UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

NASSER AL-TALAQANI, THAAMER ALTALAQANI, AAMER AL-TALAQANI, and SARA

ALMOSAWI

Plaintiffs,

v.

LIBERTY MUTUAL GENERAL INSURANCE

CO.,

Defendant. 

 /

Case No. 15-10048

OPINION AND ORDER DENYING DEFENDANT’S MOTION 

FOR SUMMARY JUDGMENT 

Pending before the court is Defendant’s Motion for Summary Judgment. In this

insurance-coverage action, Plaintiffs Nasser Al-Talaqani (Nasser), Thaamer Al-Talaqani

(Thaamer), Namer Al-Talaqani (Namer), Aamer Al-Talaqani (Aamer), and Sara

Almosawi (Sara), contend that Defendant Liberty Mutual General Insurance Company

(“Liberty Mutual”) breached an automobile insurance policy by rescinding the policy

after Plaintiffs made Personal Injury Protection (PIP), Uninsured Motorists, and Collision

Damage claims. (Dkt. #1-1, Pg. ID 14-17.) Defendant filed the instant Motion for

Summary Judgment asserting that the policy was validly rescinded on December 12,

2013 because of misrepresentations made in Plaintiff Sara’s auto insurance application.

(Dkt. # 12, Pg. ID 236.) Plaintiffs filed a response to the motion (Dkt. # 18), to which

Defendant replied (Dkt. 20).1 The matter is fully briefed and the court concludes that a

1

 Plaintiffs originally failed to file a timely response to the Motion for Summary

Judgment. The court issued an order to show cause why Defendant’s Motion should not

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hearing on the motion is unnecessary. E.D. Mich. L.R. 7.1(f). For the reasons stated

below the court will deny Defendant’s Motion for Summary Judgment.

I. BACKGROUND

Plaintiffs Sara and Namer are married and are the parents of Plaintiffs Nasser,

Thaamer, and Aamer. (Dkt. # 12.) Sara and Namer live in separate homes, at 6844

Evergreen and 6836 Evergreen, respectively. (Dkt. # 18, Pg. ID 611; Dkt. # 18, Pg. ID

630.) Nasser lives with his mother at 6844 Evergreen, Thaamer lives with his father at

6836 Evergreen, and Aamer lives at the family's rental property at 6492 Evergreen and

occasionally resides at his mother’s home. (Dkt. # 12-9, Pg. ID. 329; Dkt. # 12-13, Pg.

ID 489; Dkt. # 12-11, Pg. ID 420.) 

On June 7, 2013, Defendant Liberty Mutual issued Plaintiff Sara an automobile

insurance policy for two vehicles, a 2001 Oldsmobile and a 2005 Pontiac Grand Prix.

(Dkt. # 12, Pg. ID 236; Dkt. # 18, Pg. ID 580.) The policy covering the vehicles was

originally under Aamer’s name. (Dkt. # 12-13, Pg. ID 481) Sara obtained the insurance

policy through Liberty Mutual's insurance representative Todd Boone, and in doing so

listed herself as the titled owner of the insured vehicles. (Dkt. # 18, Pg. ID 580.) Sara

does not own the 2001 Oldsmobile nor the 2005 Pontiac. (Dkt. # 12-13, Pg. ID 474.)

Additionally, Sara did not disclose that her driving age son Nasser lived with her at the

time. (Dkt. # 12-8, Pg. ID 319.) Sara later added a 2012 Dodge, leased by her husband

be granted or alternatively why the case should not be dismissed for Plaintiffs’ failure to

prosecute. (Dkt. # 17.) Plaintiffs timely responded to the order to show cause and also

filed a response to the Motion for Summary Judgment. (Dkt. ## 18, 19.) Because the

court is satisfied that the mistake was a a one-time, inadvertent clerical error, the court

will exercise its discretion to consider the response. 

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Namer, to the policy. (Dkt. # 12-12, Pg. ID 442; Dkt. # 12-14, Pg. ID 522.) Aamer owns

the 2001 Oldsmobile and Nasser owns the 2005 Pontiac. (Dkt. # 12-14, Pg. ID 553-55.)

Plaintiffs filed insurance claims based on three accidents. On September 26,

2013, a neighbor’s vehicle hit the 2012 Dodge while the Dodge was parked on the

street. (Dkt. # 12, Pg. ID 239.) On that same day, Nasser and Sara were injured in the

2001 Oldsmobile after being struck by another vehicle. (Dkt. # 18, Pg. ID 582.) Lastly,

on October 11, 2013, Thaamer was injured after a passing vehicle struck the 2005

Pontiac while the Pontiac was parked on the side of the road due to a flat tire. (Id.)

Plaintiff submitted claims seeking Personal Injury Protection (PIP), Uninsured Motorist

coverage, and Collision Damage as a result of the accidents. (Dkt. # 18, Pg. ID 580.)

Defendant refused to pay the claims and, in a letter dated December 12, 2013,

Defendant notified Plaintiff that Defendant rescinded the insurance policy declaring the

policy “null and void as of June 7, 2013,” based on a misrepresentation Plaintiff made

on the Liberty Mutual insurance application. (Dkt. # 12-3, Pg. ID 295.) The letter,

addressed to Sara, states that 

[t]he following information was undisclosed, concealed or otherwise

misrepresented. . . You are not the registered owner of the vehicles on

your policy and as such, you have no insurable interest in the vehicles . . .

Had we known about this information, we would have refused to issue the

policy.

(Id.) 

The application states that "only the vehicles listed above have coverage under

this policy . . . Each vehicle must be owned or leased by a named Insured." (Dkt. # 12-3,

Pg. ID 289.) The insurance application further contains an "Applicant Authorization and

Acknowledgment" section, that states:

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Signing this form does not bind the applicant to complete the insurance

but it is agreed that this form shall be the basis of the contract should a

policy be issued. In the event that any material misrepresentations,

omissions, concealment of facts and/or incorrect statements are made by

or on behalf of the insured during the application process, we may

exercise whatever legal remedies may be available to us under the laws

and regulations of this state . . . By signing below I acknowledge that I

have read and understand the Applicant Authorization and

Acknowledgment as well as validated information on all pages of the

application.

(Id.) 

Additionally, Defendant’s “General Policy” states that no coverage is issued if the

insured “intentionally conceals or misrepresents any material fact or circumstance,”

makes false statements, or engages in fraudulent conduct relating to the LM General

Policy.” (Dkt. # 12, Pg. ID 257)

Plaintiffs assert that in placing the insurance policy of the vehicles in Sara’s

name, they did not misrepresent the ownership status of the vehicles. (Dkt. # 18, Pg. ID

581.) Plaintiffs assert that during the process of applying for the policy insuring vehicles

under Sara’s name, Lead Sales Representative, Todd Boone (“Boone”) sat down with

Sara, Nasser, and Aamer in order to have Sara sign the appropriate paperwork. (Id. at

Pg. ID 580-81.) In deposition, Aamer stated that after he showed Boone the vehicle

registration card for the 2001 Oldsmobile, Boone suggested that insurance coverage

would be cheaper if the policy was transferred into Sara’s name. (Dkt. # 12-11, Pg. ID

432.) Boone’s story differs, and he asserts that he advised Aamer that the vehicles must

be owned by the named insured and asserts that the policy transfer occurred over the

phone. (Dkt. # 12-2, Pg. ID 267.)

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II. STANDARD

A court will enter summary judgment only when “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). “In deciding a motion for summary judgment, the court must view the

evidence in the light most favorable to the non-moving party, drawing all reasonable

inferences in that party’s favor.” Sagan v. United States, 342 F.3d 493, 497 (6th Cir.

2003). The movant has the initial burden of showing the absence of a genuine dispute

as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden

then shifts to the non-movant, who must put forth enough evidence to show that there

exists “a genuine issue for trial.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004)

(citation omitted). The non-movant “must do more than simply show that there is some

metaphysical doubt as to the material facts.” Matsushita v. Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986). Additionally, the court’s role is not to weigh the

evidence and rule on the truth of the matter, but to determine whether there is a genuine

issue to be considered at trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249

(1986). Summary judgment, therefore, is not appropriate when “the evidence presents a

sufficient disagreement to require submission to a jury.” Id. at 251–52 (1986).

III. DISCUSSION

It is well-settled in Michigan “that where an insured makes a material

misrepresentation in the application for insurance, including no-fault insurance, the

insurer is entitled to rescind the policy and declare it void ab initio.” Lake States Ins. Co.

v. Wilson, 586 N.W.2d 113, 115 (Mich. Ct. App. 1998) (citing Lash v. Allstate Ins. Co.

532 N.W.2d 869 (Mich. Ct. App. 1995)). A representation is material “where

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communication of it would have had the effect of ‘substantially increasing the chances

of loss insured against so as to bring about a rejection of the risk or the charge of an

increased premium’.” Oade v. Jackson Nat. Life Ins. Co. of Mich., 632 N.W.2d 126, 131

(Mich. 2001). If a misrepresentation is material, the insurer may rescind the policy

“without regard to the intentional nature of the misrepresentation, as long as it is relied

upon by the insurer. Reliance may exist when the misrepresentation relates to the

insurer’s guidelines for determining eligibility for coverage.” Id.

However, the above rule regarding rescission allows a “blameless contracting

party to avoid its contractual obligations” due to fraud. Titan Ins., Co. v. Hyten, 491

Mich. 547, 570 (2012) (emphasis added). An insurer may be estopped from rescinding

a policy based on a misrepresentation where the insurer knew about the allegedly

misrepresented fact and chose not to rescind the policy. Burton v. Wolverine Mut. Ins.

Co., 540 N.W.2d 480, 482 (Ct. App. Mich. 1995). Cf. Keys v. Pace, 358 Mich. 74, 84

(1959) (“The short answer to the arguments of waiver and estoppel is that a litigant

cannot be held estopped to assert a defense . . . because of facts he doesn’t know . . . .

That is not to say, of course, that one may willfully close his eyes to that which others

clearly see.”). In regards to knowledge obtained by a company’s representative, the rule

of agency requires that “the principal is chargeable with, and is bound by, the

knowledge of or notice to his agent received while the agent is acting within the scope

of his authority.” Hawkeye Cas. Co. v. Holcomb, 5 N.W.2d 477, 481 (Mich. 1942). 

Specifically, in cases involving insurances policies, “when essential facts are disclosed

to the insurer’s agent, the knowledge of that information will be imputed to the insurance

company and the insurance company is estopped from denial of coverage.” Shah v.

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Gen. Am. Life Ins. Co., 965 F. Supp. 978, 982 (1997). 

Defendant contends that Sara’s misrepresentation of the ownership status of the

insured vehicles entitles Defendant to rescind the policy and, thus, warrants summary

judgement. (Dkt. # 12, Pg. ID 247.) Given the state of the fact record, the court must

disagree. Although Plaintiff’s response to the Motion for Summary Judgment is

scattered, and internally consistent,2 at least Aamer’s testimony creates a genuine issue

of fact as to whether a meeting between Boone and the family occurred and whether

Boone had knowledge of the true ownership status of the vehicles.3 Viewing the facts in

the light most favorable to Plaintiffs, the court concludes that a jury could possibly find

that Defendant’s agent knew the ownership status of the vehicles when Sara signed the

application, as Plaintiffs assert. In that case, then, “knowledge of that information [is]

imputed to the [defendant] and the [defendant] is estopped from denial of coverage.”

Shah, 965 F.Supp. at 982.

This case is similar to Burton v. Wolverine Mut. Ins. Co., where a defendant

insurance company discovered that the plaintiff misrepresented his driving record on the

2

 As Defendant points out, at least twice in the opposition brief Plaintiffs’ counsel

asserts that Sara did not meet with Todd Boone. (See Pls.’ Counter-Statement of

Material Facts ¶¶ 2, 30.) This plainly undercuts the primary thrust of Plaintiffs’ argument,

that the meeting did occur and that at this meeting Sara revealed the true ownership of

the vehicles to Boone. (Dkt. # 18, Pg. ID 581.) However, because it is clear from

Plaintiffs’ briefing that, as a general matter, they assert the meeting did happen and

deposition testimony (attached to the opposition brief) from Sara and Aamer provide

factual support for this argument, the court must consider such evidence even in the

face counsel’s inconsistent argument. 

3

 The court further notes that even Sara’s testimony is of little value. She, at one

point, claims a meeting did occur and then moments later states that no such meeting

occurred, then clarifies that she doesn’t remember, though repeatedly said the policy

transfer at issue occurred over the phone. (Dkt. # 18, Pg. ID 622-24.)

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policy application and notified the plaintiff insured that the policy would be canceled (not

rescinded) at a future date. 540 N.W.2d at 481-82. The plaintiff was later involved in an

accident that occurred before the communicated cancellation date. Id. The defendant

refused to pay the policy and subsequently voided the policy ab initio, attempting to

disavow its previous assurance that plaintiff would be insured until a certain date. Id.

The court reasoned that the defendant’s notice of cancellation “induced plaintiffs to

believe that they would have insurance until the effective date of the cancellation.” Id at

482. The court further explained that the “plaintiffs had no reason to act immediately to

replace their insurance coverage,” allowing the defendants “to collect a premium and

provide coverage as long as there are no losses and yet remain entitled to choose

rescission and deny coverage if a loss occurs.” Id. at 482-83. The court concluded that

because the defendant knew about the misrepresentation and chose to continue to

collect a premium until a later date, the defendant waived its ability to rescind the policy.

Id. at 482. In characterizing the defendant’s attempt to void the policy, the court stated

that:

The remedy that defendant seeks is untenable. Defendant wished, upon

the discovery of a misrepresentation in the application, to have the right to

collect a premium and provide coverage as long as there are no losses

and yet remain entitled to choose rescission and deny coverage if a loss

occurs. In short, defendant wishes to be able to earn a premium without

having to provide coverage. That, however desirable it may be to

defendant, is not an available option. . . . [Defendant] cannot have its

premium and deny coverage too.

Id 482-83.

Accepting Plaintiffs’ testimony stating that Boone had knowledge of the Plaintiff’s

misrepresentation as true, Defendants seek the same result that the court in Burton

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found “untenable.” Both Nasser and Aamer testify that at the meeting with Boone, they

showed him the vehicle registrations listing the correct owners of the vehicles insured

under the policy subsequently issued to Sara and told Boone that Sara did not own the

vehicles. (Dkt. # 12-9, Pg. ID 363, Dkt. # 12-11, Pg. ID 429) Similar to the defendants in

Burton, Defendant had the opportunity to “cancel,” or refrain from initially issuing Sara

the policy when Boone allegedly learned of the true ownership status of the vehicles.

Furthermore, just as the defendant in Burton induced the plaintiffs to believe that

plaintiffs had a valid insurance policy, here, a jury could find that Defendant induced

Plaintiffs to believe that they had a valid policy by continuing to collect insurance

premiums from Plaintiffs after Plaintiffs informed Defendant that Sara did not own the

insured vehicles.

Defendant rescinded the policy only after Plaintiffs submitted insurance

claims—approximately five months after Defendant initially issued Sara the policy. (Dkt.

# 12-3, Pg. ID 295.) As a result, Defendant is not entitled to rescind the policy if it was

aware of the misrepresentation at the time it issued the policy. Defendant cannot have

its premiums and deny coverage too. See Burton, 540 N.W.2d at 482-83.

Relatedly, Defendant appears to make a separate but similar argument that,

instead of being based on the common-law affirmative defense of misrepresentation, is

based on the contractual language precluding any intentional fraud or

misrepresentations and providing that the “policy will not provide coverage under any

part of this policy” where there is fraud or misrepresentation. (See Dkt. # 12, Pg. ID 256-

60; Dkt. # 1-2, Pg. ID 103.) However, these arguments are one in the same, and

whether presented as a common-law defense or a defense provided for in the insurance

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contract, Defendant is estopped from rescinding coverage based on misrepresentation

or fraud where Plaintiffs can show that Defendant was aware of the misrepresentation

and chose not to act on it. See Rory v. Cont’l Ins. Co., 473 Mich. 457, 461 (2005)

(“[I]nsurance policies are subject to the same contract construction principles that apply

to any other species of contract” and “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.”) The cases Defendant has cited

are not to the contrary because those cases did not contain facts indicating that the

Defendant knew about the alleged fraud or misrepresentation. See Flowers v. IDS

Property Casualty Ins. Co., No. 10-cv-15164, 2012 WL 5906728 (E.D. Mich. Nov. 26,

2012); Martin v. Farm Bureau General Ins. Co. of Mich., No. 275261, 2008 WL 1807940

(Mich. Ct. App. April 22, 2008). 

Defendant also argues that it would be entitled to rescind the policy because

Sara “materially failed to disclose that Nasser did reside with her when the Application

required her to list household members age 16+.” (Dkt. # 12, Pg. ID 248) The court

cannot credit this argument at the summary judgment stage because Defendants have

offered no evidence that this misrepresentation was material, i.e., that it “would have

had the effect of ‘substantially increasing the chances of loss insured against so as to

bring about a rejection of the risk or the charge of an increased premium’.” Oade, 632

N.W.2d at 131. While a defendant bears the burden of proof on the affirmative defense

of misrepresentation, courts generally accept as sufficient the undisputed affidavit of an

underwriter who avers that had certain facts been know, the insurance policy would not

have been issued or the rate would have been higher. See Montgomery v. Fidelity &

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Guar. Life Ins. Co., 713 N.W.2d 801, 804 (Mich. Ct. App. 2005). Here Defendants have

failed to submit an affidavit making such an averment. While the affidavit of Nicholas

Marrangoni, Director of Liberty Mutual’s Complex Loss Issues department, states that

“[Defendant] LM General would not have issued [the] LibertyGaurd Policy . . . to Ms.

Almosawi if true and correct information disclosing that Ms. Almosawi did not own or

lease the Oldsmobile Aurora and Pontiac Grand Prix was conveyed to LM General in

her Application,” (Dkt. #12-3, Pg. ID 275), the affidavit is silent as to the materiality of

the misrepresentation regarding Nasser’s residence. Thus Defendant has, at this stage,

failed on the element of materiality as to this argument. 

Alternatively, Defendant argues that Sara does not have an insurable interest to

support her collision coverage claim because she did not own or lease the vehicles

insured under her name under the policy. (Dkt. # 12, Pg. ID 255) The court disagrees.

“An ‘insurable interest’ need not be in the nature of ownership but rather can be any

kind of benefit from the thing so insured or any kind of loss that would be suffered by its

damage or destruction.” Morrison v. Secura Ins., 781 N.W.2d 151, 153 (Mich Ct. App.

2009). The “insurable interest” requirement exists to void policies that “present insureds

with unacceptable temptation to commit wrongful acts to obtain payment.” Id. at 152-53. 

Here, drawing all reasonable inferences in the light most favorable to the

Plaintiffs, the court agrees with Plaintiffs that Sara has an insurable interest in the

vehicles despite not being the owner of the insured vehicles. Sara uses the vehicles to

drive short distances and relies on her family members to use the vehicles to provide

her with transportation. (Dkt. # 12-13, Pg. ID 480; Dkt. # 18, Pg. ID 586.) As a result,

Sara has an interest in the insured vehicles because she relies on the vehicles for

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transportation. Given that Sara received the benefit of insuring the vehicles under the

policy, it is unlikely that Sara or the other Plaintiffs were tempted to “commit wrongful

acts to obtain payment.” Morrison 781 N.W.2d at 152-153. Accordingly, the court rejects

Defendant’s argument that Plaintiffs do not have an insurable interest to support their

collision coverage claim in accordance with the policy. 

In sum, Plaintiffs have raised an issue of material fact sufficient to defeat

Defendant’s Motion for Summary Judgment. Although a misrepresentation of the true

owner of the insured vehicles would be a material misrepresentation, Plaintiffs testify

that they told Defendant’s agent that Sara was not the owner of the vehicles, and

therefore, Defendant is charged with this information. As explained above, an insurer

cannot sit on knowledge of a misrepresentation and then later rescind a policy when an

insured attempts to make a claim.

IV. CONCLUSION

IT IS ORDERED that Defendants’ Motion for Summary Judgment (Dkt. # 12) is

DENIED.

 s/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: July 21, 2016

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I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, July 21, 2016, by electronic and/or ordinary mail.

 

 s/Lisa Wagner 

 Case Manager and Deputy Clerk

(313) 234-5522

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