Westfield Insurance Company v. Naje Al-Qaizy
333130
| Mich. Ct. App. | Nov 16, 2017Background
- Single-car crash on I-275 (July 7, 2013) injured occupants of a 2003 Ford Taurus titled to Haider Al-Qaizy; several occupants (including two minors and the mother Najat) sought PIP benefits.
- Naje Al-Qaizy (father/husband) held a Westfield auto policy listing multiple vehicles and drivers; the Taurus was added to that policy shortly before the accident.
- Westfield refused PIP payments alleging fraud/misrepresentation in procuring the policy (vehicles and drivers mischaracterized), asserting rescission ab initio; claimants were assigned to Farmers via the Michigan Assigned Claims Plan who moved for summary disposition.
- Trial court granted summary disposition to Farmers and denied the Al-Qaizys’ request for no-fault attorney fees; Westfield appealed and also filed a separate declaratory complaint that was dismissed.
- The Court of Appeals found genuine factual disputes about whether fraud occurred (e.g., documentary evidence, prior payments on similar facts, disputed ownership/use of vehicles), vacated the summary disposition and dismissal, affirmed denial of attorney fees, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer may rescind policy for fraud in procurement | Al-Qaizy: no fraud; insured entitled to benefits; innocent third-party doctrine protects injured family members | Westfield: policy obtained through fraud/misrepresentation, so rescission and denial of PIP valid | Court: factual disputes exist about fraud; resolution requires trial; Bazzi nullifies innocent-third-party as ultimate refuge if fraud proven |
| Coverage for titled owner (Haider) and non-domiciled adult (Wasan) | Al-Qaizy: these occupants are insured under Naje’s policy | Westfield: Haider (owner) and Wasan (non-resident family) not covered; MCL 500.3113 bars owners without required coverage from recovery | Court: As a matter of law Haider and Wasan cannot recover PIP if owners lacked required coverage; statutory bar applies to owners of involved vehicle |
| Whether Westfield was estopped by prior payments/agent knowledge | Al-Qaizy/Farmers: Westfield previously paid claims under similar facts and its agent knew; insurer estopped from denying coverage | Westfield: prior payments do not resolve present fraud allegations | Court: estoppel/agency and prior payment evidence create factual issues precluding summary disposition; must be resolved below |
| Entitlement to no-fault attorney fees for delay/refusal to pay | Al-Qaizy: Westfield unreasonably delayed/refused payments and fees should be awarded under MCL 500.3148 | Westfield: refusal/delay justified by legitimate factual uncertainty (fraud/rescission) | Court: insurer’s refusal/delay was based on legitimate factual uncertainty (fraud); denial of attorney fees affirmed |
Key Cases Cited
- Bazzi v. Sentinel Ins. Co., 315 Mich. App. 763 (recognition that insurer may void policy obtained by fraud and deny PIP to innocent third parties)
- Titan Ins. Co. v. Hyten, 491 Mich. 547 (fraud in procurement can support rescission and equitable remedies)
- Barnes v. Farmers Ins. Exch., 308 Mich. App. 1 (statutory bar on PIP recovery for owners of involved vehicles lacking required coverage)
- Moore v. Secura Ins., 482 Mich. 507 (standards for insurer reasonableness and attorney-fee awards under MCL 500.3148)
- Adanalic v. Harco Nat’l Ins. Co., 309 Mich. App. 173 (requirements for awarding no-fault attorney fees; insurer burden to justify delay/refusal)
- Attard v. Citizens Ins. Co. of Am., 237 Mich. App. 311 (delay not unreasonable when based on legitimate statutory, constitutional, or factual uncertainty)
- Lash v. Allstate Ins. Co., 210 Mich. App. 98 (rescission prerequisites, including premium return, discussed in context of insurer remedies)