Michigan Court of Appeals; Docket #266878 and #267093; Unpublished
Judges Jansen, Neff, and Hoekstra; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable Link to Opinion 
STATUTORY INDEXING:
Misrepresentation / Fraud as a Basis To Rescind Coverage [3113]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed the trial court’s denial of defendant Automobile Club Insurance Association’s motion for summary disposition, finding there was a question of fact of whether the insured made any misrepresentation in her application for insurance and whether her son, who was injured in a motor vehicle accident, was an active participant in the alleged fraud.
In 2001, plaintiff, Jason O’Neal, purchased a Ford Focus with help from his mother, Bertile O’Neal. On the day of the purchase, Bertile obtained no-fault insurance for the Ford Focus from defendant ACIA. The application for insurance did not ask for an address of where the Focus was garaged, or who owned the car. The application did require Bertile to list everyone who lived with her. Bertile did not list Jason because he did not live with her. In 2002, Jason was involved in a motor vehicle accident while driving the Focus for which Bertile made a claim. At that time, ACIA became aware that Jason was driving the Focus and that he did not live with Bertile. In 2003, Jason was injured in an accident which is the subject of this appeal. ACIA denied Jason benefits and refused to pay his health care providers, citing fraud in the application for insurance. Jason sued ACIA for coverage ad the medical providers sued Jason and ACIA for payment.
The trial court denied ACIA’s motion for summary disposition and the jury found for Jason and his health care providers. The Court of Appeals affirmed, noting that if an insurance policy is procured through an insured’s fraud, the policy is void ab initio as to the person who obtained the policy through the fraud. However, an insurer can only void a policy ab initio if an innocent third party is not affected by its action. Therefore, the issues in this case are whether Bertile committed active fraud and whether Jason participated in the fraud. In affirming, the Court of Appeals found that reasonable minds could disagree regarding whether Jason’s mother made any representation on the policy application and whether Jason was an active participant in the alleged fraud. Moreover, the court determined that ACIA did, in fact, know that Jason was the principal driver and that he did not live with his mother. Therefore, the Court of Appeals determined that the trial court properly denied ACIA’s motion for summary disposition and submitted the issue to the jury for its determination. In this regard, the court stated:
“Viewing the evidence in the light most favorable to plaintiffs, reasonable minds could differ regarding whether Bertile made any misrepresentations in the insurance application and, if so, whether Jason was actively involved in trying to defraud ACIA. . . . Indeed, it is not clear that Bertile intentionally made a misrepresentation of a material fact in the insurance application, or that Jason knew of any misrepresentation. In fact, it appears that ACIA knew that Jason was the principle driver of the Focus and did not live in Bertile’s residence after the first accident in April 2002, but did not rescind the policy at that time. This matter was, therefore, properly submitted to the jury and the trial court did not err by failing to determine, as a matter of law, that there was fraud in the application for the insurance policy.”
