Court Opinion

ID: 1038316
Source: CourtListenerOpinion
Date Created: 2013-08-24 00:01:21.117091+00
Date Added: 2024-06-11T11:37:01.920561
License: Public Domain

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
                             _________________

                                                X
                                                 -
 CLEVELAND INDIANS BASEBALL COMPANY,
                                                 -
 L.P.,
           Fourth-Party Plaintiff-Appellant,     -
                                                 -
                                                     No. 12-1589

                                                 ,
                                                  >
                                                 -
          v.

                                                 -
                         Defendant-Appellee, --
 NEW HAMPSHIRE INSURANCE COMPANY,

                                                 -
                                                 -
                                                 -
 CSI INSURANCE GROUP,

           Fourth-Party Defendant-Appellee. -
                                                N
                  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

“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.

        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.
No. 12-1589            Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al.                    Page 4

         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

         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:”
No. 12-1589           Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al.                    Page 5

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

         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 non-
         mechanical 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.
No. 12-1589           Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al.                   Page 6

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 &
Partition Co., 809 N.W.2d 553, 556 (Mich. 2011). The question of whether a duty exists
is a question of law. Id.

         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.
No. 12-1589             Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al.                      Page 7

         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

         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).
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

                                  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 . . . .”

       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.
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. Union-
Commerce 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

         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.

         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.)
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.