Refusal to Appear for EUO Fatal to Claim

Public Adjuster as Pseudo-Professional Must Be Sued Within Malpractice Statute of Limitations

Fire insurance requires, if the insurer requires it, that the insured present documents in support of claim and appear for and testify at examination under oath (EUO). Failure to do so is a breach of a material condition precedent to recovery under the policy.

In Papa’s Pizza, Inc. v. Globe Midwest Corporation, No. 333295, State Of Michigan Court Of Appeals (March 8, 2018) the insured sued its public adjuster after losing a trial against its insurer who denied the claims because the insured failed to comply with the policy condition.


Plaintiff operated a number of pizza stores in Detroit. In February 2012, two of those stores sustained significant losses from separate fires. The first location sustained fire damage on February 3, 2012. Three days later, on February 9, 2012, the second location sustained fire damage. Plaintiff retained defendant’s services to assist with the adjustment of both fire-loss claims. Defendant agreed to assist plaintiff “in the preparation and presentation” of the two fire-loss and business-interruption loss claims. This included “providing all documents received from [p]laintiff to” Millers. In return, plaintiff agreed to pay defendant 5% of any monetary recovery paid by Millers.

Plaintiff submitted its proofs of loss on May 10, 2012, claiming the fire loss at the first location totaled $379,963.98, and the fire loss at the second location totaled $245,045.35. On May 17, 2012, attorney E. Frederick Davison sent a letter to plaintiff informing it that Millers had retained Davison for purposes of investigating the claims. Davison attached an additional four pages of document requests regarding the fire loss and general financial condition of the businesses and informed plaintiff that Phil Almaki, the owner of Papa’s Pizza, was to complete an examination under oath (EUO) on June 5, 2012. On May 22, 2012, Millers also sent a letter to plaintiff stating it did not agree with the proofs of loss and had retained Davison to arrange for the EUO.

On July 3, 2012, Davison sent a letter to Aiello, indicating that Millers still had not received the requested documentation and was extending the production deadline to July 20, 2012. On July 25, 2012, when plaintiff again failed to comply with Millers’s requests for documentation, Millers sent a denial letter, stating that the two insurance claims were “fully, finally and formally denied” because plaintiff had “failed, and/or refused, to participate in an [EUO], [and] to produce material documents and information as requested by the company.”

When Millers did not withdraw the denial, plaintiff filed its lawsuit against Millers, and in February 2015, a jury trial was held. Defendant’s vice president, Becker, testified at the trial, claiming he had forwarded to Millers all documentation that was provided to him, and additionally, he did not receive any documentation as it related to requests sent in May 2012. The jury returned a no-cause verdict.

After losing a motion for a new trial in the case against Millers, plaintiff filed this action against defendant on October 5, 2015, alleging breach of contract. Plaintiff alleged that defendant negligently represented plaintiff, failed to provide the requested documentation to Millers, misled plaintiff into believing that the required documentation that plaintiff provided had been forwarded to Millers, and wrongfully concealed the fact the documentation had not been provided. Plaintiff alleged that defendant’s breach of contract resulted in the denial of its insurance claims and that defendant’s breach could not have been discovered until February 2015, after plaintiff’s trial against Millers.

The trial court found that although pleaded as a breach of contract claim, the gravamen of plaintiff’s claim was actually professional negligence and was subject to a two-year statute of limitations as opposed to the six-year statute of limitations afforded to breach of contract claims.


Plaintiff raised its accrual argument for the first time in its motion for reconsideration, and a trial court does not err by declining to consider new legal theories or evidence that could have been presented when the motion was initially decided. Plaintiff even conceded in its motion that the issue could have been raised sooner, but previous counsel chose to focus on other arguments.

Regardless, plaintiff’s accrual claim is without merit. A professional malpractice claim must be filed within two years of its accrual or within six months of when the plaintiff discovers or should have discovered its claim whichever is later. Generally, a claim accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results. However, if a claim is based on the malpractice of a person who is, or holds himself or herself out to be, a member of a state licensed profession the claim accrues at the time that person discontinues serving the plaintiff in a professional or pseudo-professional capacity as to the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim.

Put simply, accrual of a malpractice action occurs on the last day of professional service.

In the state of Michigan, a public insurance adjuster is required to apply for and obtain a license through the Department of Insurance and Financial Services prior to representing any insureds who have suffered losses covered by insurance for fire or other hazards. Therefore, for the purpose of determining the accrual date of plaintiff’s claim, the relevant inquiry is at what point defendant discontinued serving plaintiff in a professional or pseudo-professional capacity as a public insurance adjuster with respect to its insurance claims.

In its complaint provided no information that lists, or even suggests, a specific date upon which defendant’s representation officially ended. Plaintiff does, however, attach letters and emails that shows it obtained legal counsel to handle the insurance claims when Millers informed plaintiff of its disagreement with the proofs of loss. Once Millers retained Davison, plaintiff retained its own counsel.

In its motion for summary disposition, defendant claimed that as of May 9, 2012, it no longer represented plaintiff in its insurance claims. Defendant argued that after plaintiff retained legal counsel, defendant turned over its files and was no longer engaged in a professional, or pseudo-professional, relationship with plaintiff. The July 25, 2012 denial letter from Millers to plaintiff was sent care of plaintiff’s attorneys, not defendant.

Plaintiff failed to present any affidavits or other documentary evidence affirmatively establishing that defendant continued to represent plaintiff as a public adjuster on its insurance claims through any particular date. What is clear is that plaintiff’s insurance claim was officially denied on July 25, 2012. At that time—regardless of defendant’s involvement leading up to the official denial—defendant no longer had a role in adjusting plaintiff’s claim. Instead, plaintiff’s attorney was responsible for pursuing the legal action against Millers. July 25, 2012 was, at the very least, defendant’s “last day of professional service” regarding the two insurance claims. Thus, plaintiff had until July 25, 2014, to file its complaint.

Plaintiff waited until after the trial against Millers before filing the complaint on October 5, 2015—well outside the statute of limitations. Because plaintiff’s complaint was not timely filed, the trial court properly granted summary disposition in favor of defendant.


Public adjusters are licensed by almost every state in which they do business. As a result they are considered to be professionals or, as the Michigan court concluded, pseudo-professionals. They can be sued for malpractice but must me sued within the malpractice statute of limitations. There is no question the plaintiff was ill served by his public adjuster and his lawyers who did not assist in the production of documents and scheduling an EUO but he filed his suit too late.

© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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