Michigan Court of Appeals; Docket # 343716; Unpublished
Judges O’Brien, Gadola, and Redford; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Fraud/Misrepresentation
Cancellation and Rescission of Insurance Policies
SUMMARY:
In this unanimous unpublished per curiam decision regarding a suit for declaratory relief, the Court of Appeals affirmed the trial court’s summary disposition order in favor of the defendants, Roy Alan Shadowens, Julie Sixbey, and State Farm Mutual Insurance Company. The plaintiff, Pioneer State Mutual Insurance Company, alleged that its insureds, Shadowens and Sixbey, committed fraud by failing to disclose a change in their household—that Sixbey’s son had stayed with them for two or three months—after they had renewed their policy, thereby entitling Pioneer to rescind the policy altogether. The Court of Appeals disagreed, because Pioneer failed to establish that Shadowens and Sixbey had a duty to make such a disclosure, and because Pioneer failed to present sufficient evidence to create a question of fact as to whether Sixbey’s son was even staying with them at the time they renewed their policy.
In September 2016, Julie Sixbey and her son were injured in a motor vehicle collision. Sixbey lived with her husband, Alan Shadowens, and the two had been insured with Pioneer since 2008. Sixbey’s son had moved out of Shadowens’s and Sixbey’s home in 2005, but stayed with them for two or three months in 2012 or 2013, around which time Shadowens and Sixbey renewed their policy with Pioneer. Neither in the original application for insurance in 2008, nor when they renewed in 2012 or 2013, did Shadowens and Sixbey identify Sixbey’s son as living with them. After the subject motor vehicle collision, then, Pioneer filed this lawsuit seeking to rescind Shadowens’s and Sixbey’s policy for fraud, and the trial court ultimately granted summary disposition for Shadowens, Sixbey, and the automobile insurer of the other driver involved in the subject motor vehicle collision, State Farm.
The Court of Appeals affirmed the trial court’s summary disposition order in favor of the defendants and rejected Pioneer’s argument that Shadowens and Sixbey had a duty to inform Pioneer of any changes in their household between policy renewals. Pioneer failed to establish that Shadowens and Sixbey had any such duty or obligation.
Pioneer asserts in its brief that defendants had an “obligation and duty . . . to inform [Pioneer] of any change in the household,” but it does not identify any contractual duty or law in support of that proposition. The common-law duty to disclose newly acquired information expires with the consummation of the agreement. See US Fidelity & Guaranty, 412 Mich at 127. Defendants had a duty to fully and accurately respond to direct inquires by Pioneer, see Toering, 319 Mich at 187; M&D, Inc, 231 Mich App at 29, but, unlike the 2011 incident involving Bartel- Sixbey’s address change, Pioneer failed to present evidence that it made any direct inquiries in 2012 or 2013. Absent such evidence, Pioneer’s contention that “a duty arose which required [defendants] to inform [Pioneer] of the addition of Bartel-Sixbey to the household” in 2012 or 2013 is legally incorrect. The trial court properly concluded that defendants are entitled to summary disposition as a matter of law on Pioneer’s theory of silent fraud for failure to disclose because Pioneer failed to establish that defendants had a legal or equitable duty to disclose that Bartel-Sixbey stayed with them for two or three months in 2012 or 2013.
The Court of Appeals also rejected Pioneer’s argument that a question of fact existed as to whether Sixbey’s son was living with Shadowens and Sixbey at the time they renewed their policy in 2013, and that if he was, that their failure to disclose that fact amounted to actionable fraud. The Court of Appeals held that Pioneer failed to present sufficient evidence to create a question of fact as to whether Sixbey’s son was living with Shadowens and Sixbey at that time—any such conclusion would be based purely on speculation or conjecture.
We conclude, however, that this evidence is insufficient to create a question of fact whether Bartel-Sixbey lived with defendants on the date of a particular contract renewal in 2012 or 2013, such that their failure to update the statements in the application or declarations page would amount to a misrepresentation in the procurement of the renewal. There is simply no evidence in the record to support that Bartel-Sixbey was living with defendants at a time when they renewed their policy. Such a conclusion would be speculation or conjecture—“an explanation consistent with known facts or conditions, but not deducible from them as a reasonable inference.” Skinner v Square D Co, 445 Mich 153, 164; 516 NW2d 475 (1994) (quotation marks and citation omitted). While Bartel-Sixbey living with defendants when they renewed their policy in 2012 or 2013 would be consistent with evidence that he stayed with them for two or three months in 2012 or 2013, there is no way to reasonably infer that, because Bartel- Sixbey lived with defendants in 2012 or 2013, he was living with them when they renewed their policy. Pioneer’s theory “is, at best, just as possible as another theory,” and Pioneer does not afford a reasonable factual basis to conclude that, “more likely than not,” its analysis is correct. Id. at 164, 165. Thus, Pioneer’s “proffered evidence constitutes only a mere possibility, which is insufficient to raise a material question of fact” and survive summary disposition. Karbel v Comerica Bank, 247 Mich App 90, 107; 635 NW2d 69 (2001) (quotation marks and citation omitted). Because Pioneer is unable to establish a question of fact for its claim of actionable fraud, the trial court properly granted summary disposition for defendants on that claim.
