Stephens v. Worden Insurance Agency, LLC
307 Mich. App. 220
Mich. Ct. App.2014Background
- Fritz sought multistate workers’ compensation and general liability coverage from Worden Insurance Agency (1998–2008).
- Becker’s Florida death in 2008 triggered a coverage dispute; Florida insurer denied coverage for Florida-based injuries.
- Stephens, assignee of Fritz after a Florida settlement, sued Worden and Shamaly in 2011 for negligence, special relationship, and vicarious liability.
- Defendants moved for summary disposition arguing malpractice and statute of limitations; circuit court dismissed on limitations grounds.
- Court held the claims are ordinary negligence, not malpractice, and accrual occurs when the insurer denies the claim, making the 2011 suit timely.
- Court remanded for continued proceedings on remaining issues including vicarious liability
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims sound in malpractice or ordinary negligence | Stephens argues claims are negligence/breach of duty, not malpractice | Defendants argue claims are malpractice under MCL 600.5805(6) | Ordinary negligence; not malpractice |
| Accrual date for negligent procurement/advice claims | Accrual when damages occur or Florida judgment entered | Accrual based on malpractice timeline or policy events | Accrual at insurer denial; timely filing within three years |
| Adequacy of fraud claim pleading | Fraud alleged with material misrepresentation about Florida coverage | Fraud pled without particularity regarding knowledge/reckless conduct | Fraud claim not properly pled with particularity; insufficient to defeat dismissal |
| Vicarious liability of Worden for Shamaly's acts | Worden liable for employee within scope of employment | No separate theory beyond ordinary liability | Sufficient evidence to avoid dismissal; res ipsa not required |
| Scope of damages and limitations law applicability | Negligence claims fall under three-year limitations; not six-year contract theory | Malpractice/contract theories would alter accrual | Three-year ordinary negligence statute applies; accrue when denial occurred |
Key Cases Cited
- Holton v A+ Ins Assocs, 255 Mich App 318 (2003) (negligent insurance procurement recognized as tort, not malpractice)
- Harts v Farmer Ins Exch, 461 Mich 1 (1999) (insurer–insured relationship not automatically malpractice)
- Local 1064, RWDSU AFL-CIO v Ernst & Young, 449 Mich 322 (1995) (defined common law malpractice and scope of professional liability)
- Sam v Balardo, 411 Mich 405 (1981) (common-law malpractice standard; not all licensed professionals are malpractice defendants)
- Zaremba Equipment, Inc v Harco Nat’l Ins Co, 280 Mich App 16 (2008) (insurance agent negligence for failure to procure coverage; not malpractice)