RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 13a0246p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

CLEVELAND INDIANS BASEBALL COMPANY,

L.P.,

Fourth-Party Plaintiff-Appellant,

v. 

NEW HAMPSHIRE INSURANCE COMPANY,

Defendant-Appellee,

CSI INSURANCE GROUP,

Fourth-Party Defendant-Appellee.

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No. 12-1589

Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 2:11-cv-11378—Sean F. Cox, District Judge.

Argued: April 30, 2013

Decided and Filed: August 23, 2013 

Before: MERRITT, CLAY, and DONALD, Circuit Judges. 

_________________

COUNSEL

ARGUED: Michelle A Thomas, THOMAS, DeGROOD & WITENOFF, P.C.,

Southfield, Michigan, for Appellant. Trent B. Collier, COLLINS, EINHORN,

FARRELL & ULANOFF, P.C., Southfield, Michigan, for Appellee CSI ON BRIEF:

Michelle A Thomas, THOMAS, DeGROOD & WITENOFF, P.C., Southfield, Michigan,

for Appellant. Trent B. Collier, COLLINS, EINHORN, FARRELL & ULANOFF, P.C.,

Southfield, Michigan, for Appellee CSI. Jeffrey C. Gerish, NEW HAMPSHIRE

INSURANCE COMPANY, Bloomfield Hills, Michigan, for Appellee New Hampshire

Insurance.

MERRITT, J., delivered the opinion of the court, in which DONALD, J., joined.

CLAY, J. (pp. 14–19), delivered a separate dissenting opinion.

1
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 2

_________________

OPINION

_________________

MERRITT, Circuit Judge. In this diversity case, an accident occurred at a “Kids

Fun Day” event before a Cleveland Indians baseball game on June 12, 2010. Douglas

Johnson and David Brown were attending the game as spectators. They were looking

at an exhibit outside the Kids Zone when a large inflatable slide collapsed on them. Mr.

Johnson died nine days later. This insurance dispute arises out of a lawsuit filed against

the Cleveland Indians and other parties by Mr. Brown and the estate of Mr. Johnson in

an Ohio state court for punitive and compensatory damages. The question is whether the

district court erred when it concluded that the insurance broker, defendant CSI Insurance

Group, who mistakenly failed to obtain the insurance that would cover the accident,

could not be liable in negligence. For the reasons that follow, we affirm the judgment

in favor of New Hampshire Insurance Company but reverse the judgment in favor of CSI

Insurance Group and remand for further proceedings.

I.

Four parties were involved in a series of transactions to obtain the inflatable slide

and the insurance coverage on it: Cleveland Indians Baseball Company, L.P., National

Pastime Sports, LLC, CSI Insurance Group and New Hampshire Insurance Company.

National Pastime Sports, not a party to this appeal, entered into a contract with plaintiff

Cleveland Indians Baseball Company to produce “Kids Fun Day” events before several

Cleveland Indians games during the summer of 2010. As part of the entertainment,

National Pastime agreed to provide the inflatable slide that collapsed. Also in

accordance with the agreement, National Pastime was required to purchase a

comprehensive general liability insurance policy naming the Cleveland Indians as an

additional named insured. “Production Agreement” dated Jan. 4, 2010, at ¶ 6. National

Pastime engaged an independent insurance broker, defendant CSI Insurance Group, to

procure the required policy. See Annual Events Application, dated Mar. 2, 2010. On

the first page of the Application sent to the insurance broker, under the heading
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 3

1

National Pastime was to provide the inflatables and provide insurance coverage for them under

its agreement with the Indians. The record does not indicate who “owns” the inflatables.

“Qualification Questions,” the box is checked to indicate that the events will have

“bounce houses or inflatables.” Id. The insurance broker, CSI, subsequently provided

National Pastime with a proposal for a policy from defendant New Hampshire Insurance

Company for a premium of $2,590, which was accepted. A “Certificate of Liability

Insurance” was issued on April 27, 2010, more than six weeks before the accident

occurred. It named the insured as “National Pastime Sports LLC” and the Certificate

Holder as “Cleveland Indians Baseball Company LP.” It is undisputed that neither

National Pastime nor the Indians had received a copy of the full policy at the time of the

accident that killed Mr. Johnson and underlies this insurance dispute.

Shortly after the accident, National Pastime contacted the insurance broker, CSI,

to notify it of the accident. It was then that National Pastime learned that, despite its

specific request on the application for insurance sent to CSI, that CSI had mistakenly

failed to procure a comprehensive liability policy that expressly covered inflatables. In

an email exchange between CSI and National Pastime on June 22, 2010, National

Pastime points out that it checked the box on the cover page of the application that

inflatables would be used at the event. In response, an employee of CSI emailed back,

“Oh, ok. Sorry, I guess I missed it. I’m so used to quoting up your events I think I

hardly look a anything but the dates and the details of the event.” The next email to

National Pastime goes on to say that CSI will submit the claim to the carrier [New

Hampshire Insurance] but seems to begin to deny any fault: “however, inflatable’s [sic]

are excluded on the policy you purchase[d] from us. Whoever own the inflatable’s [sic]

are [sic] to carry insurance on them and name you as Additional Insured’s [sic] on their

policy.1 I don’t believe I’ve ever seen you indicate on your applications that inflatable’s

[sic] are at your events, but please note, the exclusion is listed on the quotes we sent over

to you.” See Email exchange between Lori Nelson of CSI Insurance Group and Jason

Hockman of National Pastime, dated June 22, 2010.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 4

2

In the same complaint, National Pastime also brought a negligence claim against CSI for failing

to procure the policy with the coverage requested. That claim was dismissed below on the parties’

stipulation, presumably due to settlement.

3

See Oral Opinion issued pursuant to Sixth Circuit Rule 36 in Nat’l Pastime Sports, LLC v. New

Hampshire Ins. Co., No. 12-1588 (Apr. 30, 2013). Briefly, we held that the standard, comprehensive

general liability policy specifically excludes “slides:”

The underlying suit by Johnson and Brown was submitted to New Hampshire

Insurance, which denied any responsibility to defend or indemnify National Pastime or

the Cleveland Indians based on the “amusement device” exclusion in the policy. Letter

from York Services Group, the claim administrator for New Hampshire Insurance, dated

Aug. 11, 2010. National Pastime filed a complaint against New Hampshire Insurance

seeking a declaration that it defend and indemnify National Pastime in the underlying

wrongful death suit.2

 New Hampshire Insurance subsequently filed a counterclaim

against National Pastime and a third-party complaint against the Indians stating that it

was not required to defend or indemnify under the terms of the policy. The Indians then

filed a counterclaim against New Hampshire Insurance for a declaratory judgment

seeking coverage under the policy and filed a complaint against CSI, the insurance

broker that failed to procure the insurance as requested.

CSI moved for summary judgment on the Indians’ claims pertaining to CSI’s

failure to procure the proper insurance, which the district court granted on November 17,

2011. The district court held that “any duty owed to them [Cleveland Indians] by CSI

must lie in statute or contract” and ruled out any negligence claim. Nat’l Pastime Sports,

LLC v. CSI Ins. Group, 830 F. Supp. 2d 348, 354 (E.D. Mich. 2011). The district court

denied the Indians’ Motion for Reconsideration. Opinion and Order, Mar. 29, 2012.

New Hampshire Insurance filed a Motion for Judgment on the Pleadings

pertaining to the claims to defend and indemnify brought by National Pastime and the

Indians. The district court granted New Hampshire Insurance’s motion on the pleadings,

finding that the insurance policy was unambiguous in its exclusion of coverage for

injuries arising out of the inflatable slide. Amended Opinion and Order, dated Apr. 18,

2012. In a previous decision, this Court agreed with the district court that the policy

excluded coverage for the inflatable slide.3

 For the reasons given in our opinion in Nat’l
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 5

For purposes of this exclusion, “amusement device” means any device or equipment a

person rides for enjoyment, including, but not limited to, any mechanical or nonmechanical ride, slide, water slide (including any ski or tow when used in connection

with a water slide), moonwalk or moon bounce, bungee operation or equipment.

“Amusement device” does not include any video arcade or computer game. 

Endorsement pertaining to Sports/Leisure Activities/Entertainment Activities and Devices to Policy issued

by New Hampshire Insurance Co. to National Pastime Sports (attached to Complaint filed in Nat’l Pastime

Sports, LLC v. CSI Ins. Group, et al., No. 2:11-cv-11378 (E.D. Mich. filed Apr. 4, 2011) (RE 1-4, Page

ID 64) (emphasis added). Courts apply general contract rules when interpreting insurance contracts, so

we must construe unambiguous provisions as written. The policy on its face excludes coverage for slides.

Pastime Sports, LLC v. New Hampshire Ins. Co., No. 12-1588, we affirm the judgment

of the district court as to the Cleveland Indians’ appeal against New Hampshire

Insurance Company.

The district court entered a final judgment on all claims on April 18, 2012. The

Indians filed a timely appeal to this Court alleging error in the November 17, 2011,

Order Granting Summary Judgment to CSI, the March 12, 2012, Order Denying

Reconsideration of the November 17, 2011, Opinion and Order, and the April 18, 2012,

Amended Opinion and Order Granting New Hampshire Insurance Company’s Motion

for Judgment on the Pleadings.

II.

The Indians filed a complaint against the insurance broker, CSI Insurance Group,

claiming tort injury due to CSI’s negligent failure to procure the insurance requested by

National Pastime Sports for the “Kids Fun Day” events, as well as the Indians’ reliance

on a Certificate of Insurance they received from CSI as notice that the requested

coverage was in place. The Indians raise two arguments in this appeal: (1) the district

court erred in granting summary judgment to CSI on the Indians’ claims of negligence;

and (2) the district court erred in holding that the Indians did not bring a claim of

negligent misrepresentation or in not allowing them to amend their complaint and further
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 6

4

The Indians do not appeal the grant of summary judgment to CSI on the Indians’ claims of

innocent misrepresentation, fraudulent misrepresentation, and silent fraud.

5

National Pastime’s suit against CSI has been dismissed and the parties have presumably settled.

The record does not reflect that National Pastime and CSI had any contractual relationship.

holding that, in any event, such a claim would fail on the merits even if properly raised.4

The Indians set forth in their complaint several claims based on various

negligence theories based on CSI’s failure to procure the requested insurance and the

Indians’ reliance on the Certificate of Insurance they received from CSI, which caused

the Indians to proceed with the “Kids Fun Day” under the false belief that they were

covered by the insurance they had requested and for which they had paid. The district

court found that, as a matter of law, CSI did not owe a duty of care to the Indians

because (1) CSI’s professional relationship was with National Pastime only; (2) no

privity of contract existed between the Indians and CSI and, in any event, the Indians’

negligence claims were not “separate and distinct” from National Pastime’s contract

claims;5

 and (3) the Indians cannot recover for economic loss from CSI’s negligence.

The district court acknowledges, and we agree, that there is no Michigan case

law directly on the issue of an insurance broker’s duty to an additional insured. Hence,

we are left to examine the Michigan case law and decide what we think the Michigan

Supreme Court would hold in this circumstance. Erie R.R. Co. v. Tompkins, 304 U.S.

64 (1938). We disagree with the district court and reverse and remand to the district

court on the Indians’ claims of negligence and negligent misrepresentation against CSI.

Negligence

To establish a prima facie case of negligence under Michigan law, a plaintiff

must establish (1) that a duty existed; (2) that the duty was breached; (3) causation

between the breach and the injury; and (4) damages. Loweke v. Ann Arbor Ceiling &

PartitionCo., 809 N.W.2d 553, 556 (Mich. 2011). The question of whether a duty exists

is a question of law. Id.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 7

6

The right to be compensated for injuries due to the negligence of another is well settled. 

This is a specific application of the ancient common law maxim ubi jus, ibi remedium—where there is a

wrong, there is a remedy. If one has a right, one must have the means by which to vindicate and maintain

that right. Chief Justice Marshall said: “The very essence of civil liberty certainly consists in the right of

every individual to claim the protection of the laws, whenever he receives an injury. One of the first duties

of government is to afford that protection.” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 163 (1803).

The district court relied on Fultz v. Union–Commerce Assoc., 683 N.W.2d 587,

592 (Mich. 2004), to conclude that CSI owed no duty to the Indians that was “separate

and distinct” from CSI’s contractual duties to the party with which it “contracted,”

National Pastime. Shortly before the district court’s consideration of this case, the

Michigan Supreme Court clarified that Fultz’s “‘separate and distinct’ mode of analysis”

should be interpreted to hold that a contracting party’s assumption of contractual

obligations does not extinguish or limit separately existing common-law or statutory tort

duties owed to noncontracting third parties in the performance of the contract. Loweke,

809 N.W.2d at 555. Quoting from the Sixth Circuit case Davis v. Venture One Const.,

Inc., 568 F.3d 570, 575-76 (6th Cir. 2009), the Michigan Supreme Court said that “Fultz

did not extinguish the simple idea that is embedded deep within the American law of

torts . . .; if one having assumed to act, does so negligently, then liability exists as to a

third party for failure of the defendant to exercise care and skill in the performance

itself.” Loweke, 809 N.W.2d at 561 (internal quotation marks omitted).6

Furthermore, Michigan law does not require that “plaintiff have a link such as

privity, a bond approaching privity, or a fiduciary relationship with the defendant in

order for a duty of reasonable care to exist.” Molecular Tech. Corp. v. Valentine, 925

F.2d 910, 916 (6th Cir. 1991) (citing Williams v. Polgar, 215 N.W.2d 149 (Mich. 1974))

(quotation marks and internal ellipse omitted). Specifically, a contracting party owes a

separate and distinct common law duty of care to all those whom the party knew or

reasonably should have foreseen would be injured by the party’s negligent acts or

omissions. Hill v. Sears, Roebuck and Co., 822 N.W.2d 190, 196-98 (Mich. 2012);

Loweke, 809 N.W.2d at 555.

The Michigan courts have imposed “an independent duty of care” to be exercised

by providers of professional services, like insurance brokers, towards third parties where
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 8

the harm was foreseeable and where the defendant had specific knowledge that its

actions might harm a specific third party. See Polgar, 215 N.W.2d at 156-57 (title

abstractor); Mieras v. DeBona, 550 N.W.2d 202 (Mich. 1996) (attorney); Nat’l Sand,

Inc. v. Nagel Const., Inc., 451 N.W.2d 618, 620 (Mich. Ct. App. 1990) (engineers liable

to contractor as foreseeable injured party for negligent preparation of construction

plans); cf. Molecular Tech. Corp., 925 F.2d at 915-16 (“without limiting its holding to

a particular group of professionals, the [Polgar] court reiterated the well-developed

negligence rule that a defendant owes a duty of care to all those who are foreseeable as

a potential class of injured persons . . . [and] all of those third parties who defendant

knows will rely on the information . . . .”) (footnote omitted). Furthermore, the

Restatement (Second) Torts § 299A provides the common law understanding of the duty

of a professional to others:

Unless he represents that he has a greater or lesser skill or knowledge,

one who undertakes to render services in the practice of a profession or

trade is required to exercise the skill and knowledge normally possessed

by members of that profession or trade in good standing in similar

communities.

The Michigan Supreme Court has followed the Restatement of Torts in numerous cases,

and we believe it would follow this basic tenet of the common law in this case as well.

See, e.g., Ritchie-Gamester v. City of Berkley, 597 N.W.2d 517 (Mich. 1999)(apparent

consent); McAuley v. Gen. Motors Corp., 578 N.W.2d 282, 285 (Mich. 1998) (damage

remedies); Orel v. Uni-Rak Sales Co., 563 N.W.2d 241, 243 (Mich. 1997) (negligence

claims relating to real property). 

Here, it is reasonably foreseeable that an additional insured such as the Indians

will be harmed if an insurance agency or other intermediary fails to procure the intended

coverage, just as the primary insured would be. While it is understandable that the law

should not allow the insurance broker to be held liable to a virtually limitless class of

claimants who are total strangers to the relationship between the insurance agency and

the insured, or parties who were unknown to the insurance broker before the filing of a

suit, this is not that case. The Michigan courts have repeatedly held in numerous
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 9

contexts that considerations of fairness, including the defendant’s ability to prevent the

harm, permit a finding that the defendant owes a duty of care to foreseeable third parties.

CSI knew that it was procuring insurance for the Indians as well as for National Pastime,

it knew exactly what dates and events the insurance was for, it knew that the Indians had

paid the premium and that CSI had issued a Certificate of Insurance to the Indians

indicating that the policy was in effect. CSI was well aware that the Indians could be

harmed if the proper insurance was not procured.

CSI also argues that foreseeability alone is not enough and that there must be

some additional “special relationship” that would make CSI liable to the Indians in this

case. That special relationship certainly exists here. It is undisputed that CSI knew that

the insurance was to cover the “Kids Fun Days” events hosted by the Indians before

baseball games. CSI sent a Certificate of Insurance directly to the Indians, listing them

as an additional named insured. See 1 Jeffrey E. Thomas & Francis J. Mootz, New

Appleman on Ins. § 2.07[1], at 2-84 (Lib. ed. 2011)(any communication between the

plaintiff and the insurance agent regarding coverage makes the harm foreseeable to the

agent procuring the coverage). The Certificate of Insurance lists the dates of the “Kids

Fun Days” and says the “Certificate Holder is added as Additional Insured with respect

to our insured’s [National Pastime Sports] negligence.” Immediately below that

language, the Cleveland Indians Baseball Company is named as the “Certificate Holder.”

Certificate of Liability Insurance, dated April 27, 2010. If indeed Michigan would

require some additional “special relationship” to impose tort liability on CSI, such a

relationship surely can be demonstrated here.

The district court also concluded that the lack of physical injury on the part of

the Indians bars recovery in tort. According to CSI, the Indians’ only damages are for

an economic loss—the loss of insurance proceeds—and the “economic loss doctrine”

precludes recovery in tort for this type of loss. The term “economic loss” refers to

damages that are solely monetary, as opposed to damages involving physical harm to

person or property. Broadly speaking, the economic loss doctrine is designed to

maintain a distinction between damage remedies for breach of contract and for tort. The
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 10

economic loss doctrine provides that certain economic losses are properly remediable

only in contract. The doctrine has roots in common-law limitations on recovery of

damages in negligence actions in the absence of physical harm to person or property.

The primary purpose of the rule is to shield a defendant from unlimited liability for all

of the economic consequences of a negligent act, particularly in a commercial or

professional setting, and thus to keep the risk of liability reasonably calculable. Because

the Indians’ tort claim is based on CSI’s professional negligence in a commercial setting,

CSI argues that the economic loss doctrine bars the claim.

The cases cited by CSI for the proposition that the “economic loss doctrine” bars

recovery are not factually analogous and do not convince us that the Michigan Supreme

Court would hold that the doctrine bars the Indians’ negligence claim in this case. This

case does not involve products liability, implied warranties, or economic recovery for

some other sort of defective good where the damage is confined to the product itself —

the type of case where the doctrine is most often invoked. Generally, a negligent

defendant is liable for all injuries resulting directly from his wrongful act if the damages

were the legal and natural consequences of his conduct and might reasonably have been

anticipated. See, e.g., Ensink v. Mecosta Cnty. Gen. Hosp., 687 N.W.2d 143, 147 (Mich.

Ct. App. 2004); GHD Oper., LLC v. Emerson Prew, Inc., No. 278857, 2009 WL 249399,

at *5 (Mich. Ct. App. Feb. 3, 2009). Moreover, the underlying wrongful-death suit in

this case most certainly does concern physical injury. The fact that the case presents

itself as an insurance dispute veils the fact that the underlying injuries complained of are

physical.

In addition, based on our review of case law from other jurisdictions, we

conclude that the economic loss doctrine does not generally bar claims for economic

losses suffered when an insurance broker negligently procures insurance. See, e.g., Pitts

v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 98 & n.4 (Iowa 2012); Grynberg v. Agri

Tech, Inc., 10 P.3d 1267, 1271 & n. 4 (Colo. 2000) (en banc); Steiner Corp. v. Johnson

& Higgins, 196 F.R.D. 653, 656-57 (D. Utah 2000); Kanter v. Deitelbaum, 648 N.E.2d

1137, 1139-40 (Ill. 1995).
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 11

7

The Restatement (Second) of Torts § 552, addressing negligent misrepresentation, states:

(1) One who, in the course of his business, profession or employment, or in any other

transaction in which he has a pecuniary interest, supplies false information for the

guidance of others in their business transactions, is subject to liability for pecuniary loss

caused to them by their justifiable reliance upon the information, if he fails to exercise

reasonable care or competence in obtaining or communicating the information.

(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to

loss suffered

(a) by the person or one of a limited group of persons for whose

benefit and guidance he intends to supply the information or knows

that the recipient intends to supply it; and

(b) through reliance upon it in a transaction that he intends the

information to influence or knows that the recipient so intends or in

a substantially similar transaction.

(3) The liability of one who is under a public duty to give the information extends to

loss suffered by any of the class of persons for whose benefit the duty is created, in any

of the transactions in which it is intended to protect them.

Negligent Misrepresentation

The Indians contend that they were also injured when CSI delivered a Certificate

of Insurance to them that implied that the requested insurance was in force. The Indians

offer proof that they relied on the representation provided by CSI in proceeding with the

Kids Fun Day under the belief that they had a policy that covered the activities they

specified. The district court found that the Indians did not adequately plead a claim of

negligent misrepresentation against CSI and, in any event, Michigan law limits such a

theory to claims against abstractors and accountants.

The elements of the tort of negligent misrepresentation are: (1) the defendant

made a material misrepresentation; (2) the representation was false; (3) the defendant

was negligent in making the misrepresentation, i.e., the defendant breached a business

or professional duty of care to provide accurate information to those who employ him;

and (4) the plaintiff suffered damages as a result. Law Offices of Lawrence J. Stockler

P.C. v. Rose, 436 N.W.2d 70, 81 (Mich. Ct. App. 1989).

Section 552(2) of the Restatement (Second) of Torts7

 limits a professional’s

liability for negligently supplied information to “the person or one of a limited group of

persons for whose benefit and guidance he intends to supply the information . . . .”
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 12

Section 552 requires a determination of whether the professional had any reason to know

that a third party might be relying on the information. This approach provides protection

to injured third parties, while avoiding the potentially limitless liability created by a

simple foreseeability analysis. As with the negligence claim, the focus is on whether an

insurance agent could have foreseen possible injury to some specific third party and

narrows the pool. Under this approach, concepts of foreseeability and reliance are

combined to limit the professional’s liability. Rather than imposing liability on any

potentially foreseeable third party, the approach under Section 552 essentially requires

a determination of whether the professional had any reason to know that a third party

might be using the information and whether the professional knew that the third party

would be relying on the information.

The element of foreseeability in this case has already been established—and, in

fact, conceded by CSI—so we turn to the reliance element. The Indians claim that they

did not receive any document or other information from any party indicating that the

insurance policy did not cover inflatable slides. It is undisputed that neither the Indians

nor National Pastime had not yet received a copy of the full policy from New Hampshire

Insurance Company or CSI. In the absence of receipt of the actual policy, reliance by

the Indians on the Certificate as a representation by CSI that CSI had procured the

requested insurance, including coverage for inflatables, was reasonable. See GHD

Operating, LLC v. Emerson Prew, Inc., No. 278857, 2009 WL 249399, at *6-*7 (Mich.

Ct. App. Feb. 3, 2009) (reliance on certificate insurance in absence of actual policy is

justified).

The Indians did not bring a separate claim for negligent misrepresentation nor

did it file a motion to amend until after the district court granted summary judgment to

CSI on all of the Indians’ claims in its complaint. However, the allegations in its

complaint and the other claims in the complaint, particularly the “innocent

misrepresentation” claim (which the Indians did not pursue on appeal), state that the

Indians relied on the Certificate of Insurance to proceed with the “Kids Fun Days” with

knowledge that they had the requested insurance coverage. CSI was on notice that the
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 13

Indians were asserting claims grounded in negligence and on notice that the Indians

claim to have relied on the Certificate of Insurance as written proof of coverage. We

therefore remand to the district court with instructions to let the negligent

misrepresentation claim proceed along with the general negligence claim.

Accordingly, for the foregoing reasons, the judgment of the district court is

affirmed as to defendant New Hampshire Insurance Company, but we reverse and

remand for proceedings consistent with this opinion concerning the Indians’ negligence

claims against defendant CSI Insurance Group.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 14

_________________

DISSENT

_________________

CLAY, Circuit Judge, dissenting. I disagree with the majority’s interpretation

of the relevant Michigan tort law as to both the claims of negligence and negligent

misrepresentation. I would affirm the decision of the district court, and accordingly, I

respectfully dissent. 

1. Negligence

Under Michigan law, there are four elements of a claim for negligence: duty,

breach, causation, and damages. Hill v. Sears-Roebuck, 492 Mich. 651, 660, — N.W.2d

— (2012). The district court found that CSI could not be liable to the Indians under a

theory of negligence because as a matter of law, CSI did not have a duty of care to the

Indians.

“A legal duty or obligation may arise by contract, statute, constitution, or

common law.” West American Ins. Co. v. Meridian Mutual Ins. Co, 583 N.W.2d 548,

551 (Mich. Ct. App. 1998.) In this case, there is neither a statutory nor constitutional

duty, and CSI did not have a contract with the Indians; therefore, CSI is only liable to

the Indians for negligence if there is a common law duty of care to an additional insured

party. See also Belfor USA Group, Inc. v. Alexis Manor Apartments, 2009 WL 609558,

at *1 (Mich. Ct. App. Mar. 10, 2009) (“In general, professional relationships for services

are established by contract.”). While Michigan case law makes it clear that one can owe

a third party a duty of care, Hill, 492 Mich. at 681 n.20, there are no cases that establish

specifically that an insurance broker owes an additional insured any common law duty

of care.

The majority relies on the Michigan Supreme Court’s decision in Loweke v. Ann

Arbor Ceiling & Partition Co., 809 N.W.2d 553 (Mich. 2011) to find that the Indians

have made out a prima facie case for negligence. This is an incorrect interpretation of

that case. Under the rule in Fultz v. Union-Commerce Assocs., 683 N.W.2d 587 (Mich.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 15

2004), as clarified in Loweke, a defendant can only be liable to a plaintiff if, “aside from

the contract, the defendant owed any independent legal duty to the plaintiff.” Loweke,

809 N.W.2d at 562. In this case, the entirety of CSI’s duty to the Indians was derived

from its contract with National Pastime Sports (“NPS”), and therefore it cannot be

separately liable to the Indians on a theory of negligence.

In Loweke, the Michigan Supreme Court clarified its decision in Fultz v. UnionCommerce Associates, 683 N.W.2d 587 (Mich. 2004). Loweke, 809 N.W.2d at 557.

“Since Fultz . . . issued . . . courts have erroneously interpreted this Court's decisions as

rejecting accepted tort-law principles and creating a legal rule . . . which bars negligence

causes of action on the basis of a lack of duty if . . . plaintiff alleges a hazard that was

the subject of the defendant's contractual obligations with another.” Id. Therefore, it is

possible for a defendant to owe a duty of care to a plaintiff who was not party to the

contract even if the duty arose because of the subject of the contract. In Loweke, one

subcontractor was responsible for carpentry and drywall at a construction project. The

subcontractor leaned cement boards against a wall, and they fell, injuring another

subcontractor. Id. at 555–56. Though the defendant’s duty to provide the drywall

services was the subject of the contract, the Michigan court found that the second

subcontractor could proceed on a theory of negligence, because in addition to its

contractual obligation to provide the service, the defendant had a common-law

obligation to perform that service with at a reasonable standard of care so that

foreseeable third parties would not be harmed. Id. at 562. The mere fact that there was

a contract does not excuse CSI from its duty to perform that contract with its ordinary

duty of care. As the court stated in Loweke, “courts should not permit the contents of

the contract obscure the threshold question of whether any independent legal duty to the

noncontracting third party exists, the breach of which could result in tort liability.” Id.

at 561.

However, while Loweke holds that a defendant may be liable to a third party for

actions arising out of the subject of the contract, there still must be an independent duty

to the plaintiff that is separate and distinct from the contract itself. The majority finds
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 16

that CSI owed an independent duty of care to perform its contractual duties such that the

Cleveland Indians would not be harmed, and thus is liable directly to the Indians.

Because this finding is incorrect as a matter of law, I would affirm the judgment of the

district court. 

Unlike the situation in Loweke, where “plaintiff’s cause of action . . . was not

brought solely on the basis of defendant’s failure to perform its contractual

obligations . . . ” id. at 561, in this case the purported negligence is identical to a claim

of breach of contract. As the Michigan Supreme Court has held: 

[A]n action would lie in contract if it was based solely on a defendant's

failure or refusal to perform a contractual promise. In contrast, an action

could lie in either contract or in tort if a “defendant negligently performs

a contractual duty or breaches a duty arising by implication from the

relation of the parties created by the contract . . . .” Fultz, 470 Mich. at

469, 683 N.W.2d 587. In the latter category of cases, however, no tort

liability would arise “for failing to fulfill a promise in the absence of a

duty to act that is separate and distinct from the promise made.” Id. at

470.

Id. at 558. 

In this case, there was no duty independent of CSI’s contractual promise. The

entirety of CSI’s duty was contained in the contract itself, and we know that because

there is no breach that the Indians allege that would not also be a breach of contract

between CSI and NPS. The majority attempts to plug this hole in the Indians’

allegations by stating that it was foreseeable that the Indians would be harmed by CSI’s

alleged breach. But the fact that it was foreseeable that the Indians would be hurt by a

breach of the contract is irrelevant because that is precisely what forecloses liability

sounding in tort in this case; we only know that the Indians were a foreseeable plaintiff

because the contract tells us so. And “although a tort can grow out of a contract, in

general, a tort is a ‘wrong independent of the contract.’” Id. at 561 (quoting Churchill

v. Howe, 186 Mich. 107, 114 (1915)). While we need not decide whether the harm

alleged in tort must be a physical harm, though that it strongly hinted at in the Loweke
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 17

decision, see id. at 562, it is enough that we know that there is no tort claim that could

be brought as a result of CSI’s conduct based on these facts.

The majority further attempts to construct a separate duty out of CSI’s status as

a provider of professional services. This misses the point. A professional’s status as a

professional ordinarily concerns the standard of care, rather than whether or not the

professional owed a duty to the particular plaintiff. In the cases cited by the majority,

the tortfeasors were professionals who performed services that then either induced

unrelated third parties to detrimental action, see, e.g., Williams v. Polgar, 215 N.W.2d

149, 152–53 (Mich. 1974), or were based on a particular status relationship, such as

being the beneficiary of a will. See, e.g., Miera v. DeBona, 550 N.W.2d 278, 204–05

(Mich. 1996). For this argument to work, there must be a principle of law which makes

an additional insured analogous to the beneficiary of a will. The majority concedes that

no such principle exists in Michigan law, and at least one other state has examined this

question and found that there is no such duty. See, e.g., Federal Ins. Co. v. Spectrum

Ins. Brokerage Servs., 304 A.D.2d 316, 317 (N.Y. App. Div. 2003) (“In addition, the

broker's duty is to its customer (here, the contractor) and not to additional insureds.”).

Finally, the majority incomprehensibly cites the Latin maxim “ubi jus, ibi

remedium,” as if the existence of a remedy were an actual issue in this case. The more

relevant Latin for this matter is “restitutio ad integrum.” That phrase refers to the idea

that the damages awarded should restore the plaintiff to its original state. The issue at

the heart of this case is not the ultimate question of liability; on the facts as established

at this stage, there is little question that CSI is liable to NPS, who in turn may be liable

to the Indians. The rule proposed by the majority would permit double recovery,

because under the majority’s approach CSI could be liable to NPS for breach of its

contract to obtain insurance, and to the Indians for negligence, even though the damages

due to each would be the same.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 18

8

In the initial complaint, the Indians labeled this cause of action as “innocent misrepresentation,”

but during the litigation of this motion, briefed the issue before the district court as one of negligent

misrepresentation. (Order, Nov. 17, 2011, at 9 n.2.)

2. Negligent Misrepresentation

I further disagree with the majority on the question of negligent

misrepresentation.8 First, construing the claim as one of “innocent misrepresentation,”

the Indians cannot succeed on this claim because they did not have privity of contract

with CSI. Forge v. Smith, 580 N.W.2d 876, 883 (Mich. 1998); U.S. Fidelity and

Guaranty Co. v. Black, 313 N.W.2d 77, 84 (Mich. 1981) (comparing Michigan’s rule

with the common law and finding that privity of contract must exist for a claim of

innocent misrepresentation under Michigan law). Simply, this claim does not apply

where there was no contract between the two parties.

Treating the claim as one of negligent misrepresentation, the Indians still cannot

show that they are entitled to recovery from CSI. It is true that Michigan courts have

abolished the requirement of contractual privity for some claims of negligent

representation. See Williams v. Polgar, 215 N.W.2d 149, 152–53 (Mich. 1974). In

Williams, the Michigan Supreme Court found that a real estate abstracter could be liable

to a third party when the abstracter’s work was performed negligently. But other cases

that have found such third-party liability have usually required some form of detrimental

reliance based on those misrepresentations, such as the purchase of property based on

an abstracter’s statements. See id. While the Indians are correct that the logic of the

Williams court might not totally bar the use of this theory in situations that do not

involve real estate abstracters, because they are a foreseeable third party, id., they cannot

show why the theory should apply here. In Williams, there were two key distinguishing

features: an abstract can be (and is intended to be) used by anyone, and there were

actions taken specifically in reliance on the information in the abstract. In other words,

the misrepresentation induced behavior by the plaintiff.

In this case, there was no sale or any event based on that misrepresentation; the

Indians just believed that NPS had obtained the proper insurance through CSI.
No. 12-1589 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. Page 19

Furthermore, in the context of insurance contracts, the Michigan courts have held that

a certificate of insurance only represents that insurance has been purchased, but makes

no claims as to the extent of the coverage or the particulars of the policy. See West

American Ins. Co. v. Meridian Mutual Ins. Co., 583 N.W.2d 548, 551 (Mich. Ct. App.

1998). A certificate of insurance does not create any duty to warn of inaccuracies, id.,

and therefore the Indians cannot show reasonable reliance on the document. 

 As with the claim for negligence, the issue here is not whether CSI is liable; it

may very well be liable to NPS for its failure to perform under the contract. The issue

is to whom it is liable, and because it had no contract with the Indians, it cannot be liable

to them on either a theory of negligence or of negligent misrepresentation.

Accordingly, for the reasons set forth above, I respectfully dissent.