Meemic Insurance Co. v. Jones (Opinion on Application - Reverse CoA)
Annotate this CaseMeemic Insurance Company filed a subrogation claim against Angela Jones, seeking to recover from Jones money it had paid to CitiMortgage, Inc., the mortgagee of a residential house owned by Jones and insured by Meemic, after fire damaged the property. In September 2015, Jones was living at the house when it was damaged by a fire. Meemic paid her $2,500 in partial payment of the claim for insurance benefits. During Meemic’s ensuing investigation, Jones admitted that at the time she secured the policy in 2014, she did not reside at the house but, instead, rented it to a third party. Meemic claimed that Jones’s failure to disclose in the initial policy that her home was being rented to others constituted a material misrepresentation. On the basis of the misrepresentation, Meemic rescinded and voided the insurance policy from its inception and returned Jones’s policy payments. After rescinding the policy, Meemic paid $53,356.49 to CitiMortgage under the lienholder contract of the policy. Jones filed an action against Meemic, claiming breach of contract and sought to recover under the insurance policy. Meemic moved for summary judgment, arguing that it had properly rescinded the policy given Jones’s misrepresentation in the initial policy. The motion was ultimately granted, and Jones' complaint was dismissed with prejudice. In 2018, Meemic filed the underlying action against Jones seeking to recover the $2,500 advance payment made to Jones and the $53,356.49 it had paid to CitiMortgage under the lienholder contract. Jones moved for summary judgment, arguing that she was relieved from any obligations under the insurance policy because Meemic had rescinded the insurance policy; Meemic opposed the motion and filed a countermotion for summary judgment. The Court of Appeal reversed the trial court's grant of summary judgment in favor of Meemic, and Meemic appealed. The Michigan Supreme Court held: an insurer who rescinds a homeowner’s insurance policy that contains a mortgage clause may seek subrogation from the insured under its rescinded policy for the amount paid to the mortgagee under the lienholder contract. The Court of Appeals judgment was reversed because it erred by concluding that Meemic’s rescission of the risk contract precluded it from denying payment to Jones and then asserting rights under the subrogation provision of the lienholder contract.
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