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### STATE OF MICHIGAN

COURT OF APPEALS

ROBERT MILLER and DIANE MILLER,

Plaintiffs-Appellants/CrossAppellees, UNPUBLISHED August 2, 2016

v No. 325885
Tuscola Circuit Court

FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, LC No. 12-027312-CK

Defendant-Appellee/CrossAppellant.

Before: J ANSEN , P.J., and S ERVITTO and M. J. K ELLY , JJ.

J ANSEN

, P.J. ( concurring in part and dissenting in part ).

I concur with the majority in all respects except with regard to its determination that the trial court properly granted refo rmation of the insurance contr act. I do not believe that the
circumstances of this case warrant reformation on the basis of a mutual mistake. Therefore, I
would reverse the trial court’s order granting plaintiffs’ moti on for reformation of the insurance
contract and remand for further proceedings.

“Michigan courts sitting in equity have long had the power to reform an instrument that does not express the true intent of the parties as a result of fraud, mistake, accident, or surprise.” Johnson Family Ltd Partnership v White Pine Wireless, LLC , 281 Mich App 364, 371-372; 761 NW2d 353 (2008).

Courts will reform an instrument to reflect the parties’ actual intent where there is clear evidence that both parties reached an agreement, but as t he result of mutual mistake, or mistake on one side and fraud on the other, the ins trument does not express the true intent of the parties. [ Olsen v Porter , 213 Mich App 25, 29; 539 NW2d 523 (1995).]

In other words, “[t]o obtain reformation, a plaintiff must prov e a mutual mistake of fact, or
mistake on one side and fraud on the other, by clear and convin cing evidence.” Casey v AutoOwners Ins Co , 273 Mich App 388, 398; 729 NW2d 277 (2 006). A unilateral mis take by itself is not sufficient for the court to grant reformation. Id . Similarly, “[a] mistake in law—a mistake by one side or the other regarding the legal effect of an agree ment—is not a basis for
reformation.” Id . A party seeking reformation on the basis of a mutual mistake must prove the-2- mistake by clear and satisfactory evidence. Johnson , 281 Mich App at 379. A mutual mistake may be a mistake of law or a mistake of fact. Id . A mistake of fact is “an erroneous belief, which is shared and relied on by both parties, about a material fact that affects the substance of
the transaction.” Ford Motor Co v Woodhaven , 475 Mich 425, 442; 716 NW2d 247 (2006). “[M]istakes of law are divided i nto two classes: mistakes regar ding the legal effect of the contract actually made and mistak es in reducing the instrument to writing.” Johnson , 281 Mich App at 379-380.

In the former, * * * the contract actually entered into will s eldom, if ever, be relieved against unless there are other equitable legal feat ures calling for the interposition of the court; but in the second class, where the mistake is not in the contract itself, but terms are used in or omitted from the inst rument which give it a legal effect not intended by the parties, and different from the contract actually made, equity will always grant relief unless barred on some oth er ground, by correcting the mistake so as to produce a conformity of the ins trument to the agreement. [ Id . at 380 (citations and quotation marks omitted).]

I believe that the trial court improperly granted plaintiffs’ request to reform the insurance contract to list Diane as a named insured because plaintiffs fa iled to establish a mutual mistake. Instead, the evidence establishe s that the parties intended for the insurance polic y to cover Diane, and the insurance policy covered Diane for over five years. Th e insurance policy listed Robert as the named insured. The insurance policy provided, in releva nt part, that an “insured person” under the policy included the named insured, as well as residen ts of the named insured’s household, including the named i nsured’s spouse. The policy al so provided, in relevant part:

We cover personal property owned by an insured while it is anywhere in the world. After a covered loss and at your request, we will c over personal property owned by:

1. others while the property is on the part of the residence premises occupied by an insured ;

Accordingly, defendant contended that Diane’s personal property was not covered by the insurance policy at the time of the fire because she was not an insured person. This was because
she was neither a named insured nor a member of the named insur ed household, a nd her property was not on the residence premises occupied by the named insured . In addition, the policy only provided for dwelling, loss of use, and landscaping coverage fo r the “residence premises” in
which the named insured resides. Defendant contended that beca use Robert did not reside at the home, it was not a residence premises for the purpose of covera ge under the policy. Defendant therefore argued tha t the damage to the house was not covered.

The November 17, 2003 applicatio n reflects that Robert was lis ted as the first named insured, and there are no additional named insured parties. Di ane signed the application as the applicant in two different places. The majority concludes that the fact that Diane signed as the applicant indicates a mutual mist ake regarding whether she was a named insured. However, the parties may have decided to list Robert as the only named insur ed for a number of reasons, and
there is no indication in the document that the failure to name Diane as a named insured-3- constituted a mutual mistake. Instead, the application reflect s that the parties intended for both Robert and Diane to be covered under the policy, but also inten ded for Robert to be the only
named insured. 1 Subsequent communications betw een defendant and plaintiffs ov er the next several years listed Robert as th e only named insured. There i s no indication that plaintiffs ever raised the issue that Robert was the only named insured listed on the documents they received from defendant, which further s hows that there was no mistake o f fact or law.

The majority concludes that Dia ne’s affidavit al so provides ev idence of a mutual mistake, but Diane’s affidavit supports defendant’s argument that the in surance agreement reflected the parties’ intent. Diane stated in her affidavit that she went t o the local Farm Bureau office in 2003 in order to apply for a policy to cover her home. She sta ted that she advised Soper that she “wanted complete coverage for [her] husband and [her] home and belongings.” She further stated, “I made clear my intentio ns to Mr. Soper to obtain cove rage for both the home and personal property for both my husband and myself.” According to Diane, Soper informed her that the policy “would provide com plete coverage for our home a nd our personal property.” The insurance policy did just that. D iane was completely covered a s the spouse of the named insured at the time the insurance policy went into effect. In fact, Di ane remained covered until Robert moved out of the home five years later. Therefore, defendant i ssued the policy the parties agreed to at the time they entered into the insurance agreement. Alth ough Diane was not covered after Robert moved out of the home, th is subsequent change of circums tances does not establish that the instrument did not express the true intent of the parties a t the time they entered into the agreement. Furthermore, Diane’s unilateral mistake regarding t he legal effect of the insurance agreement does not constitute a mutual mistake warranting refor mation. Instead, Diane’s affidavit evidences the parties’ mutual intent for the policy t o cover Diane, and the insurance agreement reflected that agreement because Diane was covered un der the policy at the time it
was executed.

I also do not believe t hat Diane’s statemen ts in her affidavit regarding her discussion with Soper in 2009 establish a mutual mistake at the time the partie s entered into the insurance agreement. Diane stated in her affidavit that she went to Sope r’s office in January 2009 or February 2009 following her separation from Robert in order to make a premium payment. She asked his support staff if she w as still covered under the poli cy even though her husband was no longer living with her in their ho me, and Soper replied that sh e was completely covered. However, Soper’s statements to Diane over five years after defe ndant issued the insurance policy are of no moment because they do not establish a mutual mistake of fact or law at the time the insurance agreement was entered into. See Lenawee Co Bd of Health v Messerly , 417 Mich 17,

1 Plaintiffs point out in their br ief on cross-appeal that defen dant produced two versions of the application, including one in whi ch Diane was listed as a quali fying named insured or spouse, and one in which her name was crossed out. Regardless of when or why the altered version of the application was cr eated, the application listed Diane as a qualifying named insured or spouse , which is consistent with the remainder of the application listi ng Robert as the only named insured. Furthermore, the section at issue involved whether th e named insured or spouse qualified for various credits and d id not determine which perso ns were insured under the policy.-4- 24; 331 NW2d 203 (1982) (“The err oneous belief of one or both o f the parties must relate to a fact in existence at the time the contract is executed.”). Ins tead, plaintiffs contend that Diane intended for her and Robert to be covered by the policy, and Di ane was covered by the policy
after it went into effect. There fore, I do not believe that pl aintiffs established a mutual mistake by clear and satisfactory evidence.

Accordingly, I would reverse the order granting plaintiffs’ mo tion for reformation of the insurance contract and remand for further proceedings.

/s/ Kathleen Jansen