Michigan Court of Appeals; Docket #300043, #303405; Unpublished
Judges Beckering, Jansen, and M.J. Kelly; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Entitlement to PIP Benefits: Arising Out Of/Causation Requirement [§3105(1)]
Disqualification for Intentionally Suffered Injury [§3105(4)]
Misrepresentation/Fraud as a Basis to Rescind Coverage [§3113]
Reasonable Proof and Time for Payment Rules; Penalty Interest on Overdue Benefits [§3142]
Penalty Attorney Fees [§3148]
TOPICAL INDEXING:
Fraud/Misrepresentation
CASE SUMMARY:
In this unanimous per curiam unpublished Opinion involving priority of payment, fraudulent misrepresentation, rescission of an insurance contract, and the “intentionally suffered injury” exclusion in MCL 500.3105(4), the Court of Appeals held the insured’s claim for PIP benefits was improperly dismissed because a material dispute existed regarding: 1) whether the insured made “material misrepresentations” on his insurance application that permitted his no-fault insurer to effectively rescind his policy, thereby precluding the insurer from having to pay PIP benefits, and 2) whether the injuries the insured sustained in the accident were intentional, thereby precluding PIP coverage under the “intentionally suffered injury” exclusion in §3105(4).
In so holding, the Court of Appeals emphasized that, to support the rescission of a no-fault insurance contract, an insurer must demonstrate that: 1) the insured made a material misrepresentation; 2) the representation was false; 3) the insured knew the representation was false when it was made, or made it recklessly without knowledge of its truth; 4) the insured made the representation with the intent that it would be acted on by the insurer; 5) the insurer acted in reliance on the representation; and 6) the insurer suffered an injury.
When applying for his no-fault policy with defendant Titan Insurance Company, plaintiff did not indicate that his driver’s license had been indefinitely suspended. After the policy was issued, plaintiff suffered severe injuries when he was hit while walking on I-75 by a semi-truck owned by Transportation Services, Inc. (TSI), a self-insured trucking company. Titan later discovered that plaintiff’s license was suspended and sent plaintiff a letter rescinding his no-fault policy, asserting he made “material misrepresentations” on the insurance application. Titan, the self-insured trucking company, and the trucking company’s excess insurer all denied plaintiff’s claims for PIP benefits. Plaintiff then brought an action seeking coverage against Titan, the trucking company, and the excess insurer. Plaintiff filed an application with the Assigned Claims Facility, which assigned his PIP claim to Farmers, which also denied plaintiff’s claim, prompting plaintiff to add Farmers as a defendant in this priority dispute. Ultimately, the trial court determined that Farmers was liable for paying no-fault benefits incurred through May 7, 2010, and that Titan was the carrier of highest priority for benefits incurred after that date. Titan’s motions for reconsideration were denied.
In its decision, the Court of Appeals emphasized that an insurer can rescind a policy if it was procured through the insured’s “intentional misrepresentation of a material fact” on the application. The court said the rescission issue was controlled by the Michigan Supreme Court’s ruling in Titan Ins Co v Hyten, 491 Mich 547 (2012). Relying on that case, the appeals court said the following about plaintiff’s alleged misrepresentations:
“As the decision in Hyten makes clear, the fact that Titan did not timely investigate the representations in plaintiff’s insurance application, and the fact that Titan did not attempt to independently verify whether plaintiff was a licensed driver, have no bearing on Titan’s ultimate entitlement to rescind plaintiff’s insurance policy on the basis of fraudulent misrepresentation. Instead, the real question is whether plaintiff did, indeed, make a material misrepresentation when he indicated on his insurance application that he had a valid driver license (or, alternatively, if independent agent Abbo completed the application, whether plaintiff made a material misrepresentation when he signed it).”
Plaintiff had argued that when the insurance application was completed, he did not know that his driver’s license was suspended. He also claimed that, even if he did make a false representation, Titan did not rely on it to issue the policy. But the Court of Appeals pointed out there was “substantial” evidence to contradict these arguments:
“[T]hese matters … present genuine issues of material fact that require development in the circuit court. Whether a misrepresentation was material and whether it was relied on are generally questions of fact for the jury.”
The Court of Appeals further held that legitimate questions remained about whether plaintiff’s injuries were intentional. According to the court:
“[I]f the jury ultimately concludes that plaintiff’s injuries were caused intentionally, plaintiff will not be entitled to PIP benefits from any insurer, and each of the defendants will be entitled to judgment as a matter of law.”
Therefore, the Court of Appeals affirmed the denial of summary disposition for both Titan and Farmers. The appeals court also reversed the trial court’s order that had dismissed the other insurers involved in the case, and remanded the matter for further proceedings.
Regarding which insurer had priority to pay benefits, the Court of Appeals reversed the trial court’s finding that Farmers was responsible for paying no-fault benefits up to May 7, 2010, and that Titan was the insurer of highest priority with respect to benefits incurred after that date.
As for the question of whether Farmers was entitled to any reimbursement from Titan, the Court of Appeals said this issue could not be resolved until it was determined whether Titan had effectively rescinded plaintiff’s policy.
Lastly, regarding plaintiff’s claim for penalty attorney fees under §3148, the Court of Appeals said:
“Any remaining question concerning plaintiff’s entitlement to costs, interest, and attorney fees will depend on the resolution of the main issues in this case.”
