Michigan Court of Appeals; Docket #361189; Unpublished
Judges Redford, K.F. Kelly, and Rick; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEX:
Personal Protection Insurance (PIP) Benefits Entitlement
TOPICAL INDEX:
Cancellation and Rescission of Insurance Policies
SUMMARY:
In this unanimous, unpublished, per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Hiram Settler’s action for no-fault PIP benefits against Defendant Auto-Owners Insurance Company (“Auto-Owners”). The Court of Appeals held, first, that under Meemic Ins Co v Fortson, 506 Mich 287 (2020) and Haydaw v Farm Bureau Ins Co, 332 Mich App 719 (2020), Auto-Owners could still deny specific, fraudulent claims for benefits made by Settler, even if it could not altogether void the policy under which Settler was claiming benefits on the basis of fraud. The Court held, second, that there was no question of fact that Settler did commit fraud on his application for PIP benefits.
Hiram Settler was driving a rental car when another driver ran a stop sign, crashed into the rental car Settler was driving, and caused Settler to develop a serious traumatic brain injury. Settler thereafter filed an application for PIP benefits with Auto-Owners under a policy Auto-Owners issued to the rental car company. Auto-Owners proceeded to deny Settler’s claims for benefits and, in Settler’s resultant lawsuit against it, Auto-Owners moved for summary disposition, arguing that it was entitled to deny Settler’s claims based on fraudulent statements made in his application for benefits. Settler appealed the trial court’s summary disposition order, and while his appeal was pending, the Supreme Court and the Court of Appeals issued their opinions in Meemic and Haydaw, respectively. The Court of Appeals, in this case, thus vacated the trial court’s summary disposition order and remanded for reconsideration in light of Meemic and Haydaw. Once remanded, Auto-Owners renewed its motion for summary disposition, which the trial court granted, concluding “there was no genuine issue of material fact that plaintiff committed fraud in connection with his submission of the application for benefits.”
The Court of Appeals ultimately affirmed the trial court’s summary disposition order, but first rejected Auto-Owners' argument that the law-of-the-case doctrine should not apply in this case because VHS of Mich, Inc v State Farm Mut Auto Ins Co, 337 Mich App 360 (2021) presented an “intervening development in the law.” In other words, Auto-Owners wanted the Court not to be bound by its prior decision in this case, in which it vacated the trial court’s summary disposition order based on Meemic and Haydaw, because VHS was decided after this case was remanded and represented an “intervening development in the law.” The Court clarified that VHS was explicitly not a change in the law, however: the Court factually distinguished that case from Meemic and Haydaw and held, consistent with Meemic, that while an insurer cannot void a policy based on post-procurement fraud, it can still reject specific, fraudulent claims for benefits.
“Contrary to defendant’s arguments here, the Court in VHS of Mich did not articulate a change in the law with respect to fraud and insurance benefits such that the law-of-the-case doctrine should not apply in this case. The Court explicitly stated it was factually distinguishing the case from Haydaw, Meemic, and Williams, and nowhere in the quoted language above does the Court purport to articulate a new rule or change in the law. See Sumner, 245 Mich App at 657-658 (rejecting the plaintiff’s argument that the law-of-the-case doctrine required a new trial where an intervening case overruled the holding in Sumner in the parties’ first appeal); Freeman, 212 Mich App at 38-39 (stating that the law-of-the-case doctrine did not apply in an appeal concerning the Uniform Commercial Code where, after the first appeal, the Court concluded that privity was not required in economic loss cases involving commercial buyers of manufactured goods). Defendant’s central claim is that while it is not permitted to void a policy on the basis of postprocurement fraud, it is entitled to deny claims on that basis. While the Court in VHS of Mich affirmed this principle, such a rule existed before this Court issued its original opinion in Settler. Indeed, in Meemic, 506 Mich at 304 n 10, the Michigan Supreme Court set forth the same rule, stating that insurers faced with postprocurement fraud ‘can reject fraudulent claims without rescinding the entire policy.’”
The Court’s rejection of Auto-Owners' argument regarding the law-of-the-case doctrine notwithstanding, it still affirmed the trial court’s summary disposition order, holding, first, that under Meemic, Auto-Owners could deny specific, fraudulent claims made by Settler, even if it could not altogether void the policy under which Settler was claiming benefits. Settler’s application of benefits was submitted prior to litigation, and thus the rule set forth in Haydaw—‘that a fraud provision in a policy does not apply to statements made during the course of litigation’—did not apply either.
“Regardless of whether plaintiff’s application for benefits is considered pre- or postprocurement, there is no dispute that the application was submitted to defendant before litigation commenced. Accordingly, even if the application is considered postprocurement, defendant was entitled to deny coverage on the basis of the purported fraud. Plaintiff’s argument that the application was postprocurement and, therefore, cannot serve as a basis to deny coverage, is unconvincing because it is at odds with the holdings in Meemic and Haydaw. While defendant was not entitled to void the policy as a result of plaintiff’s application for benefits, it was entitled to deny the claims that flowed from it. Thus, the trial court did not err when it concluded that plaintiff’s application for benefits could serve as a basis for defendant’s fraud defense and denial of coverage.”
The Court of Appeals held, second, there was no question of fact that Settler committed fraud on his application for benefits. While Settler claimed that there was a question of fact as to whether he could form an intent to deceive based on his traumatic brain injury, as well as a question of fact as to whether he, in fact, signed the application for benefits, the Court of Appeals found neither evidence of “a causal connection between his head injury and his ability to truthfully answer questions in his application,” nor any firm denial from Settler that the signature on the application was his; he merely equivocated when asked, during his deposition, whether the signature was his.
“In this case, plaintiff claims that defendant did not carry its burden to show that plaintiff intended to make a material misrepresentation in connection with his application for benefits because plaintiff suffered a traumatic brain injury shortly before the application was submitted. Plaintiff is correct that there is evidence in the record that he suffered a head injury before the application was submitted. Plaintiff was placed in a medically-induced coma as a result of a traumatic head injury and cerebral hematoma after he passed out and hit his head in his girlfriend’s apartment. Plaintiff, however, did not submit any evidence that there was a causal connection between his head injury and his ability to truthfully answer questions in his application. In opposing defendant’s renewed motion for summary disposition, plaintiff was required to rely on something more than ‘pure conjecture and speculation’ to link his head injury with any purported memory loss. See West v Gen Motors Corp, 469 Mich 177, 188; 665 NW2d 468 (2003). Thus, as in Woody and Urech, we conclude that there is no question of fact for trial on the issue of whether he lacked the requisite intent to make a material misrepresentation.
. . .
During plaintiff’s deposition, he was asked whether he signed the application for benefits. Rather than denying that the signature was his, plaintiff responded:
I can’t say it look like I would write it. That don’t even look like—I don’t know. I don’t know. It could be. I can’t say yes. I can’t say no. I mean it look like somebody scribbled my name on there.
Just as plaintiff’s unsupported assertions that his head injury resulted in a lack of memory causing false statements on his application were insufficient to defeat defendant’s motion for summary disposition, the same is true with respect to plaintiff’s nondenial concerning his signature. Plaintiff’s lack of knowledge of whether it was his signature on the application did not create an issue of fact for trial. See West, 469 Mich at 188. Accordingly, the trial court did not err when it granted defendant’s renewed motion for summary disposition.”
