Per Curiam:.
The principal question presented is whether Manual A. Kassab may maintain a civil rights action against Michigan Basic Property Insurance Association and others for unfair claims processing following a fire that destroyed business [438]*438property insured by Michigan Basic. Another question is whether Kassab’s complaint adequately pleaded and stated a cause of action that Michigan Basic made false representations to him that it intended to pay for the fire damage.
i
Kassab was the owner of premises on West Seven Mile Road in Detroit where he conducted business as Seven Mile Auto Electric for a number of years. He purchased a standard fire insurance policy from Michigan Basic with policy limits of $50,000 on the building and $25,000 on contents. The policy was in effect on August 30, 1986, when a fire occurred. He reported the loss and claimed damages in excess of the policy limits. Michigan Basic hired Metropolitan Adjustment & Investigation Company and John D. Honeyman to investigate the claim. On their recommendation, Michigan Basic denied the claim.
More than one year after the claim was denied, Kassab filed a multicount complaint seeking damages against Michigan Basic, Metropolitan Adjustment, and Honeyman. The circuit court denied summary disposition. A divided panel of the Court of Appeals1 affirmed the denial of summary disposition of the civil rights and fraud and misrepresentation claims, but reversed with respect to the contract claim, holding that it was barred by a one-year statute of limitation.2
We reverse the judgment of the Court of Appeals on the civil rights claim, but affirm on the fraud and misrepresentation claim and remand to the circuit court for further proceedings on the fraud and misrepresentation claim._
[439]*439II
Kassab’s complaint alleges that Michigan Basic did not pay his fire-loss claim because he is "Chaldean by national origin.” Kassab relies on the section of the Civil Rights Act3 providing that a person shall not "[d]eny an individual the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a place of public accommodation or public service because of religion, race, color, national origin, age, sex, or marital status.”4
The focus, we agree with Michigan Basic, of that section of the Civil Rights Act is primarily on denial of access to a place of public accommodations or public services.5 Michigan Basic did not deny Kassab access to insurance; it insured Kassab for fire loss.
We do not agree with the dissent that "it would make a mockery of the act’s purposes” to recognize that the act might provide a civil rights remedy for refusal to insure, but not a civil rights [440]*440remedy for discrimination in the "handling and adjustment of claims under a policy.”6
The dissent’s argument assumes that the Legislature intended to provide a civil rights remedy for breach of a commercial contract, and not only a civil rights remedy for refusal to contract. Adoption of the dissent’s approach might well result in the addition of a civil rights count in many actions for breach of contract where it has not in the past been commonplace to do so.7
hi
Acknowledging that an insurer may8 be a "[p]lace of public accommodation” within the meaning of that term because it is a "business . . . whose . . . services . . . are extended, offered, sold, or otherwise made available to the public,”9 the gist of Kassab’s claim is breach of contract. Because access to insurance coverage was not denied, the majority of the Court is of the [441]*441opinion that it is beyond the legislative purpose to provide a civil rights action under the public accommodations section of the act for breach of contract in claims processing. Upon the issuance of a policy of insurance, the services owed by an insurer to an insured are no longer "services . . . made available to the public.” The rights and obligations of the contracting parties are then private. While an insured is not separated from the "public” upon entering into insuring agreements embodied in a policy of insurance, the obligations of the insurer are owed to a particular contracting party/insured. The rights and obligations of the contracting parties are specific to the contract and to the persons involved.10
No Michigan case is dispositive of the issue. The cases cited by the dissent do not bear directly on the issue whether performance under a contract is within the scope of the civil rights act.11_
[442]*442Under the most reasonable construction of the scope of the Civil Rights Act, Kassab’s claim for breach of contractual obligations in claims processing cannot be maintained.
iv
We are persuaded that Kassab’s complaint stated the circumstances constituting fraud with particularity, that the complaint stated a cause of action, and remand for trial on that claim.12
The elements constituting actionable fraud or misrepresentation are well settled:
The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. [Hi-Way Motor Co v Int’l Harvester Co, 398 Mich 330, 336; 247 NW2d 813 (1976), quoting Candler v Heigho, 208 Mich 115, 121; 175 NW 141 (1919).]
Kassab’s first amended complaint alleged that he, as the insured, and Michigan Basic, as the insurer, had entered into a contract of fire insurance, that a fire loss occurred which he duly reported to Michigan Basic, that Michigan Basic made representations to Kassab that it intended to pay and would pay for fire damage to his business [443]*443property, that the representations were false, that Michigan Basic made the representations knowing they were false or with reckless disregard for their truthfulness, that the representations were made with the intention that Kassab would rely thereon, and that he relied on those representations "in obtaining fire protection for his property.”
Read as a whole, the complaint alleges that false representations were made to Kassab before he entered into the contract of insurance with Michigan Basic, and thus that when Michigan Basic entered into the contract of insurance with Kassab and represented that it intended to pay and would pay for fire damage, the representation was false and Michigan Basic knew when it made the representation that it was false. The allegation that Michigan Basic knew when it made the representation that it was false is within the so-called " 'bad faith’ exception to fraudulent misrepresentation” referred to in our colleague’s opinion.13 While Kassab may have difficulty in establishing the allegations, they do state a cause of action.
Free access — add to your briefcase to read the full text and ask questions with AI
Per Curiam:.
The principal question presented is whether Manual A. Kassab may maintain a civil rights action against Michigan Basic Property Insurance Association and others for unfair claims processing following a fire that destroyed business [438]*438property insured by Michigan Basic. Another question is whether Kassab’s complaint adequately pleaded and stated a cause of action that Michigan Basic made false representations to him that it intended to pay for the fire damage.
i
Kassab was the owner of premises on West Seven Mile Road in Detroit where he conducted business as Seven Mile Auto Electric for a number of years. He purchased a standard fire insurance policy from Michigan Basic with policy limits of $50,000 on the building and $25,000 on contents. The policy was in effect on August 30, 1986, when a fire occurred. He reported the loss and claimed damages in excess of the policy limits. Michigan Basic hired Metropolitan Adjustment & Investigation Company and John D. Honeyman to investigate the claim. On their recommendation, Michigan Basic denied the claim.
More than one year after the claim was denied, Kassab filed a multicount complaint seeking damages against Michigan Basic, Metropolitan Adjustment, and Honeyman. The circuit court denied summary disposition. A divided panel of the Court of Appeals1 affirmed the denial of summary disposition of the civil rights and fraud and misrepresentation claims, but reversed with respect to the contract claim, holding that it was barred by a one-year statute of limitation.2
We reverse the judgment of the Court of Appeals on the civil rights claim, but affirm on the fraud and misrepresentation claim and remand to the circuit court for further proceedings on the fraud and misrepresentation claim._
[439]*439II
Kassab’s complaint alleges that Michigan Basic did not pay his fire-loss claim because he is "Chaldean by national origin.” Kassab relies on the section of the Civil Rights Act3 providing that a person shall not "[d]eny an individual the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a place of public accommodation or public service because of religion, race, color, national origin, age, sex, or marital status.”4
The focus, we agree with Michigan Basic, of that section of the Civil Rights Act is primarily on denial of access to a place of public accommodations or public services.5 Michigan Basic did not deny Kassab access to insurance; it insured Kassab for fire loss.
We do not agree with the dissent that "it would make a mockery of the act’s purposes” to recognize that the act might provide a civil rights remedy for refusal to insure, but not a civil rights [440]*440remedy for discrimination in the "handling and adjustment of claims under a policy.”6
The dissent’s argument assumes that the Legislature intended to provide a civil rights remedy for breach of a commercial contract, and not only a civil rights remedy for refusal to contract. Adoption of the dissent’s approach might well result in the addition of a civil rights count in many actions for breach of contract where it has not in the past been commonplace to do so.7
hi
Acknowledging that an insurer may8 be a "[p]lace of public accommodation” within the meaning of that term because it is a "business . . . whose . . . services . . . are extended, offered, sold, or otherwise made available to the public,”9 the gist of Kassab’s claim is breach of contract. Because access to insurance coverage was not denied, the majority of the Court is of the [441]*441opinion that it is beyond the legislative purpose to provide a civil rights action under the public accommodations section of the act for breach of contract in claims processing. Upon the issuance of a policy of insurance, the services owed by an insurer to an insured are no longer "services . . . made available to the public.” The rights and obligations of the contracting parties are then private. While an insured is not separated from the "public” upon entering into insuring agreements embodied in a policy of insurance, the obligations of the insurer are owed to a particular contracting party/insured. The rights and obligations of the contracting parties are specific to the contract and to the persons involved.10
No Michigan case is dispositive of the issue. The cases cited by the dissent do not bear directly on the issue whether performance under a contract is within the scope of the civil rights act.11_
[442]*442Under the most reasonable construction of the scope of the Civil Rights Act, Kassab’s claim for breach of contractual obligations in claims processing cannot be maintained.
iv
We are persuaded that Kassab’s complaint stated the circumstances constituting fraud with particularity, that the complaint stated a cause of action, and remand for trial on that claim.12
The elements constituting actionable fraud or misrepresentation are well settled:
The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. [Hi-Way Motor Co v Int’l Harvester Co, 398 Mich 330, 336; 247 NW2d 813 (1976), quoting Candler v Heigho, 208 Mich 115, 121; 175 NW 141 (1919).]
Kassab’s first amended complaint alleged that he, as the insured, and Michigan Basic, as the insurer, had entered into a contract of fire insurance, that a fire loss occurred which he duly reported to Michigan Basic, that Michigan Basic made representations to Kassab that it intended to pay and would pay for fire damage to his business [443]*443property, that the representations were false, that Michigan Basic made the representations knowing they were false or with reckless disregard for their truthfulness, that the representations were made with the intention that Kassab would rely thereon, and that he relied on those representations "in obtaining fire protection for his property.”
Read as a whole, the complaint alleges that false representations were made to Kassab before he entered into the contract of insurance with Michigan Basic, and thus that when Michigan Basic entered into the contract of insurance with Kassab and represented that it intended to pay and would pay for fire damage, the representation was false and Michigan Basic knew when it made the representation that it was false. The allegation that Michigan Basic knew when it made the representation that it was false is within the so-called " 'bad faith’ exception to fraudulent misrepresentation” referred to in our colleague’s opinion.13 While Kassab may have difficulty in establishing the allegations, they do state a cause of action.
We reverse the judgment of the Court of Appeals on the civil rights claim, but affirm on the fraud and misrepresentation claim and remand to the circuit court for further proceedings on the fraud and misrepresentation claim.14
Levin, Brickley, Riley, and Griffin, JJ., concurred.
Levin, J.
(separate opinion). The essence of Kassab’s claim is that Michigan Basic did not process his fire-loss claim in good faith. Kassab asks that this Court recognize a civil rights action against [444]*444insurers for mental distress and anguish1 resulting from unfair claims processing because of religion, race, color, national origin, age, sex, or marital status.
In the sixteen years since the enactment in 1976 of the Civil Rights Act and the Uniform Trade Practices Act as an amendment to the Insurance Code, insureds claiming unfair claims processing have been confined to the statutory remedy set forth in the utpa,2 which provides in general that an insurer must pay twelve percent interest when benefits are not paid on a timely basis.
I have joined in the majority opinion which holds that it is beyond the legislative purpose to provide a civil rights action under the public accommodation section of the act for breach of contract in claims processing. I write separately to explain why I am of the opinion that that is the correct result reading the Civil Rights Act and the Uniform Trade Practices Act together.
A
An earlier effort to recover damages for mental distress and anguish claimed to have been occasioned by unfair claims processing was unsuccessful. In Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401; 295 NW2d 50 (1980), the jury found that the insurer was obliged to pay $16,500 under a disability insurance contract, and additionally awarded $75,000 for mental or emotional distress and $50,000 exemplary damages. This Court, in setting aside the $75,000 and $50,000 awards, said that breach of an "insurance contract, as with [445]*445almost any agreement, results in some annoyance and vexation,” and held that an insurer’s failure to pay did not give rise to a right to recover damages for mental distress, mental anguish, or exemplary damages.3
B
The utpa provides that it constitutes an unfair act or practice in the business of insurance to refuse to insure, to refuse to continue to insure, or to limit the amount of coverage available to an individual because of religion, race, color, national origin, age, sex, or marital status, except that marital status may be used to classify individuals for the purpose of insuring family units, and except, as to age, if there is a reasonable relationship between the age of the individual and the extent of the risk.
The act further proscribes "[c]harging a different rate for the same coverage” on the basis of sex, marital status, or age "unless the rate differential is based on sound actuarial principles, a reasonable classification system, and is related to the actual and credible loss statistics or reasonably anticipated experience in the case of new coverages.”4
While the utpa so expressly proscribes civil rights discrimination in refusing to insure, refusing to continue to insure, or limiting the amount of coverage or charging different rates, it does not allude to civil rights discrimination in claims processing.
The only remedy provided by the utpa for delay in paying contracted-for benefits is recovery of twelve percent interest. There is no provision for [446]*446payment of damages for emotional or mental distress or anguish or attorney fees.
c
The parties have called our attention to one case where it was sought to maintain an action against an insurer for violation of a civil rights act. In Thompson v IDS Life Ins Co, 274 Or 649; 549 P2d 510 (1976), the Oregon Supreme Court held that its public accommodations act did not cover the sale of insurance and that a female plaintiff could not maintain an action against an insurer under that act for refusal to sell a policy of insurance on the same terms the insurer would sell such a policy to a male.5 The court observed that the public accommodations act prohibits all discrimination, while the insurance laws prohibit only unfair discrimination. The court was of the view that it should construe the laws to avoid conflict in their administration.
The dissent states that "whatever conflicts were perceived by the Oregon court to exist in Oregon law plainly do not exist between Michigan’s utpa and Civil Rights Act with regard to this case.”6 The dissent unduly minimizes the potential for conflict. While the utpa specifically permits discrimination on the basis of sex, marital status, or age in some particulars, there are no exceptions for discrimination on the basis of religion, race, color, or national origin.
Adoption of the view set forth in the dissent [447]*447would open the door to civil rights actions claiming that the pricing and other policies of insurers discriminate on the basis of religion, race, color or national origin, and also to civil rights actions claiming that pricing and other policies, other than those specifically excepted in the utpa, discriminate on the basis of age, sex, or marital status.
D
Reading the Civil Rights Act and the Uniform Trade Practices Act together, I am persuaded that the Legislature did not intend to provide a civil rights action for mental distress and anguish with respect to unfair claims processing, alleged to have been based on national origin, and for the payment of attorney fees in addition to the twelve percent interest for delay in payment provided in the utpa.