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Wright v LM General Ins Co (COA – UNP 5/3/2018; RB #3746)

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Michigan Court of Appeals; Docket #338131; Unpublished
Judges Borrello, Sawyer, and Jansen per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 


STATUTORY INDEXING:

TOPICAL INDEXING:
Actual Fraud
Evidentiary Issues
Innocent Third Party Doctrine


CASE SUMMARY:
In this unanimous per curiam opinion, the Court of Appeals upheld summary disposition for Defendant LM General Insurance Company (“LM General”) regarding its liability to pay no-fault benefits based on the innocent third-party doctrine. The Court upheld the trial court’s grant of summary disposition because it found that its precedent of Bazzi v Sentinel Ins Co, 315 Mich App 763, 767, 771-773; 891 NW2d 13 (2016), abolished the innocent third party rule and this case was distinguishable from Shelton  v Auto-Owners Insurance Company, 318 Mich App 648; 899 NW2d 744 (2017).

Plaintiff Pamela Wright (“Wright”) was injured in a car accident while riding as a passenger in a vehicle owned and operated by Dnisha Brannon (“Brannon”). Brannon had purchased an insurance policy with LM General, but LM General voided the policy based on Brannon’s material misrepresentation during the application process. Wright requested LM General pay her uninsured motorist benefits as well as her PIP benefits under the No-Fault Act. LM General argued that Wright was barred by the fraud provision of Brannon’s policy because Brannon had procured the policy through misrepresentation. Wright brought a motion to compel LM General to pay benefits. The Circuit Court granted summary disposition for LM General after Wright failed to file a timely response to LM General’s motion for summary disposition. Wright appealed.

The Court of Appeals upheld the trial court’s grant of summary disposition because it found that the trial court did not commit plain error in denying Wright’s motion for reconsideration, the innocent third-party doctrine was abolished under Brazzi, and this case was distinguishable from Shelton. The Court first explained that the issue of reconsideration is reviewed for plain error when the plaintiff fails to raise the issue. Here, the trial court did not commit a plain error in refusing to reconsider Wright’s motion. Next, the Court reasoned that its prior holding in Brazzi eliminated the innocent third-party doctrine. Although the case was up for review in the Supreme Court, the case was still binding until overturned. Thus, Wright could not make a claim under the third-party doctrine because it was abolished. Finally, the Court distinguished Shelton, which allowed an injured passenger to receive benefits, because the issue in Shelton was whether the insured committed  fraud in claiming no-fault PIP benefits. Here, Brannon’s policy was rescinded based on her procurement of the policy. That distinguished Shelton from this case and the Court therefore allowed LM General to deny benefits to Wright.

“However, following our Supreme Court’s decision in Titan Ins Co v Hyten, 491 Mich 547; 817 NW2d 562 (2012), this Court subsequently held in Bazzi v Sentinel Ins Co, 315 Mich App 763, 767, 771- 773; 891 NW2d 13 (2016), lv gtd __ Mich __; 894 NW2d 590 (2017), that the “innocent third party” rule did not survive Hyten. Plaintiff argues that this Court should not rely on Bazzi because the plaintiff’s application for leave to appeal has been granted in that case, “signaling the possibility of a change in the outcome.” See Bazzi, __ Mich __; 894 NW2d 590. However, unless and until our Supreme Court reaches a decision in Bazzi, we are compelled to follow it as binding precedent. The trial court did not err by doing the same. . . .In Shelton, the policy at issue had not been rescinded at the time of the accident. Rather, the defendant in Shelton argued that the plaintiff had committed a fraud in her claim for PIP benefits, and sought to exclude her from coverage based on this fraud. In the instant case, defendant argued that it was not liable to pay plaintiff benefits under the statute based on Brannon’s fraud in procuring the policy.”

Thus, the Court upheld summary disposition for Defendant LM General.

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