Zaremba Equipment, Inc. v. Harco National Insurance
302 Mich. App. 7
| Mich. Ct. App. | 2013Background
- Zaremba Equipment purchased a Harco commercial policy (building limit $525,000; contents $700,000); a 2003 fire destroyed the primary building and replacement costs exceeded policy limits.
- Zaremba sued Harco and its agent Patrick Musall, alleging negligent advice on coverage amounts, negligent appraisal (using Marshall & Swift), innocent misrepresentation, and fraud; Musall was Harco’s agent.
- First jury (2009) returned a large verdict for Zaremba; this Court reversed and remanded for a new trial because the trial court refused to instruct that Zaremba had a duty to read its policy (Zaremba I).
- On remand, a properly instructed jury found Musall negligent and liable for innocent misrepresentation (but not fraud), assessed comparative negligence (Zaremba 20–30% depending on claim), and awarded damages reduced to $1,245,264.40; court also awarded costs, fees, and case-evaluation sanctions.
- Defendants appealed on multiple grounds (duty to read as bar to recovery, insufficiency of evidence of a special relationship, attorney misconduct, inconsistent verdicts, and case-evaluation sanctions); Zaremba cross-appealed limited comparative-fault treatment.
- The Court affirmed: law of the case barred relitigation of duty-to-read issues, evidence supported a special relationship and submission of comparative fault on misrepresentation given new facts, attorney misconduct claims were harmless, verdicts were reconcilable, and sanctions were proper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zaremba’s failure to read the policy bars recovery / JNOV | Zaremba argued its failure to read did not bar recovery because Musall assumed advisory duties and appraisal issues were not revealed by the policy | Harco argued the duty to read is dispositive and negates reliance on agent’s statements | Rejected defendants’ JNOV — law of the case (Zaremba I) required comparative-fault analysis, not a complete bar |
| Whether there was a special relationship creating a duty of care by agent | Zaremba: Musall gave coverage advice, performed a survey/"appraisal," used Marshall & Swift, and promised to "meet or beat" Deere quote, creating a special relationship | Harco: Agent was an ordinary order-taker; no duty to appraise or guarantee adequacy of coverage | Court held sufficient evidence of a special relationship under Harts (agent assumed advisory/appraisal role) |
| Whether attorney misconduct warranted new trial | Zaremba: trial counsel’s comments were legitimate advocacy and did not prejudice outcome | Harco: Plaintiff’s counsel made speaking objections, accused witnesses of lying, and argued policy was too confusing to read | Court found some improper remarks but no deliberate attempt to prejudice; trial court’s curative instructions rendered errors harmless |
| Whether jury verdicts and comparative-fault allocations were inconsistent | Zaremba: comparative fault should not apply to misrepresentation tied to appraisal; also challenged allocation across building vs contents | Harco: different percentages are irreconcilable and higher percentage should apply | Court held verdicts reconcilable (separate theories/proofs); comparative fault submission proper given new evidence; content-related challenge waived |
Key Cases Cited
- Zaremba Equip, Inc. v. Harco Nat’l Ins. Co., 280 Mich. App. 16 (2008) (prior appellate opinion establishing duty-to-read as comparative fault and distinguishing negligent appraisal claims)
- Harts v. Farmers Ins. Exch., 461 Mich. 1 (1999) (special-relationship framework for agent duties when agent assumes advisory role)
- Sniecinski v. Blue Cross & Blue Shield of Mich., 469 Mich. 124 (2003) (standard of review for JNOV and viewing evidence favorably to nonmoving party)
- Casey v. Auto-Owners Ins. Co., 273 Mich. App. 388 (2006) (no implied duty on insurer/agent to insure adequacy absent advisory relationship)
- Granger v. Fruehauf Corp., 429 Mich. 1 (1987) (verdicts set aside only when logically irreconcilable)
- Severn v. Sperry Corp., 212 Mich. App. 406 (1995) (case-evaluation sanction awards may include fees from multiple trials after rejection)