Lead Opinion
We are asked in this case to determine whether the so-called “innocent third party” rule, which this Court established in State Farm Mut Auto
Plaintiff, Ali Bazzi (plaintiff), is seeking to recover personal protection insurance (PIP) benefits for injuries he sustained in an automobile accident while driving a vehicle owned by third-party defendant Hala Bazzi (plaintiffs mother).
Sentinel thereafter moved for summary disposition of plaintiffs claim against Sentinel for PIP benefits, as well as the intervening plaintiffs’ claims because the policy was rescinded on the basis of fraud. The trial court denied the motion, concluding that plaintiff had a claim because of the innocent-third-party rule.
The standard of review to be applied here was set forth, as follows, in Titan:
This Court reviews de novo a trial court’s decision on a motion for summary disposition. Shepherd Montessori Ctr Milan v Ann Arbor Charter Twp, 486 Mich 311, 317; 783 NW2d 695 (2010). In addition, the proper interpretation of a statute is a question of law that this Court reviews de novo. Eggleston v Bio-Med Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003). The proper interpretation of a contract is also a question of law that this Court reviews de novo. Rory v Continental Ins Co, 473 Mich 457, 464; 703 NW2d 23 (2005).
In Titan, the insurer sought a declaratory judgment on the basis that, because of fraud in the application, it had no duty to indemnify its insureds in a claim brought by third parties injured in an automobile accident with Titan’s insureds.
Plaintiff and defendant Citizens argue that the decision in Titan does not apply to this case for two reasons: Titan did not involve mandatory PIP benefits, and it only considered the “easily ascertainable fraud” rule and not the “innocent third party” rule. These are the essential arguments in this case because if Titan does not apply here, then there is binding precedent of this Court in which we applied the innocent-third-
We first consider whether there is a distinction between the easily-ascertainable-fraud rule discussed in Titan and the innocent-third-party rule advanced in this case. We conclude that they are one and the same.
While Titan consistently referred to the easily-ascertainable-fraud rule set forth in Kurylowicz, it and the so-called innocent-third-party rule are not separate and distinct rules. As stated by the Titan Court:
The principal question presented in this case is whether an insurer may avail itself of traditional legal and equitable remedies to avoid liability under an insurance policy on the ground of fraud in the application for insurance, when the fraud was easily ascertainable and the claimant is a third party.[13 ]
Therefore, the focus of Titan was not merely on the ascertainability of the fraud; it was also relevant that the case involved a third-party claimant. Indeed, the substance of Kurylowicz was that both conditions had to apply before the insurer was prevented from raising a fraud defense. This point was recognized by the Supreme Court in Titan when it observed that “when it is the insured who seeks benefits under an insurance
In sum, Titan recognized that the rule in Kurylowicz only applied if the fraud was easily ascertainable and involved an innocent third party. Moreover, it would make no sense to conclude that an insurer has no liability if the fraud is easily ascertainable, but would retain liability if the fraud was not easily ascertainable.
Furthermore, even if the decision in Kurylowicz has evolved into two separate rules—the easily-ascertainable-fraud rule and the innocent-third-party rule—it is irrelevant. Both these rules have their roots in the Kurylowicz decision. And Titan clearly overruled Kurylowicz “and its progeny . .. .”
We now turn to the other question posed in this case, whether the holding in Titan extends to mandatory no-fault benefits. We conclude that it does. Titan involved optional benefits not mandated by statute. But that was not the basis of the Court’s decision. And it made the rather unremarkable observation that when insurance benefits are mandated by statute, coverage is governed by that statute.
Thus, the question is not whether PIP benefits are mandated by statute, but whether that statute prohibits the insurer from availing itself of the defense of fraud. And the parties are unable to identify a provision in the no-fault act itself in which the Legislature statutorily restricts the use of the defense of fraud with respect to payment of PIP benefits. That is, the one argument under Titan that would carry the day for the appellees simply does not exist. And the Legislature was certainly aware that it could do so as it had already done so with respect to the financial responsibility act.
Several appellate decisions of this state have suggested that MCL 257.520 applies to all liability insurance policies. For example, in State Farm Mut Auto Ins Co v Sivey, 404 Mich 51, 57; 272 NW2d 555 (1978), this Court indicated that MCL 257.520(b)(2) applies to “all policies of liability insurance[.]” (Emphasis added.) In addition, in Farmers Ins Exch v Anderson, 206 Mich App 214, 220; 520 NW2d 686 (1994), the Court of Appeals indicated that “when an accident occurs in this state, the scope of liability coverage is determined by the financial responsibility act.” See also League Gen Ins Co v Budget Rent-A-Car of Detroit, 172 Mich App 802, 805; 432 NW2d 751 (1988) (“When an accident occurs in this state, the scope of the liability coverage required in an insurance policy is determined by Michigan’s financial responsibility act].]”). However, none of these decisions undertook a close analysis of this issue.
We have closely reviewed MCL 257.520(f)(1), and we believe that the statute does not in every case limit the ability of an automobile insurer to avoid liability on the ground of fraud; its reference to “motor vehicle liability policy” is not all encompassing. Rather, as used in MCL 257.520(f)(1), “motor vehicle liability policy” refers only to an “owner’s or an operator’s policy of liability insurance,*776 certified as provided in [MCL 257.518] or [MCL 257.519] as proof of financial responsibility ... MCL 257.520(a). Thus, absent this certification, MCL 257.520(f)(1) has no relevant application. Further, MCL 257.520(f)(1) refers only to “the insurance required by this chapter,” (emphasis added), and the only insurance required by chapter V of the Michigan Vehicle Code is insurance “certified as provided in [MCL 257.518] or [MCL 257.519] as proof of financial responsibility ....” MCL 257.520(a). Therefore, as we stated in Burch v Wargo, 378 Mich 200, 204; 144 NW2d 342 (1966), MCL 257.520 “applies only when ‘proof of financial responsibility for the future’... is statutorily required . . ..” See also MCL 257.522 (“This chapter shall not be held to apply to or affect policies of automobile insurance against liability which may now or hereafter be required by any other law of this state ....”); and State Farm Mut Auto Ins Co v Ruuska, 412 Mich 321, 336 n 7; 314 NW2d 184 (1982) (“[I]n discussing the requisites for an automobile liability policy issued as proof of future financial responsibility, the Legislature [in MCL 257.520(b)], after requiring an owner’s policy to designate by explicit description or appropriate reference all covered motor vehicles, limited the liability coverage to only those automobiles listed in the policy by speaking in terms of the use of ‘such’ vehicle(s).”). For these reasons, we now clarify that MCL 257.520(f)(1) does not apply to a motor vehicle liability insurance policy unless it has been certified under MCL 257.518 or MCL 257.519 and, to the extent that Sivey, Anderson, and League suggest otherwise, they are overruled.
This is an important point. Titan specifically established that MCL 257.520(f)(1) only restricts the fraud defense as to coverage required under Chapter V of the vehicle code.
Citizens argues that MCL 257.520(f)(1) “only provides authority for policy cancellation or annulment as to the ‘insured’ ” and, therefore, the “statute has absolutely no application to the claim of Ali Bazzi in the instant action, and makes the Titan v. Hyten opinion, again, completely distinguishable.” While Citizens is
Next, Citizens argues that public policy requires us to retain the innocent-third-party rule. But this argument ignores the Supreme Court’s criticism of this Court’s reliance on public policy in Kurylowicz when justifying the easily-ascertainable-fraud rule. In Titan,
First, Kurylowicz justified the “easily ascertainable” rule on the basis of its understanding of the “public policy” of Michigan. In light of the Legislature’s then recent passage of the no-fault act, MCL 500.3101 et seq., Kurylo-wicz reasoned that
the policy of the State of Michigan regarding automobile liability insurance and compensation for accident victims emerges crystal clear. It is the policy of this state that persons who suffer loss due to the tragedy of automobile accidents in this state shall have a source and a means of recovery. Given this policy, it is questionable whether a policy of automobile liability insurance can ever be held void ab initio after injury covered by the policy occurs. [.Kurylowicz, 67 Mich App at 574.]
This “public policy” rationale does not compel the adoption of the “easily ascertainable” rule. In reaching its conclusion, Kurylowicz effectively replaced the actual provisions of the no-fault act with a generalized summation of the act’s “policy.” Where, for example, in Kurylowicz’s state*779 ment of public policy is there any recognition of the Legislature’s explicit mandate that, with respect to insurance required by the act, “no fraud, misrepresentation,. .. or other act of the insured in obtaining or retaining such policy. . . shall constitute a defense” to the payment of benefits? MCL 257.520(f)(1). We believe that the policy of the no-fault act is better understood in terms of its actual provisions than in terms of a judicial effort to identify some overarching public policy and effectively subordinate the specific details, procedures, and requirements of the act to that public policy. In other words, it is the policy of this state that all the provisions of the no-fault act be respected, and Kurylowicz’s efforts to elevate some of its provisions and some of its goals above other provisions and other goals was simply a means of disregarding the stated intentions of the Legislature. The no-fault act, as with most legislative enactments of its breadth, was the product of compromise, negotiation, and give-and-take bargaining, and to allow a court of this state to undo those processes by identifying an all-purpose public policy that supposedly summarizes the act and into which every provision must be subsumed, is to allow the court to act beyond its authority by exercising what is tantamount to legislative power. Third-party victims of automobile accidents have a variety of means of recourse under the no-fault act, and it is to those means that such persons must look, not to a judicial articulation of policy that has no specific foundation in the act itself and was designed to modify and supplant the details of what was actually enacted into law by the Legislature.
The policy concerns raised by Citizens may well have merit. But it is for the Legislature, and not this Court, to determine whether there is merit to those concerns and, if so, the appropriate remedy. While the Legislature might conclude that the appropriate response is to create an innocent-third-party rule, it may choose to address the issue differently. While we can envision any number of policy issues, as well as solutions to those issues, we are judges, not legisla
For these reasons, we conclude the trial court erred by denying summary disposition to Sentinel based on the trial court’s erroneous conclusion that the innocent-third-party rule remained viable after our Supreme Court’s decision in Titan. However, we must decide the appropriate disposition of this matter. Sentinel argues that it is entitled to have summary disposition entered in its favor because a default judgment was entered against Hala and Mariam Bazzi, which rescinded the insurance policy. Citizens argues that that default judgment only operates as a determination against those two parties and not against it or Ali Bazzi. It does not appear that the trial court ultimately resolved this question; therefore, we conclude that the trial court should first address this question on remand.
Accordingly, we remand the matter to the trial court. On remand, there are two questions before the trial court. First, it must determine whether the default judgment against Hala and Mariam Bazzi conclusively established fraud, which would provide a basis for Sentinel to rescind the policy as to all parties, or whether the remaining parties are entitled to litigate the issue of fraud. Next, the trial court must determine whether there is a genuine issue of material fact regarding the fraud issue. If the trial court determines either of those questions in favor of Sentinel, it shall enter summary disposition in favor of Sentinel. If the
In sum, regardless whether there is one rule or two, and whether we consider a case involving liability coverage or PIP benefits, it all leads back to Kurylow-icz, and the Supreme Court in Titan overruled Kurylo-wicz because Kurylowicz ignored the Supreme Court’s decision in Keys v Pace,
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. Sentinel may tax costs.
Boonstra, J., concurred with Sawyer, P.J.
67 Mich App 568; 242 NW2d 530 (1976).
491 Mich 547; 817 NW2d 562 (2012).
Plaintiff is seeking PIP benefits under the no-fault act, MCL 500.3101 et seq. See MCL 500.3105 (insurer liability) and MCL 500.3107 (allowable expenses).
Defendant Citizens Insurance Company’s involvement and potential liability in this case is as the servicing insurer under the Michigan Assigned Claims Plan. See MCL 500.3172(1).
The trial court entered a default judgment against the third-party defendants in favor of Sentinel.
At this point we assume, without deciding, that plaintiff is, in fact, innocent of the fraud.
Bazzi v Sentinel Ins Co, unpublished order of the Court of Appeals, entered May 21, 2014 (Docket No. 320518).
Bazzi v Sentinel Ins Co, 497 Mich 886 (2014).
491 Mich at 553.
Titan, 491 Mich at 551-552. Titan acknowledged that it was obligated to indemnify its insureds for the minimum liability coverage of $20,000 per person/$40,000 per occurrence required under the financial responsibility act, MCL 257.501 et seq. Id. at 552 n 2.
Id. at 550-551.
See, e.g., Lake States Ins Co v Wilson, 231 Mich App 327; 586 NW2d 113 (1998).
491 Mich at 560.
Id. at 564.
Indeed, applying such a conclusion to this case would lead to the rather bizarre result that Sentinel could deny liability if it can demonstrate that the fraud committed by the Bazzis was easily ascertainable, but not if the fraud was more difficult to establish.
Titan, 491 Mich at 551, 573.
179 Mich App 355; 445 NW2d 228 (1989).
Titan, 491 Mich at 551 n 1.
Ohio Farmers, 179 Mich App at 363-365.
Titan, 491 Mich at 568.
Id. at 568 n 11.
Id. at 554.
Id. (emphasis added).
Id. at 571.
See MCL 257.520(f)(1) (providing in part that “no fraud, misrepresentation, assumption of liability or other act of the insured in obtaining or retaining such policy.. . shall constitute a defense as against such judgment creditor”).
491 Mich at 558-560.
MCL 257.501 through MCL 257.532.
MCL 257.512 and MCL 257.513.
This also rebuts the suggestion that the insurer would be liable for $20,000 per person/$40,000 per occurrence in PIP benefits. The provisions of the financial responsibility act are simply inapplicable to no-fault benefits or other coverages required under the no-fault act.
491 Mich at 564-566 (bracketed citation in original).
We acknowledge that, based on a statement made by the trial court at the motion hearing, it seems likely the trial court will rule in Sentinel’s favor regarding whether there is a genuine issue of material fact on the issue of fraud. Specifically, the trial court stated as follows:
So if the inquiry ended right there you would say that, I’ve already made the determination that Hala Bazzi was fraud, so you would say, you would agree, we would all agree that the contract is rescinded, you would say rescinded with a period right there. [Emphasis added.]
It can certainly be argued that the trial court has already resolved this point and merely went on to hold that the policy cannot be rescinded as to Ali Bazzi solely because of the innocent-third-party rule. Nonetheless, we are not quite prepared to determine that the trial court definitively resolved the issue; therefore, remand is necessary.
358 Mich 74; 99 NW2d 547 (1959).
See id. at 84.
Concurrence Opinion
(concurring). I fully concur in the majority opinion. I write separately because, as a member of the panel that decided State Farm Mut Auto Ins Co v Mich Muni Risk Mgt Auth, unpublished opinion per curiam of the Court of Appeals, issued February 19, 2015 (Docket Nos. 319709 and 319710),
In vacating both State Farm and another unpublished decision that had reached a contrary conclusion,
Cogent arguments exist on both sides of the issue before us. At first blush, it may appear that we are being asked to disregard decades of published jurisprudence from this Court, in favor of abrogating it based on an interpretation of recent Supreme Court obiter dicta, and to hold that the Supreme Court has already implicitly abrogated it. Were that the case, I would be inclined to conclude that we are bound to follow the binding decisions of this Court
I am persuaded, however, as the majority recognizes, that the judicially created doctrine known as the “innocent-third-party rule” is indeed part and parcel of the “easily ascertainable rule” that the Supreme Court abrogated in Titan Ins Co v Hyten, 491 Mich 547; 817 NW2d 562 (2012). In Titan, the Supreme Court noted that “the ‘easily ascertainable’ rule . . . only applies when a third-party claimant is involved.” Id. at 563. Therefore, while its application has been described as denying insurers equitable remedies “when the fraud was easily ascertainable and the claimant is a third party,” id. at 550, the latter reference (to the claimant being a third party, and presumably thus being innocent of the fraud) really is surplusage because being a third party is a necessary predicate to applying the
I therefore conclude that by rejecting State Farm Mut Auto Ins Co v Kurylowicz, 67 Mich App 568; 242 NW2d 530 (1976), and its easily-ascertainable-fraud rule, the Supreme Court must have been rejecting the totality of the rule, whether we refer to it as the easily-ascertainable-fraud rule or the innocent-third-party rule. The reason is that if an insurer may rescind a policy even as to an Innocent third party when the fraud was easily ascertainable to the insurer, then it must also be allowed to rescind when the fraud was not easily ascertainable. To conclude otherwise would simply make no sense. Why would an insurer remain accountable to an innocent third party in a situation in which the insurer could not have easily discovered the fraud, if it is not accountable to the third party in a situation in which the insurer could have easily discovered the fraud? For this reason, in abolishing the easily-ascertainable-fraud rule, the Supreme Court in Titan must also have rejected the innocent-third-party rule. This conclusion is bolstered by the fact that the Supreme Court overruled not only Kurylowicz but also its “progeny”—such as Ohio Farmers Ins Co v Mich Mut Ins Co, 179 Mich App 355; 445 NW2d 228 (1989). Ohio Farmers did not even address the easily-ascertainable-fraud aspect of the rule but only (insofar as it
Having concluded that the Supreme Court in Titan abolished the innocent-third-party rule, I must next address the distinction relied on by the panel in State Farm, unpub op at 9-10, i.e., that Titan involved optional liability insurance, while State Farm (like this case) involves statutory no-fault personal protection insurance (PIP) coverage. The question is: does the distinction matter? I conclude that it does not.
The Supreme Court in Titan indeed noted that “when a provision in an insurance policy is not mandated by statute, the rights and limitations of the coverage are entirely contractual and construed without reference to the statute.” Titan, 491 Mich at 554 (emphasis added). This was contrasted with a situation in which “a provision in an insurance policy is mandated by statute,” in which case “the rights and limitations of the coverage are governed by that statute.” Id. The coverage at issue in Titan was nonstatutory, purely optional liability coverage. The coverage at issue in this case, by contrast, is PIP coverage that is required by the no-fault act.
In Titan, there was no statute requiring optional liability coverage, and no statutory prohibition on a contractual defense. Therefore, common-law contract defenses were allowed. Also in Titan, the insurer conceded liability (as the panel in State Farm, unpub op at 9, noted) for the basic liability coverage that is mandated by the financial responsibility act, MCL 257.501 et seq. Titan, 491 Mich at 552 n 2. And the Supreme Court clarified that MCL 257.520 does not apply to all liability policies, but only to those that are required by that act. Id. at 559-560. Moreover, the financial responsibility act provides that, as to the basic statutorily required liability coverage, fraud is not a defense. MCL 257.520(f)(1). The statutory disal-lowance of the fraud defense is therefore limited to the basic required liability coverage mandated by the financial responsibility act. As stated in Titan, “the rights and limitations of the coverage are governed” by the financial responsibility act, such that the limitation on the otherwise-available fraud defense applies only to the extent the statute dictates, i.e., only to the basic required liability insurance. Titan, 491 Mich at 554.
Further, Titan quotes from Couch on Insurance to the effect that “[the insurance] policy and the statutes relating thereto must be read and construed together as though the statutes were part of the contract. . . .” Titan, 491 Mich at 554, quoting 12A Couch, Insurance, 2d (rev ed), § 45:694, pp 331-332. And that would mean that if there were a statutory disallowance of a fraud defense (as there is in MCL 257.520(f)(1)), it would be part of the policy and thus contractually enforceable. If, however, there is no language in the statute (as is the case with the no-fault act) prohibiting a fraud defense, then there is no basis by which to disallow the otherwise-available fraud defense as to PIP coverage. Again, as Titan noted, “because insurance policies are contracts, common-law defenses may be invoked to avoid enforcement of an insurance policy, unless those defenses are prohibited by statute.” Id. (emphasis added). There being no statutory prohibition of the fraud defense in this situation, there is nothing to preclude its invocation here.
Said differently, if, as Titan says, we must construe the insurance policy and the statute (here, the no-fault
Finally, I note that in prior opinions this Court has justified the innocent-third-party rule in various ways that have ranged from public policy
In light of this analysis and that of the majority opinion, I simply see no way to continue to apply the innocent-third-party rule in the PIP context. I therefore concur in the majority’s determination. Applying Titan, when an insurer is able to establish that a no-fault policy was obtained through fraud, it is entitled to declare the policy void ab initio and rescind it, including denying the payment of benefits to innocent third parties.
Our Supreme Court subsequently vacated that decision. State Farm, Mut Auto Ins Co v Mich Muni Risk Mgt Auth, 498 Mich 870 (2015).
See Frost v Progressive Mich Ins Co, unpublished opinion of the Court of Appeals, issued September 23, 2014 (Docket No. 316157), vacated sub nom Frost v Citizens Ins Co, 497 Mich 980 (2015).
MCR 7.215(C)(2) (“A published opinion of the Court of Appeals has precedential effect under the rule of stare decisis.”); MCR 7.215(J)(1) (“A panel of the Court of Appeals must follow the rule of law established by a prior published decision of the Court of Appeals issued on or after November 1, 1990, that has not been reversed or modified by the Supreme Court, or by a special panel of the Court of Appeals as provided in this rule.”).
As the majority notes, there are potentially meritorious public policy issues that the Legislature may wish to consider. However, it is properly the role of the Legislature, not this Court, to consider and address those issues. See Myers v Portage, 304 Mich App 637, 644; 848 NW2d 200 (2014). (“[MJaking public policy is the province of the Legislature, not the courts.”).
See 1990 PA 305, effective January 1, 1992.
Dissenting Opinion
(dissenting). At issue in this appeal is whether our Supreme Court’s decision in Titan Ins Co v Hyten, 491 Mich 547; 817 NW2d 562 (2012), which threw out the “easily ascertainable rule,” adversely impacted and necessarily abrogated the “innocent-third-party rule,” which I maintain is a distinctly different rule and one to which this Court has adhered for decades without complaint or redirection from either our Supreme Court or our Legislature. With all due respect for my esteemed colleagues, I would conclude that the easily-ascertainable-fraud and innocent-third-party rules are not “one and the same,” and caselaw bears out a clear distinction. Furthermore, because they are different rules and because the coverage at issue in Titan—contractually based excess liability coverage—is substantially different from the type of coverage at issue in this case—statutorily mandated benefits—I would decline to extend Titan and would instead adhere to 30 years of this Court’s published decisions applying the innocent-third-party rule. In this respect, I would affirm the decision of the circuit court, save for the circuit court’s decision to limit personal protection insurance (PIP) benefits to
I. THE INNOCENT-THIRD-PARTY RULE IS NOT THE SAME AS THE EASILY-ASCERTAINABLE-FRAUD RULE
Before diving into the effect of Titan, I would be remiss not to address the majority and concurring opinions’ conclusion that the easily-ascertainable-fraud rule and the innocent-third-party rule are one and the same. They are not. My colleagues conclude that they are the same in part because they both necessarily involve an innocent third party. While this observation is accurate, any attempt to equate them disregards the context in which they have been used and overlooks pertinent caselaw. The innocent-third-party rule has consistently been applied to prevent an insurer from avoiding liability as to mandatory coverage—namely PIP benefits, while the easily-ascertainable-fraud rule had, before it was overruled in Titan, consistently been applied to prevent an insurer from avoiding optional coverage, i.e., nonstatu-tory coverage, when the insured’s fraud was easily ascertainable. See, e.g., Farmers Ins Exch v Anderson, 206 Mich App 214; 520 NW2d 686 (1994), overruled by Titan, 491 Mich 547; State Farm Mut Auto Ins Co v Kurylowicz, 67 Mich App 568; 242 NW2d 530, overruled by Titan, 491 Mich 547.
The difference between the rules can be put simply: the innocent-third-party rule acts as a prohibition against rescinding a policy that was procured by fraud, but only as to mandatory coverage—specifically PIP coverage—for innocent third parties, while the now-overruled easily-ascertainable-fraud rule prevented a defrauded insurer from avoiding liability with respect to optional coverage. Stated differently, the innocent-third-party rule concerns statutory benefits, and the
The panel in Wilson, 231 Mich App at 331-332, in a slightly different factual scenario involving PIP benefits, reinforced the idea that the rules are not the same, specifying that the innocent-third-party rule acted as a bar against rescinding a policy as it concerns statutorily mandated benefits, and that the easily-
Once an innocent third party is injured in an accident in which coverage was in effect with respect to the relevant vehicle, the insurer is estopped from asserting fraud to rescind the insurance contract. However, an insurer is not precluded from rescinding the policy to void any ‘optional’ insurance coverage, unless the fraud or misrepresentation could have been ‘ascertained easily’ by the insurer. [Id. at 331-332 (citations omitted; emphasis added).]
Thus, as is apparent from this Court’s opinion in Wilson, the innocent-third-party rule and the easily-ascertainable-fraud rule are different. The innocent-third-party rule concerns mandatory coverage and arises from the fact that the coverage is mandatory, while the easily-ascertainable-fraud rule applies to optional coverage. Essentially, the innocent-third-party rule is a rule that applies to PIP benefits and protects entitlement to those benefits. Consistently with this rationale, this Court has applied the
This distinction is of critical importance to the instant case, as the concern in this case is with mandatory PIP benefits, not optional excess liability coverage.
I take issue with the majority and concurring opinions’ conclusions that our Supreme Court’s decision in Titan necessarily recognized that the innocent-third-party rule and the easily-ascertainable-fraud rule are one and the same. In fact, our Supreme Court in Titan made no mention of the innocent-third-party rule, nor did it weigh in on whether fraud could be asserted as a basis to avoid liability in the context of statutorily mandated benefits. The subject of statutorily mandated coverage was simply not before the Court in Titan, as the insurer in that case expressly conceded its liability for mandatory coverage and only sought a declaration “that it was not obligated to indemnify [the insured] for any amounts above the minimum liability coverage limits required by the financial responsibility act. . . .” Titan, 491 Mich at 552 n 2. Hence, the issue before the Titan Court was the application of the easily-ascertainable-fraud rule, and Titan did not implicate the innocent-third-party rule.
Along similar lines, I note that the majority and concurring opinions observe that our Supreme Court in Titan overruled this Court’s decision in Ohio Farmers Ins Co v Mich Mut Ins Co, 179 Mich App 355, 358, 364-365; 445 NW2d 228 (1989), and conclude that: (1) Ohio Farmers discussed the innocent-third-party rule and (2) therefore, the Supreme Court in Titan must have necessarily overruled the innocent-third-party rule. Assuming that the decision in Ohio Farmers implicated the innocent-third-party rule, I disagree with my colleagues’ conclusions. First, our Supreme Court in Titan, 491 Mich at 551 n 1, did not make any
Aside from taking issue with the conclusion that the rules are one and the same, I take issue with the majority opinion’s conclusion that both the easily-ascertainable-fraud rule and the innocent-third-party rule “have their roots in the Kurylowicz decision.” Examination of the case conclusively dispels the notion that the innocent-third-party rule was sired by Kurylowicz. Indeed, the sole concern in Kurylowicz was whether an insurer has a duty to investigate representations made by an insured, and the panel in Kurylowicz expressly rejected the opportunity to weigh in on the innocent-third-party rule. Also, there is no indication that Kurylowicz involved a claim for mandatory coverage.
In Kurylowicz, 67 Mich App at 569, the plaintiff, State Farm, appealed as of right a declaratory judgment that stated it was not allowed to rescind a policy for optional,
This Court, in an effort to avoid the application of Keys, noted that our Legislature had amended various statutes since our Supreme Court issued Keys, including statutes regarding the cancellation of insurance policies, MCL 500.3220, and the motor vehicle accident claims act, MCL 257.1101 et seq., which the panel described as providing compensation for citizens injured by uninsured tortfeasors. Kurylowicz, 67 Mich App at 573. Further, this Court noted that although the case currently before it was not controlled by the no-fault act, the enactment of the no-fault act, MCL 500.3101 et seq., reflected a legislative policy of providing compensation to lessen “the tragic social and economic consequences that often accompany automobile
With that “policy” as a backdrop, the panel cited a treatise for the proposition that an insurer’s liability “with respect to insurance required by the act” becomes absolute “whenever injury or damage covered by such policy occurs . . . .” Id. (citation and quotation marks omitted). However, the panel was quick to observe that “[t]hat issue is not before us in this case”—whether liability with respect to insurance required by law became absolute upon the happening of an injury— “so we need not decide it.” Id. Hence, the panel expressly declined to comment on the innocent-third-party rule—which is implicated in situations involving the “liability of the insurer with respect to insurance required by the [no-fault] act.” Id. (quotation marks and citation omitted). Instead, stated the panel, “[w]e need only decide whether, under the facts of the case at bar, State Farm reasonably relied on the representations of the insured so as to justify a holding
The panel’s framing of this issue is of particular significance and illustrates the fatal flaw in the majority opinion’s conclusion that Kurylowicz created the innocent-third-party rule. The focus of the issue in that case was the insurer’s reasonable reliance, or lack thereof, on the insured’s representations. And when the panel mentioned the scenario that implicates the innocent-third-party rule—liability mandated by statute and an injured third party—it expressly declined to consider it in any detail. It cannot reasonably be argued that Kurylowicz created a rule it took special care to avoid.
Indeed, the only issue in Kurylowicz concerned whether the insurer should have accepted certain representations at face value, or whether the insurer should have discovered that the representations were false. The rest of the opinion in Kurylowicz was spent answering that question, and only that question, as evidenced by the panel citing caselaw from other jurisdictions that imposed on an insurer a duty to investigate representations made by insureds in insurance applications. Id. at 574-577, citing Allstate Ins Co v Sullam, 76 Misc 2d 87; 349 NYS2d 550 (1973); State Farm Mut Ins Co v Wood, 25 Utah 2d 427; 483 P2d 892 (1971); Barrera v State Farm Mut Auto Ins Co, 71 Cal 2d 659; 79 Cal Rptr 106; 456 P2d 674 (1969); State Farm Mut Auto Ins Co v Wall, 92 NJ Super 92; 222 A2d 282 (NJ Sup Ct, 1966). The panel then went on to impose a duty on the insurer in that case to make a reasonable investigation of an insured’s representations in an application for insurance. This is precisely contrary to the tenets of Keys.
II. THE INNOCENT-THIRD-PARTY RULE
The innocent-third-party rule has been firmly entrenched in this Court’s jurisprudence for the past three decades and has never been questioned by our Supreme Court, nor has it prompted the Legislature to revise the no-fault law. In general, an insurer may
For decades, this Court has adhered to the innocent-third-party rule in cases in which the insured sought statutory, i.e., nonoptional, benefits and precluded insurers from denying coverage to injured third parties who were innocent of the insured’s fraud. See, e.g., Wilson, 231 Mich App at 331; Hammoud v Metro Prop & Cas Ins Co, 222 Mich App 485, 488; 563 NW2d 716 (1997); Burton v Wolverine Mut Ins Co, 213 Mich App 514, 517 n 2; 540 NW2d 480 (1995); Auto-Owners Ins Co v Johnson, 209 Mich App 61, 64; 530 NW2d 485 (1995); Katinsky v Auto Club Ins Ass’n, 201 Mich App 167, 170; 505 NW2d 895 (1993); Darnell v Auto-Owners Ins Co, 142 Mich App 1, 9; 369 NW2d 243 (1985); Cunningham v Citizens Ins Co of America, 133 Mich App 471, 477; 350 NW2d 283 (1984); United Security Ins Co v Comm’r of Ins, 133 Mich App 38, 43; 348 NW2d 34 (1984).
The challenges raised against the innocent-third-party rule come from claims by Sentinel and others that our Supreme Court’s decision in Titan, 495 Mich 547, implicitly overruled the innocent-third-party rule. Accordingly, our Supreme Court’s decision in Titan must be examined.
III. TITAN v HYTEN
While much is being made about what Titan says and implies, it is helpful to focus first on what Titan does not say. For example, and most notably, the innocent-third-party rule was not at issue in Titan, 491
In examining the viability of the easily-ascertainable-fraud rule, the Supreme Court in Titan began by recognizing that insurance policies are contracts, and that, “when a provision in an insurance policy is mandated by statute, the rights and limitations of the coverage are governed by that statute.” Titan, 491 Mich at 554. Titan, id., cited Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 524-525; 502 NW 2d 310 (1993), for the proposition that “because personal injury protection benefits are mandated by MCL 500.3105, that statute governs issues regarding an award of those benefits.” Titan noted that conversely, “when a provision in an insurance policy is not mandated by statute, the rights and limitations of the coverage are entirely contractual and construed without reference to the statute.” Titan, 491 Mich at 554. In addition, “because insurance policies are contracts, common-law defenses”—such as fraud—“may be invoked to avoid enforcement of an insurance policy, unless those defenses are prohibited by statute.” Id.
The Court then looked at the various common-law doctrines of fraud that exist in Michigan and concluded that common-law fraud did not include as an element that the party asserting the fraud prove the fraud was not easily ascertainable. For this reason, the common-law doctrines of fraud did not support the existence of the easily-ascertainable-fraud rule. Id. at 555-557.
Next, the Court looked at the different remedies available in those instances in which a contract was procured by fraud. Id. at 557-558. Because contracts
With this backdrop, the Court turned its attention to the easily-ascertainable-fraud rule, concluding that its earlier decision in Keys, 358 Mich 74, was outcome-determinative in that Keys had rejected the easily-ascertainable-fraud rule over 50 years ago. Titan, 491 Mich at 562 {“Keys answered the precise question presented in this case[,] . . . holding that an insurer may avail itself of traditional legal and equitable remedies to avoid liability under an insurance policy on the ground of fraud, notwithstanding that the fraud
Our Supreme Court noted that despite the fact that Keys had rejected the easily-ascertainable-fraud rule, this Court later reached the opposite conclusion in Kurylowicz; for this reason, Titan overruled Kurylow-icz because it had ignored Supreme Court precedent. Titan, 491 Mich at 572-573. In addition, the Court went on to decry the reasoning employed in Kurylow-icz.
Next, in rejecting the purported justifications for the easily-ascertainable-fraud rule, the Court rebuffed the idea that MCL 500.3220
Finally, in concluding that there was no support in the law for the easily-ascertainable-fraud rule, the Court considered—and rejected—the idea that the rule was “required for the protection of third parties.” Id. at 568. The Court explained that “there is simply no basis in the law to support the proposition that public policy requires a private business in these circumstances to maintain a source of funds for the benefit of a third party with whom it has no contractual relationship.” Id. The no-fault act protects third parties “in a variety of ways,” reasoned the Court—including allowing tort actions—“but it states nothing about altering the common law that enables insurers to obtain traditional forms of relief when they have been the victims of fraud.” Id. at 568-569. The Court further explained that requiring an insurer to indemnify an insured in spite of fraud “relieves the insured of what would otherwise be the insured’s personal obligation in the face of his or her own misconduct. As between the fraudulent insured and the insurer, there can be no question that the former should bear the burden of his
rv. THE INNOCENT-THIRD-PARTY RULE AFTER TITAN
Before weighing in on the issue of whether Titan affects the validity of the innocent-third-party rule in the context of statutorily required PIP benefits, I note that this Court has already had occasion to examine this matter, albeit in unpublished opinions. See Frost v Progressive Mich Ins Co, unpublished opinion per curiam of the Court of Appeals, issued September 23, 2014 (Docket No. 316157); State Farm MutAuto Ins Co v Mich Muni Risk Mgt Auth, unpublished opinion per curiam of the Court of Appeals, issued February 19, 2015 (Docket Nos. 319709 and 319710). Those two cases, however, came to opposite conclusions. Rather than grant leave to appeal in one or both of those cases and resolve firsthand the breadth of its intentions in Titan and whether its rationale should be extended to the innocent-third-party rule and statutorily mandated PIP benefits, our Supreme Court came to the somewhat perplexing conclusion that it should vacate both of those decisions, remand the cases to this Court, order this Court to accept as on leave granted yet another case regarding this issue—the instant case— and hold in abeyance any further rulings in Frost and State Farm pending our resolution in this matter.
A. FROST v PROGRESSIVE
The first case following Titan to examine the innocent-third-party rule in the context of PIP benefits was Frost. In Frost, Kenya Frost’s minor daughter was injured in an accident while a passenger in an uninsured automobile. Citizens Insurance Company was assigned by the assigned claims plan to Frost’s daughter’s claim. Progressive had issued a policy of insurance to Frost on her own vehicle, which had been destroyed one month before Frost’s daughter’s accident. Citizens Insurance Company sought reimbursement from Progressive for the benefits it had paid on Frost’s daughter’s behalf.
On appeal in this Court, the panel overturned the trial court and held that its ruling was “inconsistent with our Supreme Court’s holding” in Titan. Id. The panel explained:
*811 In [Titan], our Supreme Court held that absent statutory provisions to the contrary, “an insurer is not precluded from availing itself of traditional legal and equitable remedies to avoid liability under an insurance policy on the ground of fraud in the application for insurance, even when the fraud was easily ascertainable and the claimant is a third party.” [Titan, 491 Mich at 571.] Accordingly, the claim by Frost’s daughter did not bar Progressive from rescinding the policy in this case. [Frost, unpub op at 2.]
B. STATE FARM v MICH MUNI RISK MGT AUTH
Five months after Frost was issued, this Court reached the opposite conclusion in State Farm.
On appeal, a panel of this Court examined the innocent-third-party rule and recognized that “[t]his Court has generally denied an insurer’s right to rescind a policy of insurance in order to avoid payment of no-fault benefits to an innocent third partyf.]” Id. at 9, citing Hammoud, 222 Mich App at 488. “Thus,” the panel explained, “ ‘[o]nce an innocent third party is injured in an accident in which coverage was in effect with respect to the relevant vehicle, the insurer is
The relevant insurer in that case argued that the innocent-third-party rule was abrogated by our Supreme Court’s decision in Titan, 491 Mich 547. The panel disagreed, explaining that Titan involved a different type of coverage—optional, excess liability coverage—rather than the mandatory PIP coverage at issue. In addition, the panel noted that Titan did not involve a claim for benefits by an innocent third party. In this regard, the panel explained:
In Titan, our Supreme Court held that an excess insurance carrier may avail itself of the equitable remedy of reformation (of contract) to avoid liability under an insurance policy on the ground of fraud in the application for insurance, even though the fraud was easily ascertainable and the claimant is a third party, so long as the remedies are not prohibited by statute.
[The claimed] entitlement to PIP benefits is statutory, however, not contractual. The insurer in Titan did not seek to avoid payment of statutorily mandated no-fault benefits; in fact, that insurer acknowledged its liability for the minimum liability coverage limits. Nor did Titan address a claim for PIP benefits from an innocent third party. Thus, the holding of Titan, that an insurance carrier may seek reformation to avoid liability for contractual amounts in excess of statutory minimums, does not compel a finding that Titan overruled the many binding decisions of this Court applying the “innocent third-party rule” in the context of PIP benefits and an injured third party who is statutorily entitled to such benefits. [State Farm, unpub op at 9 (citations omitted).]
Because of the key differences between the issue in Titan and the issue involved in State Farm, the panel
V. THE INNOCENT-THIRD-PARTY RULE SURVIVES TITAN
I would hold that the panel in State Farm reached the correct result by concluding that the innocent-third-party rule survives Titan in the context of statutorily mandated no-fault benefits, and I would therefore hold that the rule has continuing validity and applies in this case. As the panel did in State Farm, I note that the coverage at issue in this case differs from that which was at issue in Titan. In Titan, contractual liability coverage, i.e., nonstatutory, optional liability coverage, was at issue. In fact, statutory coverage was expressly not at issue in Titan, as the insurer conceded liability for the statutory minimum coverage amounts under the financial responsibility act, despite alleging that the policy was void ab initio because of the insured’s fraud. Titan, 491 Mich at 552 n 2. In other words, Titan involved a case in which the insurer sought to rescind the policy, but acknowledged it was nevertheless responsible for statutory benefits.
In contrast to Titan, the PIP benefits at issue in this case are mandated by statute. See, e.g., MCL 500.3101(1) (mandating that the owner or registrant of a motor vehicle required to be registered in this state “maintain security for payment of benefits under personal protection insurance,” among other types of insurance); MCL 500.3105 (requiring an insurer to pay PIP benefits, subject to the provisions of the no-fault act, and providing no other exceptions to or limitations on that requirement); Johnson v Recca, 492 Mich 169, 173; 821 NW2d 520 (2012); Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 524-525; 502 NW2d 310 (1993) (“PIP benefits are mandated by statute under
Like the panel in State Farm, I conclude that the difference between the benefits at issue in this case and the contractual benefits at issue in Titan is significant. Simply put, Titan did not address benefits that were required by statute; the insurer in that case expressly acknowledged liability for statutory residual liability amounts. To conclude that our Supreme Court’s ruling as to purely contractual, excess liability benefits should apply and overrule approximately 30 years of this Court’s precedent with regard to statutory PIP benefits is a leap I am not prepared to make. That is, I am disinclined to extend Titan and its reasoning to the innocent-third-party rule as that rule applies to
Nonetheless, this conclusion warrants the discussion of two matters. First, the justifications posed for the innocent-third-party rule have been inconsistent over time, and in some cases those justifications were premised on incorrect legal principles.
Second, it could be argued that portions of the Titan opinion appear to undermine the innocent-third-party rule: notably, the portions of the opinion concluding that the remedy of rescission can only be limited by statute could be said to call the innocent-third-party rule into question. However, as noted earlier in this opinion, the instant case involves an entirely different type of benefits than was at issue in Titan. That is, the instant matter involves mandatory PIP benefits, while Titan involved voluntary liability coverage above the statutorily required minimum. And significantly, Titan expressly did not address mandatory benefits, because the insurer in that case acknowledged liability for certain statutory amounts. Further, and contrary to the majority opinion’s suggestions, Titan contained no discussion about the innocent-third-party rule and instead addressed a rule arising from this Court’s jurisprudence—Kurylowicz—that was directly contrary to a published Supreme Court decision regarding the easily-ascertainable-fraud rule. Given these significant differences between this case and Titan, I am not inclined to stretch Titan's holding to fit a scenario that was simply not addressed or contemplated by the Court in Titan. Accordingly, as did the panel in State Farm, unpub op at 9-10, I conclude that Titan is inapplicable to the innocent- third-party rule in the context of statutorily required no-fault PIP benefits.
In addition, I note that in Titan, 491 Mich at 557, the Court rejected the easily-ascertainable-fraud rule in part because the various doctrines of fraud in Michigan “do not require the party asserting fraud to have performed an investigation of all assertions and representations made by its contracting partner as a prerequisite to establishing fraud.” In short, the easily-ascertainable-fraud rule had no place in the common law of fraud, and thus it could not bar rescission of an insurance policy. This type of problem is not present in the instant case, as the innocent-third-party rule does
Moreover, turning to the remedy of rescission, it has generally been viewed as an equitable remedy. Madugula v Taub, 496 Mich 685, 712; 853 NW2d 75 (2014). It is not found in the plain language of the no-fault act, yet the Supreme Court deemed it appropriate to apply in the context of voluntary insurance coverage, which is rooted in contract rights. Similarly, the innocent-third-party rule is an equitable remedy that is not found in the plain language of the no-fault act; like rescission, it too should be deemed appropriate to apply in the proper, equitable context. It is well established that the equitable remedy of rescission is not granted as a matter of right and will not be granted when it would accomplish an inequitable result. See, e.g., Schnitz v Grand River Avenue Dev Co, 271 Mich 253, 257; 259 NW 900 (1935); Johnson v QFD, Inc, 292 Mich App 359, 375; 807 NW2d 719 (2011); McMullen v Joldersma, 174 Mich App 207, 219; 435 NW2d 428 (1988). Thus, the remedy of rescission carries with it the idea that the result achieved is to be an equitable one. In other words, there is room within the concept of rescission for balancing the equities, which ostensibly extends to considering the fact that an innocent third party is involved and mandatory PIP benefits are at issue. I am not convinced that it is equitable in this case to allow an insurer to avoid paying statutorily mandated PIP benefits when the innocent, injured third party, absent another’s fraud, would have been entitled to coverage under the policy. See Morgan, 411 Mich at 276-277. This is especially true when the no-fault act itself discusses mandatory benefits with no mention of limitations on or exceptions to that mandatory coverage.
The majority opinion indicates that it “decline [s] the invitation to legislate into existence an innocent-third-party rule that, thus far, the Legislature has chosen not to adopt.” I first note that the equitable remedy of the innocent-third-party rule has barred claims for the equitable remedy of rescission with respect to PIP benefits and innocent third parties for more than 30 years, yet the Legislature has felt no need to tweak the no-fault act to set this Court straight. I also note that the Legislature has never adopted the equitable remedy of rescission when it comes to the no-fault act and statutorily entitled PIP benefits. Rather, it expressly states that no-fault PIP benefits are mandatory. That should rule the day when it comes to statutorily mandated PIP benefits.
VI. CONCLUSION
The differences that exist between this case and Titan are significant. For the reasons stated in this
Accordingly, I would affirm the trial court’s ruling to the extent it held that the innocent-third-party rule applied. However, I would hold that the trial court erred by concluding that plaintiff, as an innocent third party, could only recover PIP benefits up to the amount mandated by MCL 257.520. As discussed, that limitation is not applicable to this case.
This was the precise situation in Titan, 491 Mich at 552 n 2, as the insurer expressly acknowledged its liability for mandatory coverage and only sought to rescind the policy as to excess or optional liability coverage.
MCL 257.520(f)(1) does not require innocence.
The panel in Anderson even went so far as to clarify that the easily-ascertainable-fraud rule applied only in situations where fraud was asserted as a means for avoiding optional liability coverage. Anderson, 206 Mich App at 219 (“Despite the holdings in Ohio Farmers [Ins Co v Mich Mut Ins Co, 179 Mich App 355, 358, 364-365; 445 NW2d 228 (1989)] and Katinsky [v Auto Club Ins Ass’n, 201 Mich App 167; 505 NW2d 895 (1993)], we do not go so far as to say that a validly imposed defense of fraud will absolutely void any optional excess insurance coverage in all cases. To the contrary, when fraud is used as a defense in situations such as these, the critical issue necessarily becomes whether the fraud could have been ascertained easily by the insurer at the time the contract of insurance was entered into.”).
In Wilson, a case that involved PIP benefits, the insurer sought to reform the noncoordinated policy, on the basis of fraud, into a policy that was coordinated with the insured’s health insurance, thereby relieving the insurer of the obligation to pay duplicative medical benefits to the insured. Wilson, 231 Mich App at 331-332. Concluding that noncoordi-nated coverage was optional under the no-fault act, the panel determined that the innocent-third-party rule did not preclude the reformation sought by the insurer. Id. at 332-333. And because the fraud at issue in that case was not easily ascertainable, the panel ruled that the insurer could reform the contract in the manner it sought. Id. at 333-334.
This distinction is discussed in more detail later in this opinion.
Ohio Farmers, a somewhat curious decision that this Court later backed away from in Anderson, 206 Mich App at 219, cited Kurylowicz, but only for its “policy considerations.” See Ohio Farmers, 179 Mich App at 363. Thus, as the majority and concurring opinions correctly note, Ohio Farmers does not appear to implicate the easily-ascertainable-fraud portion of the Kurylowicz decision, despite what our Supreme Court believed to be the case in Titan. See Titan, 491 Mich at 563-564.
This is not to say, however, that there are no reasonable arguments as to whether portions of the Titan decision cast doubt on the innocent-third-party rule. Those arguments are discussed later in this opinion.
Although not expressly stated in the Kurylowicz opinion, it is apparent that the liability coverage was optional liability coverage. Indeed, the policy at issue in Kurylowicz was issued before enactment of the no-fault act, see Kurylowicz, 67 Mich App at 573, and at that time, “motorists could choose whether or not to carry liability insurance,” Coburn v Fox, 425 Mich 300, 308; 389 NW2d 424 (1986).
The refusal to impose on insurers the burden of investigating representations by the insured was the premise of the holding in Keys:
Moreover, if inquiry is to be demanded, is it enough to stop with the traffic court? Might not the accident suggest physical or psychiatric defects? Should investigations not also be made of the past hospitalizations of the insured? Where will we say this may stop within the existing economic framework? It is doubtful whether one who deliberately sets out to swindle an insurance company can be prevented from so doing by any such requirement, and it is even more doubtful that there is enough of this practice to warrant the placing upon the insurance business of a requirement so onerous. [Keys, 358 Mich at 84.]
In fact, the panel, recognizing that the cause of action in that case accrued before the enactment of the no-fault act, expressly stated that because the cause of action did not concern the no-fault act, “our holding in this case cannot be precedent for actions arising after the effective date of no-fault. . ..” Kurylowicz, 67 Mich App at 573.
Despite the Supreme Court’s criticism in Titan about Kurylowicz’s policy arguments—discussed in more detail later in this opinion—I would be remiss not to note that in Coburn, 425 Mich at 310 n 3, our Supreme Court cited with approval this very same policy rationale from Kurylowicz.
Like other cases applying the innocent-third-party rule, Roberts was a case involving an insured’s application for mandatory PIP benefits, not optional liability coverage. See id. at 346-347.
In addition, we note that Michigan is not alone in applying the innocent-third-party rule in the context of automobile insurance. See 7 Am Jur 2d, Automobile Insurance, § 61, pp 566-568 (summarizing the law from various jurisdictions).
As will be explained in more detail later in this opinion, MCL 257.520(f)(1) prohibits an insurer from avoiding liability up to certain statutory minimums for liability coverage, and pursuant to Titan, it is not applicable to the PIP benefits at issue in this case.
Titan expressly acknowledged its responsibility for the minimum liability coverage limits-—-$20,000 per person/$40,000 per occurrence— required under the financial responsibility act. Titan, 491 Mich at 552 n 2. For that reason, statutorily mandated benefits were not at issue in Titan.
The alleged fraud was in regard to whether Hyten possessed a valid driver’s license at the time of the application for insurance.
As recognized by the Titan Court, MCL 257.520(f)(1)—which is part of the financial responsibility act—does not apply to PIP benefits under the no-fault act. Id. at 559-560. Of note, the financial responsibility act was enacted 24 years before the no-fault act. Hence, our Supreme Court in Titan discerned the Legislature’s intended scope and applicability of MCL 257.520(f)(1) with respect to an act that did not exist when MCL 257.520(f)(1) was enacted.
The reasoning employed by the Court when it rejected the easily-ascertainable-fraud rule forms the basis of Sentinel’s argument that the innocent-third-party rule did not survive Titan.
MCL 500.3220 provides:
Subject to the following provisions no insurer licensed to write automobile liability coverage, after a policy has been in effect 55 days or if the policy is a renewal, effective immediately, shall cancel a policy of automobile liability insurance except for any 1 or more of the following reasons:
*808 (a) That during the 55 days following the date of original issue thereof the risk is unacceptable to the insurer.
(b) That the named insured or any other operator, either resident of the same household or who customarily operates an automobile insured under the policy has had his operator’s license suspended during the policy period and the revocation or suspension has become final.
See Frost v Citizens Ins Co, 497 Mich 980 (2015); State Farm Mut Auto Ins Co v Mich Muni Risk Mgt Auth, 498 Mich 870 (2015).
Citizens intervened in Frost’s lawsuit against Progressive in which Frost sought to obtain reimbursement for losses incurred when her car was destroyed.
As he acknowledges in his concurring opinion in this case, Judge Boonstra was on the panel in State Farm. As my dissenting opinion makes clear, I think he and his panel got it right in State Farm.
QBE Insurance Corporation is the insurer that sought to rescind its policy.
For instance, Wilson, 231 Mich App at 331, justified the innocent-third-party rule in a case involving PIP benefits by citing MCL 257.520(f) of the financial responsibility act. MCL 257.520(f) does not apply to PIP benefits under the no-fault act. See Titan, 491 Mich at 559-560. However, while MCL 257.520(f) does not apply, when the mandatory nature of PIP benefits is considered, it is not that far of a stretch to see the rationale in analogizing mandatory PIP benefits to mandatory minimum levels of liability coverage.
MCL 500.3174, which refers to timing deadlines for PIP benefits (MCL 500.3145(1)), provides:
A person claiming through the assigned claims plan shall notify the Michigan automobile insurance placement facility of his or her claim within the time that would have been allowed for filing an action for personal protection insurance benefits if identifiable coverage applicable to the claim had been in effect. The Michigan automobile insurance placement facility shall promptly assign the claim in accordance with the plan and notify the claimant of the identity and address of the insurer to which the claim is assigned. An action by the claimant shall not be commenced more than 30 days after receipt of notice of the assignment or the last date on which the action could have been commenced against an insurer of identifiable coverage applicable to the claim, whichever is later.
MCL 500.3145(1) sets forth certain deadlines for commencing an action for the recovery of PIP benefits as follows:
An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the*821 accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury. If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor’s loss has been incurred. However, the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced. The notice of injury required by this subsection may be given to the insurer or any of its authorized agents by a person claiming to be entitled to benefits therefor, or by someone in his behalf. The notice shall give the name and address of the claimant and indicate in ordinary language the name of the person injured and the time, place and nature of his injury.
Although unpublished decisions such as Visner Eire not binding precedent, they may be viewed as instructive or persuasive authority. Paris Meadows, LLC v Kentwood, 287 Mich App 136, 145 n 3; 783 NW2d 133 (2010).