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Humphrey v Home-Owners Ins Co (UNP – COA 8/19/2021; RB # 4308)

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Michigan Court of Appeals; Docket #354214; Unpublished
Judges Letica, Servitto, and Kelly; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Not Applicable

TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Fraud/Misrepresentation


SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Adaseny Humphrey’s first-party action against Defendant Home-Owners Insurance Company (“Home-Owners”) on the basis of fraudulent statements Humphrey made at her deposition. Relying on Haydaw v Farm Bureau Ins Co, 332 Mich App 719 (2020), the Court of Appeals held that Home-Owners could not deny Humphrey’s claim for no-fault PIP benefits under her mother’s policy based on false statements Humphrey made after litigation had begun. Notably, the Court of Appeals explained that it was reaching this holding even though, in this case, Home-Owners was relying on a common law fraud defense, as opposed to a fraud-exclusion defense like that which was at issue in Haydaw. In so explaining, the Court iterated “the basic principle—that statements made during litigation are not made with the intent that the insurer will rely upon them—applies equally to both fraud-based defenses.”

Humphrey was driving her mother’s vehicle when she was involved in a motor vehicle crash, and thereafter filed a claim for no-fault PIP benefits with her mother’s automobile insurer, Home-Owners. After Home-Owners stopped paying her PIP benefits, Humphrey filed the underlying first-party action, and in her subsequent deposition, she testified that, as a result of the subject crash, she suffered numerous psychological injuries, as well as injuries to her neck, left shoulder, and left wrist. She further testified that she had never had any problems with these areas prior to the crash, a claim which was contradicted by her medical records. Furthermore, she testified that she could not drive for long periods of time due to her anxiety and back pain, but records from a casino 50 minutes away from her home indicated that she made that drive more than 200 times in the two years following the crash. Based on these inconsistencies, Home-Owners moved for summary disposition, arguing that Humphrey’s claims for PIP benefits were barred because she had engaged in common-law fraud. The trial court agreed and granted Home-Owners motion.

The Court of Appeals then reversed the trial court’s summary disposition order, relying on Haydaw for the proposition that “false statements made by the insured during litigation are incapable of satisfying the elements for voiding a policy on the basis of post-loss fraud.” The Court of Appeals further held that the Haydaw holding was applicable to this case even though Haydaw dealt with a fraud-exclusion clause, whereas in this case, Home-Owners was asserting a common-law fraud defense.

Although Haydaw involved a fraud-exclusion clause as opposed to a common-law fraud defense, the basic principle—that statements made during litigation are not made with the intent that the insurer will rely upon them—applies equally to both fraud-based defenses. There is no meaningful distinction between a fraud defense based upon the language of the insurance policy and a fraud defense based upon the common law. In both instances, the insured must have made a material misrepresentation with the intent that the insurer acts upon the misrepresentation. See Haydaw, 332 Mich App at 728; Tian, 491 Mich at 555.4 As a result, although Humphrey made numerous false statements during her deposition testimony, those false statements do not warrant a grant of summary disposition. Rather, the validity of her claim must be tested by the trier of fact.

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