Michigan Court of Appeals; Docket # 347155; Unpublished
Judges Beckering, Borrello, and Kelly; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Equitable Estoppel
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s denial of Auto Club Insurance Association’s motion for summary disposition following a priority dispute between Auto Club and Allstate Insurance Company of America. The Court of Appeals determined: (1) that a question of fact existed as to whether Auto Club properly rescinded the insurance policy at issue, and (2) that Allstate’s claim was not barred by the doctrine of equitable estoppel.
Kevin Williams was injured in a pedestrian-versus-car collision after being struck by a car driven by Marquise Harris. Williams submitted his claim for no-fault PIP benefits to the Michigan Assigned Claims Facility, who in turn assigned his claim to Allstate. Some time thereafter, Williams’s lawyer discovered that Harris had an automobile insurance policy with Auto Club that was in effect at the time of the collision. Auto Club then undertook an investigation of Harris and determined that she had made a material misrepresentation on her application for insurance. Auto Club claimed to have sent Harris notice of rescission of the policy as well as a refund check shortly thereafter, but retained incomplete records of having done so. After 12 years passed, Allstate filed suit against Auto Club seeking reimbursement under MCL 500.3175 for the PIP benefits it had paid to Williams, and Auto Club moved for summary disposition, asserting:
that Harris’s policy was rescinded by mutual consent when she cashed the refund check. Alternatively, Auto Club argued that its rescission of Harris’s policy was proper because Harris had materially misrepresented her domicile when she filed her application for insurance. Finally, Auto Club asserted that Allstate’s claim was barred by the doctrine of latches.
The trial court denied Auto Club’s motion for summary disposition, finding that no evidence existed that the refund check had been cashed.
The Court of Appeals affirmed the trial court’s denial of Auto Club’s motion for summary disposition, finding firstly that a question of fact existed as to whether Auto Club properly rescinded Harris’s policy. The Court first determined that a question of fact existed as to whether the policy was rescinded by mutual consent given the lack of evidence surrounding the alleged check that was sent to Harris.
Auto Club sent notice of the rescission to Harris on November 10, 2003, and it presented evidence showing that on November 20, 2003, it sent her a premium refund check. Although Auto Club did not have a copy of the check because its bank only kept records for 7 years and Auto Club only retained its file for 10 years, one of its accountants confirmed that the check had not been returned or escheated. The accountant added that a check that escheated to the state would be a check that was not cashed. On appeal, Auto Club posits that the only reasonable inference is that because the check was not returned or escheated, it must have been cashed. However, despite Harris’s general testimony that she did not recall receiving the rescission notice, she also firmly stated that she “never got it.” Additionally, Harris testified that the reason she changed insurers after the crash was because she “got a cheaper rate.” Harris’s testimony permits a reasonable inference that she did not receive notice of the rescission. Moreover, although Auto Club argues on appeal that only three things could have happened to the check— i.e., it was returned, it was escheated, or it was cashed—there is no documentary evidence indicating that those are the only options. In particular, its accountant did not state that all uncashed checks from Auto Club are escheated, nor is there evidence showing that the amount of the check was actually withdrawn from Auto Club’s account. In sum, reasonable minds could differ on whether Harris received unequivocal notice of the rescission and then cashed a premium refund check. Because reasonable minds might differ, there is a genuine issue of material fact and summary disposition under MCR 2.116(C)(1) is not permissible. See Pioneer State Mut Ins Co, 301 Mich App at 377.
Auto Club argued alternatively that it was entiteled to rescind Harris’s policy on the basis of the fraud-exclusion clause in Harris’s policy because Harris lied about her domicile. The Court of Appeals determined that a question of fact existed, however, as to whether she did actually lie about her domicile and as to whether that was even a material fact.
On appeal, Auto Club argues that Harris misrepresented her address because she had not established the Shelby address as her new domicile. Domicile is usually relevant under MCL 500.3114(1), which mandates coverage for a resident relative domiciled with a policyholder. However, the question of domicile is irrelevant in this case because there is no evidence indicating that the insurance application required Harris to disclose her domicile as opposed to where she was residing and where her vehicle was principally garaged. See Grange Ins Co of Mich v Lawrence, 494 Mich 475, 494-495; 835 NW2d 363 (2013) (distinguishing a person’s domicile from his residence and holding that a person may have more than one residence, but only one domicile at a time). Therefore, to the extent that Auto Club is arguing that there is no question of fact with regard to where Harris was domiciled, even if there were a disputed question of fact, there is nothing on this record to indicate that it is a material fact.
Furthermore, we note that there is a question of fact with regard to where Harris was living at the time of the accident. Harris testified that she was not living at the Detroit address in 2003, and that the last time she had stayed there had been approximately four months before the motor-vehicle crash. She explained that she had previously lived at the Detroit address with her husband, but that they separated and she was living with her sister-in-law at an apartment in Shelby Township. She recalled that she kept her belongings at the Shelby address and that she paid rent. Furthermore, she stated that before the accident she changed her address at the Secretary of State and the post office to reflect the Shelby address. Similarly, Harris’s mother and Harris’s husband testified that Harris was living at the Shelby address at the time of the accident. Harris’s husband believed Harris only stayed overnight at the Detroit address once or twice between 2001 and July 11, 2003. Although Auto Club relies on aspects of Harris’s testimony—such as the fact that she did not have a key or a bedroom at the Shelby address—and documentary evidence—such as the police report listing Harris’s address as being in Detroit— that evidence is contradicted by the testimony from Harris, her mother, and her husband that she was living at the Shelby address. Moreover, although Harris testified that she did not intend to stay at the Shelby address indefinitely, she also testified that she did not have any set period of time that she was intending to stay at the address. An indefinite period of time, by definition, is one that lacks a set start and end date. Consequently, her testimony, viewed in the light most favorable to Allstate is that she was living at the Shelby address for an indefinite period of time, i.e., one without a defined end date. Therefore, given the testimony provided by Harris, her mother, and her husband, there is a question of fact with regard to where Harris was living at the time she applied for no-fault insurance.
Lastly, the Court of Appeals rejected Auto Club’s argument that Allstate’s claim was barred by the doctrine of equitable estoppel, because Allstate was never actually given notice that Auto Club was rescinding its policy with Harris.
In support of its argument, Auto Club relies on a letter from Williams’s lawyer to Auto Club. That letter provides, in full,
Please allow this letter to confirm our discussion of October 29, 2003, during which you indicated that [Auto Club] would not be taking any further action on this claim due primarily to a lack of cooperation on behalf of your insured. Accordingly, [Auto Club] will not pay any of the bills submitted on behalf of Kevin Williams pursuant to his claim. If this letter does not accurately reflect our discussion please send me correspondence indicating the same. Otherwise, I would assume that this letter does accurately confirm the contents of our discussions of October 29, 2003.
The letter was cc’d to Allstate and is dated November 6, 2003. The rescission letter was not sent until November 10, 2003. Critically, the above letter does not constitute notice to Allstate that Auto Club was rescinding its policy with Harris. Nor does it contain information alleging or proving that Harris made a material misrepresentation on her application for insurance. Thus, the only evidence in the record is that Allstate was aware that Auto Club was refusing to pay no- fault benefits to Williams and that Auto Club was Harris’s insurer. To the extent that Auto Club relied on this secondhand notice to Allstate as a confirmation that Allstate would not seek reimbursement under MCL 500.3175, its reliance cannot be construed as reasonable. Consequently, Allstate’s claim is not barred by the doctrine of equitable estoppel.
