Injured? Contact Sinas Dramis for a free consultation.

   

Powell, et al v Progressive Mich Ins Co (COA – UNP 12/21/2021; RB #4369)   

Print

Michigan Court of Appeals; Docket #352850; Unpublished 
Judges Boonstra, Gleicher, and Letica; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING: 
Not Applicable

TOPICAL INDEXING: 
Cancellation and Rescission of Insurance Contracts


SUMMARY: 
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Joshua Powell’s first-party action against Defendant Progressive Michigan Insurance Company (“Progressive”).  Powell was statutorily entitled to no-fault PIP benefits under his brother’s policy with Progressive, but after the subject motor vehicle collision, Progressive rescinded his brother’s policy on the basis of fraud and informed Powell there was no valid coverage in effect with Progressive at the time of the collision.  Powell then applied for no-fault PIP benefits under the Michigan Assigned Claims Plan (MACP), and had his claim assigned to Farmers Insurance Exchange ("Farmers").  After reaching a settlement in a separate first-party action against Farmers, Powell filed a first-party action against Progressive, seeking payment of additional no-fault PIP benefits that had accrued prior to the settlement and release with Farmers, and arguing that he was entitled to said benefits because Progressive committed actionable fraud in leading him to believe that his brother’s policy had been rescinded with respect to his claim thereunder.  The Court of Appeals held that Powell failed to present any evidence that Progressive made any fraudulent misrepresentation and, alternatively, that his claim against Progressive was barred by the one-year-back rule.

On October 15, 2017, Joshua Powell was injured in a motor vehicle collision while traveling in a vehicle being driven by his brother.  Because Powell did not have a no-fault insurance policy in effect at the time of the collision, he sought PIP benefits from Progressive, his brother’s insurer.  While investigating Powell’s claim, Progressive discovered that his brother had misrepresented his address on his original application for benefits, and thus rescinded the policy ab initio.  Progressive then called and sent a letter to Powell’s counsel, informing Powell that there was no valid coverage for the crash and that Progressive would not pay the claim.

Powell then applied for PIP benefits under the MACP, and had his claim assigned to Farmers.  Powell later filed a first-party action against Farmers, which was settled on June 27, 2019.  The same day of the settlement, Powell filed a first-party action against Progressive, seeking additional no-fault PIP benefits that had accrued prior to June 27, 2019.  In response, Progressive asserted that Powell’s brother’s policy had been rescinded ab initio and that, even if it had not been, Powell could not proceed with his action because he had settled any claim to PIP benefits through June 27, 2019 in the separate first-party action, and executed a release confirming as much.   

Powell then filed an amended complaint against Progressive, restating his claim for PIP benefits in Count I, and, in Count II, adding a count alleging fraudulent misrepresentation against Progressive.  Specifically, Powell argued that Progressive committed fraud by leading him to believe that it had rescinded the policy with respect to his claim thereunder.  Progressive then moved for summary disposition in lieu of filing an answer to Powell’s amended complaint, arguing that Powell’s claims were barred by virtue of the prior settlement, that Powell’s claims were barred by the one-year-back rule, and, additionally, that Progressive had not committed any fraudulent misrepresentation.  Ultimately, the trial court granted summary disposition in Progressive’s favor.

The Court of Appeals affirmed the trial court’s summary disposition order, clarifying, preliminarily, the crux of Powell’s somewhat confusing position in this case regarding his fraud allegation:

“In this case, plaintiff’s fraudulent misrepresentation claim centered on his allegations that defendant denied him coverage through its rescission of the no-fault policy for fraud by the insured, that the policy was not rescinded at the time of the accident, and that defendant knew that the policy had not been rescinded, but misrepresented that the policy had been rescinded in order to induce plaintiff to act on that misrepresentation. In response to the motion for summary disposition, plaintiff asserted that defendant ‘specifically committed fraud by deceptively stating that the policy had been rescinded.’ ” 

More specifically, Powell asserted that, under Bazzi v Sentinel Ins Co, 502 Mich 390 (2018) (“Bazzi II”), Progressive’s rescission of his brother’s policy did not automatically entitle it to rescission as to Powell’s claims thereunder, as Powell was an innocent third-party to his brother’s fraud.  Therefore, Powell’s argument went, Progressive committed fraud when it implied in its letter and call to Powell’s counsel that the policy had been rescinded as to Powell’s claim thereunder.  Furthermore, Powell argued that Progressive knew that the policy had not been automatically rescinded with respect to his claim thereunder, that Progressive made its misrepresentation in order to induce Powell to act on it, that he did act on it, and that he suffered damages as a result.

The Court of Appeals rejected Powell’s fraud claim, holding that Progressive’s statements and the position that it communicated to Powell’s counsel were not misrepresentations at all.  At the time Progressive reached out to Powell’s counsel, Bazzi I—which held that, “ ‘if 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 PIP benefits to innocent third parties.’ ”—was still binding precedent.  Therefore, under Michigan law, the Court held that Progressive’s statements “were neither fraudulent nor a misrepresentation.”

“Further, defendant’s representations regarding rescission were not a misrepresentation. Bazzi II was decided on July 18, 2018, seven months after defendant informed plaintiff that the policy had been rescinded. At the time defendant rescinded the policy and informed plaintiff’s counsel of the lack of coverage for plaintiff, this Court’s decision in Bazzi I, 315 Mich App 763, was binding precedent. MCR 7.215(C)(2). In Bazzi I, this Court held that ‘if 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 PIP benefits to innocent third parties.’ Bazzi I, 315 Mich App at 781-782. Bazzi I did not require a judicial determination to support rescission. 

At the time defendant rescinded the policy and denied coverage to plaintiff, defendant was entitled under Michigan law to do so. Even accepting as true plaintiff’s assertion that defendant did not inform him of the rescission, defendant’s January 4, 2018 letter informing plaintiff that no coverage was available was neither fraudulent nor a misrepresentation. Thus, plaintiff is unable to satisfy an essential element of his claim. This determination was a matter of law that was properly decided by the trial court. See Meemic Ins Co v Fortson, 324 Mich App 467, 473; 922 NW2d 154 (2018).” 

The Court of Appeals further held that Progressive was entitled to summary disposition for the alternative reason that Powell’s claims were barred by the one-year-back rule.  The Court noted that Powell’s complaint was filed on June 27, 2019, and that Powell “did not present any evidence of services or cost incurred on or after June 27, 2018.”

Lastly, the Court of Appeals held that the trial court was not required to balance the equities under Bazzi II, because Progressive did not seek dismissal of Count I of Powell’s amended complaint on the ground that the policy had been rescinded.  Rather, Progressive sought dismissal of that count  under (C)(7) and (10), arguing that Powell was judicially estopped from bringing his claim for no-fault PIP benefits by a prior settlement and release.  Thus, the Court did not err in declining to balance the equities in the absence of a requirement that it do so.  Moreover, the trial court was not required to balance the equities as to Count II of Plaintiff’s amended complaint, because  “Progressive did not fraudulently misrepresent that the policy had been rescinded, and the trial court did not fail to exercise its discretion when it declined to balance the equities regarding rescission in granting summary disposition on [Powell’s] claim of fraudulent misrepresentation.”


Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

Copyright © 2022 Sinas Dramis Law Firm, George Sinas, Stephen Sinas.
All Rights Reserved.
Login (Publishers Only)

FacebookTwitterInstagram