Builder cannot sue his agent after underinsured building burns during construction
Simone Mauro, a licensed residential builder, was constructing an 11,000 square-foot home, apparently as a "spec-home," when it burned just prior to completion. At the commencement of construction, Mauro instructed his agent to insure the home--which would only be a "hole in the ground" initially--for $330,000.00. Over the succeeding two years of progress, however, the insurance was never increased commensurate with the value of the structure, so that when it burned, Mauro suffered a substantial loss. He sued his agent, arguing that the agent owed a duty to increase the insurance on the spec home as it increased in value.
The Court of Appeals upheld the dismissal of Mauro's claim, relying primarily on the 1999 Harts decision, where a Republican majority of the Michigan Supreme Court held that an agent owes no general duty to the insured to advise them about appropriate coverage. Under this "Engler Majority" holding, an agent owes a duty only if he misrepresents coverage, gives inaccurate advice, or responds to an ambiguous request or makes an express agreement with the insured. The Court of Appeals held that because this case does not document one of these exceptional circumstances, the insurance agent owed no general "duty of reasonable care" to its insured, Mauro. It also held that Mauro's testimony did not raise a question of fact with regard to an "express agreement" to adjust coverage.