Michigan Court of Appeals; Docket #265808; Unpublished
Judges Borrello, Sawyer, and Fitzgerald; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
General Rule of Priority [3114]
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
No-Fault Insurer Claims for Reimbursement: Insurer Reimbursement – Other Scenarios
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals held that defendant-insurer was not entitled to reimbursement from another insurer that had rescinded its no-fault insurance policy where defendant lacked standing to make such a challenge. The plaintiff in this case was injured in a pedestrian/motor vehicle accident. At the time of the accident, plaintiff resided with his parents. Plaintiff’s father had a no-fault insurance policy issued by defendant-Meemic Insurance Company. Meemic initially paid plaintiff’s benefits. However, plaintiff’s mother also had a no-fault insurance policy which was issued by defendant Farm Bureau. When Meemic discovered the existence of the Farm Bureau policy, Meemic ceased paying benefits and claimed a right to reimbursement. When Meemic ceased paying benefits, plaintiff filed an action in which he only named Meemic. Meemic then filed a third party action against Farm Bureau, claiming that plaintiff qualified as an insured and that under MCL 500.3114, Farm Bureau was first in priority. Farm Bureau denied liability, claiming it had rescinded its policy as void ab initio. Meemic argued that Farm Bureau could not deny liability to an innocent third party. The trial court disagreed and granted Farm Bureau’s motion for summary disposition.
In affirming the decision, the Court of Appeals first noted that if Farm Bureau had issued a no-fault insurance policy to plaintiff’s mother, Farm Bureau would be liable to plaintiff and would be liable to partially reimburse Meemic. It also noted that Farm Bureau did, in fact, rescind its policy based on a material misrepresentation after the accident occurred. The court further noted that an innocent third party can challenge the effectiveness of a policy rescission. However, because the entity challenging the rescission was Meemic, not the plaintiff, the challenge was ineffective because Meemic lacked standing. Moreover, Meemic failed to show that plaintiff was, in fact, innocent with respect to the misrepresentation. In this regard, the court stated:
“Plaintiff, who was injured in a motor vehicle accident and thus potentially entitled to coverage under the Farm Bureau policy, is the allegedly innocent injured third party who could challenge the effectiveness of the rescission. However, he has not done so. Defendant is not an innocent injured third party otherwise entitled to benefits under the Farm Bureau policy. Rather, defendant is another insurer obligated to pay benefits with a right to reimbursement from another insurer also obligated to the insured. Defendant, who does not claim to be subrogated to the rights of plaintiff, has not shown that it has standing to contest the rescission on his behalf. In any event, defendant has not shown that plaintiff was in fact innocent with respect to the misrepresentation made by his mother. Therefore, the trial court did not err in granting third-party defendant’s motion for summary disposition.”
