Auto Club Insurance Association v. Corporate Limousine Inc
345965
| Mich. Ct. App. | Jun 17, 2021Background
- On July 21, 2011 Brian Miller (a pedestrian) was struck by a Dodge Caravan owned by Corporate Limousine; Miller had no auto insurance and applied for PIP benefits under the Michigan Assigned Claims Plan (MACP).
- Auto Club was assigned to adjust Miller’s claim and paid substantial PIP benefits (over $700,000 total claimed) and sought reimbursement from the highest-priority no-fault insurer.
- American Country insured Corporate Limousine; it disputed priority, filed a cross-claim seeking rescission of the policy for alleged fraud, and filed a third-party claim against Auto Owners (insurer of Miller’s father), arguing Miller was domiciled at his father’s house.
- The trial court ruled the domicile issue was a question of law (no material factual dispute) and found Miller was not domiciled at his father’s house; therefore American Country was the highest-priority insurer.
- The trial court denied American Country’s request to rescind the policy after balancing equities (finding neither Auto Club nor American Country was more innocent) and dismissed the third-party claim against Auto Owners.
- The court also rejected American Country’s laches defense because Auto Club sued within the six-year statute of limitations; judgment for Auto Club for $744,931.62 was entered and affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which insurer is highest-priority for PIP (domicile question)? | Auto Club: Miller was not domiciled at his father’s house; American Country (insurer of the vehicle) is highest-priority. | American Country: Miller was domiciled at his father’s house; Auto Owners is highest-priority. | Court: Affirmed that Miller was not domiciled with his father; American Country is highest-priority. |
| May American Country rescind the policy for fraud (procured after accident)? | Auto Club: Rescission would be inequitable, Auto Club is an innocent MACP assignee and American Country delayed seeking rescission. | American Country: Corporate Limousine committed fraud by adding the vehicle after the accident; rescission is warranted. | Court: Denied rescission after equitable balancing (neither party more innocent; rescission would be unjust). |
| Was dismissal of American Country’s third-party claim against Auto Owners proper? | Auto Club: Dismissal proper because domicile finding removes Auto Owners’ priority. | American Country: Dismissal premature/erroneous. | Court: Affirmed dismissal as domicile ruling eliminated Auto Owners’ priority claim. |
| Is Auto Club’s claim barred by laches for delay? | Auto Club: Suit filed within the six-year statute of limitations, so laches inapplicable. | American Country: Auto Club unreasonably delayed over five years and was prejudiced. | Court: Laches inapplicable where claim filed within statutory period; affirmed. |
Key Cases Cited
- Grange Ins Co of Mich v Lawrence, 494 Mich 475 (Michigan Supreme Court) (describing no-fault priority under MCL 500.3114 and defining domicile)
- Bazzi v Sentinel Ins Co, 502 Mich 390 (Michigan Supreme Court) (rescission of insurance policy is equitable and requires balancing of equities)
- Farm Bureau Gen Ins Co of Mich v ACE Am Ins Co, 503 Mich 903 (Michigan Supreme Court) (concurrence identifying nonexclusive factors for balancing equities in innocent-third-party rescission cases)
- MEEMIC v Morris, 460 Mich 180 (Michigan Supreme Court) (doctrine of laches in insurance reimbursement context; laches inapplicable where suit filed within statute of limitations)
- Workman v Detroit Auto Inter-Ins Exch, 404 Mich 477 (Michigan Supreme Court) (nonexhaustive factors for determining domicile)