Court Opinion

ID: 3005877
Source: CourtListenerOpinion
Date Created: 2015-09-30 14:07:29.712953+00
Date Added: 2024-06-11T15:03:00.812207
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

TEREES WILLIAMS,                                                     UNPUBLISHED
                                                                     September 29, 2015
               Plaintiff-Appellant,

v                                                                    No. 323434
                                                                     Muskegon Circuit Court
JERVISS-FEHTKE INSURANCE CO,                                         LC No. 13-49185-CK

               Defendant-Appellee.

Before: BOONSTRA, P.J., and MURPHY and MARKEY, JJ.

PER CURIAM.

       Plaintiff appeals by right, in propria persona, from the judgment entered in defendant’s
favor following a directed verdict granted to defendant after the close of proofs at a jury trial.
The trial court denied plaintiff’s motion for reconsideration of its directed verdict and
subsequently entered a judgment of no cause of action on plaintiff’s claims. We affirm.

                   I. PERTINENT FACTS AND PROCEDURAL HISTORY

        Plaintiff’s rental property was destroyed by a gas explosion that originated at a
neighboring house. Plaintiff submitted a claim to her insurer, Auto-Owners Insurance Company
(“Auto-Owners”). Auto-Owners denied the claim on the grounds that the policy did not cover
losses arising from explosions originating outside the property.

         Plaintiff then filed this action in propria persona against Auto-Owners and defendant
insurance agency. Plaintiff’s complaint, although styled a “breach of contract” complaint,
alleged primarily that Kevin Dick, an insurance agent and employee of defendant, was negligent
in failing to provide the type of insurance coverage plaintiff had requested. Plaintiff also alleged
deficiencies in Auto-Owners’s denial of coverage. The trial court granted summary disposition
to Auto-Owners and dismissed the claims against it; plaintiff did not appeal that dismissal.

        The case proceeded with respect to plaintiff’s allegations against defendant. Prior to trial,
the trial court granted defendant’s motion in limine to exclude evidence that plaintiff wished to
present regarding payments made by another insurer on a claim by another property owner for
damage to a different property that had allegedly been damaged in the same explosion. The trial
court also excluded documentary evidence related to Auto-Owners’s denial of coverage for
plaintiff’s loss on the grounds that it was not relevant to plaintiff’s claim.

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       At trial, plaintiff testified that she had telephoned defendant’s office in April of 2012
seeking a quote for insurance on several rental properties she owned in Muskegon. Plaintiff
spoke to Dick, and provided him with the addresses of her rental properties. Plaintiff also told
Dick that she had previously had an Auto-Owners policy. Plaintiff testified that they scheduled
an appointment to discuss quotes for insurance policies on April 9, 2012.

        Plaintiff testified that she told Dick at the meeting that she wanted “full coverage” for her
rental properties. Plaintiff further testified that she told Dick that the property that is the subject
of the instant case (“the property”) was her only rental property that was subject to a mortgage.
Plaintiff testified that Dick responded by explaining “replacement cost” insurance to her;
according to plaintiff, Dick told her that even if she received a “replacement cost” policy, if she
suffered a total loss she would not receive the replacement cost of the property, but only the
market value. Plaintiff testified that she requested “full coverage insurance up to the value of the
home” and clarified that she would be fine with using the state equalized value (SEV) of the
home. Plaintiff stated that Dick said he wasn’t sure if it was possible, but that he would check
with the underwriter regarding that coverage. Plaintiff testified that Dick told her that if it was
possible to receive the coverage she requested, she would receive a policy in the mail; if not,
Dick would contact her to discuss other options. She testified that she received a policy in the
mail for the property in the amount of $50,000 a few weeks later. She testified that she looked it
over and that it appeared to be the coverage she had requested. Plaintiff testified that her
understanding of “full coverage” was a policy that would insure against all losses regardless of
their cause.

         Dick testified that his initial telephone call with plaintiff lasted approximately 15 minutes
and that he gathered the information from plaintiff necessary to begin a “policy shell or a client
shell” in his company’s computer system. Dick also testified that a second telephone
conversation took place between the initial call and the April 9 meeting, and that during one of
these calls he told plaintiff that “full coverage” home insurance policies did not exist. During the
second call, Dick testified, he told plaintiff that, based on his preliminary calculations, if a
“replacement cost” policy was available, he estimated that it would cost about $9,500 per year.
Dick stated that plaintiff said that amount was much more than plaintiff had paid in the past.
Dick testified that he had doubts about his ability to even obtain a “replacement cost” policy
based on the large discrepancy between the market value of the property and its replacement
cost, although the record is unclear whether he communicated these doubts to plaintiff during the
telephone call.

        Dick testified that, during the second call, he explained to plaintiff that the highest level
of coverage available for a non-owner-occupied property was the “replacement cost” policy they
had discussed earlier. According to Dick’s calculations, the replacement cost for the property
was over $150,000; if plaintiff had obtained that policy, she would receive that amount for a
covered total loss. Dick denied telling her that a “replacement cost” policy would only pay the
actual market value in the event of a total loss. Dick testified that plaintiff stated that she did not
want to pay that much for a policy even if it was available, and that he told her that the only other
option was a “dwelling fire policy based on actual cash value.” Based on his belief that plaintiff
did not want to try to obtain a “replacement cost” policy, Dick did not contact underwriters to see
if such a policy was available.

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        Dick testified that, at the April 9 meeting, plaintiff provided him with the SEV’s of the
properties she wanted insured, and they discussed obtaining “dwelling fire” policies for those
properties. Dick testified that he told plaintiff that a “dwelling fire” policy provided less
coverage than a “replacement cost” policy. Dick denied telling her that he would speak to an
underwriter concerning “full coverage” and telling her that if he could get her the coverage she
requested she would receive a policy in the mail; instead, Dick said that if the underwriters had
any concerns regarding potential repairs to the property he would contact her. Dick testified in
fact that the underwriters did contact him, following an inspection of the property, about some
repairs they wanted made to the property. He contacted plaintiff about these concerns; plaintiff
made the repairs and kept the policies that had been issued.

        Defendant presented an expert witness, David Walker, as an expert in the sale of
residential insurance policies by independent agents. Walker testified that, in 2012, three types
of insurance policies were available for residential properties: “homeowners,” “replacement
cost,” and “dwelling fire.” Walker testified that a “homeowners” policy was not available to
plaintiff because she was not occupying the property as the owner. Walker explained further that
a “replacement cost” policy was only available if “the replacement cost was within a reasonable
margin to the market value.” Walker opined that no insurance company in 2012 would have
issued a “replacement cost” policy for a property with a market value of $50,000 and a
replacement cost of over $150,000 because of the “moral hazard” such policies represented.
Therefore, Walker opined that the only type of policy available to plaintiff for the property was a
“dwelling fire” policy for the market value of the property. Such a policy only insures for
specific perils specifically identified in the policy—as contrasted to a “replacement cost” policy,
which insures against all perils not specifically excluded. Walker testified that plaintiff’s policy
stated that it covered “internal” explosions. Walker stated that based on the information he had
concerning the property, he could not identify any policy that plaintiff could have obtained for
the property that would have protected from damage caused by an external explosion.

        Following Walker’s testimony, defendant moved for a directed verdict, on the grounds
that the evidence indicated that it would have been impossible for Dick to have obtained an
insurance policy for plaintiff that would have covered the loss. The trial court granted the
motion on proximate causation grounds, finding that, regardless of whether Dick was negligent
in procuring an insurance policy for plaintiff, there was no evidence that any negligence on
Dick’s part resulted in damages to plaintiff.

       This appeal followed. On appeal, plaintiff challenges the trial court’s exclusion of
evidence, as well as its entry of a directed verdict.

                                II. EXCLUSION OF EVIDENCE

       Plaintiff argues that the trial court erred in excluding evidence that the insurer of another
home paid a claim related to the explosion, and also in excluding evidence related to Auto-
Owners’s denial of her claim. We disagree. We review a trial court’s decision regarding the
admission of evidence for an abuse of discretion. See Edry v Adelman, 486 Mich. 634, 639; 786
NW2d 567 (2010). We review issues involving the interpretation of the Michigan Rules of
Evidence de novo. Howard v Kowalski, 296 Mich. App. 664, 675; 823 NW2d 302 (2012). Even

                                                -3-
if evidence was erroneously excluded, reversal is not required unless the error was prejudicial.
Shaw v Ecorse, 283 Mich. App. 1, 27; 770 NW2d 31 (2009).

        Regarding Auto-Owners, plaintiff sought to admit a letter from Auto-Owners’s claims
adjuster denying her claim, a forensics engineering report prepared for Auto-Owners detailing
damages to the property, and a letter from Auto-Owners to the credit union mortgagee of the
property indicating that its claim was denied because of a lack of coverage on the property.
Plaintiff argued before the trial court that the denial letter to her supported her claim that she had
received a different insurance policy than she had requested in her conversations with Dick.
Plaintiff further argued that the engineering report supported her claim of damages, and that the
denial letter sent to her credit union showed “a pattern of negligence” by Dick because he
allegedly had forgotten to add the mortgagee to the policy.

        The trial court denied the admission of the denial letters and engineering report on both
relevance and hearsay grounds. MRE 402, MRE 802. With regard to hearsay, the trial court
noted that no foundation had been provided for any of the correspondence or the report, so as to
bring them within the hearsay exception found in MRE 803(6), the “business records” exception.
We agree. MRE 803(6) requires that the party seeking admission lay a foundation by providing
evidence that the records were prepared in the course of a regularly conducted business activity.
See Price v Long Realty, Inc., 199 Mich. App. 461, 468; 502 NW2d 337 (1993).1 Plaintiff did not
provide such evidence by either testimony or affidavit.

        With regard to relevance, the trial court noted that it was undisputed that plaintiff had
suffered a total loss and that Auto-Owners had denied her claim. Thus, the evidence plaintiff
sought to admit was not relevant. We agree. Plaintiff’s evidence regarding Auto Owners’s
denial of her claim would not have been helpful in shedding light on any material fact at issue.
MRE 401; Dep’t of Transp v VanElslander, 460 Mich. 127, 129; 594 NW2d 841 (1999). Further,
even if plaintiff’s evidence was minimally relevant, its admission would have been a needless
presentation of cumulative evidence. MRE 403; Taylor v Mobley, 279 Mich. App. 309, 315; 760
NW2d 234 (2008). Finally, as the trial court noted, admission of this evidence risked a
confusion of the issues and misleading the jury, by potentially inviting the jury to consider anew
the issue of whether Auto-Owners had properly denied her claim. Id. In addition, with regard to
plaintiff’s claim that the denial letter received by the mortgagee indicated a “pattern of
negligence” on the part of Dick, the record reflects that the mortgagee was retroactively added to
the policy, that plaintiff had failed to complete the portion of the application indicating the
presence of a lienholder on the property, and that the mortgagee’s claim was denied for the same
reason plaintiff’s claim was denied—the policy did not cover the peril that caused the loss.
Under these circumstances, the trial court did not err in concluding that the evidence was not
relevant. MRE 401.

1
  The trial court noted its doubt that the engineering report and denial letters would even qualify
as “records prepared in the course of a regularly conducted business activity.” In light of the fact
that we agree that in any event the proffered evidence lacked sufficient foundation and was
irrelevant, we do not address this additional concern.

                                                 -4-
        With regard to the evidence that another insurer had paid a claim on a different rental
property related to the explosion, the trial court also excluded that evidence on the basis of
hearsay and lack of relevance. Plaintiff sought to admit documents from the City of Muskegon
indicating that the insurer of a neighboring property was required to withhold a portion of
insurance proceeds from any insurance settlement and to remit that amount to the City, and
additionally a copy of the check from the insurer remitting that amount. Although plaintiff
argued that an affidavit of the Freedom of Information Act (FOIA) Coordinator for the City of
Muskegon sufficed to provide a foundation for this evidence under MRE 803(6), the trial court
found that the affidavit “essentially says this is our file and she’s completely unqualified to say
whether the thing that’s in their file is accurate.”

        The trial court properly excluded this evidence. Although the FOIA coordinator’s
affidavit indicated that the documents as a whole were kept in the regular course of business, that
is not the end of the inquiry; “not every statement contained within [a] document is admissible
merely because the document as a whole is one kept in the regular course of business.” Merrow
v Bofferding, 458 Mich. 617, 625; 581 NW2d 696 (1998). Rather, when hearsay exists within a
business record, a separate exception must exist for its admission. Id. Here, plaintiff offered
these documents to prove the truth of the matter asserted that the owner of another rental
property received insurance payments from damage caused by an external explosion. The
documents offered to prove this assertion are a September 11, 2012 application for registration of
the damaged property as a non-owner occupied rental dwelling, and a check from Fremont
Insurance remitted to the City of Muskegon that states that the claim type was “EXPLOSION.”
Plaintiff offered no hearsay exception or foundational testimony to support her position that (1)
the insured property was in fact a non-owner occupied rental property at the time of the
explosion or (2) that Fremont Insurance paid for damages caused by an external explosion. We
therefore conclude that the trial court did not err in declining to admit this hearsay within
hearsay.

        Further, even if there was no hearsay problem, admission of this evidence, without
additional evidence, ran the risk of misleading the jury. Taylor v Mobley, 279 Mich. App. at 315.
The evidence offered by plaintiff did not indicate the type of insurance policy in place on the
neighboring property or the details surrounding the payment of that particular claim. Without
more evidence to support it, this evidence would have merely invited the jury to speculate that
plaintiff could have obtained a “dwelling fire” policy, in 2012, covering the property at issue,
that would have covered an external explosion. The trial court thus did not abuse its discretion in
declining to admit this evidence on relevancy grounds. MRE 403.

        In her reply brief on appeal, plaintiff argues that her evidence was admissible under the
“residual” exception to the hearsay rule, MRE 803(24). The application of this exception was
not argued to the trial court and the issue is thus unpreserved. Walters v Nadell, 481 Mich. 377,
387; 751 NW2d 431 (2008). In any event, the residual exception “is to be employed only in
extraordinary circumstances where the court is satisfied that the evidence offers guarantees of
trustworthiness and is material, probative, and necessary in the interest of justice.” People v
Katt, 248 Mich. App. 282, 300-301; 639 NW2d 815 (2001). In light of the relevancy issues and
lack of foundational testimony discussed above, we find no error in the trial court’s failure to sua
sponte admit plaintiff’s proffered evidence under this exception to the hearsay rule.

                                                -5-
                                    III. DIRECTED VERDICT

        Plaintiff also argues that the trial court erred in granting defendant’s motion for a directed
verdict. We disagree. We review a trial court’s decision on a directed verdict motion de novo.
Tobin v Providence Hosp, 244 Mich. App. 626, 642; 624 NW2d 548 (2001).

       In deciding a directed verdict motion, the trial court must view the evidence and all
legitimate inferences from the evidence in the light most favorable to the nonmoving party to
determine whether it has established a prima facie case. Chouman v Home-Owners Ins Co, 293
Mich. App. 434, 441; 810 NW2d 88 (2011). If no factual question exists upon which reasonable
minds could differ, the trial court may grant a directed verdict. Id.

       To establish a prima facie case of negligence, a plaintiff must show proof of all of the
following elements: “that ‘(1) the defendant owed the plaintiff a legal duty, (2) the defendant
breached the legal duty, (3) the plaintiff suffered damages, and (4) the defendant’s breach was a
proximate cause of the plaintiff’s damages.’ ” Hill v Sears, Roebuck & Co, 492 Mich. 651, 660;
822 NW2d 190 (2012), quoting Loweke v Ann Arbor Ceiling & Partition Co, LLC, 489 Mich.
157, 162; 809 NW2d 553 (2011).

       Here, the trial court stated that it was granting defendant’s motion for a directed verdict
on the grounds that no factual question existed regarding the absence of proof of proximate
causation:

       Let’s suppose the jurors believe -- let’s assume that Mr. Dick was negligent, he
       did a horrible job? What would have changed? And in terms of the damage, your
       loss might be your opportunity to shop around and we don’t have any way the
       jurors could put a number on that. Given the testimony, you don’t have any
       testimony - - given the evidence, you don’t have any testimony that you could
       find such a policy so I’m thinking, okay, what’s the value of your opportunity to
       find that out yourself, and there’s just no way that the jurors have any evidence
       that helps them put a number on that and I’m not sure that anybody could do that.
       So on the four-part analysis it’s causation really where the Court to overuse the
       analogy is planting its flag at this point and I think that requires granting the
       motion.

        We agree with the trial court. “A plaintiff must adequately establish cause in fact in
order for legal cause or ‘proximate cause’ to become a relevant issue.” Skinner v Square D Co,
445 Mich. 153, 163; 516 NW2d 475 (1994). Cause in fact requires a showing that “but for” the
defendant’s actions, plaintiff would not have been injured. Id. Proximate cause “involves
examining the foreseeability of consequences, and whether a defendant should be held legally
responsible for such consequences.” Id.

        In this case, Dick and Walker’s unrefuted testimony was that plaintiff could not have
obtained an insurance policy for the property in 2012 that covered the risk of damage from an
external explosion. Thus, even if Dick was negligent in his procurement of an insurance policy
for plaintiff’s property, no question of fact upon which reasonable minds could differ existed,
based on the evidence presented at trial, concerning whether Dick’s actions were a “but for”

                                                 -6-
cause of plaintiff’s injuries. Plaintiff therefore did not make out a prima facie case of proximate
cause or, consequently, of negligence, and the trial court did not err in granting defendant’s
motion for a directed verdict.2

      Because the trial court did not err in granting a directed verdict on proximate causation
grounds, we decline to address the other elements of plaintiff’s prima facie negligence case.

       Affirmed.

                                                            /s/ Mark T. Boonstra
                                                            /s/ William B. Murphy
                                                            /s/ Jane E. Markey

2
  Our conclusion would not be altered if the trial court had admitted the proffered evidence of
insurance payments made by Fremont Insurance concerning another damaged property. As
stated above, the evidence offered by plaintiff lacked information concerning the policy that
covered the property, the date the policy was issued, and the circumstances surrounding the
payment of the claim. “[A] plaintiff’s circumstantial proof must facilitate reasonable inferences
of causation, not mere speculation.” Skinner, 445 Mich. at 164. Even if the jury had been
presented with this evidence, and even viewing it in the light most favorable to plaintiff, the
inference that plaintiff could in fact have insured the property against the peril that caused the
loss would have been “impermissible conjecture” rather than a “reasonable inference.” Id. at
164.

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