Robertson v. State Farm Fire and Cas. Co.

Decision Date20 June 1995
Docket NumberNo. 94-CV-10251-BC.,94-CV-10251-BC.
Citation890 F. Supp. 671
PartiesHelen and Byron ROBERTSON, Plaintiffs, v. STATE FARM FIRE AND CASUALTY CO., Defendant.
CourtU.S. District Court — Western District of Michigan

Michael H. Fabian, Farmington Hills, MI, for plaintiffs.

Paul H. Johnson, Jr., Southfield, MI, for defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS CLAIM UNDER MICHIGAN CONSUMER PROTECTION ACT

CLELAND, District Judge.

I. Background

This matter is before the court on defendant's motion for partial dismissal under Fed.R.Civ.P. 12(b)(6). Defendant asserts that plaintiffs' claim under the Michigan Consumer Protection Act ("MCPA") must fail because expressly exempted from the Act's coverage at Mich.Comp.Laws § 445.904(1)(a) and (2)(a) and because the acts complained of do not involve the sale of "goods, property, or service primarily for personal, family or household purposes."

This action arises out of the collapse of a barn belonging to the plaintiffs, Helen and Byron Robertson, on their dairy farm located in Hillman, Michigan. Plaintiffs allege that defendant, through its agent John Knapp, made the following representations to the plaintiffs in 1991: that an insurance policy from defendant would exceed coverage in plaintiffs' existing policy; that all of plaintiffs' insurance needs would be covered; and that defendants would provide the best service possible so plaintiffs would be current with coverage as to all real, personal, and business property needs at the dairy farm location. Complaint, p. 2, ¶ 5. Plaintiffs further contend that they relied on these representations in purchasing an insurance policy from the defendant. Complaint, p. 2, ¶ 6.

In November, 1993, plaintiffs learned from their mortgage company that their insurance policy with defendants had been cancelled. Complaint, p. 3, ¶ 7. Plaintiffs then notified Knapp of this problem and set up a meeting with him to discuss it. At the meeting on November 23, 1993, Knapp rewrote the plaintiffs' insurance policies and made the following representations:

(a) That two new policies of insurance would be issued by Defendant State Farm separately and fully insuring the respective interests of Plaintiff Helen Robertson and Plaintiff Byron Kevin Robertson in the real property, personal property and equipment, as well as against other business losses;
(b) That the new policy would provide full replacement cost coverage on all of the structures.
(c) That he would determine the full replacement cost of the structures and obtain insurance for said amount;
(d) The new policies would provide for unscheduled equipment and other personal property that was maintained in the barn;
(e) The new policies would provide coverage for business income losses and expenses, including losses and expenses suffered if the cows had to be moved;
(f) The new policies would include milk pipeline coverage;
(g) The cows would be covered under the new policies as business assets if loss or damage occurred to the barn.

Complaint, pp. 3-4, ¶ 9.

On February 17, 1994, the barn collapsed, the cows needed to be relocated, the cows suffered illness and injury, and plaintiffs suffered large business losses. Complaint, p. 4, ¶ 11. Plaintiffs notified Knapp of the loss and told him that they had not received their new policies. Complaint, p. 4, ¶ 12. Knapp told plaintiffs their losses were covered by the current policy. Complaint, p. 4, ¶ 13. When plaintiffs later met with their claims adjuster, he informed them that they were not insured and that defendants would not pay for their losses. Complaint, p. 4, ¶ 14. Defendants have continued to refuse to reimburse plaintiffs for the losses suffered. Complaint, p. 4, ¶ 15.

Plaintiffs' first count sets forth an action in negligence for breach of duties to advise plaintiffs and to properly train their employees. The second count avers misrepresentation and the third avers violation of the Michigan Consumer Protection Act. This motion addresses only Count III, violation of the Michigan Consumer Protection Act.

Oral argument was held in this matter on May 8, 1995, at which time the matter was taken under advisement. On May 9, 1995, the court entered an order allowing plaintiff ten days in which to file a supplemental brief addressing an issue raised in the defendant's reply brief. The court has considered the arguments raised in the original briefs, at oral argument, and in the supplemental brief. Therefore, the matter is fully before the court and ripe for decision.

II. Standard

The standard to be applied to deciding a motion to dismiss is as follows:

This Court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief. A complaint need only give `fair notice of what plaintiff's claim is and the grounds upon which it rests.' A judge may not grant a Fed.R.Civ.P. 12(b)(6) motion to dismiss based on a disbelief of a complaint's factual allegations. While this standard is decidedly liberal, it requires more than a bare assertion of legal conclusions. `In practice, a ... complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.'

In Re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993) (internal citations omitted) (emphasis in original).

III. Discussion

For the reasons stated below, the motion to dismiss will be granted, not based on the MCPA's statutory exemptions, but rather because the acts complained of do not involve the sale of "goods, property, or service primarily for personal, family or household purposes."

A. Exemptions
1. § 2(a)'s exemption

Defendant relies on Kekel v. Allstate Ins. Co., 144 Mich.App. 379, 375 N.W.2d 455 (1985), in which the Michigan Court of Appeals held that since the conduct alleged by the plaintiffs fell under § 2043 of the Uniform Trade Practices Act of the Insurance Code, plaintiffs failed to state a claim under the Michigan Consumer Protection Act. The holding in Kekel rested, at least in part, on § 445.904(2)(a)1 which reads as follows:

(2) Except for the purposes of an action filed by a person under section 11, this act shall not apply to an unfair, unconscionable, or deceptive method, act, or practice which is made unlawful by:
(a) Chapter 20 of Act No. 218 of the Public Acts of 1956, as amended, being sections 500.2001 to 500.2093 of the Michigan Compiled Laws.

Mich.Comp.Laws 500.2001 to 500.2093 is the Unfair Trade Practices Act of the Insurance Code.

Consequently, it appears at first blush that the Michigan Consumer Protection Act does not apply to any conduct described as unlawful under the Unfair Trade Practices Act of the Insurance Code. The acts described as unlawful by the Unfair Trade Practices Act of the Insurance Code are as follows:

(a) Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies, certificates, or contracts of insurers, health care corporations, or health maintenance organizations for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy, certificate, or contract or to take out a policy, certificate, or contract with another insurer, health care corporation, or health maintenance organization.
(b) Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, or threat, whether explicit or implied, or undue pressure.
(c) Making use directly or indirectly of any method of marketing that fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

Mich.Comp.Laws § 500.2005a.

The instant complaint's averments coincide with the above-described activities made unlawful by the Unfair Trade Practices Act. Accordingly, it would appear that the Michigan Consumer Protection Act does not apply to these acts which are "made unlawful by" the Unfair Trade Practices Act. Mich.Comp. Laws § 445.904(2)(a)2; Kekel, supra.

However, the first phrase of § 2(a) reads "except for purposes of an action filed by a person under section 11" and thus alters this result. Although ignored by all published decisions of which this court is aware, § 11's exception from the exemption renders plaintiffs' claim viable.

§ 11 provides:

(1) Whether or not he seeks damages or has an adequate remedy at law, a person may bring an action to do either or both of the following:
(a) Obtain a declaratory judgment that a method, act or practice is unlawful under section 3.
(b) Enjoin in accordance with the principles of equity a person who is engaging or is about to engage in a method, act, or practice which is unlawful under section 3.
(2) Except in a class action, a person who suffers loss as a result of a violation of this act may bring an action to recover actual damages or $250.00, whichever is greater, together with reasonable attorneys' fees.
(3) A person who suffers loss as a result of a violation of this act may bring a class action on behalf of persons residing or injured in this state for the actual damages caused by any of the following:3

Mich.Comp.Laws § 445.911.

Thus, section 11 is the section regarding private causes of action brought by consumers. The only other sections addressing who may bring actions under the act (and under what circumstances) are sections 10 and 15. § 10 applies to class actions brought by the attorney general on behalf of citizens of the state, and § 15 extends to county prosecutors the power of the attorney general to bring suit. Mich.Comp.Laws § 445.910, and 445.915, respectively.

§ 11 allows private actions to be...

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