Michigan Court of Appeals; Docket No. 210854; Unpublished
Judges Cavanagh, Hoekstra, and Gage; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
CASE SUMMARY:
This unanimous unpublished per curiam Opinion reversed the trial court's order granting summary disposition in favor of defendant on plaintiff’s claim for no-fault PIP coverage. The trial court had ruled that plaintiff was precluded from claiming PIP benefits under a policy issued by defendant to plaintiff’s longtime girlfriend, Karen Mercer, because of certain misrepresentations made by Mercer when she acquired the policy.
The vehicle covered by this policy was actually owned by plaintiff, but plaintiff had given the vehicle to Mercer for her use, because plaintiff had lost his driver's license and Mercer needed the vehicle for employment purposes. Mercer made certain misrepresentations in her application for insurance with regard to who owned the vehicle and what other drivers resided in her household. Plaintiff subsequently was injured while a passenger in this vehicle, and claimed no-fault benefits from defendant.
Defendant denied benefits on the basis that plaintiff was not an innocent third party with respect to Mercer's misrepresentations, because plaintiff was the owner of the vehicle, and therefore had the legal obligation to obtain coverage. The trial court ruled in favor of defendant. The Court of Appeals reversed.
In reversing the trial court, the Court of Appeals held that the evidence created a genuine issue of disputed fact with respect to whether plaintiff qualified as an innocent party to Mercer's misrepresentations in obtaining insurance coverage from defendant. The court noted,
"Where a policy of insurance is procured through the insured's intentional misrepresentation of a material fact in the application for insurance, and the person seeking to collect the no-fault benefits is the same person who procured the policy of insurance through fraud, an insurer may rescind an insurance policy and declare it void ah initio.... The insurer's right to rescind ceases to exist, however, once an innocent third party becomes involved in a claim under the policy.... The relevant inquiry is whether the injured third party was innocent with respect to the misrepresentation made to the insurance company or was actively involved in defrauding the insurer.... Our review of the instant record reveals that a disputed question of fact exists with respect to whether plaintiff either participated in or knew of Mercer's misrepresentations to defendant.... [Deposition testimony] clearly tends to establish that plaintiff knew nothing of Mercer's misrepresentations.... Because conflicting evidence existed concerning plaintiff's knowledge of Mercer's misrepresentations to defendant, we conclude that the trial court improperly granted defendant summary disposition."
