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Nelson v Owusu, et al (COA – UNP 9/15/2022; RB #4475)   


Michigan Court of Appeals; Docket #358984; Unpublished 
Judges Cavanagh, Garrett, and Yates; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Disqualification of Uninsured Owners / Operators for Noneconomic Loss [§3135(2)]

Innocent Third Party Doctrine

In this unanimous, unpublished, per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Latasha Nelson’s first-party action against Defendant Progressive Michigan Insurance Company (“Progressive”), and auto negligence action against Defendant Kwadwo Owusu.  With respect to Nelson’s first-party action, the Court of Appeals held that the trial court made an improper credibility determination in deciding Progressive’s motion for summary disposition (Specifically, in ruling that the equities weighed in favor of denying Nelson’s claim for no-fault PIP benefits related to the subject motor vehicle accident under a now-rescinded policy issued to her then-boyfriend, Christopher Johnstone, the trial court found that Nelson’s claimed ignorance of a misrepresentation Johnstone made to Progressive regarding the two’s living arrangement was not believable).  With respect to Nelson’s auto negligence action against Owusu, the Court of Appeals held that rescission of a policy, ab initio, is a remedy in contract and does not actually change the past for purposes of MCL 500.3135(2)(c), such as would retroactively render Nelson uninsured at the time of the accident.

Latasha Nelson was injured as a result of Kwadwo Owusu crashing into her Kia Forte.  Approximately one month prior to the accident, Nelson purchased the Kia and attempted to add it to her then-boyfriend, Christopher Johnstone’s no-fault policy with Progressive.  Johnstone claimed that on the day Nelson purchased the car, he called his insurance agent, Cory Richardson, and requested that Richardson add the Kia Forte to his policy.  Johnstone claimed he told Richardson that Nelson did not live with him, and that Richardson responded by telling him that he could still add the vehicle to the policy.  Richardson testified, contrarily, that he told Johnstone he could not add Nelson to the policy if she did not live with him, but that Johnstone told him Nelson did live with him.  Richardson recalled that Johnstone “seemed hesitant” when discussing the living arrangement, prompting him to ask Johnstone to electronically sign the household members acknowledgment statement, confirming that all the information provided regarding members of Johnstone’s household was accurate.  The parties do not dispute that Richardson then received a copy of Nelson’s driver’s license—identifying her actual address—and added the Kia Forte to the policy.

After the accident with Owusu, Nelson filed a first-party action against Progressive and an auto negligence action against Owusu.  Progressive moved for summary disposition with respect to Nelson’s first-party claim, arguing that it was entitled to void Johnstone’s policy, ab initio, based on his misrepresentation regarding Nelson’s address, and that the equities weighed in favor of denying Nelson’s claim under the policy because she should have known that her living arrangement was misrepresented on the policy.  Nelson, for her part, claimed that she was unaware of the policy requirement that she and Johnstone live together.  

Owusu moved for summary disposition with respect to Nelson’s third-party claim, arguing that Progressive’s voidance of the policy, ab initio, meant that Nelson was an uninsured driver at the time of the accident and therefore barred from third-party recovery under MCL 500.3135(2)(c).  The trial court decided the two motions without holding an evidentiary hearing, ruling, first, that the equities weighed in favor of denying Nelson’s claim under the now-rescinded policy, because ‘[her] position of innocent ignorance of the requirements for being added to Mr. Johnstone’s no-fault insurance policy is not believable.’  Based on this ruling, the trial court granted Owusu’s motion as well, ruling that Nelson was also barred from third-party recovery as an uninsured driver at the time of the crash.

The Court of Appeals reversed both of the trial court’s summary disposition orders, holding, first, that the trial court improperly weighed Nelson’s credibility in deciding Progressive’s motion for summary disposition.  It would have been acceptable for the trial court to have found Nelson’s claimed ignorance of the policy’s requirements uncredible after an evidentiary hearing on the matter, but to have made such a finding at the summary disposition stage was improper under MCR 2.116(C)(10).

“To be sure, the trial court had reasons to be suspicious of plaintiff’s credibility when she disclaimed knowledge of the requirements for her to be added to Johnstone’s no-fault insurance policy, and we may well have accepted those reasons if the trial court had conducted an evidentiary hearing and then concluded that plaintiff’s position of innocent ignorance of those requirements ‘is not believable.’ . . . But the trial court conducted no hearing of any kind before reaching that conclusion in its opinion. Consequently, the trial court was ‘not permitted to assess credibility, weigh the evidence, or resolve factual disputes’ and then award ‘summary disposition under MCR 2.116(C)(10)’ on the basis of a credibility determination. See Pioneer State, 301 Mich App at 377. The trial court erred in doing so.” 

Based on this holding, the Court of Appeals held that the trial court could not yet grant summary disposition to Owusu on the basis that Nelson was uninsured at the time of the crash.  Alternatively, the Court held that Nelson did have the security required by MCL 500.3101(1) in effect at the time of the crash for purposes of MCL 500.3135(2)(c)—a reality which cannot be retroactively affected by a court rescinding a policy, ab initio.

“In a separate written opinion, the trial court awarded summary disposition to defendant Owusu and his employer, defendant Hizmo Trucking, on plaintiff’s claim for third-party no-fault benefits because plaintiff was an uninsured motorist at the time Owusu—driving a truck for Hizmo Trucking—ran into plaintiff and her Kia Forte. The no-fault act ordinarily forecloses an uninsured motor-vehicle driver from pursuing third-party benefits. MCL 500.3135(2)(c); see also Brickley v McCarver, 323 Mich App 639, 648; 919 NW2d 412 (2018). But that statutory preclusion arises when the motor-vehicle driver ‘did not have in effect for that motor vehicle the security required by [MCL 500.3101(1)] at the time the injury occurred.’ MCL 500.3135(2)(c). As an initial matter, plaintiff procured no-fault insurance from Progressive before she was hit by the truck that Owusu was driving, so plaintiff actually ‘had in effect for’ her Kia Forte ‘the security required’ by MCL 500.3101(1) at the time she was injured in the collision. Moreover, because the trial court erred in granting summary disposition to Progressive on the propriety of rescission, plaintiff has not yet been stripped of the insurance coverage from Progressive, so she manifestly cannot yet be viewed as an uninsured driver subject to the preclusive effect of MCL 500.3135(2)(c). Thus, the trial court erred in awarding summary disposition under MCR 2.116(C)(10) to Owusu and Hizmo Trucking on plaintiff’s claims against them for third-party no-fault benefits. As a result, we must reverse all of the trial court’s awards of summary disposition to the defendants and remand the case for further consideration.” 

*Editor’s Note: Prior Court of Appeals panels have noted that rescission, ab initio, is an equitable remedy in contract, and does not actually change the fact that insurance under the policy was in effect at a past point in time.  See, e.g., Bernard Estate v Ayers, unpublished per curiam opinion of the Court of Appeals, issued April 8, 2021 (Docket No. 348048), pp 12-13; Wilmore-Moody v Everest Nat’l Ins Co, unpublished per curiam opinion of the Court of Appeals, issued May 6, 2021 (Docket No. 352411) pp. 12-13).  The panel in this case was perhaps unaware of these holdings, noting only the following in a footnote addended to its holding on this issue:

“In our previous opinion in this case, we relied upon Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 330 Mich App 584, 593; 950 NW2d 528 (2019), for the proposition that ‘when a policy of no-fault insurance is rescinded, the policy is considered to have not existed.’ As it turns out, however, that Esurance decision was subsequently reversed by our Supreme Court. Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 507 Mich 498; 968 NW2d 482 (2021). We do not offer any opinion about how our Supreme Court’s decision affects this case.” 

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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