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Gonzalez v Titan Indemnity Co (COA – UNP 11/27/2018; RB #3815)


Michigan Court of Appeals; Docket # 341227; Unpublished
Judges Riordan, Ronayane Krause, and Swartzle per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


Cancellation and Rescission of Insurance Policies 

In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court grant of summary disposition for Defendant Titan Indemnity Co. (“Titan”) regarding fraud/misrepresentation. The Court reversed the trial court because it found that Plaintiff San Juanita Gonzalez (“Gonzalez”) had provided Titan with evidence that her fiancé lived with her, directly contradicting Titan’s allegation of fraud/misrepresentation.

Gonzalez purchased no-fault insurance from Titan through an independent agent Patrick Coomes (“Coomes”). Gonzalez added a second car to the policy the following day. Gonzalez and Coomes discussed the fact that Gonzalez had a fiancé Quintana-Fiallo Lazaro Pedro (“Pedro”). Gonzalez claimed that she discussed adding Pedro to the policy with Coomes and that Coomes lived with Gonzalez at that time. Coomes argued that Gonzalez never asked to have Pedro added to the policy or told him that Pedro lived with her. It was undisputed that Gonzalez provided Coomes with a certificate of title for the second vehicle that listed Pedro as an owner of the vehicle and listed his address as Gonzalez’s address.

Gonzalez was involved in an accident and Titan sent two insurance adjusters to investigate the matter. The investigators learned that Pedro was living with Gonzalez. Gonzalez readily admitted this to the investigators. The investigators interviewed Coomes, and later Coomes would admit that he was not truthful in that interview. At an internal meeting to decide whether or not to rescind Gonzalez’s policy, one of the investigators explained that he did not believe Gonzalez materially misrepresented anything because she sent paperwork for the second titled vehicle to Titan that indicated Pedro lived with her. However, Titan decided to rescind the contract because of a material misrepresentation. Gonzalez brought an action against Titan. The trial court granted summary disposition for the defendant because it found that the under Titan Ins Co v Hyten, 491 Mich 547; 817 NW2d 562 (2012), an insurance company had no duty to investigate applications even when the misrepresentation is easily ascertainable.

The Court of Appeal found that there is a genuine issue of material fact if an insurance company is provided information that directly contradicts a material misrepresentation. The Court agreed with the trial court that an insurance company has no duty to investigate applications under Titan. However, the Titan Court also explained that: “[i]gnoring information that contradicts a misrepresentation is considerably different than failing to affirmatively and actively investigate a representation.” The Court explained that the trial court was in error for not taking note of contradicting evidence that was provided to Titan. Gonzalez had provided Titan with evidence that Pedro lived with her and Titan knowingly disregarded that information. Titan did not need to go actively looking for the information because it actually received the information from Gonzalez. Therefore, the Court found that the trial court misapplied Titan to this case.

“There is considerable evidence that Titan received an official state form unambiguously showing that Pedro was a co-owner of the car and lived in Gonzalez’s home. One of the adjusters even specifically opined that Titan “should have known about Pedro.” Consequently, there is, at a minimum, a genuine question of fact whether Titan actually received information directly contradicting statements in the policy. . . .We find that the record establishes a genuine question of material fact whether Titan became actually aware of a problem with Gonzalez’s insurance policy application when processing that application, and therefore violated its duty to act on that information and perform a further investigation, and then either modify the policy or refuse to offer it entirely.”

Thus, the Court reversed the trial court’s grant of summary disposition and remanded the case.

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