967 N.W.2d 869
Mich. Ct. App.2021Background
- Marilyn Williams was injured in a car accident on September 1, 2016, and filed a PIP (no-fault) claim with Farm Bureau; Farm Bureau denied the claim and Williams sued on October 20, 2017.
- Farm Bureau moved for summary disposition under MCR 2.116(C)(10), arguing Williams made material false statements after the policy was issued (postprocurement fraud) about employment, injuries, and need for assistance, and that the policy’s antifraud clause voided coverage.
- Farm Bureau did not allege fraud in the inducement (preprocurement) or that, viewed in Williams’s favor, the underlying injury/treatment would not qualify for PIP benefits.
- The trial court granted summary disposition for the insurer; on appeal the Court of Appeals reversed based on Michigan Supreme Court precedent in Meemic Ins Co v Fortson, which holds that policy antifraud provisions cannot be used to deny statutorily mandated no-fault (PIP) benefits when the alleged fraud occurred after the policy was issued.
- The panel explained Meemic permits antifraud clauses only to the extent they address fraud in the inducement (preprocurement), not postprocurement misrepresentations, and remanded for further proceedings because credibility and factual issues cannot be resolved on summary disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a policy antifraud clause can void PIP coverage for postprocurement fraud | Antifraud clause unenforceable as to postprocurement fraud for mandatory PIP benefits (per Meemic) | Policy permits voiding for material misrepresentations before or after loss; Bahri supports applying clause postprocurement | Reversed: clause invalid as applied to postprocurement fraud for mandatory PIP benefits; insurer cannot preemptively void coverage on that basis |
| Whether Bahri remains controlling authority | Bahri should be limited per Meemic to fraud in inducement | Bahri supports applying antifraud clause to postprocurement fraud by insured | Bahri survives only insofar as consistent with Meemic — i.e., limited to fraud in inducement |
| Whether summary disposition was appropriate on disputed fraud facts | Credibility and factual disputes preclude summary disposition; fraud determinations are for a finder of fact | Insurer contended evidence showed false statements warranting dismissal | Held for plaintiff on procedural ground: factual issues require trial; (MCR 2.116(C)(10) inappropriate) |
Key Cases Cited
- Bahri v IDS Prop Cas Ins Co, 308 Mich App 420 (Mich. Ct. App. 2014) (applied an antifraud provision to postprocurement statements in a PIP dispute)
- Titan Ins Co v Hyten, 491 Mich 547 (Mich. 2012) (explains common-law fraud doctrines and rescission limited to fraud inducing contract formation)
- Mina v Gen Star Indem Co, 218 Mich App 678 (Mich. Ct. App. 1996) (fire-insurance context recognizing statutory authorization for antifraud clauses)
- Sabbagh v Hamilton Psychological Servs, PLC, 329 Mich App 324 (Mich. Ct. App. 2019) (summary-judgment standard on disputed factual credibility under MCR 2.116(C)(10))
- Bazzi v Sentinel Ins Co, 502 Mich 390 (Mich. 2018) (describing no-fault system as comprehensive statutory scheme)
- TBCI PC v State Farm Mut Auto Ins Co, 289 Mich App 39 (Mich. Ct. App. 2010) (prior case discussing res judicata where fraud was found in a previous proceeding)
- Ohlsen v DST Indus, Inc, 111 Mich App 580 (Mich. Ct. App. 1981) (statutory remedies are exclusive where statute creates new rights/duties)
- Pompey v Gen Motors Corp, 385 Mich 537 (Mich. 1971) (same principle on exclusivity of statutory remedies)