Michigan Court of Appeals; Docket # 337310 ; Unpublished
Judges Borrello, Kelly, Boonstra per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
TOPICAL INDEXING:
Fraud/Misrepresentation
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court’s denial of summary disposition to Defendant Everest National Insurance Company (“Everest”) regarding Everest’s decision to rescind its no-fault policy ab initio for a material misrepresentation. The Court reversed because it found that Plaintiff engaged in fraudulent misrepresentation by failing to disclose that he lived with his mother, stepfather, and sister on his no-fault application.
Everest provided Plaintiff with no-fault auto insurance. When Plaintiff applied for no-fault auto insurance with the defendant, he listed himself as the only member of his household on the application. However, Plaintiff lived with his mother, stepfather, and sister at the time of the application. When Plaintiff was involved in an accident on December 3, 2015, Everest denied benefits to Plaintiff based on the false claim in the application. Plaintiff sued for his benefits.
Plaintiff’s no-fault application clearly indicated that all household member over the age of 14 must be listed on the application as potential drivers. In fact, the application required Plaintiff to sign in three different locations acknowledging that he had listed all potential drivers who were over the age of 14 that lived with in the household. At deposition, it was revealed that Plaintiff lived with his mother, stepfather, and sister (who was 20 years old) at the time of the application. Additionally, Plaintiff indicated on the application form that he lived at his mother’s house. At trial Everest moved for summary disposition arguing that Plaintiff had engaged in fraudulent misrepresentation. The trial court denied the motion, but the Court of Appeals reversed.
The Court of Appeals found that Plaintiff engaged in fraud because he put his mother’s house down as his address, but did not indicate that he lived with his mother at that time. The Court of Appeals first remarked that insurance policies are contracts and in absence of a statute applying to a situation, normal contract construction principles apply. Because no statute applied to this instance, the common-law defense of fraud was available to Everest. The Court then explained that common-law fraud that occurs in the procurement of an insurance policy may provide retroactive rescission of the policy. Quoting from 21st Century Premier Insurance Company v. Zufelt, 315 Mich. App 437, 445 (2016), the Court explained “it is well settled that an insurer is entitled to rescind policy ab initio on the basis of a material misrepresentation made in an application for no-fault insurance.” The Court found that Plaintiff falsely represented that he was the only member of his household on the application. The representation was a false because Plaintiff indicated that he was living at his mother’s address on the application. However, on the same application Plaintiff stated that he lived with no one over the age of 14 (Plaintiff’s mother was over 14 years old). Further, Plaintiff also lived with his stepfather (older than 14) and his sister (older than 14 at the time of the application) at the time of the application. Second, the Court found that the representation was material because there was undisputed evidence that Everest would have charged a higher monthly rate to Plaintiff if it had known that there were other household members over the age of 14. Plaintiff did not offer any evidence to dispute these facts.
“Therefore, defendant’s representation in his insurance application that there were no other household members over the age of 14 was false, and he clearly knew at the time he filled out the application that his representation of no additional drivers was false. Moreover, plaintiff’s representation was material because there was undisputed evidence that defendant would have charged a higher premium if plaintiff had truthfully disclosed his other household members.”
The Court found that the lower court failed to properly weigh the evidence. Thus, it believed that summary disposition was appropriate because there was no genuine issue of material fact.
