Michigan Court of Appeals; Docket #355047; Unpublished
Judges Gleicher, Cavanagh, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Partial Concurrence and Dissent
In this 2-1 unpublished per curiam decision (Gleicher, concurring in part and dissenting in part), the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Amy G. Losinski’s first-party action against Defendant Progressive Marathon Insurance Company ("Progressive"). The majority held that Progressive was entitled to deny Losinski’s claim for no-fault PIP benefits because of a “preprocurement innocent misrepresentation” she made when she renewed her policy with Progressive. Specifically, the majority held that Losinski committed fraud when she renewed her policy without first disclosing to Progressive that she no longer lived at the address she listed on her original application for insurance. The majority squared its holding with Meemic Ins Co v Fortson, 506 Mich 287 (2020) by reasoning that, every time Losinski renewed her policy, a new, distinct contract was formed, and thus, every time she renewed her existing policy, she was actually procuring a new policy. Therefore, her misrepresentation at renewal, according to the majority, “ ‘related to the inducement or inception of the contract,’ ” pursuant to Meemic. Justice Gleicher, in her dissent, argued that Losinski’s alleged fraud at renewal “could not possibly” be construed as a “misrepresentation in the inducement of the insurance contract,” because “an automatic renewal . . . is not equivalent to the formation of a contract.” Furthermore, Justice Gleicher argued that the majority’s holding would invite “insurers to play the renewal card whenever a misrepresentation is alleged,” thereby circumventing Meemic.
Losinski had been insured by Progressive since 2011, at which time she lived in Grosse Pointe Woods. In 2013, she moved to Macomb Township, and reported her change of address to Progressive. She moved two more times –first to St. Clair Shores, then to Harper Woods—between 2013 and 2017, but never reported these additional address changes to Progressive. In May 2018, Losinski added a vehicle to her policy, the declarations page of which provided that her address was still in Macomb Township. Approximately seven months later, in December of 2018, Losinski was injured in the subject motor vehicle collision, after which she filed a claim for no-fault PIP benefits with Progressive. Progressive denied her claim, charging Losinski with having made a material misrepresentation which entitled it to deny her claim in its entirety. The trial court agreed and granted Progressive’s motion for summary disposition.
The Court of Appeals affirmed the trial court’s summary disposition order, acknowledging preliminarily the Supreme Court’s recent holding in Meemic Ins Co v Fortson, 506 Mich 287 (2020). The Court of Appeals observed that, per Meemic, an insurance company could only assert fraud as a defense to its contractual obligations if a policy was obtained as a result of the insured’s fraudulent insurance act. In this case, the Court of Appeals held that Losinski did, in fact, make a misrepresentation in the procurement of her policy—even though her misrepresentation was made after she originally applied for insurance in 2011—because every six months, when she renewed her policy, the renewed policy was a distinct, new contract.
The Court of Appeals next held that, although there was a question of fact as to whether Losinski committed silent fraud, there was no question of fact as to whether she committed a preprocurement innocent misrepresentation. The Court noted that, in order for an insurer to deny a claim for benefits based on its insured’s innocent misrepresentation, “ ‘there must be privity of contract between the party making the misrepresentation and the party claiming to have detrimentally relied on it.’ ” Both elements existed in this case, and thus Progressive was entitled to deny Losinski’s claim for benefits based on her innocent misrepresentation.
“Plaintiff admitted that she did not notify defendant of her change of address after moving from Macomb Township. Plaintiff renewed her insurance policy every six months. The record indicates that plaintiff renewed her insurance policy several times after moving, yet the address on her policy remained the Macomb Township address. Additionally, when plaintiff added the Tahoe to her insurance coverage, the policy reflected that the Tahoe was garaged in Macomb Township; however, plaintiff admitted that the vehicle was never garaged there. The representation that she continued to live in Macomb Township and garage the Tahoe and the other vehicles there was thus false. Defendant detrimentally relied on this representation because it continued covering plaintiff at a lower premium than it would have had it known plaintiff’s current address. This injury benefitted plaintiff because she received a lower premium payment. Finally, there was privity of contract between plaintiff and defendant by virtue of the insurance policy, under which plaintiff was a named insured. Thus, no genuine issue of material fact existed regarding whether plaintiff committed innocent misrepresentation in the procurement of the renewal contracts in violation of the terms of the insurance policy because she renewed her policy several times after moving out of Macomb Township. Even though the trial court erroneously granted summary disposition in part on the basis of silent fraud, it did not err by granting summary disposition because no genuine issue of material fact existed regarding plaintiff committing an innocent misrepresentation in the inducement of the renewal contracts. See Gleason v Mich Dep’t of Transp, 256 Mich App 1, 3; 662 NW2d 822 (2003) (‘A trial court’s ruling may be upheld on appeal where the right result issued, albeit for the wrong reason.’).”
The Court of Appeals further held that a provision in Losinski’s policy, “stating that [Losinski] could not sue [Progressive] ‘unless there [was] full compliance with all the terms of th[e] policy,’ ” was enforceable. One such term required Losinski to notify Progressive of any change in address, and since she failed to do so, the Court held that she was precluded from bringing her claim against Progressive.
Justice Gleicher dissented in part and concurred in part, taking special exception with the majority’s determination that a policy renewal created a distinct, new contract, and that Losinski’s fraud, even though it occurred after her policy was initially procured, could therefore be considered fraud in the inducement. In Justice Gleicher’s opinion, Losinski’s failure to inform Progressive about her address change could not, as a matter of law, constitute fraud. Justice Gleicher reasoned that fraud requires an intent to deceive, and that a legal determination of Losinski’s mental state depended on her credibility, which could not be assessed on summary disposition. Judge Gleicher stated that “mistakenly or forgetfully neglecting to report an address change is not a species of fraud.” She further reasoned that Losinski’s failure to update her address was a post-procurement event, and therefore, under Meemic, Progressive should not have been permitted to cancel the policy or to deny her claim. Moreover, she asserted that, “[a]n automatic renewal . . . is not equivalent to the formation of a contract, and Losinski’s failure to update her vehicles did not ‘induce’ Progressive Marathon to insure her.” As for the practical consequences of the majority's opinion, Justice Gleicher warned that it might open the door to insurers playing the “renewal card whenever misrepresentation is alleged” in order to circumvent Meemic.
“Meemic stressed that when a no-fault insurer raises a fraud defense to mandated coverage, the issue turns on whether the alleged fraud related to the contract’s initial formation. Meemic, 506 Mich at 310, n 17. By permitting Progressive Marathon to avoid its statutory obligations to Losinski, the majority invites no-fault insurers to play the renewal card whenever a misrepresentation is alleged. This is a dangerous precedent. It disregards the letter and the spirit of Meemic, and it deprives insureds of benefits they paid for—in this case, for seven years. I respectfully dissent.”
It is not readily apparent in what respect Justice Gleicher partially concurred with the majority opinion.