If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

LOST LAKE DISTILLERY, LLC, and 605, LLC,

Plaintiffs-Appellants,

UNPUBLISHED

September 17, 2020

v No. 346552

Wayne Circuit Court

ATAIN INSURANCE COMPANY, PETER J. 

STATON, CONCEPT INSURANCE AGENCY, 

LLC, and BURNS & WILCOX, LTD,

LC No. 17-010963-CB

Defendants-Appellees.

Before: RIORDAN, P.J., and O’BRIEN and SWARTZLE, JJ.

PER CURIAM.

Plaintiffs, Lost Lake Distillery, LLC (“Lost Lake”) and 605, LLC (“605”), appeal by right 

the trial court’s order granting defendant Atain Insurance Company’s motion for summary 

disposition. The appeal also involves the trial court’s previous order, which granted summary 

disposition in favor of defendants, Concept Insurance Agency (“Concept”), Peter J. Staton, and 

Burns & Wilcox, Ltd (“B&W”). We affirm.

I. FACTS

On October 27, 2016, a fire damaged property at 142 Maple St. in Wyandotte, Michigan. 

The property was owned, subject to a land contract, by 605 and was leased to Lost Lake, both of 

which are solely owned by Richard Alex Bohl. The property was insured though Concept, owned 

by Staton, which obtained a series of policies from B&W on behalf of Atain. The first four policies 

had varying term lengths of one year, three months, six months, and three months.1 Before the 

expiration of each policy, B&W sent inquiries to Concept asking whether renewals would be 

 

1 The policies had the following coverage dates: (1) October 16, 2014, through October 16, 2015; 

(2) October 16, 2015, through January 16, 2016; and (3) January 16, 2016, through July 16, 2016; 

and (4) July 16, 2016, through October 16, 2016.
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needed. After being prompted by B&W, Concept asked Bohl about renewing, and Bohl agreed to 

a renewal policy in each instance. However, leading up to the expiration of the fourth policy on

October 16, 2016, B&W did not ask Concept about renewing. In turn, Concept never asked Bohl 

about renewing, and consequently, Bohl never initiated any renewal. The policy lapsed on October 

16, 2016, and a fire broke out on the property on October 27, 2016.

The day after the fire, October 28, Concept contacted B&W and asked about renewing the 

expired policy, such that it was backdated to October 16. No one from Concept ever mentioned 

that a fire had occurred, B&W never asked for a statement of no-loss, and a new policy was issued 

on behalf of Atain, effective October 16, 2016, and expiring April 16, 2017. On November 2, the 

day after Bohl paid the premium for this latest policy, a claim was submitted on that new policy 

for the fire damage. The claim listed Staton as the person who was submitting the claim, and the 

date of loss was listed as October 30.2 Atain, the insurer, later denied coverage and rescinded the 

policy on the basis of fraud.

Plaintiffs brought suit against defendants, but the trial court granted summary disposition 

under MCR 2.116(C)(10) in favor of all defendants. This appeal followed.

II. STANDARD OF REVIEW

We review de novo the proper interpretation of a contract, questions of law such as whether 

a defendant owes a duty to a plaintiff, and a trial court’s decision on a motion for summary. 

Gyarmati v Bielfield, 245 Mich App 602, 604; 629 NW2d 93 (2001); Loweke v Ann Arbor Ceiling 

& Partition Co, LLC, 489 Mich 157, 162; 809 NW2d 553 (2011); Titan Ins Co v Hytan, 491 Mich 

547, 553; 817 NW2d 562 (2012). When deciding whether summary disposition is proper under 

MCR 2.116(C)(10), a court must consider the pleadings, affidavits, depositions, admissions, and 

other documentary evidence submitted by the parties in a light most favorable to the party opposing 

the motion. MCR 2.116(G)(5); Greene v A P Prod, Ltd, 475 Mich 502, 507; 717 NW2d 855 

(2006). A motion brought under MCR 2.116(C)(10) is properly granted when there are no genuine 

issues of material fact and the moving party is entitled to judgment as a matter of law. Michalski 

v Bar-Levav, 463 Mich 723, 730; 625 NW2d 754 (2001).

III. BREACH OF CONTRACT

Plaintiffs first argue that the trial court improperly granted summary disposition in favor 

of Atain on plaintiffs’ breach-of-contract claim. We disagree.

A false statement of a material fact is a ground to void or rescind a policy, regardless of 

the intent of the person making the false statement. Titan Ins Co, 491 Mich at 555-558. An insurer 

can waive its right to rescind a contract when, upon learning of fraud in the procurement of the 

policy, the insurer opts to cancel a policy, rather than rescind it. Burton v Wolverine Mut Ins Co, 

213 Mich App 514, 517-518; 540 NW2d 480 (1995). However, an insurer cannot waive its right 

to seek traditional common-law remedies based on misrepresentations in an insurance application, 

 

2 Staton, the owner of Concept and an insurance agent, denied submitting the claim. However, 

this question of fact is not material to the issues on appeal.
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including rescission, based on facts it does not know, even if it could have “easily ascertained” the 

misrepresentation. Titan Ins Co, 491 Mich at 571.

On March 29, 2017, Atain rescinded the policy on account of fraud. Plaintiffs contend that 

Atain waived its right to rescind the policy because Atain’s rescission was untimely, and therefore 

impermissible. Plaintiffs note that on February 2, 2017, Atain issued a notice of nonrenewal of 

the policy, without any indication that it intended to rescind the policy at that time. When Atain 

issued the notice of nonrenewal, it was not issued because of any known fraud; instead, it was 

because of the existence of the claim. As the trial court noted, there was no evidence to show that 

Atain knew of the fraud3at the time it issued the notice of nonrenewal on February 2, 2017.

Plaintiffs claim that Atain knew about the fraud as of February 10, 2017. Plaintiffs rely on 

a letter written by Atain’s counsel, Michael Spinazzola, referring to the loss date as being October 

27, 2016. That letter was in response to a subrogation claim made by owners of neighboring units 

that were affected by the fire. Spinazzola testified that he was not aware of any date discrepancy 

and was unaware of the possibility of October 30 being the date of loss. Further, the letter merely 

states that the subrogation claim had been assigned to Spinazzola and that Atain “[i]s conducting 

an immediate investigation” of the claim. The letter’s isolated reference to the date of loss as 

October 27, 2016, is insufficient to allow a fact-finder to infer that Atain had actual knowledge of 

any fraudulent activity as of the date of the letter.

Even assuming that Atain knew about the fraud as of February 10, February 10 is after 

February 2. The fact that other entities or people working with or for Atain’s benefit were aware 

that October 27 might have been the actual date of loss does nothing to show that Atain knew of 

any fraudulent activity at that time.4 As a result, Atain’s issuance of the notice of nonrenewal was 

not a decision on how to remedy the fraud, which it had not yet discovered.

Plaintiffs argue that an insurer’s knowledge of fraud can be constructive or aggregated. In 

other words, by showing that one person at Atain had one piece of information and other people 

at Atain had other information, this combined information was sufficient to show that it had 

knowledge that fraud had occurred. Plaintiffs provide no authority to support this position, and 

our Supreme Court has stated that it is not enough merely to show that the insurer could have easily 

 

3 There are two instances of fraud or misrepresentation present. The first is when Concept sought 

the backdated insurance policy and did not disclose that a fire had occurred the day before it made 

the request. The second instance is when the claim listed October 30 as the date of loss instead of 

the correct date of October 27.

4 Plaintiffs note that the independent adjuster assigned to work on the claim, Paul Curtis, received 

a cause and origin report on December 8, 2016, which included a report from the fire department 

noting the date of the fire as October 27, 2016. But Curtis testified that he did not read the report, 

and again, any knowledge of Curtis cannot constitute knowledge that Atain knew of any fraudulent 

activity. Curtis testified that never expressly reported any discrepancies in the dates of loss and 

that he did not send his report to Minuteman Adjusters, the entity that Atain had hired, which in 

turn hired him, until March 1, 2017.
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ascertained the misrepresentation. Titan Ins Co, 491 Mich at 571.

Plaintiffs further argue that the Atain should be estopped from rescinding the policy due to 

the delay of nearly six weeks from when Atain purportedly first learned of the fraud on February 

10, 2017, to when it finally rescinded the policy on March 29, 2017. “A defrauded party who 

seeks to rescind must act with reasonable promptness after discovering the facts.” Gyles v Stadel, 

252 Mich 349, 351; 233 NW 339 (1930) (emphasis added). “The law does not require action to 

rescind before the defrauded person is reasonably certain that he has been defrauded.” Hall-Doyle 

Equity Co v Crook, 245 Mich 24, 29; 222 NW 215 (1928) (internal quotes and citation omitted). 

Plaintiffs have not shown that Atain unreasonably delayed in seeking rescission after discovering

plaintiffs’ misrepresentation. Therefore, the trial court did not err by granting Atain’s motion for 

summary disposition on the breach-of-contract claim.

IV. NEGLIGENCE

Plaintiffs next argue that the trial court improperly granted summary disposition in favor 

of Concept, Staton, and B&W on plaintiffs’ negligence counts against them. The trial court 

granted summary disposition in favor of these defendants because the court determined that they 

owed no legal duty to plaintiffs to ensure that the policy remained in effect. Schultz v Consumers 

Power Co, 443 Mich 445, 449; 506 NW2d 175 (1993) (to establish a claim of negligence, a 

plaintiff must prove that the defendant owed a legal duty to the plaintiff, that the defendant 

breached that duty, that the plaintiff suffered damages, and that the breach was a proximate cause 

of the damages suffered). This was not in error.

A. CONCEPT AND STATON

Concept is an independent insurance agency, and Staton is an agent within that agency. As 

independent insurance agents, they are considered agents of the insured rather than agents of the 

insurer. Genesee Foods Servs, Inc v Meadowbrook, Inc, 279 Mich App 649, 656; 760 NW2d 259 

(2008). As such, “their primary duty of loyalty rested with plaintiffs, who could depend on this 

duty of loyalty to ensure that defendants were acting in their best interests both in terms of finding 

an insurer that could provide them with the most comprehensive coverage and in ensuring that the 

insurance contract properly addressed their needs.” Id.

Plaintiffs suggest, without citation to any legal authority, that this principle imposes a duty 

to warn of the pending expiration of an insurance policy. “[W]here a party fails to cite any 

supporting legal authority for its position, the issue is deemed abandoned.” Prince v MacDonald, 

237 Mich App 186, 197; 602 NW2d 834 (1999). 

Furthermore, the duty to ensure that a particular contract addresses an insured’s needs is 

distinct from a purported duty to warn that a particular policy is about to expire. There is no 

contention that the policies that Staton and Concept did procure inadequately addressed plaintiffs’

needs by way of coverage limits, coverage exceptions, etc. Absent any evidence that plaintiffs 

sought a longer length of term for coverage, plaintiffs cannot show how Concept and Staton had 

any duty to take steps to ensure that the property was insured beyond October 16, 2016. Plaintiffs 

contend that “Concept/Staton had a continuous obligation to ensure [that plaintiffs] received the 

insurance coverage they specifically requested.” (Emphasis added.) However, there is no 
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evidence that Concept and Staton did not provide insurance coverage that plaintiffs had 

“specifically requested.” See also 3 Couch, Insurance, 3d, § 46.28 (“The insured’s agent must 

strictly follow the insured’s instructions which are clear, explicit, absolute, and unqualified.”) and 

§ 46.62 (“An agent or broker is not liable to the insured for failing to procure insurance when there 

was no binding contract obligating him or her to do so.”). Plaintiffs cite no evidence indicating 

that they had “specifically requested” coverage past the October 16, 2016 date, and we have found 

none.5 Therefore, while they may have voluntarily done so in the past, they had no duty to warn 

or remind plaintiffs of the upcoming October 16, 2016 expiration date of the policy, or otherwise 

procure coverage past the October 16, 2016 date. Thus, summary disposition was properly granted 

in favor of Concept and Staton.6

B. B&W

With regard to B&W, plaintiffs argue that because Concept had a duty to plaintiffs, B&W 

necessarily did as well because B&W was a subagent of Concept. Because we conclude that

Concept owed no duty to remind plaintiffs of policy expiration dates or otherwise procure coverage 

past October 16, 2016, the predicate for plaintiffs’ argument is wanting. Additionally, there is no 

evidence to suggest that B&W was a subagent of Concept, which would have resulted in B&W 

owing some duties to plaintiffs. See Genesee Foods Servs, 279 Mich App at 656. Rather, the 

agreement between Concept and B&W stated that that Concept was “an independent contractor” 

and was “not an agent of B&W.” Therefore, the trial court did not err by granting summary 

disposition in favor of B&W.

 

5 Bohl admitted that no one at Concept said that Concept or any of its employees would warn or 

remind him when a policy was about to expire.

6

In finding that no duty exists, the trial court relied on Harts v Farmers Ins Exch, 461 Mich 1; 597 

NW2d 47 (1999), wherein the Supreme Court held that an insurance agent did not owe a duty to 

advise or counsel the insured. Id. at 2. There are two reasons why Harts does not apply to the 

present case. First, Harts addressed the particular duty “to advise or counsel an insured about the 

adequacy or availability of coverage.” Id. This case does not involve that type of advice. Second, 

in Harts, the Court reasoned that a general no-duty-to-advise rule existed for insurance agents, but 

that rule was in the context of “an insurance agent whose principal is the insurance company.” Id. 

at 8. Concept and Staton were independent agents, which made them agents of plaintiffs and not 

agents of Atain (or B&W). Consequently, Harts does not control this case, let alone stand for the 

proposition that independent agents, i.e., agents of the insured, bear no fiduciary duties to the 

insured. Regardless, we affirm because the trial court reached the correct result. Edelberg v Leco 

Corp, 236 Mich App 177, 181; 599 NW2d 785 (1999). 

Additionally, while Concept and Staton sent reminders to Bohl before the expiration of the 

previous policies, there was no express agreement or promise to do so, and Bohl admitted that no 

one at Concept said that Concept or any of its employees would warn or remind him when a policy 

was about to expire. Therefore, even if the no-duty rule of Harts governed, there were no facts to 

suggest that any of the enumerated exceptions set forth in Harts would apply and impose a duty 

on Concept and Staton. Accordingly, summary disposition would have been warranted under 

Harts.
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V. REFORMATION

Plaintiffs argue that that the trial court erred when it ruled that their reformation claim was 

moot. Because we conclude that the trial court properly allowed the rescission of the insurance 

contract, we also conclude that plaintiffs’ claim for reformation is moot. B P 7 v Bureau of State 

Lottery, 231 Mich App 356, 359; 586 NW2d 117 (1998) (an issue is moot when an event occurs 

that renders it impossible for a court to grant relief). 

VI. CONCLUSION

The trial court properly granted summary disposition in favor of defendants. Accordingly, 

we affirm.

/s/ Michael J. Riordan 

/s/ Colleen A. O’Brien 

/s/ Brock A. Swartzle