Opinion
355047
07-29-2021
AMY G. LOSINSKI, Plaintiff-Appellant, v. TERRENCE T. CARTER, JR., Defendant, and PROGRESSIVE MARATHON INSURANCE COMPANY, Defendant-Appellee.
UNPUBLISHED
Macomb Circuit Court LC No. 2019-003837-NI
Before: Gleicher, P.J., and Cavanagh and Letica, JJ.
Per Curiam.
Plaintiff appeals as of right the trial court's order granting summary disposition in favor of defendants Terrence T. Carter, Jr., and Progressive Marathon Insurance Company. On appeal, plaintiff argues that the trial court erred because there was no evidence that she intended to engage in fraud or misrepresentation. We affirm.
There is no indication in the lower court record that Carter ever participated in the lower court proceedings, nor is he a party to this appeal. Thus, our references to "defendant" only refer to Progressive Marathon Insurance Company.
I. FACTUAL BACKGROUND
This no-fault action arises from a two-vehicle accident that allegedly occurred in December 2018, between plaintiff and Carter. Plaintiff was the named insured on an insurance policy with defendant that she renewed every six months. Plaintiff testified that she obtained the insurance policy in 2011 when she lived in Grosse Pointe Woods. Around 2013, plaintiff moved from Grosse Pointe Woods to Macomb Township. Although plaintiff testified that she did not remember whether she reported the change of address to defendant, defendant provided records establishing that the address for plaintiff's insurance policy had been changed from Grosse Pointe to Macomb Township, effective May 2013. In fall of 2015 or 2016, plaintiff moved from Macomb Township to St. Clair Shores. Finally, in fall 2017, plaintiff moved from St. Clair Shores to Harper Woods, where she resided when the accident occurred. In May 2018, plaintiff added a vehicle-a Chevrolet Tahoe-to the insurance policy. The declarations page that memorialized the added vehicle provided that plaintiff's address was in Macomb Township.
The insurance policy contained, in relevant part, provisions regarding the insured's duty to report changes, fraud or misrepresentation, and the insured's ability to sue defendant. The "duty to report changes" provision stated, in relevant part, that the insured was required to "promptly report" all changes in policy information to defendant. This included changes in the insured's mailing address, residential address, and principal garaging address of a vehicle covered by the policy. The "fraud or misrepresentation" provision stated:
This policy was issued in reliance upon the information provided on your insurance application. We may void this policy at any time, including after the occurrence of an accident or loss, if you:
1. made incorrect statements or representations to us with regard to any material fact or circumstance;
2.concealed or misrepresented any material fact or circumstance; or
3.engaged in fraudulent conduct;
at the time of the application. This means that we will not be liable for any claims or damages that would otherwise be covered.
Any changes we make at your request to this policy after inception will be made in reliance upon information you provide. If you:
1. make incorrect statements or representations to us with regard to any material fact or circumstance;
2. conceal or misrepresent any material fact or circumstance; or
3. engage in fraudulent conduct;
in connection with a requested change we may void the policy or reform it as it existed immediately prior to the requested change. We may do this at any time, including after the occurrence of an accident or loss.
When we have not voided or reformed the policy, we may still deny coverage for an accident or loss if you, in connection with the policy application, in connection with any requested change, or at any time during the policy period,
have concealed or misrepresented any material fact or circumstance or engaged in fraudulent conduct and that concealment, misrepresentation, or fraudulent conduct was material to a risk we assumed.
We may deny coverage for an accident or loss if you or a person seeking coverage has concealed or misrepresented any material fact or circumstance, or engaged in fraudulent conduct, in connection with the presentation or settlement of a claim.
Finally, the policy contained a provision stating that an insured could not sue defendant "unless there [was] full compliance with all the terms of this policy."
After the accident, plaintiff sought benefits from defendant for injuries she allegedly sustained from the accident. Defendant denied plaintiff's claim for benefits on the basis that it "discovered a material misrepresentation" associated with the Tahoe: "During the course of the investigation we confirmed that when the . . . Tahoe was added to the policy . . . it was not garaged at the policy address provided." Plaintiff filed a complaint, seeking first-party benefits from defendant. Defendant subsequently filed a motion for summary disposition pursuant to MCR 2.116(C)(10). The trial court held a hearing on the motion and later granted it, entering an order dismissing plaintiff's claim with prejudice in its entirety. This appeal follows.
We note that plaintiff was not driving the Tahoe when the accident occurred; instead, she was driving another vehicle that was on the insurance policy.
II. ANALYSIS
Plaintiff argues the trial court erred by granting defendant's motion for summary disposition. We disagree.
"We review de novo a trial court's decision on a motion for summary disposition." El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159; 934 N.W.2d 665 (2019). "A motion for summary disposition brought pursuant to MCR 2.116(C)(10) tests the factual support for a claim." Patrick v Turkelson, 322 Mich.App. 595, 605; 913 N.W.2d 369 (2018) (quotation marks and citation omitted). "When considering such a motion, a trial court must consider all evidence submitted by the parties in the light most favorable to the party opposing the motion." El-Khalil, 504 Mich. at 160. "A motion under MCR 2.116(C)(10) may only be granted when there is no genuine issue of material fact." Id. "A genuine issue of material fact exists if the record, viewed in a light most favorable to the nonmoving party, establishes a matter in which reasonable minds could differ." Puetz v Spectrum Health Hosps, 324 Mich.App. 51, 68; 919 N.W.2d 439 (2018). "Interpretation of a contract and whether the trial court properly applied equitable principles involves questions of law that we review de novo." 21st Century Premier Ins Co v Zufelt, 315 Mich.App. 437, 443; 889 N.W.2d 759 (2016).
At the outset, it is important to note that this case involves an antifraud provision in an insurance contract. In Meemic Ins Co v Fortson, 506 Mich. 287, 293; 954 N.W.2d 115 (2020), our Supreme Court considered whether an antifraud provision in the no-fault insurance policy between the parties was "valid and enforceable when applied to coverage mandated by the no-fault act, MCL 500.3101 et seq." After discussing caselaw and the mandatory-coverage requirement of the no-fault act, the Court concluded that "[i]f the [contract-based fraud] defense is properly derived from either [the no-fault act or the common law], it is valid; if not, then it goes beyond what [an automobile insurer] can assert to avoid mandatory coverage and is invalid and unenforceable." Id. at 303. The Court first considered whether fraud was a statutory defense before concluding that "[t]he no-fault act . . . does not provide a fraud defense to [personal injury protection (PIP)] coverage . . . ." Id. at 303-304.
Turning to the common law, the Court recognized that fraud could be a defense to void the contract "if a contract is obtained as a result of fraud or misrepresentation." Id. at 305 (quotation marks and citation omitted). "At common law, the defrauded party could only seek rescission, or avoidance of the transaction, if the fraud related to the inducement to or inception of the contract." Id. Conversely, an allegation of "postprocurement fraud" would only be a valid defense when a party "fail[ed] to perform a substantial part of the contract or one of its essential terms." Id. at 308. But the Court cautioned that "the mere breach of a contract would not entitle the injured party to avoid the contract at common law. Rather, facts which will ordinarily warrant the rescission of a contract must have existed at the time the contract was made." Id. (quotation marks and citations omitted).
Here, the language of the "fraud or misrepresentation" provision-an antifraud provision-allowed defendant to void the policy, reform the policy, or deny an insured's claim "at any time, including after the occurrence of an accident or loss." Thus, if plaintiff's alleged misrepresentation regarding her address occurred postprocurement, dismissal of her action on the basis of the policy's antifraud provision would be erroneous. Id. at 308. If plaintiff's alleged misrepresentation regarding her address occurred preprocurement, though, dismissal of her action on the basis of the antifraud provision would not necessarily be erroneous. Id. at 305.
Here, plaintiff made a misrepresentation in the inducement of the insurance contract because the renewal contracts constituted separate and distinct contracts. Regarding renewal contracts, this Court explained:
A renewal contract has been stated by many jurisdictions to be a new, and a separate and distinct contract, unless the intention of the parties is shown clearly that the original and renewal agreements shall constitute one continuous contract. It has thus been stated to be a new or separate contract which is based upon and subject to the same terms and conditions as were contained in the original policy. Unless otherwise provided, the rights of the parties are controlled by the terms of the original contract, and the insured is entitled to assume, unless he has notice to the contrary, that the terms of the renewal policy are the same as those of the original contract. [Zufelt, 315 Mich.App. at 443-444, quoting Russell v State Farm Mut Auto Ins Co, 47 Mich.App. 677, 680; 209 N.W.2d 815 (1973) (quotation marks and citation omitted).]
"Michigan is one of the jurisdictions referred to that has accepted this approach." Russell, 47 Mich.App. at 680. See also Maurer v Fremont Ins Co, 325 Mich.App. 685, 696 n 6; 926 N.W.2d 848 (2018) ("A renewal policy is considered to be a new contract.").
"Opinions from this Court issued before November 1, 1990, are not binding upon this Court but may be persuasive." Jackson v Dir of Dep't of Corrections, 329 Mich.App. 422, 429 n 5; 942 N.W.2d 635 (2019).
Even considering the separate nature of the renewal contracts, a genuine issue of material fact exists regarding whether plaintiff committed preprocurement fraudulent misrepresentation or silent fraud. Fraudulent misrepresentation
entails a defendant making a false representation of material fact with the intention that the plaintiff would rely on it, the defendant either knowing at the time that the representation was false or making it with reckless disregard for its accuracy, and the plaintiff actually relying on the representation and suffering damage as a result. [Alfieri v Bertorelli, 295 Mich.App. 189, 193; 813 N.W.2d 772 (2012).]
"Silent fraud, also known as fraudulent concealment, acknowledges that suppression of a material fact, which a party in good faith is duty-bound to disclose, is equivalent to a false representation and will support an action in fraud." Maurer, 325 Mich.App. at 695 (quotation marks and citation omitted). But "in order for silent fraud to be actionable, the party having a legal or equitable duty to disclose must have concealed the material fact with an intent to defraud." Id.
Here, a genuine issue of material fact exists regarding whether plaintiff intended to defraud defendant by failing to notify it of her change of address. Plaintiff had previously changed her policy address when she moved from Grosse Pointe to Macomb Township; this move resulted in plaintiff's premium amount decreasing. Plaintiff did not notify defendant of her subsequent moves at any point before the accident occurred. Had plaintiff informed defendant of her move to Harper Woods, her premium would have increased. Plaintiff indicated that defendant had not asked her about her address in order for her to have disclosed the change until sometime after the accident, at which point she disclosed the move. But plaintiff notifying defendant of a previous change in address indicates that she was aware of the requirement to notify defendant of a change in address, as well as the process for doing so. Her notification of her change in address when it decreased her premium, but her failure to notify defendant of the same when it would have increased her premium creates a factual dispute regarding whether plaintiff intended to defraud defendant. Moreover, plaintiff's admission that she updated her addresses with the post office, Secretary of State, and her bank-but not defendant-creates a question of fact regarding why she did not do so with defendant. Viewing the record in a light most favorable to plaintiff, an issue of material fact exists regarding whether plaintiff intended to defraud defendant. El-Khalil, 504 Mich. at 160. Thus, summary disposition was not appropriate under the theories of fraudulent misrepresentation or silent fraud.
However, there is no genuine issue of material fact regarding whether plaintiff committed preprocurement innocent misrepresentation. "A claim of innocent misrepresentation is shown where a party detrimentally relies on a false representation in such a manner that the injury inures to the benefit of the party making the misrepresentation." Roberts v Saffell, 280 Mich.App. 397, 404; 760 N.W.2d 715 (2008), aff'd 483 Mich. 1089 (2009) (quotation marks and citation omitted). "[F]or liability under a theory of innocent representation to arise there must be privity of contract between the party making the representation and the party claiming to have detrimentally relied on it." Id.
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 N.W.2d 822 (2003) ("A trial court's ruling may be upheld on appeal where the right result issued, albeit for the wrong reason.").
Moreover, the trial court did not err in granting summary disposition because no genuine issue of material fact existed regarding plaintiff's failure to comply with all of the terms of the policy. Pursuant to the plain language of the policy, plaintiff had a duty to notify defendant of certain changes, including changes in mailing address, residential address, and the principal garaging address of any vehicle covered by the policy. The policy indicated that plaintiff could not bring an action against defendant unless she fully complied "with all the terms of [the] policy."Plaintiff admitted that she moved from Macomb Township to St. Clair Shores, then subsequently from St. Clair Shores to Harper Woods. Plaintiff further admitted that she did so without notifying defendant of her changes in address. When plaintiff added the Tahoe to her policy coverage, the address associated with the vehicle was in Macomb Township. But plaintiff admitted that she resided in Harper Woods and that none of the vehicles covered by the policy were garaged in Macomb Township at that time.
For this reason, plaintiff's claim that dismissal of the case was a harsh remedy is without merit.
Viewing this record in a light most favorable to plaintiff, we conclude that no genuine issue of material fact exists regarding plaintiff's failure to comply with her contractual duty to notify defendant of changes to her address. El-Khalil, 504 Mich. at 160. Under the terms of the policy, plaintiff's failure to fully comply with all terms of the policy precluded plaintiff from bringing a claim against defendant. Accordingly, the trial court properly granted summary disposition under MCR 2.116(C)(10).
Affirmed.
Elizabeth L. Gleicher, J. (concurring in in part and dissenting in part)
Amy Losinski was injured in an automobile accident. She sought first-party no-fault benefits from her insurer, Progressive Marathon Insurance Company. Progressive Marathon invoked a "fraud" provision in the insurance policy, denied benefits, and cancelled Losinski's coverage. The majority endorses Progressive Marathon's fraud defense, holding that Losinski's failure to update her home address when her policy automatically renewed warranted rescission. The alleged misrepresentation did not induce the formation of Losinski's no-fault contract and therefore does not support rescission. I would reverse the circuit court's grant of summary disposition in favor of Progressive Marathon, and respectfully dissent.
I. PERTINENT FACTS
Losinski applied for no-fault coverage with Progressive Marathon in 2011, and a policy was issued that year. In May 2018, Losinski added a Chevy Tahoe to her long-standing Progressive Marathon no-fault insurance policy. According to Progressive Marathon, Losinski represented that the Tahoe was garaged in Macomb. More accurately, however, Losinski made no affirmative representation regarding her address; she simply failed to inform Progressive Marathon that she had moved to Harper Woods in the fall of 2017. Progressive Marathon relied on Losinski's failure to provide an updated address when she added the Tahoe to her policy as the basis for rescission. At the time of the December 2018 accident, Losinski was driving a 2014 Lincoln sedan, which had been added to the policy years before.
Progressive Marathon presented no evidence in the circuit court that Losinski made any affirmative representations regarding her address when she added the Tahoe. Although Progressive Marathon makes a vague allegation to this effect in its briefing in this Court, it has not supported the allegation with documentary or other evidence.
The majority asserts that an accident "allegedly occurred." Progressive Marathon has never disputed that Losinski was involved in an accident, or that her significant injuries were caused by the accident. Viewing the evidence in the light most favorable to Losinski under MCR 2.116(C)(10) requires that we accept that an accident occurred, and that no-fault benefits were due.
Janeen Copic, an underwriting specialist employed by the Progressive Casualty Insurance Company, averred that Progressive Marathon "would not have issued the policy at the current premium rate in this instance had all of the risk variables been known." (Emphasis added.) Copic alleged that "had the proper disclosures been made to [Progressive Marathon] the premium would have increased 35.7% from $2, 246 to $3, 047 at the time . . . the Tahoe was added to the policy on May 24, 2018." Progressive Marathon presented no evidence that it would have declined to issue the policy in 2011 had Losinski lived in Harper Woods at that time, or that it would have cancelled the policy based on Losinski's move to Harper Woods.
II. ANALYSIS
In determining whether Progressive Marathon's contract-based fraud defense is valid, we are guided by Meemic Ins Co v Fortson, 506 Mich. 287; 954 N.W.2d 115 (2020). Under Meemic, the first question a court must consider is whether the alleged "fraud" was committed to induce procurement of the contract, or occurred later. This distinction is critically important. Contractual antifraud provisions regarding misrepresentations made after a no-fault policy has been procured are invalid. Id. at 310 ("Meemic's contract-based fraud defense fails because it is not the type of common-law fraud that would allow for rescission."). But an insurance company may be entitled to pursue a legal or equitable remedy "if a contract is obtained as a result of fraud or misrepresentation." Id. at 305. The Supreme Court emphasized in Meemic: "The key phrase is 'if a contract is obtained as a result of fraud or misrepresentation.'" Id. (emphasis in original). Under the common law, the Supreme Court explained, a "defrauded party could only seek rescission, or avoidance of the transaction, if the fraud related to the inducement to or inception of the contract." Id. (emphasis added). The Supreme Court quoted approvingly this statement from a leading treatise: "facts which will ordinarily warrant the recission of a contract must have existed at the time the contract was made." Id. at 308.
The majority affirms summary disposition in favor of Progressive Marathon, holding that Losinski "made a misrepresentation in the inducement of the insurance contract." But that could not possibly be true, as Losinski applied for and purchased her Progressive Marathon policy in 2011 and the alleged misrepresentation was made in 2018. Nevertheless, the majority holds, the misrepresentation "induced" the formation of the contract because "renewal contracts constituted separate and distinct contracts." An automatic renewal, however, 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.
A. THE CONTRACTUAL PROVISIONS
In support of its motion for summary disposition, Progressive Marathon invoked the policy's fraud provisions. The policy contains three relevant paragraphs regarding fraud. The first relates to pre-procurement fraud, and permits the company to rescind the policy if an insured made "incorrect statements or representations . . . with regard to any material fact or circumstance," "concealed or misrepresented any material fact or circumstance," or "engaged in fraudulent conduct" "at the time of the application." (Emphasis added.) Progressive Marathon has not identified any misstatements or false representations made at the time Losinski applied for coverage in 2011. This policy provision does not apply, and in my view should end the case. The policy specifies that "incorrect statements" "at the time of the application" allow for voiding the coverage, which aligns with Meemic. But the policy's provisions regarding statements made afterwards-on which Progressive Marathon and the majority rely-conflict with Meemic and therefore cannot be enforced.
After the "inception" of the policy, the contract states that "[a]ny changes we make at your request to this policy after inception will be made in reliance upon information you provide." The policy language continues:
If you:
1. make incorrect statements or representations to us with regard to any material fact or circumstance;
2. conceal or misrepresent any material fact or circumstance; or
3. engage in fraudulent conduct;
in connection with a requested change we may void the policy or reform it as it existed immediately prior to the requested change. We may do this at any time, including after the occurrence of an accident or loss.
Progressive Marathon relies on this section of the policy.
By its plain terms, this provision relates to post-procurement fraud. Meemic holds that Progressive Marathon may not avoid its statutory obligation to pay first-party benefits by enforcing an anti-fraud provision related to post-procurement fraud. Meemic, 506 Mich. at 308-309. The policy may have changed when cars were added or subtracted, but it was procured in 2011, and the application was completed at that time. The policy standing alone should have doomed Progressive Marathon's summary disposition motion.
B. "FRAUD"
The majority correctly holds that fact questions precluded summary disposition regarding whether Losinski committed fraud, fraudulent misrepresentation, or silent fraud. Fraud requires an intent to deceive. Losinski claims that she simply forgot to tell Progressive Marathon that she had moved.
Summary disposition of defendant's fraud claims was improper for two reasons. First, a legal determination of Losinski's mental state depends on her credibility, which cannot be assessed on summary disposition. Arbelius v Poletti, 188 Mich.App. 14, 18; 469 N.W.2d 436 (1991). As our Supreme Court has repeatedly emphasized, "[t]he granting of a motion for summary disposition is especially suspect where motive and intent are at issue or where a witness or deponent's credibility is crucial." Vanguard Ins Co v Bolt, 204 Mich.App. 271, 276; 514 N.W.2d 525 (1994). Mistakenly or forgetfully neglecting to report an address change is not a species of fraud.
Second, as discussed in greater detail below, Losinski's failure to update her address was a post-procurement event. As such, it did not permit Progressive Marathon to cancel the policy or to deny her claim.
C. INNOCENT MISREPRESENTATION
The majority holds that summary disposition was proper under the theory of innocent misrepresentation because Losinski "renewed her policy several times after moving out of Macomb Township" and failed to update her address. I am unconvinced that an innocent misrepresentation-a mistake, in other words-can support a policy rescission without evidence that the withheld information was material to a decision to undertake a risk. Progressive Marathon has presented zero evidence on this score. To the contrary, Progressive Marathon admits that the address information was relevant only to the rate charged, not to Losinski's eligibility for no-fault coverage.
But even assuming that Losinski innocently misrepresented her address and that her address was material to the risk, Losinski's innocent misrepresentation "did not occur in the procurement of the policy-it did not, in other words, induce [Progressive Marathon] to enter into the contract . . . ." See Meemic, 506 Mich. at 296. For this reason alone, summary disposition was improperly granted to Progressive Marathon.
D. NO FRAUD IN THE INDUCEMENT
According to the majority, Michigan law considers a renewal policy to be a new contract, and therefore Losinski's innocent misrepresentation induced Progressive Marathon to consent to the renewals. This reasoning, however, conflicts with the law and the policy itself.
This Court has stated that renewals are "new," "separate," and "distinct" contracts. But in the same sentence, this Court carved out an exception for situations in which the parties to a policy have agreed that the parties intended "one continuous contract":
"A renewal contract has been stated by many jurisdictions to be a new, and a separate and distinct contract, unless the intention of the parties is shown clearly that the original and renewal agreements shall constitute one continuous contract. It has thus been stated to be a new or separate contract which is based upon and subject to the same terms and conditions as were contained in the original policy. Unless otherwise provided, the rights of the parties are controlled by the terms of the original contract, and the insured is entitled to assume, unless he has notice to the contrary, that the terms of the renewal policy are the same as those of the original contract." [21st Century Premier Ins Co v Zufelt, 315 Mich.App. 437, 443-444, quoting Russell v State Farm Mut Auto Ins Co, 47 Mich.App. 677, 680; 209 N.W.2d 815 (1973) (cleaned up, emphasis added).]
Like most, if not all auto insurance companies in Michigan, Progressive Marathon allows policyholders to pay their year-long insurance policies in six-month increments, with routine and automatic renewals. Losinski took advantage of this option. Losinski did not fill out a new application when the renewal payment came due. The record does not supply any indication that she was asked any questions at all when her policy automatically renewed in November 2018, or that she made any affirmative representations when arranging for her payment to be electronically transmitted. This was one continuous contract, not "new" one.
Zufelt itself supplies little help to Progressive Marathon. In Zufelt, 315 Mich.App. at 444, this Court observed that "although [the insured's] policy was renewed, because there was no indication that the original terms changed in any significant manner, the terms and conditions that governed the original policy applied to the renewal." The same is true here. Indeed, Losinski's policy states: "The coverage provided in your policy may be changed only by the issuance of a new policy or an endorsement by us." No changes are apparent. See also 2 Couch, Insurance § 29:35 ("Where the policy of insurance is in a sense 'automatically' renewed when the insured pays an additional premium, the parties are deemed bound by the original contract of insurance.").
Furthermore, labeling the renewal a "new contract" should not allow Progressive Marathon to sidestep Meemic's central message: contractual language does not overcome the no-fault statute except when it concerns fraud at a policy's inception. The majority's holding permits insurers to refuse to pay mandatory benefits based on "fraud" (or merely a negligent oversight) long after the contract was obtained. Yet Meemic instructs that only fraud accompanying the procurement of the policy is actionable. And Meemic repeatedly reinforces what that means. In footnote 13, Meemic offers up a slew of citations supporting that "[a]t common law, the defrauded party could only seek rescission, or avoidance of the transaction, if the fraud related to the inducement or the inception of the contract." Meemic, 506 Mich. at 305 n 13, citing Dobbs, Remedies (2d ed), §9.5, p 716. Here is a sampling of the quotations and cited language in the footnote:
Epps v 4 Quarters Restoration LLC, 498 Mich. 518, 538 n 15; 872 N.W.2d 412 (2015) ("When a party fraudulently induces another party to enter into a contract, that contract is voidable at the option of the defrauded party. . . ."); . . . Geisler, Proof of Fraudulent Inducement of a Contract and Entitlement to Remedies, 48 Am Jur Proof of Facts 3d 329 (Mar 2020 update), § 1 ("Essentially, 'fraudulent inducement' occurs when a party to a contract was induced to enter into that contract by fraud of the other party. . . . 'Fraudulent inducement' relates to the accuracy and truthfulness of the discussions and negotiations of the parties prior to the contractual agreement and does not necessarily imply that a party has failed to perform its contractual duties.") (paragraph structure omitted) . . . .
Both of the two relevant forms of common-law fraud focus on conduct or circumstances at the contract's inception. "Fraudulent inducement" generally requires misrepresentations that induce a party to enter a contract, Geisler, § 1[.]
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.