Michigan Court of Appeals; Docket #316157; Unpublished
Judges Owens, Jansen, and O’Connell; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
Link to Order
STATUTORY INDEXING:
Misrepresentation/Fraud as a Basis to Rescind Coverage [§3113]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving whether the claimant’s no-fault policy was void ab initio on the grounds of fraud, the Court of Appeals held that fraud committed by an innocent third party was sufficient to justify rescission of the policy and render it void ab initio. In so holding, the Court of Appeals said the trial court erred in ruling that defendant insurer could not void its policy ab initio because such a finding was contrary to the Michigan Supreme Court’s decision in Titan Ins Co v Hyten, 491 Mich 547 (2012).
Plaintiff obtained a vehicle liability policy from defendant Progressive. The vehicle was destroyed one month later. A month after that, plaintiff’s minor daughter was injured in an accident while riding in an uninsured car. The Assigned Claims Facility assigned plaintiff’s daughter’s claim to Citizens Insurance. Progressive then informed plaintiff that her policy was rescinded ab initio, alleging that she had procured it through fraud. Plaintiff filed an action against Progressive, seeking recovery for the losses she incurred when her vehicle was destroyed. Citizens intervened in the case to seek reimbursement from Progressive for the benefits that it paid on behalf of plaintiff’s daughter. Citizens argued that Progressive could not void a policy ab initio when an innocent third party was affected. Progressive asserted that plaintiff committed fraud and that, pursuant to the Supreme Court’s ruling in Titan, the claims of an innocent third party did not bar rescission of a policy ab initio. The trial court ruled that, once the accident occurred, Progressive lost its ability to rescind the policy as to plaintiff’s daughter, and granted Citizens’ motion for summary disposition.
The Court of Appeals held the trial court’s decision was inconsistent with Hyten. The court stated:
“In Hyten, our Supreme Court held that absent statutory provisions to the contrary, ‘an insurer is not precluded from availing itself of traditional legal and equitable remedies to avoid liability under an insurance policy on the ground of fraud in the application for insurance, even when the fraud was easily ascertainable and the claimant is a third party.’ … Accordingly, the claim by Frost’s daughter did not bar Progressive from rescinding the policy in this case.”
However, Hyten did not resolve all the issues in this case, the Court of Appeals said. To prevail on its rescission claim, Progressive also had to establish proper grounds for rescission, the court noted.
Because the trial court did not expressly rule on the grounds for rescission, the Court of Appeals remanded the case for a determination of that issue.
