David Wells Jr v. Citizens Insurance Company of the Midwest, 368673

David Jr. was injured while riding in a car owned by his father, David Sr., and insured by Auto Club. David Sr.'s insurance application did not disclose that David Jr. lived with him, as required by the policy.
After the accident, Auto Club discovered this omission, notified David Sr. of policy rescission for material misrepresentation, and refunded his premiums, which he cashed.
David Jr. filed suit seeking no-fault benefits from both Auto Club and Citizens (assigned under the Michigan Assigned Claims Plan), and several medical providers intervened to collect their charges.
Auto Club moved for summary disposition, arguing the policy was properly rescinded for material misrepresentation and mutual rescission; Citizens sought dismissal on grounds the equities favored coverage for David Jr. as an innocent third party.
The trial court denied Auto Club’s motion, holding there was insufficient evidence of material misrepresentation and found the equities did not support rescission against David Jr.; Citizens was dismissed from the case.
Auto Club appealed, challenging the findings on misrepresentation and the application of the rescission/equitable analysis as it pertained to innocent third parties.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether David Sr. made a material misrepresentation	No conclusive evidence of misrepresentation	Auto Club: Omission was material	David Sr. omitted a resident relative, but summary disposition was premature—discovery was not complete.
Whether Auto Club could rescind the policy against David Jr.	Equities do not favor rescission for innocent third parties	Equities favor rescission, alternate recovery through Citizens	Denial of summary judgment proper—genuine question of fact exists as to David Jr.’s innocence; rescission unresolved.
Dismissal of Citizens Insurance from suit	Citizens not liable if Auto Club cannot rescind	Citizens: Not liable—David Jr. was innocent	Improper to dismiss Citizens; unresolved question of fact if David Jr. is an innocent third party. Remanded.
Applicability of policy opt-out and benefit limitations	Coverage not fully excluded by David Sr.’s selection	Policy excluded certain benefits for undisclosed residents	David Sr. chose MCL 500.3109a(2) coverage, not a complete opt-out under MCL 500.3107d(1); error by trial court.

Bazzi v. Sentinel Ins. Co., 502 Mich 390 (Mich. 2018) (rescission of insurance policy requires courts to balance the equities, especially where innocent third parties are involved)
Pioneer State Mut. Ins. Co. v. Wright, 331 Mich App 396 (Mich. Ct. App. 2020) (adopts equitable factors for rescission as to innocent third parties)
Farm Bureau Gen. Ins. Co. of Mich. v. ACE Am. Ins. Co., 337 Mich App 88 (Mich. Ct. App. 2021) (clarifies weighing, not tallying, of equitable factors in rescission litigation)
Neal v. Wilkes, 470 Mich 661 (Mich. 2004) (standard of review for summary disposition de novo)
Maiden v. Rozwood, 461 Mich 109 (Mich. 1999) (summary disposition standards and procedures)