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Gonzalez v Farm Bureau General Ins Co of Mich (COA - UNP; 1/4/2018; RB # 3699)


Michigan Court of Appeals; Docket # 331956; Unpublished
Judges Jansen, Cavanagh and Gadola; Non-Unanimous, Per Curiam (Judge Gadola, concurring in part and dissenting in part)
Official Michigan Reporter Citation: Not Applicable; Link to Opinion and Concurrence/Dissent.


Cancellation and Rescission of Insurance Policies
Actual Fraud


In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court’s grant of summary disposition Defendant Farm Bureau General Insurance Company (“Farm Bureau”) regarding Plaintiff Rafael Gonzalez’s (“Gonzalez”) fraud and preclusion based on the language of the auto insurance policy. The Court reversed the trial court because it found genuine issues of material fact regarding Gonzalez’s clarification to a misleading statement he made, and the accuracy of work-loss claims signed by an individual who was not an employee or officer of Gonzalez’s company. The Court also found that the specific provision of the auto insurance policy requiring payment for uninsured benefits when the owner or operator is unknown controlled over the general statement requiring uninsured benefits when the owner and operator is unknown.

Gonzalez was driving in a Chevrolet Camaro and was struck by a 2003 Dodge Stratus, which was owned by Crystal Burns (“Burns”). The operators of the vehicle fled the scene and were never identified. Burns claimed that the Stratus was stolen two months prior to the accident. At the time of the accident, there was no insurance coverage for the 2003 Dodge Stratus. Gonzalez had been a truck driver and made a claim for first party PIP benefits, which was initially granted by Farm Bureau. However, Farm Bureau suspended the payment of benefits after it allegedly found fraud committed by Gonzalez. Gonzalez brought a first party PIP action to recover benefits against Farm Bureau. Farm Bureau made a counter claim against Gonzalez to rescind the policy and recover previous PIP benefits paid to Gonzalez for fraud. Progressive provided video surveillance that showed Gonzalez at his truck yard climbing in and out of his semi-truck, driving the truck, and cleaning the truck. Moreover, Farm Bureau argued that Gonzalez misrepresented a work-loss form signed by Britni Sanders who was falsely identified as the “CFO” of Gonzalez’s company. The trial court granted summary disposition to Farm Bureau on the issue of fraud.

The Court of Appeals reversed the trial court because it found that there were genuine issues of material fact regarding Gonzalez’s statements regarding his ability to work and the accuracy of the work-loss forms. First the Court explained that fraud in auto insurance contracts requires four elements: (1) the misrepresentation was material, (2) it was false, (3) the insured knew that it was false at the time, and (4) the insured made the material misrepresentation with the intention of the insurance company acting on it. Here the Court explained that Gonzalez provided clarifying testimony that he drove his semi-truck and entered it to see if he was feeling well enough to work. Gonzalez had contacted the claims adjuster for Farm Bureau to inform her of this. Thus, although Gonzalez had made prior statements that he did not drive in December his later clarifying remarks created a genuine issue of material fact. The Court also explained that the work loss forms signed by Britini Sanders did not demonstrate that the claims were false; rather it demonstrated that her title and association with the company were inaccurate.

“In addition, defendant has not shown that it is undisputed that Gonzalez misrepresented his ability to work. In support of its claim that Gonzalez misrepresented his ability to return to work, defendant relied on Gonzalez’s activities in the truck yard and the surveillance report. Gonzalez admitted engaging in activities necessary to maintain his truck so it would not be damaged while he was off from work, and attempting to determine his ability to return to work. However, neither defendant’s evidence nor Gonzalez’s admissions establish that Gonzalez was able to fully resume his duties as a truck driver. Gonzalez described back problems and problems with his arm that prevented him from operating his truck for extended periods. Defendant’s surveillance report only reported Gonzalez driving a short distance. A jury could conclude from the evidence that Gonzalez did not misrepresent his ability to work and was only being proactive about attempting to determine his ability to return to work and perform the physical requirements of his job when he went to the truck yard in December 2014.”

The Court also reversed the trial court’s ruling that Gonzalez was not barred because the driver of a hit-and-run could not be identified. Progressive relied on the language of the insurance policy, which explained that both the auto and operator of the other vehicle were uninsured to qualify for uninsured motorist coverage. However, there was a more specific provision that required the payment of uninsured benefits when the owner or operator of the vehicle was uninsured. The Court reasoned that the more specific provision pertaining to hit-and run accidents was applicable. The Court then found that the disjunctive “or” meant that either the owner was unknown, or the operator was unknown. Because the operator was unknown in this case, the specific provision of the policy applied.

“The evidence established that plaintiffs’ vehicle was struck by another vehicle, causing bodily injury to the occupants of plaintiffs’ vehicle, and the accident was reported to the police and defendant. This leaves only the requirement that the auto that struck plaintiffs’ vehicle be an auto “whose owner or operator is unknown.” This phrase uses the term “or” to distinguish the terms “owner” and “operator.” The term “or” is “generally construed as referring to an alternative or choice between two or more things.” Hofmann v Auto Club Ins Ass’n, 211 Mich App 55, 69; 535 NW2d 529 (1995). Thus, to meet the definition of a “hit-and-run auto,” it is only necessary that either the owner or the operator be unknown. In this case, although Burns was identified as the owner of the vehicle that struck plaintiffs’ vehicle, Burns denied driving the vehicle at the time of the accident and claimed that the vehicle had been stolen. And plaintiffs presented evidence that the identity of the operator was unknown because the driver fled the scene after the accident.”

The Court thus reversed the trial court’s grant of summary disposition regarding fraud and the contract interpretation.

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