Michigan Court of Appeals; Docket # 349519; Published
Judges Riordan, O’Brien, and Swartzle; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Actual Fraud
Fraud/Misrepresentation
SUMMARY:
In this unanimous published per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing the plaintiff’s first-party action to recover no-fault PIP benefits. The Court of Appeals held that the defendant, Liberty Mutual Insurance Company, was entitled to rescind the plaintiff’s automobile insurance policy because the plaintiff’s claims for wage-loss benefits were untrue. Moreover, since the plaintiff’s fraudulent representations “about his need for wage-loss benefits because he could not perform all of his job functions after the accident” were made “before litigation commenced,” the Court of Appeals’ recent decision in Haydaw v. Farm Bureau Ins. Co., ___ Mich. App. ___ (2020) did not apply.
Butross Dawood Fashho was injured in a motor vehicle collision and subsequently sought no-fault PIP benefits, including wage-loss benefits, from his automobile insurer, Liberty Mutual. Liberty Mutual initially paid Fashho’s benefits, but discontinued payment after ordering surveillance of Fashho at his place of work. Fashho was observed performing all of his job duties at his automotive-repair shop “without any apparent restrictions.” In his subsequent first-party action against Liberty Mutual, Liberty Mutual moved for summary disposition, arguing that it was entitled to invoke the fraud provision in Fashho’s policy, thereby precluding Fashho from claiming PIP benefits under the policy. The trial court agreed, and granted Liberty Mutual’s motion, finding that “plaintiff’s statements to defendant were material and false . . . that he knew his statements were false . . . and that they were made intending for defendant to rely on them.”
The Court of Appeals affirmed the trial court’s summary disposition order, but first ordered supplemental briefing from the parties to address its recent decision in Haydaw, in which “this Court held that a defendant-insurer could not deny a plaintiff-insured’s request for benefits based on fraudulent statements made after litigation between the parties commences.” After reviewing the parties’ supplemental briefs, the Court of Appeals concluded “that Haydaw has no impact on the outcome of this case,” because in this case, Fashho’s fraud occurred before litigation began. The Court identified Fashho’s specific act of fraud as “represent[ing] that he needed wage-loss benefits because he could not perform all of his job functions after the accident”—a representation which the surveillance footage contradicted. Since that act of fraud occurred before litigation, and since it satisfied all the elements for fraud laid out in Bahri v. IDS Prop. Cas. Ins. Co., 308 Mich. App. 420 (2014), Fashho was precluded from recovering PIP benefits from Liberty Mutual.
The evidence defendant presented established that plaintiff’s representation about his need for wage-loss benefits because he could not perform all of his job functions after the accident was untrue. Plaintiff claimed that he could not pay himself the $800 per week after the accident like he had before the accident—and therefore required wage-loss benefits—because he could perform only the managerial aspects of his job and not the heavy-lifting aspects. But defendant’s surveillance of plaintiff showed that plaintiff could, and in fact did, perform the heavy-lifting aspects of his job.
Unlike in Haydaw, plaintiff’s representation that he needed wage-loss benefits because he could not perform all of his job functions after the accident was made before litigation commenced, and defendant rejected plaintiff’s claim for benefits on the basis of the surveillance evidence it obtained before litigation showing plaintiff’s representation to be untrue. While plaintiff made false statements after litigation commenced, defendant did not deny plaintiff’s claim for wage-loss benefits because of those statements. Instead, plaintiff’s false statements made after litigation began, about why he could not do his old job and required wage-loss benefits, only reaffirmed defendant’s initial determination that plaintiff made a misrepresentation about needing wage-loss benefits. Thus, Haydaw does not control this case, and the trial court correctly determined that reasonable minds could not differ with regard to the fact that plaintiff had made misrepresentations about his need for wage-loss benefits.
This misrepresentation was material because it was reasonably relevant to defendant’s investigation of plaintiff’s claim for benefits. See Bahri, 308 Mich App at 425. Reasonable minds could not differ with regard to the fact that plaintiff knew that his representation was false, or made it without knowledge of its truth, because he was the one performing the same functions of his job that he did before the accident while claiming a need for wage-loss benefits. Lastly, reasonable minds could only conclude that plaintiff made the misrepresentation with the intent that defendant pay him wage-loss benefits.
