563 N.W.2d 716 | Mich. Ct. App. | 1997
Ahmad HAMMOUD, Plaintiff-Appellant,
v.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellee.
Court of Appeals of Michigan.
*717 Law Offices of Geno T. Zayid by Geno T. Zayid, Southfield, for plaintiff-appellant.
Garan, Lucow, Miller, Seward, Cooper and Becker, P.C. by James L. Borin, David J. Lankford, and Anne K. Newcomer, Detroit, for Defendant-Appellee.
Before MARILYN J. KELLY, P.J., and MacKENZIE and J.R. ERNST[*], JJ.
MacKENZIE, Judge.
Plaintiff, who was under age 25, was injured in an automobile accident while he was driving a 1986 Ford Thunderbird. Claiming to be an insured under a no-fault policy issued by defendant, plaintiff sought and was denied no-fault benefits for his injuries. This action followed. Defendant filed a counter-complaint seeking to rescind its policy ab initio because of material misrepresentations made in the application for insurance. The trial court granted summary disposition for defendant insurer, and plaintiff now appeals as of right. We affirm.
Although the Thunderbird was titled in plaintiff's name only, the application for no-fault insurance for the Thunderbird was made by plaintiff's older brother, Mohamad Hammoud. Under the "Driver Information" portion of the application, Mohamad Hammoud was the only listed driver of the vehicle. Mohamad Hammoud's wife, Iman Hammoud, was the only person listed under the heading "All Residents Not Previously Indicated." There was no mention of plaintiff in the application, although he resided with his brother and sister-in-law and drove the Thunderbird on a regular basis. At his deposition, plaintiff acknowledged that he never attempted to get insurance for the car. He *718 explained that his brother "helped me pay for the car, so we both drove the car, and he figured it would be cheaper to have it [insured] in his name."
In granting defendant's motion for summary disposition and allowing rescission, the trial court rejected plaintiff's position that because he himself did not make the misrepresentations in the application, he was an innocent third party whose injuries precluded rescission of the no-fault policy. On appeal, plaintiff contends that the court erred in this determination. We disagree.
Where a policy of insurance is procured through the insured's intentional misrepresentation of a material fact in the application for insurance, and the person seeking to collect the no-fault benefits is the same person who procured the policy of insurance through fraud, an insurer may rescind an insurance policy and declare it void ab initio. Cunningham v. Citizens Ins. Co. of America, 133 Mich.App. 471, 350 N.W.2d 283 (1984). However, this right to rescind ceases to exist once there is a claim involving an innocent third party. Katinsky v. Auto Club Ins. Ass'n, 201 Mich.App. 167, 170, 505 N.W.2d 895 (1993); Darnell v. Auto-Owners Ins. Co., 142 Mich.App. 1, 9, 369 N.W.2d 243 (1985). See also Burton v. Wolverine Mutual Ins. Co., 213 Mich.App. 514, 517 n. 2, 540 N.W.2d 480 (1995).
In contrast to the situations in Katinsky, supra, and Darnell, supra, where the persons injured were considered innocent third parties to a material misrepresentation made to an insurance company, plaintiff in this case was not an innocent third party with respect to the misrepresentations made to defendant in the application for no-fault insurance. Plaintiff was the owner of the insured vehicle, with the responsibility to maintain a policy of no-fault insurance. To save money, he allowed his older brother to obtain the necessary insurance by misrepresenting plaintiff's status as a driver of the vehicle. Under these circumstances, plaintiff was actively involved in defrauding defendant and was not an innocent third party. Accordingly, the trial court did not err in finding that defendant was entitled to ab initio rescission of its policy covering the Thunderbird.
Plaintiff argues that defendant insurer should be estopped from seeking rescission because it could have discovered that Mohamad Hammoud was not the titled or registered owner of the Thunderbird before it issued the policy. According to plaintiff, by failing to verify what his brother represented on the application for insurance, defendant waived its right to rescind the policy. Contrary to plaintiff's argument, however, an insurer does not owe a duty to the insured to investigate or verify that individual's representations or to discover intentional material misrepresentations. United Security Ins. Co. v. Comm'r of Ins., 133 Mich.App. 38, 45, 348 N.W.2d 34 (1984). Defendant was therefore not estopped from seeking rescission of its policy.
Affirmed.
J.R. ERNST, J., concurs.
MARILYN J. KELLY, Presiding Judge (dissenting).
I respectfully dissent.
I agree with the majority that, should it be determined that plaintiff is not an innocent third party, defendant is entitled to rescind its contract. Katinsky v. Auto Club Ins. Ass'n, 201 Mich.App. 167, 170, 505 N.W.2d 895 (1993). However, I believe that factual questions remain as to whether plaintiff was involved in the misrepresentation.
When reviewing a motion granted pursuant to MCR 2.116(C)(10), this Court considers the pleadings, affidavits, depositions, admissions, and any other evidence favoring the party opposing the motion. Only if there is no genuine issue of material fact is the moving party entitled to judgment as a matter of law. Bourne v. Farmers Ins. Exchange, 449 Mich. 193, 197, 534 N.W.2d 491 (1995).
Both the trial court and the majority conclude that plaintiff was actively involved in defrauding defendant. Therefore, he was not an innocent third party. However, in reaching this conclusion, they have both resolved questions of fact which should have been left for the jury.
*719 Plaintiff testified at his deposition that, even though the car was titled in his name, his brother Mohamad helped him pay for it. In plaintiff's eyes, the car belonged to both of them. Mohamad decided to buy the insurance, because it was believed that it would be cheaper for him to be the principal driver of the car, as he was over twenty-five years of age. However, at no time during his deposition did plaintiff state that he conspired with Mohamad to omit plaintiff's name from the insurance policy. It is quite possible that plaintiff fully expected that Mohamad would include his name as an insured. Because we are reviewing a motion brought pursuant to MCR 2.116(C)(10), we must look at the evidence in a light most favorable to plaintiff. Therefore, I would leave it to the jury to determine whether plaintiff's version is credible.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
