JULIE JACKIMOWICZ V CITIZENS INSURANCE COMPANY OF AMERICA
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STATE OF MICHIGAN
COURT OF APPEALS
JULIE JACKIMOWICZ,
UNPUBLISHED
February 24, 2011
Plaintiff-Appellant,
v
No. 294472
Ingham Circuit Court
LC No. 08-000820-NZ
CITIZENS INSURANCE COMPANY OF
AMERICA, ELDER AGENCY, INC., and
NANCY LAURILA,
Defendants-Appellees.
Before: MURPHY, C.J., and WHITBECK and MURRAY, JJ.
PER CURIAM.
Plaintiff Julie Jackimowicz appeals as of right the trial court’s order granting summary
disposition in favor of defendant Citizens Insurance Company of America (Citizens). We
reverse and remand for entry of judgment in favor of plaintiff.
In July 2007, plaintiff was seriously injured in a motor vehicle accident, which occurred
when the vehicle that plaintiff was driving, her Ford Escape, was struck nearly head-on by a
Corvette that had crossed into her lane of travel. Citizens insured plaintiff and the Ford Escape,
as well as a Dodge Ram owned in part by plaintiff, through a no-fault insurance policy that was
originally issued back in November 2003. Plaintiff submitted a claim to Citizens seeking
personal protection insurance (PIP) benefits and a payment covering losses related to damages to
her car. Citizens denied the claim and rescinded the insurance contract, alleging that plaintiff, in
November 2003, made material misrepresentations and failed to divulge material facts in her
written application for the no-fault insurance policy.
Citizens asserted that plaintiff indicated in the application that the Ram and a newly
purchased Chevy Blazer were garaged in Marquette, Michigan, and that she lived in Marquette,
when in truth, she resided and garaged her vehicles in Lansing, Michigan. Citizens also
contended that plaintiff failed to divulge that she was living with her boyfriend, Christopher
McCormick, in his home in Lansing while she attended Michigan State University’s College of
Law, failed to divulge that he had a drunk driving conviction, failed to divulge that McCormick
was on the title of the Ram along with plaintiff, and failed to divulge that he occasionally drove
the household vehicles. Plaintiff maintained that she did not even fill out any application for a
policy but simply informed her family’s Marquette-area insurance agent, defendant Nancy
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Laurila of defendant Elder Agency, Inc. (EAI), that she wanted coverage for the Blazer.1
According to plaintiff, Laurila took care of the matter and obtained the policy. Plaintiff’s
mother, back in Marquette, signed plaintiff’s name to the bottom of the written application form.
Pursuant to protocol at the time, the written application form itself was not sent to Citizens;
rather, Laurila submitted an electronic application to Citizens via the computer, using
information that she had obtained through the application process or had been aware of from her
history taking care of insurance matters for plaintiff’s family. The written application, which
was filled out by Laurila, was left blank with respect to yes/no questions concerning other drivers
in the household, but the written application did indicate that plaintiff lived at the Marquette
address of her parents. We note that plaintiff faithfully paid the premiums on the policy
throughout the period of time at issue.
Plaintiff filed suit against Citizens, Laurila, and EAI, seeking an order declaring that the
policy was improperly rescinded and that Citizens was contractually obligated to provide
plaintiff with PIP benefits and other coverage under the policy. Plaintiff’s claims against
Citizens consisted of declaratory judgment and breach of contract counts, while the claims
against Laurila and EAI were predicated on negligence, professional malpractice, and violation
of the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq. The trial court
eventually granted Citizens’ motion for summary disposition under MCR 2.116(C)(10), while
denying plaintiff’s cross-motion for summary disposition, finding that plaintiff, or plaintiff’s
mother acting as plaintiff’s agent, made misrepresentations in the application such that Citizens
was entitled to rescind the policy. Plaintiff appeals as of right. After denying several motions
for partial summary disposition filed by Laurila and EAI, those parties and plaintiff stipulated to
the dismissal of the suit after they reached a settlement.
On appeal, plaintiff argues that Citizens did not have the right to rescind the policy on the
basis of purported misrepresentations, where plaintiff did not provide any of the information
incorporated into the application for insurance, the application was completed and signed
without plaintiff’s knowledge, and where plaintiff was never given a chance to review the
application before the insurance was secured. Plaintiff further contends that Citizens was not
entitled to rescind the policy because the information on the hard copy of the application for
insurance was never transmitted to Citizens, the hard copy remained in the custody of the
insurance agent, and because the hard copy of the application was not even completed with
respect to the information at issue in this case. Plaintiff also maintains that her mother was not
her agent in regard to the application for a policy, where there was no evidence of any
communications between the two relative to the application process. Plaintiff additionally
asserts that even if her mother was plaintiff’s agent, she did not make any misrepresentations.
Plaintiff also asserts that her own innocence in the matter requires the payment of benefits even
1
Plaintiff had the Ram and a Toyota Celica, but she traded in the Celica when purchasing the
Blazer in October-November 2003. In May 2007, about two months before the accident, plaintiff
traded in the Blazer for the Escape.
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if her mother was her agent. Plaintiff contends that this case is an example of sloppy practices
by Citizens, not fraud.
Citizens argues that the trial court did not err in granting summary disposition in its favor,
given that plaintiff and/or her mother, acting as plaintiff’s agent, made material
misrepresentations in the application for insurance such that the policy would not have been
issued had the truth been disclosed. According to Citizens, premiums for insurance policies
issued to Lansing area residents are higher than for Marquette area residents. Citizens also
argues that given McCormick’s drunk driving conviction it would never have issued the policy
procured by plaintiff had it known that McCormick was a household member who occasionally
drove the vehicles.
This Court reviews de novo a trial court's decision on a motion for summary disposition.
Allen v Bloomfield Hills School Dist, 281 Mich App 49, 52; 760 NW2d 811 (2008). MCR
2.116(C)(10) provides for summary disposition where there is no genuine issue regarding any
material fact, and the moving party is entitled to judgment or partial judgment as a matter of law.
A motion brought under MCR 2.116(C)(10) tests the factual support for a party's cause of action.
Skinner v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994). A trial court may grant a
motion for summary disposition under MCR 2.116(C)(10) if the pleadings, affidavits, and other
documentary evidence, when viewed in a light most favorable to the nonmovant, show that there
is no genuine issue with respect to any material fact. Quinto v Cross & Peters Co, 451 Mich
358, 362; 547 NW2d 314 (1996), citing MCR 2.116(G)(5). The trial court's task in reviewing
the motion entails consideration of the record evidence and all reasonable inferences arising from
that evidence. Skinner, 445 Mich at 161. “A genuine issue of material fact exists when the
record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon
which reasonable minds might differ.” West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d
468 (2003). A court may only consider substantively admissible evidence actually proffered
relative to a motion for summary disposition brought under MCR 2.116(C)(10). Maiden v
Rozwood, 461 Mich 109, 121; 597 NW2d 817 (1999). The trial court is not permitted to assess
credibility, to weigh the evidence, or to determine facts, and if material evidence conflicts, it is
not appropriate to grant a motion for summary disposition under MCR 2.116(C)(10). Skinner,
445 Mich at 161; Hines v Volkswagen of America, Inc, 265 Mich App 432, 437; 695 NW2d 84
(2005).
“It is a well-established rule that ‘[w]here a policy of insurance is procured through the
insured's intentional misrepresentation of a material fact in the application for insurance, and the
person seeking to collect the no-fault benefits is the same person who procured the policy of
insurance through fraud, an insurer may rescind an insurance policy and declare it void ab
initio.”’ Roberts v Titan Ins Co (On Reconsideration), 282 Mich App 339, 359-360; 764 NW2d
304 (2009) (citation omitted; alteration in original); see also Lake States Ins Co v Wilson, 231
Mich App 327, 331; 586 NW2d 113 (1998); Hammoud v Metro Prop & Cas Ins Co, 222 Mich
App 485, 488; 563 NW2d 716 (1997); Farmers Ins Exch v Anderson, 206 Mich App 214, 218;
520 NW2d 686 (1994). We note that this Court has also stated that if an insurer relied on an
insured’s misrepresentations, rescission may be appropriate even if the misrepresentations were
unintentional. Lake States, 231 Mich App at 331; Lash v Allstate Ins Co, 210 Mich App 98, 103;
532 NW2d 869 (1995). “Reliance may exist when the misrepresentation relates to the insurer’s
guidelines for determining eligibility for coverage.” Lake States, 231 Mich App at 331. A
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material misrepresentation occurs when the misrepresentation “substantially increase[s] the risk
of loss insured against so as to bring about a rejection of the risk or the charging of an increased
premium.” Darnell v Auto-Owners Ins Co, 142 Mich App 1, 9; 369 NW2d 243 (1985); see also
Katinsky v Auto Club Ins Ass’n, 201 Mich App 167, 170; 505 NW2d 895 (1993) (“A false
representation in an application for no fault insurance that materially affects the acceptance of
the risk entitles the insurer retroactively to void or cancel a policy”). The misrepresentation need
not causally relate to the accident that results in the injury giving rise to the claim in order to be
material. Darnell, 142 Mich App at 9; Auto-Owners Ins Co v Comm’r of Ins, 141 Mich App
776, 781-782; 369 NW2d 896 (1985). In general, an insurer is estopped from asserting fraud to
rescind an insurance policy relative to mandatory coverage once an innocent party is injured in
an accident in which coverage was in effect with respect to the relevant vehicle. Lake States,
231 Mich App at 331; Hammoud, 222 Mich App at 488 (“right to rescind ceases to exist once
there is a claim involving third party”). Only the claim by an insured who committed a fraud as
to a policy will be barred, not the claim of an insured under the same policy who is innocent of
fraud. Roberts, 282 Mich App at 360. In Anderson, 206 Mich App at 219, this Court deemed “it
unwise to permit an insurer to deny coverage on the basis of fraud after it has collected
premiums, when it easily could have ascertained the fraud at the time the contract was formed.”
The reasons given by Citizens for rescinding the policy of insurance were
misrepresentations in the insurance application relative to garaging and residency, the
identification of household members or additional drivers, the identification of all titled owners,
and the identification of any household drivers who had drunk driving convictions or restricted
licenses within the past five years. Looking solely at the conduct and communications of
plaintiff, without consideration of her mother’s actions, we conclude that there is no genuine
issue of material fact that plaintiff did not engage in fraud or make misrepresentations with
respect to the insurance application and the matters cited by Citizens.
There is no dispute that plaintiff did not fill out the written insurance application, that
plaintiff did not sign the written application, that plaintiff did not view the written application,
that plaintiff did not provide any of the information used by Laurila to fill out the written
application other than possibly the Blazer’s VIN, and that plaintiff was not asked questions
pertaining to her address, the garaging of the vehicles, other household drivers and titled owners,
drunk driving convictions, and restricted licenses. Plaintiff herself had nothing to do with the
written application, and she certainly had no connection with supplying and entering information
for purposes of the electronic transmission to Citizens through the computer system utilized by
EAI and Citizens. Plaintiff’s testimony concerning her phone call to Laurila when plaintiff
purchased the Blazer revealed no discussion whatsoever with respect to the subject matter of the
alleged misrepresentations, and Laurila did not even recall the phone conversation. There was
no documentary evidence indicating that the phone conversation encompassed questions
concerning plaintiff’s address, the garaging of the vehicles, other household drivers and titled
owners, drunk driving convictions, and restricted licenses. Rather, plaintiff’s testimony suggests
that the phone conversation simply entailed a request to cover the newly purchased Blazer with a
no-fault policy, with Laurila indicating that “she would take care of it.” When an underwriter for
Citizens who was involved in the decision to rescind the policy was informed that plaintiff had
not signed the application, she responded by testifying that, if true, plaintiff did not make any
misrepresentations.
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Given the very limited extent of plaintiff’s involvement in the application process and the
lack of any evidence reflecting inquiry by Laurila or Citizens directed to plaintiff on the matters
related to the alleged misrepresentations, we cannot conclude that plaintiff engaged in fraud or
made misrepresentations, intentional or otherwise. Citizens did not base its decision to rescind
the policy on the premise that plaintiff should have divulged the information at issue without
prompting or absent query.
Citizens relies on Cunningham v Citizens Ins Co of America, 133 Mich App 471; 350
NW2d 283 (1984), in support of its case for rescission. However, in Cunningham, this Court
allowed rescission where the plaintiff applicant outright lied to the insurance agent when asked
whether he had been convicted of drunk driving within the last five years; the applicant said “no”
despite being convicted of drunk driving a year and a half earlier. We have no such inquiry
followed by a lie or non-response in the case at bar relative to plaintiff.
We wish to briefly comment on the address-garaging issue. On the basis of plaintiff’s,
her mother’s, and even Laurila’s testimony, there does not appear to be any dispute that Laurila
knew that plaintiff was living in Lansing and attending law school when the application was
prepared in November 2003.2 And, on the issue of address alone, even an adjuster and
underwriter for Citizens testified that a student can use his or her parents’ address while
attending school. The debate concerning plaintiff’s address is focused on whether the move to
Lansing was temporary or permanent and whether she was financially independent, with Citizens
emphasizing that plaintiff changed her address to Lansing on her driver’s license, registered to
vote in Lansing, and that plaintiff received no financial assistance from her parents. Plaintiff
indicated that she had no specific plans to necessarily stay in Lansing following law school and
that she unsuccessfully sought to find employment as an attorney in the Marquette area; she was
apparently prepared to go wherever she could find employment. It is true that plaintiff was
financially independent.
Even assuming that plaintiff, on inquiry, had informed Citizens that her address was in
Marquette and that the vehicles were garaged in Marquette, there is no basis for rescission
despite premiums being higher in Lansing than in Marquette. First, given that Laurila knew that
plaintiff was living in Lansing and attending law school and that Laurila filled in the address
information on the written application, the onus was on her to inquire more deeply if there was
any concern about plaintiff’s actual status as it could have easily been ascertained. See
2
We note that “[w]hen an insurance policy ‘is facilitated by an independent insurance agent or
broker, the independent insurance agent or broker is considered an agent of the insured rather
than an agent of the insurer.’” Genesee Foods Services, Inc v Meadowbrook, Inc, 279 Mich App
649, 654; 760 NW2d 259 (2008), quoting West American Ins Co v Meridian Mut Ins Co, 230
Mich App 305, 310; 583 NW2d 548 (1998). While Laurila was an independent insurance agent,
we find it unnecessary to classify her as Citizens’ agent in order to merely attribute her
knowledge of the circumstances to Citizens for purposes of misrepresentation and reliance.
Laurila processed the application on behalf of Citizens.
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Anderson, 206 Mich App at 219. Second, the fact that there were two claims made and paid
under the policy in 2005 and 2006 relative to damages occurring both times in the Lansing area,
hundreds of miles away from Marquette, after investigation by an adjuster, supports a conclusion
that Citizens could have easily ascertained whether plaintiff was permanently residing in
Lansing. Next, it is reasonably arguable that the move was “temporary” under the
circumstances, when viewed from plaintiff’s perspective in November 2003, despite the changes
in the driver’s license and as to her voter registration card. Next, we do not see any particular
question on the written application asking where the vehicles are to be garaged. Moreover, with
respect to the issue of garaging, the record and logic would dictate that Laurila knew that the
vehicles, especially the Blazer, were with plaintiff in Lansing and not sitting idle in Marquette.
And again, this information could have easily been ascertained if Laurila had any doubts
concerning the garaging location. Finally, an underwriter for Citizens testified that, had the only
problem been with plaintiff’s address and the garaging of the vehicles, Citizens would not have
rescinded the policy.
Although the trial court examined the conduct and communications of plaintiff’s mother,
finding that she made misrepresentations and was acting as plaintiff’s agent, we conclude that it
was improper to take into consideration the actions of plaintiff’s mother and to apply agency law,
where plaintiff, the injured insured, was innocent of making any misrepresentations.
Plaintiff claims that she is an innocent insured party who made no misrepresentations and
did not engage in fraud, thereby falling into the exception to the rule of rescission. Roberts, 282
Mich App at 360; Lake States, 231 Mich App at 331. Caselaw indicates that an innocent person
seeking benefits is entitled to the benefits, regardless of material misrepresentations made by a
person who qualifies as the innocent person’s agent and who procured the policy by submitting
an application.
In Roberts, 282 Mich App 339, a mother’s son, the plaintiff, was injured while joyriding
in a household vehicle generally used by the plaintiff’s mother, and PIP benefits were sought by
the plaintiff from the defendant insurer under a policy issued by the insurer to the plaintiff’s
mother. It was discovered that the plaintiff’s mother had lied on the insurance application when
she stated that she owned a particular vehicle when it was actually owned by another one of her
sons. The plaintiff himself had made no misrepresentations to the insurer, but the insurer
maintained that it was entitled to void the policy ab initio based on the mother’s
misrepresentations. Id. at 342-347. The Roberts panel disagreed with the insurer and invoked
the innocent third party exception to allow the plaintiff to recover benefits. Id. at 359-361.
The Court noted that there was no dispute that the plaintiff’s mother had lied about the
vehicle’s ownership, that the misrepresentation was material to the risk because the insurer
would have increased the premium had it known the truth about the vehicle’s ownership, and that
the policy was procured through the mother’s intentional misrepresentation in the insurance
application. Id. at 360. The Court held:
[A]n insurer may not void a policy of insurance ab initio where an
innocent third party is affected. Therefore, only the claim of an insured who has
committed the fraud will be barred, leaving unaffected the claim of any insured
under the policy who is innocent of fraud. [The insurer] argues that this innocent
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third party doctrine does not apply in this case because, given that [the plaintiff] is
a minor, it is [his mother] who is actually responsible for paying his medical
expenses and therefore she is the person actually seeking to collect any insurance
benefits.
However, caselaw demonstrates that the innocent third party doctrine
ensures coverage for any person who is innocent of participation in the alleged
fraud. For example in Darnell[, 142 Mich App 1], this Court held that the plaintiff
was entitled to recover benefits where his wife, not the plaintiff, made the alleged
misrepresentations. In contrast, in Hammoud[, 222 Mich App 485], this Court
held that the plaintiff was not entitled to recover benefits because he was actively
involved in defrauding the insurer by allowing his older brother to obtain the
insurance policy by misrepresenting the plaintiff's status as a driver of the vehicle.
Therefore, the relevant inquiry is whether the injured third party was innocent
with respect to the misrepresentation made to the insurance company or was
actively involved in defrauding the insurer.
Here, it was [the mother], not [the plaintiff], who is alleged to have
misrepresented facts on the application for insurance. Consequently, while we
certainly do not condone [the mother’s] actions, the fact remains that [the
plaintiff] made no misrepresentation and coverage may not be denied to him on
the basis of his mother's improper actions. [Id. at 360-361 (citations and internal
quotations omitted).]
Plaintiff here was innocent with respect to any misrepresentations, and there was no
evidence that she was actively involved in defrauding the insurer in the application process,
where plaintiff testified, without evidence to the contrary, that she had no conversations or
discussions with her mother about the application and that she had nothing to do with the written
application. While the Court in Roberts did not specifically address the law of agency, certainly
the mother there, like plaintiff’s mother here, could have qualified as an agent of the injured
insured. And in Roberts, the plaintiff’s mother stood to benefit, despite her misrepresentations,
by not having to pay her child’s medical expenses. Here, plaintiff’s mother did not receive any
comparable benefit in executing the written application.
The Roberts panel cited Darnell, 142 Mich App 1, in support of its position. Roberts,
282 Mich App at 361. And Darnell makes an even stronger case for not imposing the law of
agency.
In Darnell, the plaintiff husband was injured in a motor vehicle accident and sought PIP
benefits under a policy of insurance. His wife had executed the insurance application on his
behalf, and his wife, when asked by the insurer whether any drivers in the household had
previously had their licenses revoked or restricted in the last three years, answered in the
negative. The plaintiff, however, did have a restricted license, even though his wife claimed that
she did not know about the restriction.
The plaintiff husband himself made no
misrepresentations to the insurer. The insurer declined to pay benefits, asserting that the policy
was void ab initio due to the wife’s material misrepresentation in the application. Darnell, 142
Mich App at 5-7. This Court held:
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Of most importance, however, is that, because plaintiff himself made no
misrepresentation, Auto-Owners must justify rescission on the basis of Mrs.
Darnell's statements. But, Mrs. Darnell's misrepresentation does not affect
plaintiff's coverage. Auto-Owners argues that it was authorized to void the policy
ab initio on the basis of the insured's agent's (Mrs. Darnell's) misrepresentation of
a material fact. Auto-Owners reasons that plaintiff would not have been insured
but for the misrepresentation of his wife who, in addition to being his agent, was
a contractual insured under the policy. However, “only the claim of an insured
who has committed the fraud” will be barred, leaving unaffected “the claim of any
insured under the policy who is innocent of fraud.” Consequently, while we
certainly do not countenance the actions of Mrs. Darnell in this case, the fact
remains that plaintiff made no misrepresentation, and coverage may not be denied
him on the basis of his spouse's improper actions. We hold that summary
judgment was properly granted in favor of plaintiff below[.] [Darnell, 142 Mich
App at 10-11 (citations omitted; emphasis added).]
Looking solely at the conduct and communications of plaintiff, without consideration of
her mother’s actions, we conclude that there is no genuine issue of material fact that plaintiff did
not engage in fraud or make misrepresentations with respect to the insurance application and the
matters cited by Citizens. Accordingly, plaintiff was entitled to judgment on her motion for
summary disposition, and the trial court erred in denying that motion and in granting Citizens’
motion for summary disposition. Citizens is ordered to pay the benefits available under
plaintiff’s policy.
Reversed and remanded for entry of judgment in favor of plaintiff. Plaintiff, having
prevailed in full, is awarded taxable costs under MCR 7.219. We do not retain jurisdiction.
/s/ William B. Murphy
/s/ William C. Whitbeck
/s/ Christopher M. Murray
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