957 N.W.2d 858
Mich. Ct. App.2020Background:
- Plaintiff (Haydaw) was injured in a motor vehicle accident and sought PIP benefits from his no-fault insurer (Farm Bureau), which were denied; he sued for wrongful withholding of benefits.
- Before and during litigation plaintiff executed medical releases, was deposed through an interpreter, and underwent two insurer-ordered medical examinations.
- Plaintiff’s medical records showed intermittent pre-accident complaints of back/neck/shoulder pain and prior prescriptions; at deposition he answered that his pre-accident doctor visits were for the flu.
- Defendant moved for summary disposition under the policy’s fraud clause, alleging plaintiff made false statements in discovery and at the IMEs and relied on Bahri for rescission.
- Plaintiff responded that he disclosed records earlier, that his deposition answer referred to the visits immediately before the accident, and that any inaccuracies go to credibility for the trier of fact.
- The trial court found plaintiff made false statements and granted summary disposition; the Court of Appeals reversed and remanded.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurer may void a policy under a fraud/misrepresentation clause based on statements made by the insured during litigation (deposition/IME). | Haydaw: deposition testimony was truthful as to immediately prior visits; records were produced earlier; any misstatements are credibility issues for the jury. | Farm Bureau: plaintiff falsely denied preexisting symptoms at deposition and IMEs; the fraud clause (and Bahri) permits voiding for material, intentional misrepresentations. | Court: Fraud/misrepresentation clauses do not apply to statements made in the course of litigation or discovery; insurer may not void policy on that basis; case reversed and remanded. |
Key Cases Cited
- Republic Fire Ins. Co. v. Weides, 81 U.S. 375 (U.S. 1871) (trial testimony does not trigger insurer’s fraud/false-swearing forfeiture clause).
- American Paint Service, Inc. v. Home Ins. Co. of New York, 246 F.2d 91 (3d Cir. 1957) (post-suit testimony cannot be used to manufacture a contractual escape from coverage).
- Bahri v. IDS Prop. Cas. Ins. Co., 308 Mich. App. 420 (Mich. Ct. App. 2014) (elements required to void a policy for intentional material misrepresentation).
- Mercantile Trust Co. v. New York Underwriters Ins. Co., 376 F.2d 502 (7th Cir. 1967) (deposition testimony is not a proper basis to void a policy).
- Farm Bureau Ins. Co. v. TNT Equip., Inc., 328 Mich. App. 667 (Mich. Ct. App. 2019) (insurance policy is a contract; first-breach rule may bar insurer from relying on insured’s subsequent conduct to defeat coverage).