Michigan Court of Appeals; Docket No. 307045; Unpublished
Judges Krause, Cavanagh, and Boonstra; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable; Link to Opinion:
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Fraud/Misrepresentation
In this unanimous unpublished per curiam Opinion, the Michigan Court of Appeals reversed the trial court's Order granting plaintiff’s motion for summary disposition on the issue of whether the plaintiff was not entitled to no-fault benefits, because of fraud made during the process of insuring the vehicle the plaintiff was driving at the time of the subject accident. The Court of Appeals held that in concluding there was no genuine issue of material fact that the plaintiff was not actively involved in the misrepresentations made during the application process regarding the insurance policy at issue, the trial court failed to properly apply the “innocent third-party doctrine,” as applied in the cases of Hammoud v Metro Prop & Cas Ins Co, 222 Mich App 485 (1997) and Roberts v Titan Ins Co, 282 Mich App 339 (2009). The Court of Appeals reasoned there was sufficient evidence for the trier of fact to conclude the plaintiff was complicit with the misrepresentations his mother made regarding the usage and garaging of the vehicle when she insured the vehicle.
The plaintiff in this case was severely injured while driving a motor vehicle that was owned by plaintiff's mother and insured under her insurance policy. The sole issue in this case was whether the plaintiff was not entitled to recover no-fault benefits, because he actively engaged in the misrepresentations his mother made when she applied for the insurance policy at issue. Under the innocent third-party doctrine, so long as an injured person was not involved in any fraud or misrepresentation during the insurance application process, he or she cannot be denied no-fault coverage. The trial court in this case apparently reasoned that simply because there was no evidence that the plaintiff, himself, made any misrepresentations during the application process regarding the insurance policy at issue, he was afforded protection under the innocent third-party doctrine as a matter of law.
In reversing the trial court, the Court of Appeals noted that “a party is not necessarily innocent as to a misrepresentation solely because he or she did not personally and directly utter it.” The Court went on to discuss the Court of Appeals holdings in Hammoud and Roberts for the proposition that a person can be found to be actively involved in the fraud or misrepresentation, if it can be shown the person was complicit in the fraud or misrepresentations taking place.
In applying the innocent third-party doctrine to this case, as established in Hammoud and Roberts, the Court of Appeals reasoned that despite there was no evidence the plaintiff made any misrepresentations, there was evidence to establish a question of fact about whether the plaintiff was complicit with the misrepresentations the plaintiff’s mother made about the vehicle being for only her use and no one else. This evidence included testimony from an insurance adjuster that the plaintiff told her he asked his mom to purchase and insure the car for him, as well as proof that the plaintiff was the predominant driver of the vehicle. It should also be noted that the vehicle Plaintiff was driving was equipped with a breathalyzer device that prevented any person other than Plaintiff from using the car, which proved that the vehicle was not intended to be used by Plaintiff’s mother. In this regard, the Court stated:
“Therefore, applying the law as stated in Hammoud and Roberts, a party’s ‘innocence’ does not depend on whether the party directly made misrepresentations to the insurer. Hammoud indicates that a party may be deemed “actively involved in defrauding” the insurer absent direct communication. Roberts does not contradict this point. In Roberts, there was no evidence that the 12-year-old son was complicit in his mother’s acquisition of insurance. In the instant case, Auto Club’s adjuster testified that plaintiff stated that his mother purchased the car for him and insured it for him. Plaintiff stated that his mother was helping him out because he was a student and he could not afford his own vehicle. A trier of fact could conclude that plaintiff was complicit in his mother’s misrepresentations to obtain insurance coverage at a favorable rate and, therefore, was actively involved in defrauding Auto Club. Because there are genuine questions of material fact, the trial court erred in granting summary disposition to plaintiff.”
