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Smith, et al v Auto Club Group, et al (COA – UNP 4/29/2021; RB #4250)

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Michigan Court of Appeals; Docket # 352662; Unpublished
Judges Gleicher, Borrello, and Swartzle; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Not Applicable

TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies


SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed a final judgment entered in plaintiff Latrice Smith’s first-party action against defendant Auto Club Group.  Auto Club Group (“Auto Club”) sought to rescind Smith’s automobile insurance policy after she was injured in a car crash by sending her a letter of rescission and refunding her premium through an electronic funds transfer.  Smith set the refund aside and did not use the funds and instead filed the underlying action against Auto Club Group for unpaid PIP benefits.  Auto Club Group moved for summary disposition, arguing that Smith consented to the rescission because she received the premium refund and did not return it to Auto Club.  The Court of Appeals disagreed, holding that reasonable minds could differ on the issue of whether Smith consented to the rescission based on the fact that she did not use the money refunded to her.

Latrice Smith was injured in a motor vehicle collision and, at the time of the collision, she was insured under a policy of automobile insurance with Auto Club.  Auto Club noticed a discrepancy between the address Smith listed on her application for insurance and the address listed for her on the police report, and based on this discrepancy, Auto Club sought to rescind Smith’s policy.  Auto Club proceeded to send Smith a letter of rescission as well as a refund of her premium via an electronic funds transfer, which automatically refunded the premium to Smith’s credit card.  Smith did not use the refund in any way, but rather “set it aside,” according to her testimony.  In Smith’s subsequent first-party action against Auto Club, Auto Club moved for summary disposition, arguing that Smith’s policy had been rescinded ab initio and that Smith consented to the rescission by receiving the premium refund and not returning it.  The trial court denied Auto Club’s motion, however, ruling that a question of fact existed as to whether Smith did, in fact, consent to the rescission.

On appeal, the Court of Appeals affirmed the trial court’s ruling, noting that all the unpublished decisions Auto Club relied on in arguing that Smith’s receipt of the refund and failure to return it constituted a mutual rescission featured fact patterns in which the insurance company refunded the premium in the form of a check that the insured endorsed and cashed.  In this case, however, Smith received an electronic transfer and did not use the funds.  Thus, the Court of Appeals held that a question of fact existed as to whether she consented to the rescission. In this regard, the Court stated:

“Defendant argues that no genuine issue of material fact exists regarding whether mutual rescission occurred because Smith admitted to receiving the letter of rescission, acknowledged receiving the premium refund, and did not return the refund to defendant. However, defendant’s characterization of the ‘facts’ is not an accurate representation of the testimony. While Smith admitted to receiving the letter of rescission, acknowledged receiving the premium refund, and did not return the refund to defendant, Smith testified that she set the refunded money aside and did not use it. We note that defendant directs this Court to a number of unpublished decisions where this Court has held that mutual recession occurred. However, in each of those cases, the insurance company refunded the premium in the form of a check and the insured endorsed and cashed the check. e.g. Green v Meemic Ins Co, unpublished per curiam opinion of the Court of Appeals, issued August 20, 2020 (Docket No. 348651). Unlike Green, here, defendant sent the funds back to Smith via an EFT. As previously stated, Smith’s testimony was that she did not use the money but rather, she set it aside. As such, Smith’s conduct did not clearly indicate a ‘mutual understanding that the contract [was] abrogated or terminated’ or acquiescence to defendant’s rescission of the insurance policy. Kundel, 301 Mich at 208. Because the trial court had no evidence that Smith used or ‘cashed’ the money refunded to her, viewing the evidence in a light most favorable to Smith, reasonable minds could differ regarding whether Smith consented to the rescission of the insurance policy. Puetz, 324 Mich App at 68. The trial court therefore did not err by denying defendant’s motion for summary disposition.”

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