967 N.W.2d 841
Mich. Ct. App.2021Background
- March 24, 2018 motor-vehicle crash: Brian Webb (driver) seriously injured; vehicle titled and insured in his mother Chirece Clark’s name. Webb was not listed on Clark’s policy.
- Progressive later sought to rescind Clark’s policy, alleging Clark failed to disclose Webb as a household member and primary driver; Progressive estimates premiums would have been ~32% higher if disclosed.
- Discovery produced two recorded calls: on Nov. 23, 2016 Clark initially disclosed Webb lived with her and would be primary driver; a week later, a second call omitted household discussion, and when Webb paid the premium he identified himself as Clark’s “friend.”
- Trial court denied Progressive’s MCR 2.116(C)(10) motion, finding factual disputes on fraud, concluding Webb was an innocent third party, and balancing equities in Webb’s favor; MAIPF was dismissed separately.
- On appeal the Court of Appeals reversed as to Clark, holding Progressive was entitled to rescind the policy procured by Clark’s material misrepresentations, but found a factual question remains whether Webb participated in the fraud and therefore remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Webb) | Defendant's Argument (Progressive) | Held |
|---|---|---|---|
| 1) Did Clark commit fraud in procuring the policy? | Clark’s actions do not create a triable issue of material fraud; agent completed application; factual disputes exist. | Clark knowingly misrepresented household/primary driver; misrepresentation was material and Progressive relied on it; rescission appropriate. | Court: Clark committed fraud as a matter entitling Progressive to rescind; reversed trial court denial as to Clark. |
| 2) Is Webb an innocent third party entitled to coverage despite Clark’s fraud? | Webb was innocent; equities (Webb’s need for coverage) favor denying rescission as to him. | Webb may have participated in the procurement (spoke on calls, paid by card, identified as "friend"); genuine issue whether he conspired to defraud. | Court: Genuine factual question whether Webb participated; trial court erred in finding him innocent and doing equity-balancing; remand for factfinding. |
| 3) Was summary disposition under MCR 2.116(C)(10) properly denied? | Trial court correctly denied because factual disputes exist. | Summary disposition was proper regarding Clark because evidence establishes material misrepresentation and reliance. | Court: Summary disposition should have been granted as to Clark; remanded for further proceedings on Webb. |
Key Cases Cited
- Titan Ins. Co. v. Hyten, 491 Mich 547 (elements of fraud and insurer may avoid policy for fraud)
- Bazzi v. Sentinel Ins. Co., 502 Mich 390 (innocent-third-party rule abrogated in no-fault context)
- West v. Gen. Motors Corp., 469 Mich 177 (de novo review of summary-disposition rulings)
- Latham v. Barton Malow Co., 480 Mich 105 (standard for MCR 2.116(C)(10) evidence view)
- Lenawee County Bd. of Health v. Messerly, 417 Mich 17 (rescission lies in court’s sound discretion)
- Montgomery v. Fidelity & Guaranty Life Ins. Co., 269 Mich App 126 (insured’s signature on application can bind despite agent involvement)