperly considered facts outside the pleadings in deciding the motion for summary disposition because its opinion states that Peerless relied on a statement in the application for insurance that plaintiff's property had a central station fire alarm—a fact not set forth in plaintiff's second amended complaint. In answer to plaintiff's second amended complaint, however, Peerless stated that when Bosquett applied for plaintiff's insurance policy, Bosquett indicated that plaintiff's property was equipped with a centrally monitored fire alarm. Therefore, there is nothing to indicate that the trial court improperly considered facts outside of the pleadings when it decided the motion for summary disposition filed by Peerless. See MCR 2.110(A)(5).
Next, plaintiff argues that the trial court erred when it granted Peerless summary disposition on plaintiff's breach of contract claim. We disagree.
This Court reviews a trial court's decision on a motion for summary disposition de novo. Gillie, 277 Mich App at 344. A motion brought under MCR 2.116(C)(10) "tests the factual support of a plaintiff's claim." Spiek v Dept of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). A trial court considers affidavits, pleadings, depositions, and other documentary evidence submitted by the parties in the light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists to warrant a trial. Innovation Ventures v Liquid Mfg, 499 Mich 491, 507; 885 NW2d 861 (2016) (citation omitted); Walsh v Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004).
Plaintiff first contends that the protective safeguard endorsement is unenforceable because Peerless violated the Uniform Trade Practices Act (UTPA), MCL 500.2001 et seq. In particular, MCL 500.2005 provides, in relevant part:
An unfair method of competition and an unfair or deceptive act or practice in the business of insurance means the making, issuing, circulating, or causing to be made, issued, or circulated, an estimate, illustration, circular, statement, sales presentation, or comparison which by omission of a material fact or incorrect statement of a material fact does any of the following:Plaintiff contends that Peerless misrepresented the terms of the insurance policy, in violation of the UTPA, when it failed to include the protective safeguard endorsement in the initial quote for insurance that was provided to plaintiff, or otherwise explicitly disclose the protective safeguard endorsement to plaintiff.
(a) Misrepresents the terms, benefits, advantages, or conditions of an insurance policy.
We first note that, "in general, a violation of the Uniform Trade Practices Act [ ], does not give rise to a private cause of action." Isagholian v Transamerica Ins Corp, 208 Mich App 9, 17; 527 NW2d 13 (1994). And, here, plaintiff has provided no legal authority in support of its contentions that: (1) a contract violates public policy if it violates the UTPA, which polices the conduct of insurers, (2) alleged misconduct by an insurer may support the nonenforcement of a provision of an insurance policy on the grounds of public policy, and (3) Peerless violated the UTPA. "It is not sufficient for a party simply to announce a position or assert an error and then leave it up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then search for authority either to sustain or reject his position." Innovation Ventures, 499 Mich at 518 (quotation marks and citations omitted). Therefore, plaintiff has abandoned this issue on appeal.
In any case, the insurance quote that was provided to plaintiff stated that the specific terms of the insurance policy were solely contained in a completed insurance policy, and that the quote itself was not an offer of insurance. The quote that was provided to plaintiff explicitly notified plaintiff that additional terms might apply in the actual insurance policy. Thus, plaintiff cannot demonstrate that Peerless violated the UTPA even if a violation of the UTPA could support a public policy violation claim.
Plaintiff also contends in its reply brief on appeal that the protective safeguard endorsement violates public policy because the effect of that provision was to provide no coverage in the event of a property damage loss by plaintiff. But the protective safeguard endorsement clearly states that "[w]e will not pay for loss or damage caused by or resulting from fire . . . ." Thus, it is unclear why plaintiff asserts that the effect of the protective safeguard endorsement was to completely cut off insurance coverage, when in fact, plaintiff's lack of an automatic centrally monitored fire alarm would only impact its ability to recover on claims related to fire damage. Therefore, plaintiff's contention is without merit.
Plaintiff next contends that the protective safeguard endorsement is unenforceable because it is ambiguous in that it includes the word "maintain" in reference to an automatic centrally monitored fire alarm but the strip mall was never so equipped; thus, plaintiff could not "maintain" an item that did not exist. "A contract is ambiguous when two provisions irreconcilably conflict with each other, or when [a term] is equally susceptible to more than a single meaning[.]" Dancey v Travelers Prop Cas Co, 288 Mich App 1, 8; 792 NW2d 372 (2010) (quotation marks and citations omitted) (first alteration in original). Thus, while plaintiff presents its argument as a claim of ambiguity, plaintiff does not actually contend that the protective safeguard endorsement was susceptible to more than one meaning.
Further, plaintiff's application for insurance indicated that its strip mall had a centrally monitored fire alarm. According to a Peerless underwriter, protective safeguard endorsements are automatically included in an insurance policy when it is indicated that there is a central fire alarm on a property. Thus, when considering that Peerless believed there was an automatic centrally monitored fire alarm on plaintiff's property, the meaning of the protective safeguard endorsement is abundantly clear: plaintiff was required to maintain the alarm system that Peerless believed was already in existence. Therefore, as plaintiff does not actually contend that the protective safeguard endorsement was ambiguous, plaintiff's challenge is without merit.
It follows, then, that the trial court did not err when it granted summary disposition in favor of Peerless as opposed to plaintiff because the protective safeguard endorsement was enforceable. And Pantos admitted in his deposition that plaintiff's strip mall was not equipped with an automatic centrally monitored fire alarm. Therefore, plaintiff's recovery was barred under the insurance policy pursuant to the protective safeguard endorsement.
Plaintiff's final contention on appeal is that the trial court erred when it refused to grant plaintiff's request for leave to amend its second amended complaint. We disagree.
A trial court's decision to permit a party to amend its pleadings is reviewed for an abuse of discretion, which occurs when the decision is outside the range of reasonable and principled outcomes. Saffian v Simmons, 477 Mich 8, 12; 727 NW2d 132 (2007); In re Kostin, 278 Mich App 47, 51; 748 NW2d 583 (2008).
As explained by the Michigan Supreme Court in Weymers v Khera, 454 Mich 639, 658; 563 NW2d 647 (1997), a party generally should be given an opportunity to amend their pleadings if summary disposition is granted under MCR 2.116(C)(8) or (10), unless amendment would be futile. However, "[i]f a plaintiff does not present its proposed amended complaint to the court, there is no way to determine whether an amendment is justified." Anton, Sowerby & Assoc, Inc v Mr C's Lake Orion, LLC, 309 Mich App 535, 551; 872 NW2d 699 (2015).
In its brief on appeal, plaintiff merely states, in a conclusory fashion, that the trial court abused its discretion when it denied plaintiff's request to amend to its second amended complaint. As previously noted, "[i]t is not sufficient for a party simply to announce a position or assert an error and then leave it up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then search for authority either to sustain or reject his position." Innovation Ventures, 499 Mich at 518 (quotation marks and citations omitted). Thus, plaintiff has abandoned this claim on appeal. But even if this claim was not abandoned, plaintiff would still be unable to demonstrate that the trial court should have granted plaintiff's request to amend its second amended complaint because plaintiff did not file a proposed amended complaint in the trial court. See Anton, Sowerby, 309 Mich App at 551.
Affirmed.
/s/ Henry William Saad
/s/ Mark J. Cavanagh
/s/ Thomas C. Cameron