Michigan Court of Appeals; Docket # 337924; Unpublished
Judges Fort Hood, Servitto, and Beckering per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
TOPICAL INDEXING:
Collateral Estoppel and Res Judicata
Fraud/Misrepresentation
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court’s order granting summary disposition for Defendant Automobile Club Insurance Association of America (“ACIAA”) on the issue of fraud. The Court of Appeals reversed because there was a genuine question of fact if Plaintiff knew that fraud was being committed and Defendant failed to carry its burden of proof for fraud since it did not submit the actual no-fault policy into evidence. The Court also denied Plaintiff’s request for res judicata because an earlier decision had not been made on the merits.
ACIAA rescinded the no fault policy based on an anti-fraud provision in the policy. There was evidence that a third-party, Everett Lamb (“Lamb”) had filled out attendant care paperwork for Plaintiff fraudulently. However, there was no evidence that Plaintiff was aware of this fact. Accordingly, Plaintiff brought an action to receive his benefits from ACIAA.
This case was originally tried in the District Court where Plaintiff received a favorable ruling; however, that decision was appealed for improper jurisdiction, and it was determined that the District Court lacked jurisdiction over the case. The District Court subsequently transferred the case to the Circuit Court for a new adjudication. The Circuit Court then granted summary disposition in favor of Defendant. The Circuit Court found that Plaintiff had committed fraud., Plaintiff appealed this decision arguing for summary disposition based on res judicata or collateral estoppel, or in the alternative that there was a genuine issue of material fact regarding the fraud.
The Court rejected Plaintiff’s res judicata and collateral estoppel argument because there was no evidence that in the previous litigation the issue of fraud was raised by any of the litigants. For res judicata an essential element is that the prior action was decided on the merits. Here, the court could find no evidence of a prior adjudication decided on the merits. For collateral estoppel an essential element is that a question of fact essential to the judgment must have “actually been litigated and determined by a final judgment.” Again, the Court found no evidence of the issue actually being litigated. Therefore, the Court rejected both Plaintiff’s res judicata and collateral estoppel arguments.
“[The res judicata] doctrine would not be applicable under the facts of this case, given that there is no indication from the record that the issue of plaintiff’s alleged fraud was already litigated and decided by the trial court in the earlier lawsuit. . . . Put simply, defendant may have raised issues regarding plaintiff’s alleged fraud with respect to completing the 2004 application for no-fault benefits, or may not have, but without additional information regarding the prior proceedings between plaintiff and defendant, it is not possible for us to decipher what transpired. . . . Therefore, under the circumstances of this case, plaintiff’s argument that defendant’s allegations of fraud are precluded by the doctrines of collateral estoppel and res judicata is unavailing.”
The Court did agree however that there was a genuine issue of material fact regarding Plaintiff’s alleged fraud. While the trial court found that Plaintiff violated the terms of the anti-fraud provision of the no-fault contract, the actual no-fault contract was not entered into evidence for the Court. The Court found this to be key because the defense had the burden of proof for an affirmative defense of fraud. Even overlooking the failure of the defense to provide the Court with the no-fault policy, the Court still found genuine issues of material fact. First, it cited to Meemic Ins Co v Fortson, ___ Mich App ___, ___ (2018)(Docket No. 337728), which explained that a fraud is generally an issue of fact for the jury to decide. Then the Court cited to Meemic, explaining that there are five elements to a fraud defense: “(1) that the individual made a material misrepresentation, (2) that the representation was false, (3) that when the individual made the representation he or she knew it was false or made it with reckless disregard as to whether it was true or false, (4) that the misrepresentation was made with the intention that the insurer would act upon it, and (5) that the insurer acted on the misrepresentation to its detriment.” The Court noted that Lamb testified that she alone filled out the attendant care paperwork and submitted it. This showed an issue of material fact regarding if Plaintiff engaged in fraud because it was unclear if Plaintiff actually knew what was being done on his behalf. Finally, Defendant introduced evidence that showed Plaintiff may have suffered certain injuries prior to his application for no-fault benefits in 2004. While Plaintiff did not disclose these injuries, it was also not clear that these injuries were related to the motor vehicle accident that caused Plaintiff to apply for benefits. Because there was no clear evidence the Court found a genuine issue of material fact.
“In this case, where defendant has failed to produce a copy of the no-fault policy, and we are left without sufficient information to discern the exact wording of the no-fault policy’s fraud exclusion clause, as well as other pertinent provisions of the no-fault policy, the absence of the policy itself creates factual disputes with respect to whether the policy does in fact bar coverage or benefits on the basis of fraudulent statements or conduct. . . . [I]n the case before this Court, there is no such clear record evidence confirming that plaintiff was clearly aware of Lamb’s alleged fraud, or even how she had completed the attendant care documentation. . . . there is nothing in the record to suggest that the symptoms related to, or the condition of plaintiff’s back following, the November 1, 2004 motor vehicle accident were the same as what plaintiff was dealing with in the time period before the motor vehicle accident.”
Thus, the Court reversed the order for summary disposition and remanded the case back to the trial court.
