ANTHONY SHEPHERD V STATE FARM MUTUALAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
July 21, 1998
Wayne Circuit Court
LC No. 95-515362 NI
STATE FARM MUTUAL AUTOMOBILE
Before: Gribbs, P.J., and Cavanagh and Saad, JJ.
Defendant, State Farm Mutual Automobile Insurance Company, appeals as of right from an
order granting plaintiff’s motion for summary disposition and denying defendant’s motion for summary
disposition on the same issue. We affirm, but with the same serious concerns about the law as
expressed by the trial judge.
A trial court’s determination of a motion for summary disposition is reviewed de novo. G&A
Inc v Nahra, 204 Mich App 329, 330; 514 NW2d 255 (1994). Although the trial court did not
specify the specific subrule of MCR 2.116(C) upon which it relied in deciding the parties’ motions, we
will treat the motions as having been decided under MCR 2.116(C)(10) because the trial court referred
to materials apart from the pleadings. Atkinson v Detroit, 222 Mich App 7, 9; 564 NW2d 473
Here, the parties do not disagree over the material facts as they relate to defendant’s alleged
defense of fraud, but do disagree on the inferences that properly may be drawn from those material
facts. Although circumstantial evidence can be used to establish a fraud defense, inferences deducible
from known facts or conditions must be reasonable. See Libralter Plastics, Inc v Chubb Group of
Ins Companies, 199 Mich App 482, 486; 502 NW2d 742 (1993).
We have carefully reviewed this matter and conclude that the trial court did not err. On this
record, it cannot be reasonably inferred from the established facts that plaintiff made misrepresentations
to defendant, knew or had reason to know of his wife’s misrepresentations, actively participated in
defrauding defendant, or otherwise engaged in improper conduct relative to his wife’s application for
insurance. Therefore, under the current law, plaintiff is an innocent third party to his wife’s
misrepresentations. Hammoud v Metropolitan Property & Cas Ins Co, 222 Mich App 485; 563
NW2d 716 (1997); Darnell v Auto-Owners Ins Co, 142 Mich App 1; 369 NW2d 243 (1985). We
so rule because we are obliged to follow existing law, but in so doing we recognize that existing law
allows or perhaps encourages fraud.
Though we share Judge Zahra’s reluctance at countenancing the result reached here, we agree
with his well-reasoned decision, and we believe the Legislature needs to examine the “innocent third
party” rule in the spousal (and perhaps intra-familial) context.
/s/ Roman S. Gribbs
/s/ Henry William Saad
I concur in result only.
/s/ Mark J. Cavanagh