Title: Meemic Ins. Co. v. Fortson (Opinion - Leave Granted)

State: michigan

Issuer: Michigan Supreme Court

Document:

MEEMIC INSURANCE COMPANY v FORTSON
 
Docket No. 158302.  Argued November 6, 2019 (Calendar No. 2).  Decided July 29, 2020. 
 
 
Meemic Insurance Company brought an action in the Berrien Circuit Court against Louise 
M. Fortson and Richard A. Fortson, individually and as conservator of their son, Justin Fortson, 
alleging that Richard and Louise had fraudulently obtained payment for attendant-care services 
they did not provide to Justin.  Richard and Louise were named insureds on a no-fault insurance 
policy issued by Meemic.  Justin was considered an insured person under the policy because he 
was a “resident relative” as defined by the policy and because under MCL 500.3114(1) of the no-
fault act, MCL 500.3101 et seq., he was a relative domiciled in the same house as a named insured.  
The policy contained an antifraud provision stating that the policy was void if any insured person 
intentionally concealed or misrepresented any material fact or circumstance relating to the 
insurance, the application for it, or any claim made under it.  In 2009, Justin was injured when he 
fell from the hood of a motor vehicle, necessitating constant supervision and long-term care.  
Richard and Louise opted to provide attendant care to Justin in their home on a full-time basis.  
Justin received benefits under his parents’ no-fault policy with Meemic, and from 2009 until 2014, 
Louise submitted payment requests to Meemic for the attendant-care services she and her husband 
provided, asserting that they provided full-time supervision; Meemic routinely paid the benefits.  
In 2013, Meemic investigated Richard and Louise’s supervision of Justin and discovered that they 
had not provided him with daily direct supervision; in fact, Justin had been periodically jailed for 
traffic and drug offenses and had spent time at an inpatient substance-abuse rehabilitation facility 
at times when Richard and Louise stated they were providing full-time supervision.  Meemic 
terminated Justin’s no-fault benefits and filed suit, asserting claims of breach of contract, fraud, 
common-law statutory conversion, and unjust enrichment.  Meemic alleged that Louise and 
Richard had fraudulently represented the attendant-care services they claimed to have provided 
and sought to void the policy under its contractual antifraud provision, terminate any future 
liability for benefits, and require Louise and Richard to reimburse Meemic for the fraudulent 
attendant-care statements.  Louise and Richard counterclaimed, arguing that Meemic breached the 
insurance contract by terminating Justin’s benefits and refusing to pay for attendant-care services.  
Meemic moved for summary disposition, and the court, John M. Donahue, J., initially denied the 
motion, reasoning that under the innocent-third-party rule, Meemic could not rescind the policy 
on the basis of fraud to avoid liability for benefits owed to Justin, an innocent third party.  Meemic 
moved for reconsideration of that decision after the Court of Appeals later concluded in Bazzi v 
 
Michigan Supreme Court 
Lansing, Michigan 
Syllabus 
 
Chief Justice: 
Bridget M. McCormack 
Chief Justice Pro Tem: 
David F. Viviano 
 
 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Richard H. Bernstein 
Elizabeth T. Clement 
Megan K. Cavanagh 
This syllabus constitutes no part of the opinion of the Court but has been  
prepared by the Reporter of Decisions for the convenience of the reader. 
Reporter of Decisions: 
Kathryn L. Loomis 
Sentinel Ins Co, 315 Mich App 763 (2016),1 that the innocent-third-party rule was no longer good 
law.  On reconsideration, the trial court granted summary disposition in favor of Meemic.  Louise 
and Richard appealed.  The Court of Appeals, MARKEY, P.J., and M. J. KELLY, J. (CAMERON, J., 
dissenting), reversed, first reasoning that Bazzi did not apply because the fraud in this case did not 
occur in the procurement of the policy and did not affect the validity of the contract.  The Court 
concluded, however, that the policy’s antifraud provision was invalid because it would enable 
Meemic to avoid the payment of personal protection insurance (PIP) benefits mandated by MCL 
500.3105.  Judge CAMERON, dissenting, would have affirmed the trial court’s grant of summary 
disposition to Meemic because the policy permitted rescission on the basis of fraud and fraud had 
occurred.  324 Mich App 467 (2018).  The Supreme Court granted Meemic’s application for leave 
to appeal.  503 Mich 1031 (2019).   
 
 
In an opinion by Justice VIVIANO, joined by Chief Justice MCCORMACK, and Justices 
MARKMAN, BERNSTEIN, and CAVANAGH, the Supreme Court held: 
 
 
A no-fault insurance policy may contain contractual defenses to benefits mandated by the 
no-fault act if the defense is provided by the act or the contractual defense is based on a common-
law defense that has not been abrogated by the act; a policy provision may not go beyond either 
statutory or common-law defenses to limit mandatory coverages to a greater extent than either the 
act or the common law.  Meemic did not assert one of the statutory defenses allowed by the no-
fault act, and the contract-based fraud defense was not the type of common-law fraud defense that 
would allow for rescission, the remedy most analogous to that sought under the antifraud 
provision.  Accordingly, the antifraud provision was unenforceable. 
 
 
1.  With regard to motor vehicle insurance policies, the no-fault act governs the coverages 
that are mandated by the act.  Because MCL 500.3105 provides that PIP benefits are mandatory, 
the act controls any questions regarding the award of those benefits.  In contrast, coverages that 
are not required by the no-fault act (that is, optional coverages) are controlled by the language of 
the insurance policy.  With regard to optional coverage, a court must construe and apply 
unambiguous contract provisions as written unless the provision violates a law or one of the 
traditional defenses to the enforceability of a contract applies; that is, unambiguous insurance 
policies are not open to judicial construction and must be enforced according to their unambiguous 
terms unless doing so would violate law or public policy.  Common-law defenses that have not 
been abrogated by the no-fault act are available against claims for coverage mandated by the act.  
Accordingly, a contractual defense to mandatory benefits under the no-fault act is valid and 
enforceable when the defense is provided by the act itself or when the contractual defense is based 
on a common-law defense that has not been abrogated by the act; thus, an insurer may include 
common-law defenses that have not been abrogated by the act in an insurance policy.  However, 
an insurance policy may not go beyond either statutory or common-law defenses to limit 
mandatory coverage to a greater extent than either the act or the common law; to hold otherwise 
would improperly reduce the scope of mandatory coverage required by the no-fault act.  Therefore, 
a provision in an insurance policy that purports to set forth a defense to a claim for mandatory 
coverage is valid and enforceable only to the extent it contains a defense available under the no-
fault act or a common-law defense that has not been abrogated.  
                                                 
1 Aff’d in part and rev’d in part 502 Mich 390 (2018). 
 
2.  If a contract is obtained as a result of fraud or misrepresentation, a party may be entitled 
to a legal or equitable remedy.  At common law, the defrauded party could only seek to rescind 
the contract, that is, avoid the transaction, if the fraud related to the inducement or inception of the 
contract.  While a contractual provision that rescinds a contract because of postprocurement fraud 
is not invalid in all circumstances—specifically, the clause would be valid as applied to a party’s 
failure to perform a substantial part of the contract or one of its essential terms—in general, the 
mere breach of a contract would not entitle the injured party to avoid the contract at common law.   
 
 
3.  In this case, because Meemic did not assert one of the statutory defenses allowed by the 
no-fault act, the question was whether its contract defense, the antifraud provision, provided for 
relief that would have been available under an unabrogated common-law defense; the now-
abrogated innocent-third-party rule was, therefore, not relevant with regard to resolving the case.  
The antifraud provision provided that Meemic could terminate benefit payments to Justin on the 
basis of the fraudulent activity of anyone who happened to be in or out of the car and entitled to 
claim under the policy, and the activity could occur years after the policy was entered and relate 
to any claim or simply to the insurance.  The common-law remedy of rescission was the closest 
analogue to Meemic’s contract-based defense.  Applying the law of rescission, the allegedly 
fraudulent claims did not induce Meemic to enter into the policy, did not deceive Meemic as to the 
policy’s content, and there was no argument or evidence that Richard and Louise’s 
misrepresentations regarding attendant care constituted a failure to perform a substantial part of 
the contract or an essential term such that Meemic could have sought rescission instead of bringing 
an action for damages.  Meemic’s contract-based fraud defense thus failed because it was not the 
type of common-law fraud defense that would allow for rescission, and the contract-based defense 
was, therefore, unenforceable.  The concurrence’s reliance on MCL 500.3220 is misplaced because 
(1) Meemic did not seek to cancel the policy under that statute and the statute did not apply to the 
facts of the case, (2) Meemic did not seek to cancel the policy but, instead, to void coverage and 
stop paying Justin’s PIP benefits, and (3) MCL 500.3220 does not abrogate common-law 
rescission in the context of this case.  The concurrence’s theory also directly conflicts with Titan 
Ins Co v Hyten, 491 Mich 547 (2012), which rejected the assertion that MCL 500.3220 abrogated 
the common-law defense of rescission.  And the concurrence’s analysis does not consider Bazzi v 
Sentinel Ins Co, 502 Mich 390 (2018), and Marquis Hartford Accident & Indemnity (After 
Remand), 444 Mich 638 (1994), which held that fraud and other common-law defenses have not 
been abrogated by the no-fault act.  In addition, the concurrence also misreads 500.3148(2) and 
offers no support of its apparent inference that the provision’s lack of express permission to void 
the policy constitutes an affirmative prohibition on voiding policies based on fraud.   
 
 
Court of Appeals judgment affirmed in result only, Court of Appeals opinion vacated, and 
case remanded to the trial court for further proceedings. 
 
 
 
Justice ZAHRA, joined by Justice CLEMENT, concurring, agreed with the majority that the 
antifraud provision was unenforceable in this case but wrote separately to express disagreement 
with the majority’s analysis, specifically, with its conclusion that the state’s common law had to 
be analyzed to arrive at the same result.  The majority improperly suggests that Michigan’s 
common law and the no-fault act are the only authorities that may be employed to determine the 
validity of a provision in a no-fault policy.  Instead, the approach set forth in Cruz v State Farm 
Mut Auto Ins Co, 466 Mich 588 (2002)—that no-fault policy provisions are allowed if they 
facilitate the goals of the act and are harmonious with the Legislature’s no-fault insurance 
regime—is the correct framework to address the issue in this case and should be reaffirmed.  MCL 
500.3220 limits the ability of a licensed insurer to cancel automobile coverage after a policy has 
been in effect for at least 55 days.  Because Meemic did not do so, the statute plainly prohibited 
Meemic from thereafter canceling the policy, including by operation of the antifraud provision.  
The no-fault act also grants insurers a limited right to challenge claims for PIP benefits because 
they must only pay those claims that are reasonably necessary; by definition, fraudulent charges 
are neither reasonable nor necessary.  MCL 500.3148(2), the only provision in the no-fault act that 
addresses a claimant’s fraudulent proofs of loss for PIP benefits, suggests that an insured remains 
entitled to PIP benefits even after the insured has filed a fraudulent charge.  Under the Cruz 
approach, because the no-fault act provides a remedy for fraudulent proofs of loss and 
contemplates that PIP benefits continue even when prior fraud is proved, the antifraud provision 
in this case contradicts the no-fault act and is unenforceable.  Moreover, the provision thwarts the 
goal of the no-fault act to provide motor vehicle crash victims with assured, adequate, and prompt 
reparation for certain economic loss.  The majority’s holding is overly broad, and its approach for 
determining whether contract language in a no-fault policy is viable may place unwarranted 
constraints on the right to contract.  Its approach erodes the scheme set forth in Cruz because it 
only considers whether the antifraud provision is expressly permitted under the no-fault act or the 
common law, leaving no room for the policy language to do any work.  The majority’s approach 
also ignores that insurers may insert provisions into a no-fault policy that are not rooted in the 
common law or referred to in the no-fault act.  Even if the majority were correct that the antifraud 
provision was a contract-based fraud defense that contemplates the remedy of rescission, MCL 
500.3220 would prevent Meemic from canceling, let alone rescinding the policy; the statute 
provides a limited path for an insurer to cancel a policy, and Meemic failed to follow that path.  
The antifraud provision would improperly allow Meemic to expand that path by allowing it to void 
or cancel the policy in a way not expressly provided by the statute.  Moreover, Meemic did not 
seek to rescind the contract, and the majority’s holding is, therefore, incorrectly premised on an 
analysis of the right of rescission.  Regardless, the no-fault act expressly prohibited Meemic from 
exercising the provision to cancel the policy, let alone from seeking a greater remedy than allowed 
by the act.  Moreover, the term “void’ in the antifraud provision is insufficiently similar to 
rescission given that the meaning of rescission is distinct from the meaning of “void” and 
rescission encompasses a broader range of contractual remedies.  Justice ZAHRA would have 
applied the approach set forth in Cruz and held that the antifraud provision was inconsistent with 
the no-fault act because it attempted to expand the limited path for cancellation set forth in MCL 
500.3220 and the provision was, therefore, void as against public policy.   
 
 
 
 
 
 
 
 
 
 
 
 
©2020 State of Michigan 
 
 
 
 
 
 
 
 
FILED  July 29, 2020 
 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
MEEMIC INSURANCE COMPANY, 
 
 
Plaintiff/Counterdefendant-
Appellant, 
 
 
v 
No. 158302 
 
LOUISE M. FORTSON and RICHARD A. 
FORTSON, Individually and as Conservator 
for JUSTIN FORTSON, 
 
 
 
Defendants/Counterplaintiffs-
Appellees. 
 
 
 
BEFORE THE ENTIRE BENCH  
 
VIVIANO, J.  
In this action, Meemic Insurance Company seeks to void its policy with defendants 
Louise and Richard Fortson and stop paying no-fault benefits to their son.  Although the 
benefits are mandated by statute, Meemic seeks to avoid its statutory obligations by 
enforcing the antifraud provision in the policy.  The issue before the Court is the extent to 
which a contractual defense like the one here is valid and enforceable when applied to 
 
Michigan Supreme Court 
Lansing, Michigan 
OPINION 
 
Chief Justice: 
Bridget M. McCormack  
 
Chief Justice Pro Tem: 
David F. Viviano 
 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Richard H. Bernstein 
Elizabeth T. Clement 
Megan K. Cavanagh 
 
 
 
 
 
2 
 
coverage mandated by the no-fault act, MCL 500.3101 et seq.  We hold that such 
contractual provisions are valid when based on a defense to mandatory coverage provided 
in the no-fault act itself or on a common-law defense that has not been abrogated by the 
act.  Because Meemic’s fraud defense is grounded on neither the no-fault act nor the 
common law, it is invalid and unenforceable.  Accordingly, we affirm the Court of Appeals 
on different grounds and remand the case to the trial court for further proceedings 
consistent with this opinion.1 
I.  FACTS 
In September 2009, defendant Justin Fortson suffered serious injuries when he fell 
from the hood of a moving automobile.  Most significantly, brain damage left him in need 
of constant supervision.  Doctors prescribed long-term care.  Rather than sending Justin to 
a brain-injury rehabilitation center, Justin’s parents, codefendants Richard and Louise 
Fortson, opted to provide 24-hour-a-day attendant care themselves. 
At the time of the accident, Meemic provided no-fault coverage to Justin and his 
parents.  Richard and Louise were the named insureds in the policy.  But Justin was also 
an “insured person” under the policy’s “resident relatives” provision and under MCL 
500.3114(1).2  Meemic agreed to pay the parents $11 an hour to provide attendant-care 
                                              
1 Given our disposition of this case, we need not reach the remaining issues raised by 
Meemic. 
2 MCL 500.3114(1) provides: 
Except as provided in subsections (2), (3), and (5), a personal 
protection insurance policy described in section 3101(1) applies to accidental 
bodily injury to the person named in the policy, the person’s spouse, and a 
 
 
 
3 
 
services to Justin and requested that the Fortsons send Meemic monthly bills documenting 
actual hours spent providing care.  From October 2009 to October 2014, Justin’s parents 
submitted bills for attendant care, and Meemic paid them.  In May 2013, however, the 
insurance company began a formal investigation.  The investigation revealed that between 
September 2012 and July 2014, Justin had been in jail for 233 days and in drug 
rehabilitation for another 78 days.  During this period, Justin’s parents had continued to 
bill Meemic for attendant care.  
Meemic’s current suit against Richard, Louise, and Justin seeks to void the policy 
pursuant to the policy’s antifraud provision so that Meemic is no longer required to pay 
Justin’s claim.3  The antifraud provision provides: 
This entire policy is void if any insured person has intentionally 
concealed or misrepresented any material fact or circumstance relating to: 
A.  This insurance; 
B.  The Application for it; 
C.  Or any claim made under it.    
                                              
relative of either domiciled in the same household, if the injury arises from a 
motor vehicle accident. 
3 In 2010, Meemic canceled the insurance policy for unrelated reasons.  Because the 
cancellation was prospective, it had no effect on Justin’s claim regarding his accident, 
which had occurred before the cancellation.  See Meemic Ins Co v Fortson, 324 Mich App 
467, 479-481; 922 NW2d 154 (2018), citing Stine v Continental Cas Co, 419 Mich 89, 98; 
349 NW2d 127 (1984).  Meemic’s amended complaint included a claim of unjust 
enrichment, seeking restitution for payments made on the basis of the Fortsons’ fraud.  That 
issue was not raised by the Fortsons in this appeal, and our opinion does not address the 
matter. 
 
 
 
4 
 
For the no-fault coverages, “Insured Person(s)” is defined under the policy to include the 
named insureds, who were Louise and Richard; any “resident relative,” which included 
Justin; and “any other person occupying the Insured motor vehicle, or any person, subject 
to the priorities set forth in the [no-fault act], injured as a result of an accident involving 
the Insured motor vehicle while not occupying any motor vehicle.”  (Emphasis omitted.)  
The complaint claims breach of contract, fraud, common-law and statutory conversion, and 
unjust enrichment.  Meemic sought damages and a determination that defendants’ actions 
voided the insurance policy.  The Fortsons filed a counterclaim for the past and future 
attendant-care benefits that Meemic was refusing to pay. 
Meemic moved for summary disposition, asking the trial court to enter an order that 
would void the insurance policy under the policy’s antifraud provision, terminate any 
future liability, and require the Fortsons to reimburse Meemic for the fraudulent attendant-
care statements.  The trial court initially denied the summary disposition motion on the 
basis of the innocent-third-party rule, under which an insurer could not rescind a contract 
on the basis of fraud to avoid liability for benefits owed to innocent third parties.  But 
Meemic moved for reconsideration after the Court of Appeals issued its opinion in Bazzi v 
Sentinel Ins Co, 315 Mich App 763; 891 NW2d 13 (2016), aff’d in part and rev’d in part 
502 Mich 390 (2018), which concluded that the innocent-third-party rule was no longer 
good law.  The trial court subsequently granted Meemic’s motion for summary disposition. 
The Court of Appeals reversed, concluding that its decision in Bazzi was 
inapplicable because the fraud here did not occur in the procurement of the policy—it did 
not, in other words, induce Meemic to enter into the contract with the Fortsons—and thus 
the fraud did not affect the validity of the contract.  Meemic Ins Co v Fortson, 324 Mich 
 
 
 
5 
 
App 467, 475-476 & 476 n 1; 922 NW2d 154 (2018).  The Court held that the policy’s 
antifraud provision was invalid because it would enable Meemic to circumvent the 
payment of statutorily mandated benefits.  Id. at 477-479.  It went on to conclude that even 
if the antifraud provision were valid, at the time they committed fraud, Richard and Louise 
were no longer “insured persons” under the policy, so the antifraud provision did not apply.  
Id. at 479-484.  Judge CAMERON dissented, arguing that the majority had impermissibly 
resurrected the innocent-third-party rule.  Id. at 485-487 (CAMERON, J., dissenting).  
Because the policy permitted rescission on the basis of fraud and fraud occurred here, Judge 
Cameron would have affirmed the trial court’s grant of summary disposition to Meemic.  
Id. at 489-493. 
We granted Meemic’s application for leave to appeal.  Meemic Ins Co v Fortson, 
503 Mich 1031 (2019). 
II.  STANDARD OF REVIEW 
We review de novo a trial court’s decision on a motion for summary disposition.  
DeFrain v State Farm Mut Auto Ins Co, 491 Mich 359, 366; 817 NW2d 504 (2012).  In 
addition, statutory interpretation is an issue of law, which we also review de novo.  
Cardinal Mooney High Sch v Mich High Sch Athletic Ass’n, 437 Mich 75, 80; 467 NW2d 
21 (1991).  To the extent this case involves the interpretation of an insurance policy, 
insurance policies are interpreted like any other contract.  See Farm Bureau Mut Ins Co of 
Mich v Nikkel, 460 Mich 558, 566; 596 NW2d 915 (1999) (“The principles of construction 
governing other contracts apply to insurance policies.  Where no ambiguity exists, this 
Court enforces the contract as written.”) (citation omitted).  Like with other contracts, 
 
 
 
6 
 
“[a]ny clause in an insurance policy is valid as long as it is clear, unambiguous and not in 
contravention of public policy.”  Id. at 568 (quotation marks and citation omitted). 
III.  ANALYSIS 
We have described the utopian aims of Michigan’s no-fault act as follows: 
The Michigan No-Fault Insurance Act, which became law on October 
1, 1973, was offered as an innovative social and legal response to the long 
payment delays, inequitable payment structure, and high legal costs inherent 
in the tort (or “fault”) liability system.  The goal of the no-fault insurance 
system was to provide victims of motor vehicle accidents assured, adequate, 
and prompt reparation for certain economic losses.  The Legislature believed 
this goal could be most effectively achieved through a system of compulsory 
insurance, whereby every Michigan motorist would be required to purchase 
no-fault insurance or be unable to operate a motor vehicle legally in this state.  
Under this system, victims of motor vehicle accidents would receive 
insurance benefits for their injuries as a substitute for their common-law 
remedy in tort.  [Shavers v Attorney General, 402 Mich 554, 578-579; 267 
NW2d 72 (1978).] 
Whether the no-fault act has lived up to its billing is the subject of an ongoing and 
vigorous policy debate.4  But one thing that is not open to debate is that the act governs the 
coverages it mandates, and the insurance policy controls coverages that are optional (i.e., 
not required by the act): 
[Personal protection insurance (PIP)] benefits are mandated by statute under 
the no-fault act, MCL 500.3105; MSA 24.13105, and, therefore, the statute 
is the “rule book” for deciding the issues involved in questions regarding 
awarding those benefits.  On the other hand, the insurance policy itself, which 
is the contract between the insurer and the insured, controls the interpretation 
                                              
4 The Legislature passed major changes to the no-fault act in 2019.  The act took immediate 
effect, but certain provisions did not become operative until later dates.  See Public Acts 
21 and 22 of 2019.  The changes are not pertinent to this action, and all references in this 
opinion are to the version of the no-fault act in effect before the amendments. 
 
 
 
7 
 
of its own provisions providing benefits not required by statute.  [Rohlman v 
Hawkeye-Security Ins Co, 442 Mich 520, 524-525; 502 NW2d 310 (1993).][5] 
In a footnote in Rohlman, we explained why the no-fault act governs the coverages 
mandated by the act: 
The policy and the statutes relating thereto must be read 
and construed together as though the statutes were a part of the 
contract, for it is to be presumed that the parties contracted with 
the intention of executing a policy satisfying the statutory 
requirements, and intended to make the contract to carry out its 
purpose. 
A policy of insurance must be construed to satisfy the 
provisions of the law by which it was required, particularly 
when the policy specifies that it was issued to conform to the 
statutory requirement; and where an insurance policy has been 
issued in pursuance of the requirement of a statute which 
forbids the operation of a motor vehicle until good and 
sufficient security has been given, the court should construe 
this statute and the policy together in the light of the legislative 
purpose.  [12A Couch, Insurance, 2d (rev ed), § 45:694, 
pp 331-332.] 
The definition[s] in an automobile liability insurance 
policy required by statute, of the motor vehicles covered by it, 
[are] to be construed with reference to statutes with which it 
was intended to comply . . . .  [Id., § 45:695, p 333.] 
We think the same would hold true for no-fault policies.  [Rohlman, 
442 Mich at 525 n 3 (alterations in original)]. 
                                              
5 See also Cohen v Auto Club Ins Ass’n, 463 Mich 525, 531; 620 NW2d 840 (2001) (“The 
Legislature requires a Michigan motorist to maintain a no-fault policy that includes certain 
elements mandated by law.  Those required coverages are the bedrock of the no-fault 
system and, as we have held on many occasions, are not subject to removal by policy 
language that conflicts with the statute.”); Husted v Auto-Owners Ins Co, 459 Mich 500, 
512; 591 NW2d 642 (1999) (“This Court has indicated that a policy exclusion that conflicts 
with the mandatory coverage requirements of the no-fault act is void as contrary to public 
policy.”), citing Citizens Ins Co of America v Federated Mut Ins Co, 448 Mich 225, 232; 
531 NW2d 138 (1995).  
 
 
 
8 
 
In Rory v Continental Ins Co, 473 Mich 457, 461; 703 NW2d 23 (2005), an optional-
coverage case involving a claim for uninsured motorist benefits, we held that “unless a 
contract provision violates law or one of the traditional defenses to the enforceability of a 
contract applies, a court must construe and apply unambiguous contract provisions as 
written.”  In particular, we held “that an unambiguous contractual provision providing for 
a shortened period of limitations is to be enforced as written unless the provision would 
violate law or public policy . . . [and that a] mere judicial assessment of ‘reasonableness’ 
is an invalid basis upon which to refuse to enforce contractual provisions.”  Id. at 470.  We 
noted that “[e]xamples of traditional defenses include duress, waiver, estoppel, fraud, or 
unconscionability.”  Id. at 470 n 23; see also Titan Ins Co v Hyten, 491 Mich 547, 554; 817 
NW2d 562 (2012) (“[B]ecause insurance policies are contracts, common-law defenses may 
be invoked to avoid enforcement of an insurance policy, unless those defenses are 
prohibited by statute.”). 
In the context of mandatory benefits, the Court has also addressed whether common-
law defenses remain available.  In Marquis v Hartford Accident & Indemnity (After 
Remand), 444 Mich 638, 652; 513 NW2d 799 (1994), we held “that the common-law rule 
requiring an injured party in a contract or tort action to mitigate damages applies in suits 
for work-loss benefits under the no-fault act.”  And in Bazzi v Sentinel Ins Co, 502 Mich 
390, 400-401; 919 NW2d 20 (2018), this Court held that a common-law fraudulent-
procurement defense may be raised to a claim for coverage mandated by the no-fault act.6  
                                              
6 In Bazzi, because the plaintiff was a relative domiciled in the same household as the 
policyholder, he was entitled to no-fault benefits under MCL 500.3114(1). 
 
 
 
9 
 
Thus, we have stated that to the extent that common-law defenses remain in force and 
effect, they may apply in certain circumstances to claims for mandatory coverage.7  
                                              
7 The extent to which the no-fault act abrogated common-law defenses to claims for 
mandatory benefits remains something of an open question.  In Titan, 491 Mich at 554, 
this Court noted that these defenses apply unless they are “prohibited by statute.”  That 
makes sense in cases like Titan that involve claims for optional coverage (i.e., coverage 
above the minimum liability amount required by the no-fault act).  Id. at 552 n 2.  In those 
cases, we have said that the policy is “construed without reference to the no-fault act . . . .”  
Twichel v MIC Gen Ins Corp, 469 Mich 524, 533; 676 NW2d 616 (2004); see also Rory, 
473 Mich at 466 (“[T]he rights and limitations of such coverage are purely contractual and 
are construed without reference to the no-fault act.”).  Accordingly, “the insurance policy 
itself, which is the contract between the insurer and the insured, controls the interpretation 
of its own provisions providing benefits not required by statute.”  Rohlman, 442 Mich at 
525.  Thus, like with other contracts, “[a]ny clause in an insurance policy is valid as long 
as it is clear, unambiguous and not in contravention of public policy.”  Farm Bureau Mut 
Ins Co of Mich, 460 Mich at 568 (quotation marks and citation omitted); see also Cruz v 
State Farm Mut Auto Ins Co, 466 Mich 588, 594; 648 NW2d 591 (2002) (“[W]here contract 
language is neither ambiguous, nor contrary to the no-fault statute, the will of the parties, 
as reflected in their agreement, is to be carried out, and thus the contract is enforced as 
written.”).  So a more precise statement of our rule is that when optional coverage is 
involved, the policy is construed without reference to the no-fault act, except that a court 
may look to see if the contract language contravenes the no-fault act or other sources of 
public policy in determining whether the contract language is enforceable.   
 
Bazzi, 502 Mich at 400-401, was a mandatory-benefits case, and it thus addressed 
the separate question of whether a no-fault insurer could raise the common-law defense of 
fraud in the procurement of the policy to a claim for coverage mandated by the no-fault act 
or whether the Legislature abrogated that defense when it enacted the no-fault act.  Bazzi 
cited Titan to support its analysis of this issue, even though Titan did not involve the issue 
of whether the common-law defense of fraud was abrogated by the mandatory coverage 
provisions of the no-fault act (and logically could not have involved that issue because it 
did not involve a claim for such benefits).  Id. at 400, citing Titan, 491 Mich at 554-555.  
Bazzi also cited a more common approach for deciding this issue, asking whether the 
Legislature clearly sought to abrogate the common law.  See Bazzi, 502 Mich at 400 
(“When the Legislature intends to limit the common-law remedies available to an insurer 
for misrepresentation or fraud, that intent is clearly reflected in the language employed in 
the statute.”); see also People v Moreno, 491 Mich 38, 41; 814 NW2d 624 (2012) (“While 
the Legislature has the authority to modify the common law, it must do so by speaking in 
‘no uncertain terms.’ ”) (citation omitted).  Elsewhere, however, we have noted that 
 
 
 
10 
 
In this case, by contrast, we are confronted with a contractual fraud defense to a 
claim for coverage mandated by the no-fault act.  The caselaw discussed above establishes 
that contractual terms are governed by the no-fault act, yet at the same time we have held 
that common-law defenses not abrogated by the no-fault act remain available in claims for 
mandatory coverage.  The upshot is that insurers can avail themselves of both statutory 
defenses and common-law defenses that the no-fault act has not displaced.   
It would make little sense to say that an insurer can invoke common-law defenses 
when sued but cannot place those defenses in its contract.  By the same token, we have 
never indicated that an insurer’s contract can go beyond either the statutory or common-
law defenses and thereby limit mandatory coverage to a greater extent than either the statute 
or the common law.  To allow such provisions would reduce the scope of the mandatory 
coverage required by the no-fault act, as supplemented by the common law.  It would, in 
short, vitiate the act.  This result is plainly prohibited by our longstanding caselaw that 
forbids parties from contracting to vitiate an insured’s duty to promptly pay benefits as 
required by the no-fault act.  See, e.g., Cruz v State Farm Mut Auto Ins Co, 466 Mich 588, 
                                              
“[w]hether or not a statutory scheme preempts the common law” depends on legislative 
intent, and when that intent is manifested in “comprehensive legislation prescrib[ing] in 
detail a course of conduct to pursue and the parties and things affected, and designat[ing] 
specific limitations and exceptions, the Legislature will be found to have intended that the 
statute supersede and replace the common law dealing with the subject matter.”  Millross 
v Plum Hollow Golf Club, 429 Mich 178, 183; 413 NW2d 17 (1987).   
We have never addressed the apparent tension between these standards in the no-
fault context or directly addressed the broader claim of whether the no-fault act is 
sufficiently comprehensive for us to conclude that the Legislature intended it to supersede 
and replace all of the common law as it relates to mandatory benefits.  Because the issue 
was not raised by the parties, however, we need not address it in the present case.  
 
 
 
11 
 
598; 648 NW2d 591 (2002) (holding that when a contractual provision “contravenes the 
requirements of the no-fault act by imposing some greater obligation upon one or another 
of the parties, [it] is, to that extent, invalid”).8  For these reasons, a provision in an insurance 
policy purporting to set forth defenses to mandatory coverage is only valid and enforceable 
to the extent it contains statutory defenses or common-law defenses that have not been 
abrogated. 
The question we are left with is whether Meemic’s contract-based fraud defense is 
available under the no-fault act or whether it is a common-law defense that has not been 
abrogated.  If the contractual defense is properly derived from either source, it is valid; if 
not, then it goes beyond what Meemic can assert to avoid mandatory coverage and is 
invalid and unenforceable. 
IV.  APPLICATION 
First, Meemic does not assert a statutory defense.  The no-fault act permits an insurer 
to avoid coverage of PIP benefits under certain enumerated circumstances.  MCL 500.3113 
lists several of these circumstances, including, for example, when a person willingly 
operates an unlawfully taken vehicle and when a person was operating a vehicle as to which 
                                              
8 The concurrence’s preoccupation with Cruz is a bit odd.  In the concurrence’s telling, our 
opinion is “an unwarranted departure” from something it calls “the Cruz standard.”  But 
our opinion does not depart from Cruz—to the contrary, it is the first from our Court to 
apply Cruz’s substantive holding. 
 
 
 
12 
 
he or she was an excluded operator.9  The no-fault act, however, does not provide a fraud 
defense to PIP coverage, so Meemic’s antifraud defense is not statutory.10 
                                              
9 MCL 500.3113 provides: 
A person is not entitled to be paid personal protection insurance 
benefits for accidental bodily injury if at the time of the accident any of the 
following circumstances existed: 
(a) The person was willingly operating or willingly using a motor 
vehicle or motorcycle that was taken unlawfully, and the person knew or 
should have known that the motor vehicle or motorcycle was taken 
unlawfully. 
(b) The person was the owner or registrant of a motor vehicle or 
motorcycle involved in the accident with respect to which the security 
required by section 3101 or 3103 was not in effect. 
(c) The person was not a resident of this state, was an occupant of a 
motor vehicle or motorcycle not registered in this state, and the motor vehicle 
or motorcycle was not insured by an insurer that has filed a certification in 
compliance with section 3163. 
(d) The person was operating a motor vehicle or motorcycle as to 
which he or she was named as an excluded operator as allowed under section 
3009(2). 
(e) The person was the owner or operator of a motor vehicle for which 
coverage was excluded under a policy exclusion authorized under section 
3017. 
MCL 500.3017(1)(b) also provides that an insurer may exclude PIP coverage for any injury 
that occurs while a transportation network driver is providing a prearranged ride.   
10 That is not to say that the no-fault act leaves insurers without recourse.  An insurer can 
reject fraudulent claims without rescinding the entire policy.  See generally Shelton v Auto-
Owners Ins Co, 318 Mich App 648, 655; 899 NW2d 744 (2017).  In addition, an insurer 
may receive attorney fees “in defending against a claim that was in some respect fraudulent 
or so excessive as to have no reasonable foundation.”  MCL 500.3148(2).  And, in certain 
narrow circumstances, an insurer can seek to cancel the policy under MCL 500.3220.  For 
 
 
 
13 
 
Second, we must consider whether Meemic’s fraud defense is available at common 
law.11  As we explained in Titan, 491 Mich at 555, “Michigan’s contract law recognizes 
several interrelated but distinct common-law doctrines—loosely aggregated under the 
rubric of ‘fraud’—that may entitle a party to a legal or equitable remedy if a contract is 
obtained as a result of fraud or misrepresentation.”12  The key phrase is “if a contract is 
obtained as a result of fraud or misrepresentation.”  Id. (emphasis added).  At common law, 
the defrauded party could only seek rescission, or avoidance of the transaction, if the fraud 
                                              
the reasons discussed later in this opinion, however, neither of those statutes is relevant or 
applicable to this case. 
11 It must be emphasized that this analysis is not about whether any common-law defense 
may be available to Meemic.  Rather, we are assessing Meemic’s defense through the lens 
of the antifraud provision in the policy.  But as explained, our caselaw limits contract 
defenses to those available under the no-fault act or the common law.  Thus, contractual 
language in an insurance policy might very well mean something different than the 
common law—but, as discussed, if it purports to provide the insurer a new or more robust 
defense outside the range of available statutory and common-law defenses it would 
circumvent the statute as read in light of the common law and would be, “to that extent, 
invalid.”  Cruz, 466 Mich at 598.  
For that reason, we agree with Meemic’s assertion that it is not seeking equitable 
relief or bringing an independent rescission action; it is simply trying to enforce its contract 
defense.  But because that contract is valid only if it provides for relief that would be 
available under an unabrogated common-law defense, we must examine its request to see 
whether it matches with those common-law defenses.  Here, as discussed more below, 
rescission is the closest common-law analogue to Meemic’s contract defense.  
12 The party asserting actionable fraud must set forth the following elements: 
(1) That defendant made a material representation; (2) that it was false; (3) 
that when he made it he knew that it was false, or made it recklessly, without 
any knowledge of its truth and as a positive assertion; (4) that he made it with 
the intention that it should be acted upon by plaintiff; (5) that plaintiff acted 
in reliance upon it; and (6) that he thereby suffered injury.  [Titan, 491 Mich 
at 555 (quotation marks and citation omitted).] 
 
 
 
14 
 
related to the inducement to or inception of the contract.  Dobbs, Remedies (2d ed, abrg), 
§ 9.5, p 716.13  The rationale for this rule is that “[o]ne who has been fraudulently induced 
                                              
13 The sources supporting this rule are numerous.  See, e.g., Epps v 4 Quarters Restoration 
LLC, 498 Mich 518, 538 n 15; 872 NW2d 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 . . . .”); Berg v Hessey, 268 Mich 599, 605; 256 NW 562 (1934) (“Rescission is not 
a vent for bad bargains unless induced by fraud . . . .”); Cole v Oatman, 234 Mich 128, 
129-130; 207 NW 839 (1926) (“Where a vendee claims that he had been defrauded in the 
purchase of property by misrepresentations as to its condition or value, . . . [h]e may 
rescind the contract . . . .”); Galloway v Holmes, 1 Doug 330, 336-337 (Mich, 1844) (“I am 
aware that many of the cases, and of the elementary books, frequently apply the term void 
to the class of contracts to which the one under consideration belongs, but they oftener, 
perhaps, and certainly with more propriety, employ language which indicates their true 
character; as, that a party lured into a contract by the fraud of another, may disregard, may 
disaffirm, may treat as void the contract . . . .”); 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); Dobbs, § 9.5, p 716 (“Fraud 
in inducing the formation of an agreement . . . warrants rescission or damages[.]”); 1 
Restatement Contracts, 2d, § 164, comment c, p 446 (“No legal effect flows from either a 
non-fraudulent or a fraudulent misrepresentation unless it induces action by the recipient, 
that is, unless he manifests his assent to the contract in reliance on it.”); Black, 1 Rescission 
of Contracts and Cancellation of Written Instruments (1916), § 20, p 37 (“It is a general 
rule that a party who has been induced to enter into any contract, obligation, or engagement 
by means of fraud, deceit, artifice, or trickery practised upon him by the opposite party, 
and who would not have placed himself in the situation in which he now is, if it had not 
been for the fraud or deceit, will be entitled to rescind the contract and demand a restoration 
of the status quo, and may have the aid of a court of equity to accomplish this purpose.”); 
id. at § 24, pp 47-49 (“And further, it is necessary that the fraud, artifice, or representation 
should have been a material inducement to the contract. . . .  Further, the fraud must have 
been inherent in, or at least contemporary with, the very transaction which is sought to be 
set aside. . . .  [T]here must be fraud executed at the time of making the contract or relating 
to a state of affairs then existing.”) (paragraph structure omitted); id. at § 36, pp 87-88 (“To 
be available as ground for the rescission of a contract or obligation, it is necessary that the 
fraud alleged to have been practised by one party upon the other should have been effective 
 
 
 
15 
 
to enter into a contract has not assented to the agreement since the fraudulent conduct 
precludes the requisite mutual assent” to form a contract.  26 Williston, Contracts (4th ed), 
§ 69:1, p 497.14  “Where mutual assent does not exist, a contract does not exist.”  Quality 
Prod & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 372; 666 NW2d 251 (2003).   
This is not to suggest that a contractual provision that rescinds a contract because of 
postprocurement fraud is invalid in all circumstances.  At common law, a contract might 
                                              
in deceiving or misleading him and also in inducing him to enter into the contract or assume 
the obligation.”).   
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, whereas “fraud in 
the factum” “ ‘is[] the sort of fraud that procures a party’s signature to an instrument 
without knowledge of its true nature or contents,” Langley v Fed Deposit Ins Corp, 484 US 
86, 93; 108 S Ct 396; 98 L Ed 2d 340 (1987).  See also Black’s Law Dictionary (10th ed) 
(defining “fraud in the factum” as occurring when the contract “as actually executed differs 
from the one intended for execution by the person who executes it” or when it otherwise 
lacks “legal existence” and defining “fraud in the inducement” as “occurring when a 
misrepresentation leads another to enter into a transaction with a false impression of the 
risks, duties, or obligations involved”); Farnsworth, Contracts (4th ed), § 4.10, p 236 
(explaining that fraud in the inducement “goes only to the ‘inducement,’ ” such as a 
misrepresentation of the quality of goods, while fraud in the factum (or fraudulent 
execution) relates “to the very character of the proposed contract itself, as when one party 
induces the other to sign a document by falsely stating that it has no legal effect”).  
14 This explanation is also reflected in the Restatement (Second) of Contracts, which states, 
“If a party’s manifestation of assent is induced by either a fraudulent or a material 
misrepresentation by the other party upon which the recipient is justified in relying, the 
contract is voidable by the recipient.”  Restatement Contracts, § 164(1), p 445 (emphasis 
omitted).  We have likewise relied on this line of reasoning.  See Otto Baedeker & Assoc, 
Inc v Hamtramck State Bank, 257 Mich 435, 441; 241 NW 249 (1932) (“The testimony 
would also justify the jury in finding that . . . defendant was deceived by plaintiff’s trick 
[i.e., fraud] into executing the instrument without reading it and, therefore, that the minds 
of the parties did not meet on a contract.”).  
 
 
 
16 
 
also be rescinded because of a party’s failure to “ ‘perform a substantial part of the contract 
or one of its essential items[.]’ ”  Innovation Ventures v Liquid Mfg, 499 Mich 491, 510; 
885 NW2d 861 (2016), quoting Rosenthal v Triangle Dev Co, 261 Mich 462, 463; 246 NW 
182 (1933).15  Thus, a postprocurement fraud clause that rescinds a contract would be valid 
as applied to a party’s failure to perform a substantial part of the contract or one of its 
essential terms.  Generally, however, the mere breach of a contract would not entitle the 
injured party to avoid the contract at common law.  See Abbate v Shelden Land Co, 303 
Mich 657, 666; 7 NW2d 97 (1942) (“It is not every partial failure to comply with the terms 
of a contract by one party which will entitle the other party to abandon the contract at 
once.”) (quotation marks and citations omitted).  Rather, “facts which will ordinarily 
warrant the rescission of a contract must have existed at the time the contract was made.”  
1 Black, Rescission of Contracts and Cancellation of Written Instruments (1916), § 5, 
p 8.16  
                                              
15 The Court of Appeals has upheld a fraud-exclusion provision when the fraud related to 
proof of loss on a claim rather than fraud in the procurement or execution of the policy.  
See Bahri v IDS Prop Cas Ins Co, 308 Mich App 420, 425; 864 NW2d 609 (2014); but see 
Shelton, 318 Mich App 648, 652-655; 899 NW2d 744 (2017) (limiting Bahri to when the 
claimant is an insured under the defendant’s policy).  A leading treatise has explained that 
“to avoid a policy on the ground of fraud or false swearing in the proof of loss, the statement 
in question must be material.”  13A Couch, Insurance, 3d (2019 rev ed), § 197:18, pp 48-
49.  In this case, however, because there is no allegation of fraud in relation to Justin’s 
claim for benefits, the Court need not address the issue of whether and to what extent fraud 
related to proof of loss can justify voiding the policy.  Moreover, because this case involves 
fraud by someone other than the claim beneficiary, the Court need not address whether a 
clause voiding a policy for postprocurement fraud would be valid as applied to fraud by an 
individual who is both a policyholder and the claim beneficiary. 
16 At common law, parties to a contract could specify the grounds for rescission, including 
fraud, and establish their scope in the contract.  See, e.g., Crane v O’Reiley, 8 Mich 312, 
315-316 (1860) (enforcing a provision in a contract that allowed one party to void the 
 
 
 
17 
 
In this case, Meemic seeks to enforce a sweeping antifraud provision against the 
claim made by Justin, who was neither a party to the insurance contract nor a beneficiary 
of the claim allegedly obtained by fraud.  As noted, the provision purports to void the entire 
policy if any “insured person” misrepresents a material fact or circumstance “relating to” 
either the “insurance,” the “[a]pplication,” “[o]r any claim made under it.”  And “insured 
person” is defined broadly such that the fraudulent actor need not be the person receiving 
benefits under the policy—indeed an insured person can also be “any person” occupying 
the car or any other person injured as a result of an accident involving the insured motor 
vehicle while not occupying any motor vehicle who is entitled to coverage.  This means 
that under the contract’s terms, Meemic could terminate benefit payments to Justin on the 
basis of the fraudulent activity of anyone who happened to be in or out of the car and 
entitled to claim under the policy, and the activity could occur years after the policy was 
entered and relate to any claim or simply to the “insurance.” 
As the Court of Appeals recognized, the fraudulent activity at issue here did not 
relate to the inception of the contract.  The fraudulent attendant-care bills submitted by 
Justin’s parents neither induced Meemic to enter into the policy nor deceived Meemic as 
                                              
contract upon the default of the other).  This freedom to define fraud is not, however, part 
of the common law that remains available to the insurer or the insured.  If it were otherwise, 
the parties could contract around the statute itself, treating its mandatory provisions as 
negotiable.  Our caselaw, as already explained, has ruled out such an approach.  See, e.g., 
Cruz, 466 Mich at 598 (explaining that parties cannot, by contract, place greater 
requirements on the parties than those that are required by the statute).  Nor do we believe 
that Marquis and Bazzi, by permitting certain common-law rules to remain in place, meant 
to introduce a Trojan horse that would enable the parties to reach agreements in 
contravention of the statute or the well-defined common-law defenses themselves. 
 
 
 
18 
 
to the contents of the policy.17  Meemic could not possibly have relied on any fraudulent 
misrepresentations when it agreed to insure the Fortsons in 2009 because, at the time, they 
had not yet made any of the alleged misrepresentations.18  And there has been no argument 
or showing that the misrepresentations in this case constituted a failure to perform a 
substantial part of the contract or an essential term, such that Meemic could obtain 
rescission instead of bringing an action for damages.  In short, Meemic’s contract-based 
fraud defense fails because it is not the type of common-law fraud that would allow for 
rescission.19   
                                              
17 Contrary to the fears expressed in Judge CAMERON’s dissent, the correct framework for 
deciding this case has nothing to do with the now-abrogated innocent-third-party rule.  See 
Meemic Ins Co, 324 Mich App at 485-487 (CAMERON, J., dissenting).  The Court of 
Appeals decision here came before this Court’s resolution of Bazzi, which, as explained, 
clarified that the criterion for the decision is whether the defense being claimed is available 
under the no-fault act or under common law that has not been displaced by that act.  The 
dispositive question in this case turns upon the nature of the common-law fraud defense—
specifically, that it must relate to the contract’s inception—which is irrelevant to Justin’s 
status as a third party. 
18 Even assuming that fraud related to the proof of loss on a claim occurring after the 
contract was signed could justify rescission, none of the fraudulent acts here pertained to 
Justin’s claim itself or any proof of loss on his part. 
19 Even if the common-law equitable remedy of rescission were available to Meemic, to 
the extent the policy purports to entitle Meemic to rescission as a matter of right (i.e., 
without balancing the equities), it would exceed the limits of the common law.  To the 
extent a claim for rescission is “equitable in nature, it ‘is not strictly a matter of right’ but 
is granted only in ‘the sound discretion of the court.’ ”  Bazzi, 502 Mich at 409, quoting 
Amster v Stratton, 259 Mich 683, 686; 244 NW 201 (1932).  Therefore, before granting 
rescission, a court must “balance the equities,” including by considering the interests of 
third parties who did not commit the fraud.  Bazzi, 502 Mich at 410-411 (quotation marks 
and citation omitted).   
Before they were merged, proceedings in equity and law were distinct, with 
different rules and procedures in each.  See Mich Const 1963, art 6, § 5.  Although the 
distinctions have been erased for most purposes, id., the differences sometimes crop up in 
 
 
 
19 
 
V.  RESPONSE TO THE CONCURRENCE 
The concurrence produces more heat than light.  As best we can tell, it sees this as 
a simple case that can be resolved by reference to a statute about canceling insurance 
policies—MCL 500.3220—that no one has cited and that everyone would agree does not 
apply.  If only our task were so easy!  But contrary to the concurrence, we do not believe 
that MCL 500.3220 is relevant to this case for the following reasons.  
First, Meemic does not seek cancellation of the policy under MCL 500.3220(a), 
which is not surprising because (1) by its terms, the statute does not permit cancellation on 
the facts of this case, as the concurrence recognizes,20 and (2) as noted above, Meemic has 
                                              
discussions of the common law.  Such is the case here.  Although equitable rescission was 
at issue in Bazzi and there was, accordingly, no need to differentiate common-law practices 
in equity and law, it is worth noting here that courts at law have also permitted rescission 
as a legal remedy.  This form of relief was hedged with formalities, most notably that the 
plaintiff had to “tender to the other party, as a precondition of suit, specific restitution of 
everything received under the contract.”  2 Restatement Restitution, 3d, § 54, comment b, 
p 268; see also Chaffee v Raymond, 241 Mich 392, 394-395; 217 NW 22 (1928) (“In an 
action at law, based on rescission, a tender is a prerequisite. . . .  In equity, however, the 
rule is not so rigid, for there the bill must make profert of return of what has been received, 
and the decree will place the parties in status quo, as far as possible.”); Witte v Hobolth, 
224 Mich 286, 290; 195 NW 82 (1923) (“A bill in equity praying rescission proceeds on 
the theory that there has been no rescission, not on the theory that rescission has already 
been accomplished.  Were plaintiff to sue at law for the money he paid defendant, he 
should, before suit, restore, or tender restoration of, the property he received, that by his 
own act he thus may have legal right and title to the money.”).  According to the 
Restatement, the formalities gave courts at law considerable discretion, almost akin to that 
wielded by equity courts.  Restatement Restitution & Unjust Enrichment, § 54, comment b, 
p 268.  In any event, Meemic’s contract did not require presuit tender, nor is there any 
evidence that Meemic made such a tender here.  Thus, Meemic has not invoked rescission 
at law, and any distinction between legal and equitable remedy is irrelevant to the outcome.   
20 Section 3220(a) provides, in pertinent part, “Subject to the following provisions no 
insurer licensed to write automobile liability coverage, after a policy has been in effect 55 
days or if the policy is a renewal, effective immediately, shall cancel a policy of automobile 
liability insurance except for any 1 or more of the following reasons . . . [t]hat during the 
 
 
 
20 
 
already canceled the policy for unrelated reasons, see note 3 of this opinion.  Second, apart 
from the statute, cancellation is not even the type of remedy Meemic is seeking.  As the 
concurrence itself recognizes, cancellation applies only prospectively and thus leaves in 
place all claims that vested before the cancellation.  See post at 10 n 22.  See also Titan, 
491 Mich at 567; 2 Couch, Insurance, 3d (2010 rev ed), § 30:25, pp 53-55.  Here, Justin’s 
rights vested when he suffered the injuries that left him in need of attendant care, and 
canceling the policy now would not relieve Meemic from liability.  Rather, in the language 
of the antifraud provision, Meemic seeks to “void” coverage and cease payment of Justin’s 
PIP benefits.  In other words, Meemic wants to rescind the policy to the extent it requires 
Meemic pay on this claim, meaning it wants to void the relevant policy provisions at least 
from the time the claim arose, if not from the policy’s inception.21   
                                              
55 days following the date of original issue thereof the risk is unacceptable to the insurer.”  
(Paragraph structure omitted.)  This provision clearly does not apply because it is 
undisputed that Meemic did not reassess the risk within the 55 days after the policy was 
issued.  We also agree with the concurrence that MCL 500.3220(b), which provides for 
cancellation if the operator’s license is suspended or revoked during the policy period, is 
plainly inapplicable to the fraud defense Meemic is raising now. 
21 Contrary to the concurrence, other courts including the Court of Appeals below, have 
interpreted a contractual provision allowing a party to “void” a contract as providing for 
rescission.  See Meemic, 324 Mich App at 477 n 1; see also Great American Reserve Ins 
Co of Dallas v Strain, 377 P2d 583, 586-587 (Okla, 1962) (“The word ‘void’ admits of 
more than one meaning.  A contract may be void in the sense of being illegal; if so, the 
obligation, being prohibited by law, is a nullity in its contemplation; hence incapable of 
affirmance, ratification and enforcement.  In some context the word void may be construed 
as meaning merely voidable; that is, the contract continues in force and effect until its 
timely repudiation or rescission by an affirmative act of the party entitled to avoid the 
obligation.  It is the latter meaning of the term void that the law attaches to a policy clause 
such as that under consideration. . . .  Non-compliance with, or breach of, a condition such 
as that which defendant invoked in its defense does not operate to extinguish the policy or 
 
 
 
21 
 
Third, and finally, MCL 500.3220 does not abrogate common-law rescission in this 
context, a point the concurrence fails to grapple with or even acknowledge.  In a stray line 
tucked in a footnote, the concurrence surmises that because MCL 500.3220 prevents 
Meemic from canceling the contract, it must also preclude it “from seeking a more robust 
remedy that would necessarily include cancellation, such as rescission.”  Post at 11 n 22.  
But we have already rejected this argument.  In Titan, we noted that rescission “is 
conceptually different in its nature and in its breadth from [other contract remedies], and 
to interpret ‘cancellation’ as encompassing a broader range of contractual remedies is 
simply without basis in the [no-fault] statute.”  Titan, 491 Mich at 568.  More generally, 
Titan explained: 
We agree with the Court of Appeals that MCL 500.3220(a) shows an intent 
to allow insurers only a limited period during which to reassess the risk after 
the formation of a policy and when the risk is deemed unacceptable to 
“cancel” the policy.  However, we disagree that when an insurer elects not to 
reassess the risk and later uncovers fraud, it is somehow precluded from 
pursuing traditional legal and equitable remedies in response.  [Id. at 566-
567.] 
In Bazzi, 502 Mich at 401, the Court applied this approach to a claim for mandatory PIP 
benefits, (“In this case, however, the plain language of the no-fault act does not preclude 
                                              
render it ineffective and void.  The law requires an affirmative act of rescission on the part 
of the insurer in order to avoid its liability.”) (paragraph structure omitted). 
It seems to us an unremarkable proposition that an insurer may seek to rescind a 
policy that is voidable on the basis of fraud.  See, e.g., Northland Radiology, Inc v USAA 
Cas Ins Co, unpublished per curiam opinion of the Court of Appeals, issued June 18, 2020 
(Docket No. 346345), p 6 (“When an insurer is induced by fraud to issue a policy of 
insurance, the fraud renders the policy voidable at the option of the insurer.  Bazzi, 502 
Mich at 408.  Thus, an insurer may rescind a policy on the basis of a material 
misrepresentation made in an application for no-fault insurance.  21st Century Premier [Ins 
Co v Zufelt, 315 Mich App 437, 445; 889 NW2d 759 (2016)].”). 
 
 
 
22 
 
or otherwise limit an insurer’s ability to rescind a policy on the basis of fraud.”), as it had 
done before in Marquis, 444 Mich at 652 (applying common-law defenses to mandatory 
work-loss benefits under the no-fault act).   
The concurrence fails to recognize that its theory directly conflicts with Titan, which 
rejected the notion that MCL 500.3220 abrogated the common-law defense of rescission.  
Nor does the concurrence consider the broader line of caselaw, including Bazzi and 
Marquis, which has clearly held that fraud and other common-law defenses were not 
abrogated.22  Also missing from the concurrence is any textual analysis to support its 
conclusion, which runs counter to the longstanding interpretive principle that legislative 
intent to abrogate the common law must be “clearly reflected in the language employed in 
the statute.”  Bazzi, 502 Mich at 400.  See also People v Moreno, 491 Mich 38, 41; 814 
                                              
22 The concurrence notes that Bazzi and Titan addressed fraud in the procurement, rather 
than fraud in the proof of loss.  Post at 13 n 27.  But the concurrence fails to explain why 
this distinction helps answer whether the common law has been abrogated.  Nothing in the 
analysis or logic of those cases suggested they applied only to procurement fraud.  Even 
so, the concurrence’s distinction does not account for Marquis, 444 Mich at 650-655, 
which applied a common-law defense (mitigation of damages) to postprocurement events.  
By disregarding the full scope of these opinions, particularly Bazzi and Marquis, the 
concurrence overlooks why we must consider whether Meemic’s antifraud provision 
invokes an unabrogated common-law defense.  Those cases clearly establish that even in 
the context of a case involving mandatory no-fault benefits, such defenses remain available 
to insurers.  Thus, if under the common law Meemic could rescind the contract on the basis 
of fraud, Bazzi and Marquis require us to allow that defense here (whether raised as an 
independent common-law defense or as a contract-based defense).  The only way to avoid 
this conclusion is to conclude, contrary to Bazzi and Marquis, that the no-fault act 
abrogated these fraud-based common-law defenses.  The concurrence’s approach would 
overrule these cases sub silentio.    
 
 
 
23 
 
NW2d 624 (2012) (“While the Legislature has the authority to modify the common law, it 
must do so by speaking in ‘no uncertain terms.’ ”) (citation omitted).23   
The upshot of the concurrence’s approach is that with the possible exception of the 
procurement fraud in Bazzi, all other common-law defenses to fraud in this context would 
have been supplanted by statute.24  As we noted earlier in this opinion, the no-fault act’s 
abrogation of the common law might merit reexamination, but the concurrence does not 
offer such an analysis, nor would it be appropriate to do so in this case.  In the end, we can 
only conclude that the concurrence’s theory is a departure from a number of our binding 
precedents in this area. 25 
                                              
23 The concurrence also misreads MCL 500.3148(2), as enacted by 1972 PA 294, which 
stated (and still states, in the current version) that an insurer “may” be awarded attorney 
fees incurred defending against a claim that “was in some respect fraudulent 
or . . . excessive” and that those fees can be offset against any PIP benefits “[t]o the extent” 
such benefits are owed.  The concurrence notes that this provision does not expressly 
permit an insurer to void the policy.  But the concurrence offers nothing to support its 
apparent inference that the lack of express permission is tantamount to an affirmative 
prohibition on voiding policies based on fraud.  Nothing in the statute’s qualified and 
conditional language suggests that a defrauded insurer is limited only to compensatory 
attorney fees and only if it decides to contest a fraudulent claim.  And, as with MCL 
500.3220, the concurrence makes no effort to analyze whether MCL 500.3148 has 
abrogated any relevant common-law defenses against fraud.  But for the reasons just stated, 
this provision does not contradict (but merely supplements) a fraud defense. 
24 The effect would be to drastically limit the common-law remedies for fraud.  For 
example, a common-law defense of rescission for a substantial breach would be 
unavailable to an insurer in cases like the present.  All that an insurer could hope for, even 
if it canceled the contract, would be to offset attorney fees from its payments of benefits if 
it disputed the fraudulent claim.    
25 We agree with the concurrence that the parties’ briefing in this Court ranged across 
various topics, some of which are not pertinent to the resolution of this case.  The parties 
also, however, raised critical issues that are squarely within the scope of our analysis, 
including the basis for the antifraud provision, i.e., whether it was an equitable remedy.  
 
 
 
24 
 
VI.  CONCLUSION 
For the reasons set forth in this opinion, we hold that Meemic’s contractual antifraud 
provision is invalid and unenforceable because it is not based on a statutory or unabrogated 
common-law defense.  Therefore, we affirm the Court of Appeals in result only, vacate its 
opinion, and remand the case to the trial court for further proceedings consistent with this 
opinion. 
 
 
David F. Viviano 
 
Bridget M. McCormack 
 
Stephen J. Markman 
 
Richard H. Bernstein 
 
Megan K. Cavanagh 
 
                                              
More importantly, the overarching issue in this case is the enforceability of the antifraud 
provision in the policy.  That is the issue we address, and we do so by analyzing the caselaw 
and authorities presented by the parties and discussed by the Court of Appeals.  In contrast, 
the concurrence resolves the case by reference to a statute, MCL 500.3220, that neither 
party nor the Court of Appeals thought relevant.  And, as explained, its approach would 
cause us to overrule or disregard our binding caselaw—hardly the “narrow and limited” 
opinion it purports to set forth. 
 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
MEEMIC INSURANCE COMPANY, 
 
 
Plaintiff/Counterdefendant-
Appellant, 
 
 
v 
No. 158302 
 
LOUISE M. FORTSON and RICHARD A. 
FORTSON, Individually and as Conservator 
for JUSTIN FORTSON, 
 
 
 
Defendants/Counterplaintiffs-
Appellees. 
 
 
 
ZAHRA, J. (concurring in the judgment). 
The majority reaches the correct result in this case.  I write separately because the 
majority’s opinion improperly suggests that our common law1 and the no-fault act2 
                                              
1 The majority’s noted reliance on this state’s “closest common-law analogue” to the 
contract defense raised by Meemic—that is, rescission—is itself a telling admission that 
our common law does not control the disposition of this case.  More telling is that the 
majority’s alleged support for concluding that an insurance provision purporting to “void” 
an insurance policy actually means the common-law remedy of “rescission” of that 
insurance policy consists of the Court of Appeals’ split decision in this very case and a 58-
year-old Oklahoma case stating that “[t]he word ‘void’ admits of more than one meaning.”  
Great American Reserve Ins Co of Dallas v Strain, 377 P2d 583, 586-587 (Okla, 1962).  
And in fact, the Oklahoma court held that a provision seeking to “void” a policy, if valid, 
would only render the policy “merely voidable,” which, of course, would preclude the 
remedy of rescission.  Id. at 587.  The parties in this case agree there is a valid contract, 
and Meemic is not seeking to restore the parties to their precontractual positions, which 
would be the result of rescission. 
2 MCL 500.3101 et seq. 
 
 
 
 
2
represent the exclusive authorities employed to determine the validity of a provision in a 
no-fault policy.  In my view, this approach is an unwarranted departure from our accepted 
and proven approach in like cases, which is “to construe contracts that are potentially in 
conflict with a statute, and thus void as against public policy, [and] where reasonably 
possible, to harmonize them with the statute” (the Cruz standard).3  I would reaffirm the 
Cruz standard, which allows courts to defer to duly approved no-fault policy provisions 
that facilitate the goals of the act and are harmonious with the Legislature’s no-fault 
insurance regime.  The majority’s suggested departure from the Cruz standard 
unnecessarily creates a dichotomy within our established precedent that may chill insurers 
from submitting reasonable and necessary provisions to the executive agency to which the 
Legislature has delegated the authority to approve all no-fault insurance policies issued 
within the state.  Many of these provisions are not mentioned by the no-fault act or 
recognized by the common law of this state.  I reach the same result as the majority without 
relying on the majority’s analysis of the state’s common law.  I would instead apply the 
                                              
3 Cruz v State Farm Mut Auto Ins Co, 466 Mich 588, 599; 648 NW2d 591 (2002).  The 
majority questions my “preoccupation” with Cruz but then immediately claims its opinion 
“is the first from our Court to apply Cruz’s substantive holding.”  I admit to my 
“preoccupation” with the law of this state.  So also does every member of the Court.  I also 
confess that my preoccupation is often pronounced when the law involves an opinion from 
this Court, which has been oft-cited in our caselaw and by leading insurance treatises 
(interstate and intrastate alike), the most recent pointedly recognizing that “Cruz v State 
Farm Mutual Auto Insurance Company is commonly the main case used to argue that a 
contract clause conflicts with a statute.”  Hijazi, A Survey of Michigan Assignment Law as 
it Relates to No-Fault Insurance Contracts: Post-Covenant, 64 Wayne L Rev 817, 837 
(2019).  If the majority does actually embrace Cruz’s substantive holding as it claims, 
which I think it clearly does not, it would be the first time that Cruz was (mis)applied 
without addressing whether a contract clause conflicts with a statute.   
 
 
 
 
3
Cruz standard and hold that the fraud-exclusion provision at issue here is inconsistent with 
the no-fault act and, therefore, void as against Michigan public policy.   
I.  FACTS AND PROCEDURAL HISTORY 
In 2014, Meemic brought the instant action in the Berrien Circuit Court, seeking a 
declaration that it was contractually entitled to void the no-fault insurance policy it had 
issued to Richard and Louise Fortson.  This policy was in full force and effect in September 
2009 when their son, Justin, who resided with them, was involved in a serious automobile 
accident.  As a result of the accident, Justin needed full-time attendant-care services for 
which he claimed benefits under the no-fault insurance policy issued by Meemic to his 
parents.  Meemic paid for these services, which were performed by Justin’s mother, a 
named insured under the policy.  At some point, Louise allegedly sought to be paid for 
services she did not provide to Justin; Meemic filed the instant suit, seeking to void the 
policy on the basis of the following policy provision: 
22. CONCEALMENT OR FRAUD 
This entire Policy is void if any insured person has intentionally 
concealed or misrepresented any material fact or circumstance relating to: 
A.  This insurance; 
B.  The Application for it; 
C.  Or any claim made under it. 
The trial court initially denied Meemic’s motion for summary disposition, citing the 
“innocent-third-party rule, which precludes an insurer from rescinding an insurance policy 
 
 
 
 
4
procured through fraud when there is a claim involving an innocent third party.”4  Meemic 
moved for reconsideration after the Court of Appeals issued its decision in Bazzi v Sentinel 
Ins Co,5 which held that the innocent-third-party rule had been abolished by our decision 
in Titan Ins Co v Hyten.6  The trial court agreed with Meemic’s argument that because the 
innocent-third-party rule had been abolished, Meemic was not precluded from raising a 
fraud defense at any point in time regardless of whether Justin was an innocent third party.  
On March 14, 2017, the trial court entered an order granting summary disposition in favor 
of Meemic.   
The Fortsons appealed, arguing, in part, that the trial court erred by relying on the 
Court of Appeals decision in Bazzi because the factual basis for the claim of fraud in Bazzi 
related to an insured’s fraudulent procurement of the insurance policy.7  In contrast, the 
insurance policy in this case was properly procured and was valid when Justin filed his 
claim.  At this point, the Fortsons maintained, the no-fault act controls and mandates that 
Meemic provide Justin with statutory no-fault benefits. 
In a published opinion, the Court of Appeals reversed the trial court’s order granting 
summary disposition to Meemic.8  In so doing, the Court of Appeals considered but found 
                                              
4 Bazzi v Sentinel Ins Co, 502 Mich 390, 396; 919 NW2d 20 (2018). 
5 Bazzi v Sentinel Ins Co, 315 Mich App 763, 767-768, 771; 891 NW2d 13 (2016), aff’d in 
part and rev’d in part 502 Mich 390 (2018). 
6 Titan Ins Co v Hyten, 491 Mich 547, 555; 817 NW2d 562 (2012). 
7 Bazzi, 315 Mich App at 768. 
8 Meemic Ins Co v Fortson, 324 Mich App 467, 471, 484; 922 NW2d 154 (2018). 
 
 
 
 
5
inapplicable its decision in Bazzi, reasoning that the fraud defense was not available to void 
or rescind the no-fault policy at issue here because, unlike in Bazzi,9 the Fortsons’ alleged 
fraud did not arise in the procurement of the policy.10  The Court of Appeals next 
considered the fraud-exclusion provision in Meemic’s policy that purports to void the 
entire policy if any insured person has intentionally concealed or misrepresented any 
material fact or circumstance relating to, in pertinent part, “[t]his insurance” or “any claim 
made under it.”11  The Court of Appeals held that “[b]ecause MCL 500.3114(1) mandates 
coverage for a resident relative domiciled with a policyholder, the fraud-exclusion 
provision, as applied to Justin’s claim, is invalid because it conflicts with Justin’s statutory 
right to receive benefits under MCL 500.3114(1).”12   
Meemic filed an application for leave to appeal in this Court, asking us to decide, 
among other things,13 whether the innocent-third-party rule remains viable when the fraud 
                                              
9 Bazzi, 315 Mich App 763. 
10 Fortson, 324 Mich App at 475-476.   
11 Id. at 477-478.   
12 Id. at 478-479.  The Court of Appeals held that under the plain language of the policy, 
“Louise and Richard were not insured persons under the policy when they committed fraud, 
so the fraud-exclusion clause is inapplicable and cannot be used to void the policy and deny 
Justin’s claim.”  Id. at 484.  I find the Court of Appeals’ alternative conclusion that Richard 
and Louise were no longer “insured parties” under the policy to be questionable.  
Nonetheless, I would not address this argument given the result reached in this case. 
13 The application for leave to appeal also asked this Court to determine (1) whether a 
person’s status as an insured person under a policy may be ignored in order to avoid the 
application of a fraud-exclusion provision and (2) whether the cancellation of a no-fault 
policy after a loss occurs nullifies the policy’s terms and conditions applicable to the loss.  
 
 
 
 
6
occurs in the claim for benefits, as opposed to in the application for insurance.  We granted 
the application,14 presumably to answer this question.15   
II.  ANALYSIS 
The majority opinion “hold[s] that such [fraud-exclusion] provisions are valid when 
based on a defense to mandatory coverage provided in the no-fault act itself or on a 
common-law defense that has not been abrogated by the act.  Because Meemic’s fraud 
defense is grounded on neither the no-fault act nor the common law, it is invalid and 
unenforceable.”  This holding is overly broad.  The scheme adopted by the majority for 
determining the viability of contract language in a no-fault insurance policy may place 
                                              
Because I would render unenforceable the fraud-exclusion provision of the policy upon 
which the above two issues are premised, Meemic cannot prevail on the remaining issues.   
14 Meemic Ins Co v Fortson, 503 Mich 1031 (2019). 
15 Although Meemic’s application for leave to appeal asks us to declare that “the innocent 
third party rule does not exempt Justin from the effect of the [fraud-exclusion] provision 
of the policy under which he claims benefits,” nothing in the Court of Appeals opinion 
reversing the trial court even remotely suggests that it was relying on this now-abolished 
equitable doctrine.  (Formatting altered.)  Meemic has presented us with a straw-man 
argument.  Accordingly, leave to appeal was improvidently granted in this case, and an 
order dismissing this appeal or a peremptory order would be appropriate.  At the least, the 
Court could order supplemental briefing.  Nonetheless, the majority chooses to answer a 
question that has nothing to do with the innocent-third-party rule.  Rather, the Court decides 
today that the fraud-exclusion provision in Meemic’s no-fault insurance policy cannot be 
applied to void statutory obligations owed under the validly procured insurance contract 
issued in this case because the provision has no basis in statute or the common law.  Neither 
the oral arguments nor the briefs presented by the litigants addressed the basis on which 
the majority opinion is premised.  To the extent the Court answers questions that are not 
briefed or argued by the parties, the Court’s opinion should be narrow and limited to the 
unique facts of the case.  This is best accomplished in the instant case by simply relying on 
Cruz and concluding that the provision under review is void as against Michigan public 
policy. 
 
 
 
 
7
unwarranted constraints on the fundamental right to contract.  The majority opinion gives 
little or no weight to the way in which we have traditionally interpreted no-fault insurance 
contracts.  Ordinarily, we would apply the Cruz standard, which is to say that we are “to 
construe contracts that are potentially in conflict with a statute, . . . where reasonably 
possible, [in such a way as] to harmonize them with the statute.”16  The majority opinion 
implicitly emasculates the Cruz standard by only asking whether the provision at issue is 
expressly permitted under the no-fault act or the common law.   
The majority opinion also states that “one thing that is not open to debate is that the 
act governs the coverages it mandates, and the insurance policy controls coverages that are 
optional . . . .”  The apparent implication of this dichotomy is that the common law and the 
no-fault act represent the exclusive authorities used to determine the validity of a provision 
in a no-fault policy, with no room for the policy language to do any work.17 
                                              
16 Cruz, 466 Mich at 599. 
17 The provisions of an insurance policy are not arbitrary but intended to allow a lay person 
to read and understand the policy.  See MCL 500.2236(3).  As an example, in the wake of 
the statutory overhaul of the no-fault act, see 2019 PA 20 and 2019 PA 21, the Director of 
the Department of Insurance and Financial Services recently issued Order No. 19-048-M, 
concluding that “[i]mplementation of statutory amendments that affect the scope of 
coverage required to be provided under an insurance policy through reliance on a 
‘conformity to law clause’ would violate . . . MCL 500.2236(5), as reliance upon an 
insurance policy provision that ‘unreasonably and deceptively affect[s] the risk purported 
to be assumed in the general coverage of the policy.’ ”  Department of Insurance and 
Financial Services, In re Requirements to File Forms and Rates Prior to Implementing 
Public Acts 21 and 22, Order No. 19-048-M (September 20, 2019), p 3 (second alteration 
in original).  While the new amendments are not applicable to this case, the point remains 
that the language in a no-fault policy that conforms to the act is not surplusage and cannot 
simply be swapped out with a “conformity of the law” clause.  “[T]he Legislature has 
assigned the responsibility of evaluating the ‘reasonableness’ of an insurance contract to 
the person within the executive branch charged with reviewing and approving insurance 
policies: the Commissioner of Insurance.”  Rory v Continental Ins Co, 473 Mich 457, 475; 
 
 
 
 
8
But this Court has clearly held that insurers may insert provisions into a no-fault 
policy that are not rooted in the common law or referred to in the no-fault act.  For instance, 
in Cruz,18 this Court considered the insertion of an examination under oath (EUO) 
provision into an insurance policy.  The Court of Appeals “found that EUOs were 
precluded in the automobile no-fault insurance context because they were not mentioned 
in the act.”19  This Court disagreed and approved the insertion of EUOs “when used to 
facilitate the goals of the act and when they are harmonious with the Legislature’s no-fault 
insurance regime[.]”20   
                                              
703 NW2d 23 (2005).  The commissioner, who is now referred to as the Director of the 
Department of Insurance and Financial Services, see 2014 PA 140, is obligated under MCL 
500.2236(1) to determine that no-fault insurance policies conform with the act’s 
requirements.  MCL 500.2236(1) forbids the issuance of any insurance policy or 
indorsement “until a copy of the form is filed with the department of insurance and 
financial services and approved by the director of the department of insurance and financial 
services as conforming with the requirements of this act and not inconsistent with the law.”  
As the Cruz Court noted, the director presumably undertakes this statutory obligation by 
“harmonizing agreed-upon contract terms with statutory requirements . . . .”  Cruz, 466 
Mich at 599 n 15.  Moreover, it is highly unlikely that the language in a no-fault policy will 
ever mirror the language of the no-fault act.  The language in a no-fault policy is subject to 
a “readability score” and various additional measures intended to allow a lay person to read 
and understand the policy.  See MCL 500.2236(3).  The director’s decisions are subject to 
judicial review under MCL 500.244.  The role of the director in approving policy language 
is also emasculated by the majority opinion, which relegates the approved policy language 
to the standard suggested in the majority opinion. 
18 Cruz, 466 Mich 588. 
19 Id. at 598, discussing the Court of Appeals’ decision in Cruz v State Farm Mut Auto Ins 
Co, 241 Mich App 159; 614 NW2d 689 (2000).   
20 Cruz, 466 Mich at 598.  To demonstrate the flexibility of the Cruz standard, I note that 
while the Cruz Court generally approved provisions regarding EUOs, the Court also 
determined under the facts of that case that the insurer’s attempt to require the insured to 
submit to an EUO as a condition precedent to payment of no-fault personal protection 
 
 
 
 
9
In my view, this Court need not delve into whether the no-fault act expressly permits 
the fraud-exclusion provision at issue in this case or whether this provision is drawn from 
common-law remedies and the extent to which, if at all, these remedies are abrogated by 
the common law to resolve this case.  Indeed, even if the fraud-exclusion provision was 
accepted as a “contract-based fraud defense” that contemplates the remedy of “rescission” 
as the majority surmises, MCL 500.3220 would prohibit Meemic from canceling, let alone 
rescinding the policy in this case.21  MCL 500.3220(b) is plainly not applicable, and 
Meemic has not argued, let alone proved, that an unacceptable risk had arisen within 55 
days from the day the policy issued, which would have allowed it to cancel the policy under 
MCL 500.3220(a).22  The majority clearly misunderstands the relevance of MCL 500.3220 
                                              
insurance (PIP) benefits was impermissible under the Cruz standard because that 
application would vitiate the insurer’s duty to pay benefits in a timely fashion as required 
by the statute.  Id. at 600. 
21 MCL 500.3220 provides: 
Subject to the following provisions no insurer licensed to write 
automobile liability coverage, after a policy has been in effect 55 days or if 
the policy is a renewal, effective immediately, shall cancel a policy of 
automobile liability insurance except for any 1 or more of the following 
reasons: 
(a) That during the 55 days following the date of original issue thereof 
the risk is unacceptable to the insurer. 
(b) That the named insured or any other operator, either resident of 
the same household or who customarily operates an automobile insured 
under the policy has had his operator’s license suspended during the policy 
period and the revocation or suspension has become final. 
22 The majority’s holding is premised on an analysis of the right of rescission, the 
correctness and applicability of which I question.  It is not immediately apparent to me that 
this case presents a question of rescission.  Meemic most assuredly wants to void its 
 
 
 
 
10 
                                              
contractual obligations under the policy, but it has never sought to rescind the policy.  And 
in this Court, Meemic has plainly and unequivocally stated both in its application for leave 
to appeal and in its brief that it is not seeking to rescind the policy.   
The Restatement of Contracts, in noting the distinctions between various ways of 
putting an end to a contractual relationship, observes: 
Sometimes the parties to a contract that is at least partly executory on each 
side make an agreement under which each party agrees to discharge all of the 
other party’s duties of performance.  Such an agreement is called an 
“agreement of rescission” in this Restatement. . . .  The term “agreement of 
rescission” is used in this Restatement to avoid confusion with the word 
“rescission,” which courts sometimes use to refer to the exercise by one party 
of a power of avoidance. . . .  An agreement of rescission differs from a 
“termination,” which “occurs when either party pursuant to a power created 
by agreement or law puts an end to the contract otherwise than for its breach” 
and from a “cancellation,” which “occurs when either party puts an end to 
the contract for breach by the other.”  [2 Restatement Contracts, 2d, § 283, 
comment a, p 390 (citation omitted).] 
Other treatises offer somewhat different arrangements of these terms.  One leading 
treatise explains: 
A rescission avoids the [policy] ab initio whereas a cancellation 
merely terminates the policy as of the time when the cancellation becomes 
effective.  In other words, cancellation of a policy operates prospectively 
while rescission, in effect, operates retroactively to the very time that the 
policy came into existence[.]  [2 Couch, Insurance, 3d (rev ed), § 30:3, p 10.] 
In this case, all indications suggest that Meemic seeks to “ ‘put[] an end to the 
contract,’ ” not “ ‘for its breach’ ” but rather “ ‘pursuant to a power created by 
agreement’ ”—i.e., the fraud-exclusion language.  Restatement, § 283, comment a, p 390 
(citation omitted).  If so, that would be a “ ‘termination.’ ”  And as the Restatement notes, 
“if under the terms of the contract the occurrence of an event is to terminate an obligor’s 
duty of immediate performance . . . , that duty is discharged if the event occurs.”  
Restatement, § 230(1), p 189 (formatting altered).  Further, Meemic does not truly seek to 
void the policy ab initio such as a party seeking rescission would.  After all, Meemic asks 
to be reimbursed for PIP benefits made in connection with fraudulent proofs of loss and to 
terminate future liability, but it does not seek reimbursement for all the PIP benefits it has 
paid retroactive to the very time that the policy came into existence. 
And regardless of whether the fraud-exclusion provision is characterized as 
 
 
 
 
11 
in this case.  Of course Meemic cannot now rely on this statute to cancel the policy.  The 
statute provides a limited path to allow an insurer to cancel an insurance policy.  Meemic 
failed to take advantage of this statutory path and instead now seeks to expand that limited 
path through a sweeping fraud exclusion.  Because the no-fault act provides a very defined 
and limited path to canceling a policy, the fraud-exclusion provision in this case that 
permits Meemic to “void” or “cancel” the policy without following the limited statutory 
path to cancellation is inconsistent with MCL 500.3220, and unenforceable.23   
And of course I appreciate that cancellation applies only prospectively and that 
canceling the policy now would not relieve Meemic from liability.  That is precisely why 
Meemic’s attempt to expand its ability to cancel the policy under the fraud-exclusion 
provision is inconsistent with MCL 500.3220 and, thus, impermissible.  There can be no 
                                              
allowing for “rescission” or “cancellation,” the no-fault act expressly prevents Meemic 
from exercising this provision to cancel the policy, let alone from seeking a more robust 
remedy that would necessarily include cancellation, such as rescission.  As we recognized 
in Bazzi: 
When the Legislature intends to limit the common-law remedies 
available to an insurer for misrepresentation or fraud, that intent is clearly 
reflected in the language employed in the statute.  For example, MCL 
500.3220—part of the no-fault act—“limits the ability of a licensed insurer 
to ‘cancel’ automobile coverage after a policy has been in effect for at least 
55 days.”  [Bazzi, 502 Mich at 400-401 (citation omitted).] 
Here, as earlier explained, there is simply no question that Meemic did not “cancel” 
the policy within 55 days of it being issued, and MCL 500.3220 plainly prohibits Meemic 
from canceling the policy thereafter.  This result is reasonably drawn from the plain 
language of the no-fault act.   
23 Meemic’s later cancellation of the policy for unrelated reasons shortly after the Fortsons 
had renewed the policy is simply not relevant.   
 
 
 
 
12 
real dispute that the cancellation of a policy does not entail the rescission of that policy, 
nor that the rescission of a policy does entail the cancellation of that policy.  In sum, the 
majority’s reliance on rescission is misplaced.  In Titan, this Court expressed agreement 
with a Court of Appeals decision holding that “[r]escission is insufficiently similar to 
cancellation to support the conclusion that the Legislature’s enactment of a statute 
controlling cancellation of an automobile insurance policy without mentioning rescission 
demonstrates the Legislature’s intent to preclude rescission.”24  Consistently with this 
understanding, and as explained in note 22 of this opinion, I believe that the word “void” 
as used in the fraud-exclusion provision is likewise “insufficiently similar to” “rescission” 
given that the meaning of “rescission” is distinct from the meaning of “void” because 
rescission “encompass[es] a broader range of contractual remedies . . . .”25 
Last, I am not suggesting that “when an insurer elects not to reassess the risk and 
later uncovers fraud, it is somehow precluded from pursuing traditional legal and equitable 
remedies in response.”26  I am only saying that these legal and equitable remedies are not 
available if they are in conflict with a statute and cannot be reasonably harmonized with 
the statute.  
                                              
24 Titan, 491 Mich at 568 n 10, quoting United Security Ins Co v Ins Comm’r, 133 Mich 
App 38, 42; 348 NW2d 34 (1984) (quotation marks omitted; emphasis added; alteration in 
original). 
25 Titan, 491 Mich at 568 & n 10, quoting United Security Ins Co, 133 Mich App at 42 
(quotation marks omitted). 
26 Titan, 491 Mich at 566-567. 
 
 
 
 
13 
Accordingly, we need only follow this Court’s decision in Cruz and hold that 
because the contractual fraud-exclusion provision conflicts with the no-fault act, it is 
against public policy and, therefore, unenforceable.27 
As mentioned, in Cruz, this Court addressed “whether the inclusion of an [EUO] 
provision in an automobile no-fault insurance policy is permitted under the Michigan no-
fault insurance act.”28  The insurer took the “position that the parties could agree in their 
contract of insurance, notwithstanding the requirements of the statute regarding prompt 
payment of benefits, to condition the payment of benefits on the submission by [the 
insured] to an EUO.”29  The insured refused repeated requests to submit to the EUO, and 
because of this, the insurer denied, in relevant part, the insured’s claims for personal 
protection insurance (PIP) benefits mandated under the no-fault act.30 
The Cruz Court noted that “the no-fault act contains no reference either allowing or 
prohibiting examinations under oath.”31  The Court phrased the relevant legal question as 
“whether, given this silence, the inclusion of examination under oath provisions in no-fault 
                                              
27 I agree with the Court of Appeals that “because the fraud in this case was not fraud in 
the procurement of the policy and instead arose after the policy was issued,” Fortson, 324 
Mich App at 475-476, neither the Court of Appeals’ decision in Bazzi, 315 Mich App 763, 
nor this Court’s decision in Titan, 491 Mich 547, is controlling.  For the same reason, this 
Court’s subsequent decision on appeal in Bazzi, 502 Mich 390, is likewise not controlling.   
28 Cruz, 466 Mich at 590. 
29 Id. at 591. 
30 Id. 
31 Id. at 594. 
 
 
 
 
14 
automobile insurance policies is allowed.”32  The Court emphasized its duty “to construe 
contracts that are potentially in conflict with a statute, and thus void as against public 
policy . . . [so as] to harmonize them with the statute [where reasonably possible].”33  The 
Court applied this rule as follows: 
[The insurer] and its insured could not contract to vitiate [the insurer]’s duty 
to pay benefits in a timely fashion as required by the statute.  Once 
“reasonable proof of the fact and of the amount of loss sustained” was 
received by [the insurer], it had to pay benefits or be subject to the penalties.  
Because it is acknowledged that such proof was received, [the insurer’s] duty 
to pay benefits to its insured began thirty days thereafter.  To the degree that 
the contract is in conflict with the statute, it is contrary to public policy and, 
therefore, invalid.[34] 
In my view, the Cruz standard presents the proper framework to address the question 
posed in this case.  The fraud-exclusion provision purports to void all of Meemic’s statutory 
duties with respect to Justin without any express or implied justification to do so under the 
no-fault act.  The act clearly provides that an insurer is only responsible for those PIP 
benefits that are “reasonably necessary,”35 and I would submit that a fraudulent charge is 
ipso facto neither reasonable nor necessary.  Given that the Legislature expressly provided 
an insurer a limited right to challenge particular charges, there appears no reasonable basis 
on which the insurer can challenge all previous and future valid charges on the basis of a 
single fraudulent charge.   
                                              
32 Id. 
33 Id. at 599. 
34 Id. at 600-601. 
35 See MCL 500.3107, as amended by 2012 PA 542, effective January 2, 2013. 
 
 
 
 
15 
In addition, the language of the no-fault act suggests that an insured remains entitled 
to PIP benefits even after the insured has filed a fraudulent charge.  Former MCL 
500.3148(2) stated: 
An insurer may be allowed by a court an award of a reasonable sum 
against a claimant as an attorney’s fee for the insurer’s attorney in defense 
against a claim that was in some respect fraudulent or so excessive as to have 
no reasonable foundation.  To the extent that personal or property protection 
insurance benefits are then due or thereafter come due to the claimant 
because of loss resulting from the injury on which the claim is based, such a 
fee may be treated as an offset against such benefits; also, judgment may be 
entered against the claimant for any amount of a fee awarded against him and 
not offset in this way or otherwise paid.  [MCL 500.3148(2), as enacted by 
1972 PA 294 (emphasis added).] 
This is the only provision in the no-fault act that addresses a claimant’s fraudulent 
proof of loss for PIP benefits.  And far from permitting an insurer to void the policy at this 
point, former MCL 500.3148(2) expressly contemplates that an insurer will continue to 
provide PIP benefits due “thereafter” “because of loss resulting from the injury on which 
the claim is based[.]”  And to make clear that this claim is not an independent cause of 
action, former MCL 500.3148(2) also provides that the “fee may be treated as an offset 
against such benefits[.]”  Because the no-fault act provides a remedy for fraudulent proofs 
of loss and contemplates the continuation of PIP benefits even though prior fraud has been 
proved, the fraud-exclusion provision in this case that would “void” a policy for that very 
reason contradicts the no-fault act and is unenforceable. 
Moreover, the fraud-exclusion provision, which only inures to the benefit of an 
insurer, by no means facilitates the goal of the no-fault insurance system—“ ‘to provide 
victims of motor vehicle accidents with assured, adequate, and prompt reparation for 
 
 
 
 
16 
certain economic losses.’ ”36  In my opinion, the instant fraud-exclusion provision in many 
respects thwarts the goal of the no-fault act.  Indeed, the specter of having one’s unlimited 
lifetime PIP benefits terminated because of fraudulent activity by anyone entitled to make 
a claim under the policy at any point in the future provides no meaningful assurance of 
reparation at all. 
III.  CONCLUSION 
I concur in the result reached by the majority that the instant fraud-exclusion 
provision is unenforceable.  But unlike the majority, I would affirm the Court of Appeals 
decision on the basis of the Cruz standard and would hold that the fraud-exclusion 
provision is inconsistent with the no-fault act and, therefore, void as against public policy.   
 
 
Brian K. Zahra 
 
Elizabeth T. Clement 
                                              
36 Cruz, 466 Mich at 595, quoting Shavers v Attorney General, 402 Mich 554, 579; 267 
NW2d 72 (1978).