Carole M. Karam v. SAGEMARK CONSULTING, INC., f/k/a CIGNA FINANCIAL ADVISORS, INC.

*The Honorable Paul R. Matia, Chief United States District Judge for
the Northern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0309P (6th Cir.)
File Name: 04a0309p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
CAROLE M. KARAM et al.,
Plaintiffs-Appellants,
v.
SAGEMARK CONSULTING,
INC., f/k/a CIGNA FINANCIAL
ADVISORS, INC. et al.,
Defendants-Appellees.
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No. 03-1763
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 00-74743—Bernard A. Friedman, Chief District Judge.
Argued: August 4, 2004
Decided and Filed: September 10, 2004
Before: CLAY and GILMAN, Circuit Judges; MATIA,
Chief District Judge.*
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No. 03-1763
_________________
COUNSEL
ARGUED: Jamal J. Hamood, HAMOOD &
FERGESTROM, Troy, Michigan, for Appellants. Ted T.
Amsden, DYKEMA GOSSETT, Detroit, Michigan, for
Appellees. ON BRIEF: Jamal J. Hamood, Richard E. Shaw,
HAMOOD & FERGESTROM, Troy, Michigan, for
Appellants. Ted T. Amsden, Thomas S. Bishoff, Kathleen
McCree Lewis, DYKEMA GOSSETT, Detroit, Michigan, for
Appellees.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. The decedent,
Abraham Karam, executed a trust agreement in 1987 that
divided his assets equally between a marital trust and a
residual family trust. In 1994, the decedent entered into a
contract with Sagemark Consulting, Inc. (then known as
Cigna Financial Advisors, Inc.) to review his personal
finances for a $2,500 fee. The contract provided that
Sagemark would prepare a personal financial plan based upon
its evaluation of relevant documents to be furnished by
Karam. Despite Sagemark’s awareness of the trust agreement
and its repeated requests to be sent a copy, Sagemark never
received the document. Sagemark’s report nevertheless stated
that, under the decedent’s “current situation,” no federal estate
tax would be due upon the death of the first spouse (either the
decedent or his wife, Carole M. Karam), and that any federal
estate tax would not be due until the death of the surviving
spouse. When the decedent died in September of 1997, his
estate was worth approximately $10 million. Contrary to
Sagemark’s report, roughly $1.9 million in federal estate
taxes was due as a result of Karam’s death.

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The plaintiffs, who are Karam’s wife and children,
subsequently filed suit against Sagemark, alleging both a
breach of contract and violation of the Michigan Consumer
Protection Act (MCPA). After a jury verdict for the plaintiffs
in the amount of approximately $3 million, the district court
granted Sagemark’s motion for judgment as a matter of law.
On appeal, the plaintiffs argue that Sagemark was untimely in
seeking judgment as a matter of law and, in any event, that
the district court erred in granting Sagemark the requested
relief. Sagemark, on the other hand, contends that the district
court’s judgment should be affirmed both on the merits and
because the plaintiffs filed their complaint after Michigan’s
six-year statute of limitations had run. For the reasons set
forth below, we REVERSE the district court’s grant of
judgment as a matter of law, REINSTATE the jury’s verdict,
and REMAND the case for further proceedings consistent
with this opinion.
I. BACKGROUND
A. Factual background
Karam’s trust agreement contained what is known as a tax
equalization clause, which required that the assets subject to
the trust be divided equally between the marital trust and the
residual family trust. The theoretical advantage of an
equalization clause is that, because of progressive estate tax
rates, two smaller distributions on the deaths of each spouse
will result in less total estate tax liability than would one large
distribution on the death of the survivor. Equalization
clauses, however, are relatively uncommon in estate planning.
More prevalent is the “normal” estate distribution, where the
bulk of the decedent’s assets pass to the surviving spouse in
a form that qualifies for the unlimited “marital deduction”
under federal law. Because the distribution to the surviving
spouse is not taxed, the imposition of the estate tax is deferred
until that spouse dies. With an equalization clause, in
contrast, the half of the decedent’s assets that do not pass to
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No. 03-1763
the surviving spouse are immediately subject to the estate tax,
less a $600,000 general exemption that was in effect at the
time of Karam’s death.
In July of 1994, after responding to a direct-mail
solicitation from Sagemark, Karam entered into a contract
with the company pursuant to which Sagemark was to
provide a financial plan regarding estate planning, investment
planning, retirement planning, and business succession
planning in exchange for a $2,500 fee. Sagemark employees
Catherine Imerman and David Moss were involved in the
process of providing the financial plan. Imerman testified
that Sagemark’s true purpose for providing Karam with the
financial plan, unbeknownst to Karam, was to convince him
that he needed life insurance that Sagemark was prepared to
sell him.
The contract between Sagemark and Karam provided that
Karam would “provide Advisor with financial and personal
data necessary to prepare your plan,” and that “on the basis of
the documents you provide . . . Advisor will prepare and
present a personal financial plan summarized in written
form.” Sagemark, however, never received a copy of
Karam’s trust agreement, despite requesting it from both
Karam and his attorney.
Without reviewing the trust agreement that he knew
existed, Moss proceeded to prepare an estate planning report
that was delivered to Karam on August 18, 1994. (Moss had
previously informed Karam that the plan would not address
investment planning, retirement planning, or business
succession planning because these types of advice were not
relevant to Karam’s situation.) The report stated that, under
Karam’s “current situation,” no federal estate tax would be
due upon the first spouse’s death, and that any federal estate
tax would be deferred until the surviving spouse died. Moss
made this statement in the report because he assumed that
Karam’s trust agreement provided for a normal distribution.

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Although Karam subsequently modified his trust agreement
three times, none of the amendments affected the equalization
clause.
Karam died on September 28, 1997, leaving an estate worth
approximately $10 million. The plaintiffs subsequently
learned that roughly $1.9 million was owed in federal estate
taxes. Their claim for damages flows from the federal and
state tax liabilities and their loss of use of the money that was
needed to pay the taxes.
B. Procedural background
1. Karam v. Law Offices of Ralph J. Kliber
In October of 1998, the plaintiffs brought a state-court
malpractice action against Karam’s former lawyer and the
lawyer’s law firm. They also sued the bank that served as
cotrustee of the trust agreement for negligence, breach of
fiduciary duty, and a violation of the MCPA. Karam v. Law
Offices of Ralph J. Kliber, 655 N.W.2d 614, 618 (Mich. Ct.
App. 2002). The plaintiffs contended that Karam’s intent at
the time he signed the trust agreement differed from what
actually appeared in the text of the document. Id. at 617-19.
Although the Michigan Court of Appeals’s opinion does not
state this directly, the plaintiffs apparently argued that Karam
intended to have a normal estate plan that would have
distributed the bulk of his assets to his wife. See id. at 617
(discussing a letter written by a vice president of the
defendant bank, which incorrectly stated that Karam’s trust
provided for a normal distribution scheme); see also
Sorkowitz v. Lakritz, Wissbrun & Associates, P.C., 683
N.W.2d 210, 213 (Mich. Ct. App. 2004) (“Karam . . . was a
dispute concerning the decedent’s intent regarding alternative
estate planning approaches.”).
The trial court granted summary judgment in favor of the
defendants. This decision was affirmed by the Michigan
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Court of Appeals, which held that, under Michigan law,
extrinsic evidence is inadmissible to show that the decedent
intended an outcome different from that set forth by the
language of the estate documents. Id. at 622-25. Because
Karam’s trust agreement contained an unambiguous
equalization clause and because there were no disputes about
which documents constituted the estate plan, the court
concluded that extrinsic evidence was inadmissible to show
a variance. Id. at 625.
2. The present lawsuit
The plaintiffs filed the present lawsuit on September 27,
2000, naming Sagemark and three other entities as
defendants. Sagemark removed the case to federal court on
the basis of diversity of citizenship. The district court granted
partial summary judgment in August of 2002, dismissing
several of the plaintiffs’ claims and all of the defendants other
than Sagemark.
When the jury trial began the following month, Sagemark
filed a motion in limine to exclude any extrinsic evidence of
Karam’s intent that conflicted with the provisions of the trust
agreement. The district court granted Sagemark’s motion.
During the trial, however, at least two of Karam’s family
members testified that they had understood that no federal
estate taxes would be due as a result of Karam’s death. The
family members did not explain the basis for their
understanding. Sagemark nevertheless failed to object.
The jury returned a verdict for the plaintiffs, specifically
finding that (1) Sagemark breached the contract with Karam;
(2) Karam did not commit the first substantial breach of the
contract by failing to provide Sagemark with the trust
agreement; (3) the breach-of-contract claim did not accrue
before September 27, 1994; (4) the breach caused the
plaintiffs $761,927.90 in damages; (5) the plaintiffs in their
individual capacities are third-party beneficiaries to the

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contract between Sagemark and Karam; (6) Sagemark
violated the MCPA by engaging in one or more unfair,
unconscionable, or deceptive methods, acts, or practices;
(7) the MCPA violation did not occur before September 27,
1994; and (8) the violation of the MCPA caused the plaintiffs
$2,285,781 in damage.
Sagemark attempted to move for judgment as a matter of
law twice during the trial. The first time was at the close of
the plaintiffs’ proof, but the district court directed Sagemark
to wait until after closing arguments. Sagemark attempted to
make the motion again at the close of all of the evidence, but
the district court stated that it would hear arguments on all
motions during the jury’s deliberations. The motion was not
in fact argued at that time. After the jury delivered its verdict,
however, the district court stated that “I know you have
reserved your right to make a Motion as a Matter of Law,”
and directed Sagemark to make the motion along with any
other post-trial motions that it intended to file.
Sagemark filed a motion for judgment as a matter of law or,
in the alternative, for a new trial in October of 2002,
approximately one month after the jury’s verdict. The district
court granted judgment for Sagemark as a matter of law in
May of 2003. In its decision, the court rejected the plaintiffs’
first argument that Sagemark had waived its right to file a
motion for judgment as a matter of law:
At the close of the plaintiffs’ proofs the Court ordered
the defendant to defer making its directed verdict motion,
and reserved all potential arguments as if the motion had
been made. The Court then repeated this order at the
close of all proofs. After the jury verdict, the Court told
the defendant, “I know you have reserved your right to
make a motion as a matter of law,” and stated that this
motion should be presented with other post-trial motions.
Accordingly, the defendant has fully preserved its right
to bring the present motion.
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The district court next stated that the Supreme Court’s
decision in Weisgram v. Marley Co., 528 U.S. 440 (2000),
required the district court to disregard evidence that was
improperly admitted when ruling on the motion for judgment
as a matter of law. Finally, the district court concluded that,
under Michigan law,
all extrinsic evidence that was admitted regarding the
plaintiffs’ belief of what the decedent had told them the
tax consequences of his trust would be [was in fact]
inadmissible, and [was] erroneously permitted. Such
testimony only serves to create the impression that the
decedent’s trust did not comport with his intentions. It
must be assumed that the decedent intended the writing
of his trust and the resulting tax consequences to be just
as they were, and contrary evidence may not be admitted.
After disregarding the allegedly inadmissible evidence, the
district court concluded that no legally sufficient evidentiary
basis existed to support the jury’s verdict in favor of the
plaintiffs on either of their claims. The district court thus
declined to discuss Sagemark’s affirmative defense that the
lawsuit was filed after Michigan’s applicable six-year statute
of limitations had run. This timely appeal followed.
II. ANALYSIS
A. The district court did not err in deciding that
Sagemark had preserved its right to file a motion for
judgment as a matter of law
The plaintiffs first argue that Sagemark waived its right to
file a motion for judgment as a matter of law by failing to
make the motion before the case was submitted to the jury.
See Fed. R. Civ. P. 50(a)(2) (“Motions for judgment as a
matter of law may be made at any time before submission of
the case to the jury.”). “The question of waiver is a mixed
question of law and fact. We review any determination of

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underlying facts under the clearly erroneous standard of
review, and make a de novo determination of whether those
facts constitute legal waiver.” Nationwide Mut. Ins. Co. v.
Home Ins. Co., 330 F.3d 843, 846 n.3 (6th Cir. 2003).
The record supports the district court’s factual finding that
Sagemark attempted to bring its motion for judgment as a
matter of law both at the close of the plaintiffs’ proof and at
the close of all of the evidence. Each time, the district court
ordered the defendant to defer making its motion and reserved
all potential arguments as if the motion had been made.
Because Sagemark twice attempted to bring its motion before
the close of all of the evidence, the district court correctly
concluded that Sagemark had preserved its right to make the
motion after the entry of the jury’s verdict.
Our disposition of this matter, however, should not be
construed as an endorsement of how the district court handled
this procedural issue. To the contrary, the proper practice is
to allow the moving party to make its Rule 50(a) motion
before the jury retires to deliberate. See Advisory
Committee’s Notes on 1991 Amendments to Fed. Rule Civ.
P. 50(a)(2) (“Paragraph (a)(2) retains the requirement that a
motion for judgment be made prior to the close of the trial,
subject to renewal after a jury verdict has been rendered. The
purpose of this requirement is to assure the responding party
an opportunity to cure any deficiency in that party’s proof that
may have been overlooked until called to the party’s attention
by a late motion for judgment.”).
B. The district court erred in granting Sagemark’s
motion for judgment as a matter of law with regard
to the plaintiffs’ breach-of-contract claim
“This Court reviews de novo a district court’s decision to
grant judgment as a matter of law pursuant to Rule 50(a) of
the Federal Rules of Civil Procedure.” Hall v. Consolidated
Freightways Corp., 337 F.3d 669, 672 (6th Cir. 2003).
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“District courts should grant judgment as a matter of law only
if a complete absence of proof exists on a material issue in the
action, or if no disputed issue of fact exists on which
reasonable minds could differ.” LaPerriere v. Int’l Union
UAW, 348 F.3d 127, 132 (6th Cir. 2003).
The district court in the present case granted Sagemark’s
motion for judgment as a matter of law based upon the court’s
conclusion that it had erroneously admitted the family
members’ testimony regarding their understanding that no
estate tax would be due at Karam’s death. See Weisgram v.
Marley Co., 528 U.S. 440, 457 (2000) (holding that a district
court, when considering post-trial motions for judgment as a
matter of law, may disregard “testimony erroneously
admitted”). According to the district court,
[s]uch testimony only serves to create the impression that
the decedent’s trust did not comport with his intentions.
It must be assumed that the decedent intended the writing
of his trust and the resulting tax consequences to be just
as they were, and contrary evidence may not be admitted.
. . .
[T]he legal cause of the tax consequences was the
decedent’s intent to have an equalization clause in his
trust. The damages—the tax consequences—resulted
from the fulfillment of that intent by the operation of the
federal estate tax law. There was no evidence presented
by which the jury could conclude that the equalization
clause was caused by CIGNA. The evidence shown at
trial indicated that the trust agreement containing this
clause was drafted and executed years before the
decedent’s dealings with CIGNA. However, even if it
could be shown that CIGNA advised the decedent to
have such a clause, there would still not be any basis for
finding that CIGNA caused the plaintiffs’ damages,
because the decedent’s intent to have such a clause, as

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expressed in the clause, would have been fulfilled, and
evidence of a contrary intent would be inadmissible.
There are two problems with the district court’s analysis.
The first is that Weisgram is probably not controlling on this
issue because the defendant in Weisgram objected to the
admission of the evidence in question. 528 U.S. at 445 (“The
District Court ov er ru le d d ef en da nt Ma rl ey’ s
objections . . . .”). Sagemark, in contrast, allowed the family
members’ testimony to be admitted without objection. In the
absence of a timely objection, such testimony is generally not
considered to be “erroneously admitted.” See Fed. R. Evid.
103(a)(1) (“Error may not be predicated upon a ruling which
admits or excludes evidence unless a substantial right of the
party is affected, and . . . [i]n case the ruling is one admitting
evidence, a timely objection or motion to strike appears of
record, stating the specific ground of objection, if the specific
ground was not apparent from the context . . . .”).
We need not decide, however, whether the district court
correctly applied Weisgram because of a second and
independent problem with the court’s analysis that the
plaintiffs’ purpose in introducing the questioned testimony
was not to negate Karam’s original intent to have an
equalization clause in the trust agreement. Instead, the
purpose was to prove that Karam and his family members had
detrimentally relied on Sagemark’s incorrect advice that no
federal estate tax would be due when Karam died. In other
words, the district court believed that the plaintiffs had
introduced the evidence in order to answer the question: “Did
Karam originally intend to have an equalization clause in his
trust agreement?” But that issue was not in dispute. The
plaintiffs in fact introduced the testimony in order to answer
the question: “Why did Karam not substitute a “normal”
distribution clause for the equalization clause that was in the
trust agreement?” Testimony by the family members
suggested that Karam did not change the clause because he
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No. 03-1763
had relied to his detriment on Sagemark’s erroneous tax
advice.
Our conclusion that the family members’ testimony was
admissible is consistent with the recent Michigan Court of
Appeals decision in Sorkowitz v. Lakritz, Wissbrun &
Associates, P.C., 683 N.W.2d 210 (Mich. Ct. App. 2004). In
Sorkowitz, the plaintiffs contended that the defendant
attorneys had negligently provided advice regarding the tax
consequences of an estate plan. The court held that
Michigan’s prohibition against the introduction of extrinsic
evidence was not applicable, and distinguished Karam as
follows:
Assuming that Karam correctly applied [Michigan’s rule
against the admission of extrinsic evidence] to the
negligent drafting claim of the personal representative of
the actual client, rather than the beneficiary, the instant
case is distinguishable to the extent it involves a claim of
negligence in advising the client regarding tax
consequences and in formulating the estate plan without
due regard for tax consequences, rather than negligence
in failing to draft the document in accordance with the
client’s expressed intent.
683 N.W.2d 214 n.5. Analogous to Sorkowitz, the plaintiffs’
claim in the present case is that Sagemark provided erroneous
advice regarding the tax consequences of Karam’s estate plan.
Sorkowitz therefore supports our conclusion that the district
court erred in its post-trial ruling that the family members’
testimony should have been excluded.
We also note that the district court never discussed whether
Sagemark would have been entitled to judgment as a matter
of law if the court had fully credited the family members’
testimony. Morever, Sagemark does not argue on appeal that
the evidence as actually admitted was insufficient to support
the jury’s verdict. We therefore reverse the district court’s

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decision to grant judgment as a matter of law with respect to
the plaintiffs’ breach-of-contract claim.
C. The district court erred in granting Sagemark’s
motion for judgment as a matter of law with regard
to the plaintiffs’ MCPA claim
The district court granted Sagemark’s motion without
differentiating between the claim for breach of contract and
the claim under the MCPA. Presumably the court assumed
that the family members’ testimony was necessary to
establish causation as to either claim, so that, if the testimony
was in fact inadmissible, judgment for Sagemark was
appropriate as to both claims. But as discussed in Part II.B.
above, we have concluded that the district court erred in
granting judgment as a matter of law based upon the court’s
incorrect belief that the evidence of detrimental reliance
should not have been admitted. With regard to the MCPA
claim, however, Sagemark offers the additional argument that
the evidence was legally insufficient to support the jury’s
verdict because it failed to demonstrate that the alleged
violation of the MCPA was the cause of the plaintiffs’
damages.
The plaintiffs’ MCPA claim was based upon Sagemark’s
failure to disclose that the financial plan it prepared for
Karam was actually a sales tool used to persuade Karam to
purchase life insurance from the company. See Mich. Comp.
Laws §§ 445.903 (“Unfair, unconscionable, or deceptive
methods, acts, or practices in the conduct of trade or
commerce are unlawful . . . .”); 500.2005a(c) (“An unfair
method of competition and an unfair or deceptive act or
practice in the business of insurance includes all of the
following: . . . (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.”).
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Sagemark argues, however, that the alleged violation of the
MCPA did not cause the plaintiffs’ damages because Karam’s
decision not to alter the equalization clause in the trust
agreement was not influenced by the failure of Sagemark to
disclose its true motivation for preparing the financial plan.
The contrary argument is that Karam would not have relied
on Sagemark’s advice if he had known that the financial plan
was simply a sales tool to market life insurance. Both of
these arguments are plausible, but the jury resolved this
debate when it found in favor of the plaintiffs on their claim
under the MCPA.
In the absence of direct evidence of what Karam would
have done if Sagemark had made the required disclosure, both
parties were forced to argue reasonable inferences from the
evidence on hand. The jury was then left to decide the
following factual question: “What would Karam have done if
Sagemark had disclosed its true motivation for creating the
financial plan?” This disputed question of fact was
reasonably resolved by the jury in the plaintiffs’ favor. We
therefore reverse the district court’s decision to grant
judgment as a matter of law with respect to the MCPA claim.
D. Judgment as a matter of law would not have been
appropriate based upon the statute of limitations
Michigan law provides for a six-year statute of limitations
on claims for both breach of contract and for violations of the
MCPA. Mich. Comp. Laws §§ 600.5807(8) (breach of
contract); 445.911(7) (MCPA). Although the district court
did not address the statute of limitations in ruling on
Sagemark’s motion, this court “may affirm a decision of the
district court if correct for any reason, including one not
considered below.” United States Postal Serv. v. Nat’l Ass’n
of Letter Carriers, 330 F.3d 747, 750 (6th Cir. 2003).
Sagemark contends that the plaintiffs’ claims accrued on
August 18, 1994, when the financial plan was delivered to

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Karam, and that this lawsuit, filed on September 27, 2000,
should therefore have been barred by the statute of
limitations. The plaintiffs, on the other hand, respond by
pointing out that Karam met with Sagemark employee Moss
to discuss the financial plan several times in August,
September, and perhaps October of 1994, and that the
plaintiffs’ claims did not accrue until at least the last of these
meetings. Alternatively, the plaintiffs argue that their claims
did not accrue until Karam’s death because, until that point,
an essential element of their claims had not yet been
established; i.e., that plaintiffs suffered no damages until
Karam’s estate became liable for the death taxes.
We need not resolve which of the parties’ alternative
contentions is legally correct, because even if we assume for
the sake of argument that the plaintiffs’ claims accrued at the
time Karam received the erroneous advice from Moss, rather
than at Karam’s death when the damage element of the claims
was established, a factual dispute still remains as to the date
of the advice. Sagemark contends that it occurred when the
plan was delivered, while the plaintiffs argue that the
meetings between Moss and Karam continued for as long as
two months thereafter. This created a factual dispute for the
jury to decide, which it did by specifically finding that the
claims did not accrue before September 27, 1994. Because
the jury’s resolution of this disputed issue of fact finds
support in the record, judgment as a matter of law would not
be appropriate based upon the statute of limitations.
III. CONCLUSION
For all of the reasons set forth above, we REVERSE the
district court’s grant of judgment as a matter of law,
REINSTATE the jury’s verdict, and REMAND the case for
further proceedings consistent with this opinion.

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