UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

LABARBARA ALFORD, KEVIN 

JOHNSON, and DESOTA JOHNSON, 

 Plaintiffs, CIVIL ACTION NO. 15-cv-11464 

 v. DISTRICT JUDGE ROBERT H. CLELAND 

 

LIBERTY MUTUAL FIRE MAGISTRATE JUDGE MONA K. MAJZOUB 

INSURANCE COMPANY, 

Defendant. 

__________________________________/ 

REPORT AND RECOMMENDATION

 Plaintiffs Labarbara Alford, Kevin Johnson, and Desota Johnson commenced this action 

against Defendants Liberty Mutual Fire Insurance Company and Michigan Automobile 

Insurance Placement Facility in the Macomb County Circuit Court on March 16, 2015, alleging 

that Defendants violated Michigan Compiled Laws § 500.3101, et seq., by failing to pay 

Plaintiffs’ No-Fault/Personal Injury Protection (PIP) benefits for alleged injuries suffered in an 

April 2, 2014 automobile accident. (Docket no. 1-1.) Defendant Liberty Mutual Fire Insurance 

Company removed the matter to this court on April 22, 2015, based on diversity jurisdiction. 

(Docket no. 1.) On July 24, 2015, the court dismissed Defendant Michigan Automobile 

Insurance Placement Facility as fraudulently joined (docket no. 8); thus, Defendant Liberty 

Mutual Fire Insurance Company is the only defendant that remains in this matter. 

 Before the Court is Defendant’s Motion for Summary Judgment. (Docket no. 13.) 

Plaintiffs responded to Defendant’s Motion (docket no. 17), and Defendant replied to Plaintiffs’ 

Response (docket no. 18). Defendant also filed a supplemental brief regarding recent controlling 

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authority relevant to this matter. (Docket no. 19.) The Motion has been referred to the 

undersigned for consideration. (Docket no. 14.) The undersigned has reviewed the pleadings, 

dispenses with a hearing pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), and 

issues this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). 

I. RECOMMENDATION 

 For the reasons that follow, it is recommended that Defendant’s Motion for Summary 

Judgment (docket no. 13) be GRANTED and that this matter be dismissed in its entirety.

II. REPORT 

 A. Background

 On September 15, 2010, Gwendolyn Pean applied for an automobile insurance policy 

with Defendant. (Docket no. 13 at 1; docket no. 17 at 2.) Defendant asserts that the information 

provided by Ms. Pean in the application was the basis for the issuance and subsequent renewals 

of LibertyGuard Auto Policy No. A02-248-676818-70 3 1, the most recent renewal being 

effective September 15, 2013 to September 15, 2014. (Docket no. 13 at 2, 3-4.) Notably, Ms. 

Pean was the only driver listed in the “Operator Information” section of the application for the 

two vehicles insured by the policy – a 2001 Ford Escort and a 2008 Ford Focus. (Docket no. 13 

at 2-3; docket no. 13-1 at 7; docket no. 17 at 2-3.) The “Application Authorization” section of 

the application, which purportedly bears Ms. Pean’s e-signature, contains statements (1) advising 

that any person who, with intent to defraud the insurer, files an application or a claim that 

includes false, incomplete, or misleading information, will be subject to imprisonment; and (2) 

acknowledging an understanding by the applicant that the policy may be rescinded and declared 

void if the application contains any false or misleading material information. (Docket no. 13 at 

3; docket no. 13-1 at 8; docket no. 17 at 3.) Additionally, the written policy limits the insured’s 

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ability to transfer any rights and duties under the policy without the written consent of the 

insurer, and it contains a fraud provision stating that the policy will not provide coverage for 

“any insured or any [sic] seeking benefits,” who conceals or misrepresents a material fact, makes 

false statements, or engages in fraudulent conduct related to a loss, an accident, the insurance, or 

the policy application. (Docket no. 13 at 4-5; docket no. 17 at 3.) 

 According to Defendant, on January 11, 2014, Ms. Pean called Defendant to inquire 

about an outstanding premium balance due on the policy, and she was advised to make the 

overdue payments to avoid cancellation; Ms. Pean declined to make any payments at that time. 

(Docket no. 13 at 5.) Subsequently, and unbeknownst to Defendant, Ms. Pean passed away on 

January 17, 2014. (Docket no. 13 at 5; docket no. 13-4; docket no. 17 at 4.) Defendant then sent 

a notice of cancellation for non-payment to Ms. Pean on February 24, 2014, which cancellation 

became effective on March 11, 2014 at 12:01 a.m., as no payment was made. (Docket no. 13 at 

at 5-6; docket no. 13-1 at 12-14.) Later that day, March 11, 2014, at 11:09 a.m., Ms. Pean’s 

daughter, Plaintiff Alford, admittedly called Defendant, impersonated her mother, and made a 

payment toward the policy premium over the phone, after which the policy was reinstated. 

(Docket no. 13 at 6; docket no. 17 at 4.) That same day, at 1:05 p.m., Ms. Pean’s other daughter, 

Artimese Scott, called and advised Defendant of Ms. Pean’s death. (Docket no. 13 at 7; docket 

no. 17 at 4.) Defendant claims that it advised Ms. Scott to provide the trust, proof of estate, or 

registration, and that the policy was cancelled, effective March 11, 2014 at 12:01 a.m. (Docket 

no. 13 at 7.) 

 Plaintiffs were then involved in an automobile accident on April 2, 2014, during which 

Plaintiff Kevin Johnson was driving the 2008 Ford Focus listed under the policy; Plaintiffs 

Alford and Desota Johnson were passengers in the vehicle. (Docket no. 13 at 7; docket no. 17 at 

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5.) After the accident, Plaintiff Alford called Defendant and again admittedly represented herself 

as Ms. Pean in order to report the accident and initiate a claim for benefits. (Docket no. 13 at 7-

8; docket no. 17 at 5.) 

 Defendant asserts that upon conducting an investigation of the accident, it discovered 

material misrepresentations made by Ms. Pean in her insurance application, specifically, that 

Plaintiffs Alford and Kevin Johnson were not listed as drivers on the policy. (Docket no. 13 at 8-

9.) Defendant asserts that it also discovered the fact that Plaintiff Alford misrepresented herself 

to Defendant as Ms. Pean on two separate occasions, the first on March 11, 2014 when she called 

to have the policy reinstated and the second when she called to report the accident. (Id.) 

Defendant claims that it consequently rescinded the insurance policy, declaring it to be null and 

void effective March 11, 2014, as if it had never been reinstated, and denied Plaintiffs’ claim for 

No-Fault PIP benefits. (Docket no. 13 at 10; docket no. 13-1 at 16.) Defendant notified Ms. 

Pean’s daughters, Plaintiff Alford and Ms. Scott, of the policy rescission and the claim denial in 

a July 31, 2014 letter. (Docket no. 13-1 at 16.) 

 B. Governing Law

 Defendant moves for summary judgment pursuant to Federal Rule of Civil Procedure 56. 

(Docket no. 13.) Summary judgment is appropriate where the moving party shows that 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). The moving party has the burden of showing an absence of 

evidence to support the non-moving party’s case. Covington v. Knox Cnty. Sch. Sys., 205 F.3d 

912, 915 (6th Cir. 2000). Rule 56 expressly provides that: 

A party asserting that a fact cannot be or is genuinely disputed must support the 

assertion by: 

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(A) citing to particular parts of materials in the record, including depositions, 

documents, electronically stored information, affidavits or declarations, 

stipulations (including those made for purposes of the motion only), admissions, 

interrogatory answers, or other materials; or 

(B) showing that the materials cited do not establish the absence or presence of a 

genuine dispute, or that an adverse party cannot produce admissible evidence to 

support the fact. 

 

Fed. R. Civ. P. 56(c)(1). “The court need consider only the cited materials, but it may consider 

other materials in the record.” Fed. R. Civ. P. 56(c)(3). 

 Once the moving party has met its burden of production, the non-moving party must 

come forward with significant probative evidence showing that a genuine issue exists for trial. 

Covington, 205 F.3d at 915. A mere scintilla of evidence is insufficient to defeat a properly 

supported motion for summary judgment; rather, “there must be evidence on which the jury 

could reasonably find for the [non-moving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 

242, 252 (1986). Ultimately, a district court must determine whether the record as a whole 

presents a genuine issue of material fact, drawing “all justifiable inferences in the light most 

favorable to the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 587 (1986); Hager v. Pike County Bd. Of Educ., 286 F.3d 366, 370 (6th Cir. 2002). 

 C. Analysis 

 Defendant argues that summary judgment in its favor is appropriate for the following 

reasons: (1) Plaintiffs are not entitled to PIP benefits under Michigan Compiled Laws §§ 

500.3113 or 500.3114 because the 2008 Ford Focus did not have the requisite security in effect 

under Michigan’s No-Fault Act, Michigan Compiled Laws § 500.3101, et seq., given that 

Plaintiff Alford became an owner of the Focus upon Ms. Pean’s death; (2) there is no coverage 

or other benefits available under the policy because it was properly and validly rescinded based 

on Plaintiff Alford and Ms. Pean’s misrepresentations; and (3) even if the policy was not validly 

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rescinded, it would not provide coverage or other benefits because Plaintiff Alford and Ms. Pean 

violated the policy’s fraud provision. (Docket no. 13 at 10-12.) Plaintiffs respond that 

Defendant is not entitled to summary judgment because (1) Ms. Pean’s representations in her 

application and Plaintiff Alford’s representations to Defendant do not constitute fraud sufficient 

to justify rescission of the policy; and (2) even if the policy was validly rescinded, the rescission 

is not effective as to Plaintiffs Kevin Johnson and Desota Johnson under the “innocent thirdparty rule.” (Docket no. 17 at 6-8.) Defendant replies that Plaintiffs’ reliance on the “innocent 

third-party rule” is misplaced under Michigan law. (Docket no. 18 at 6-8; docket no. 19.) 

 Under Michigan’s No-Fault Act, “[t]he owner or registrant of a motor vehicle required to 

be registered in this state shall maintain security for payment of benefits under personal 

protection insurance [PIP], property protection insurance, and residual liability insurance.” 

Mich. Comp. Laws § 500.3101(1). In the case of an accident, a person is not entitled to PIP 

benefits for accidental bodily injury if “[t]he person was the owner or registrant of a motor 

vehicle . . . involved in the accident with respect to which the security required by section 3101 . 

. . was not in effect” at the time of the accident. Mich. Comp. Laws § 500.3113(b). 

 Defendant seemingly argues that Plaintiff Alford, having become an owner of the 2008 

Ford Focus after Ms. Pean’s death, was required to personally insure the vehicle under MCL § 

500.3101(1), and because Plaintiff Alford was not personally insured under the subject policy, 

Defendant is not liable to Plaintiffs for PIP benefits under section 500.3113(b). Michigan’s 

Court of Appeals, however, has held that the language in MCL § 500.3113(b) precluding 

recovery of PIP benefits links the security or insurance requirement solely to the vehicle, not to 

the person standing in the shoes of an owner or registrant. Iqbal v. Bristol West Ins. Group, 748 

N.W.2d 574, 579, 583 (Mich. Ct. App. 2008). The state court of appeals later clarified and 

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narrowed its holding in Iqbal by stating that each and every owner of the vehicle need not obtain 

insurance to receive PIP benefits, so long as one owner or registrant of the vehicle has the 

requisite coverage. Barnes v. Farmers Ins. Exchange, 862 N.W.2d 681, 684-85 (Mich. Ct. App. 

2014). Thus, assuming for purposes of this motion that Plaintiff Alford was an owner of the 

2008 Ford Focus, the proper inquiry in this matter is not whether Plaintiff Alford personally 

insured the vehicle under the policy issued by Defendant, but whether the vehicle was properly 

insured under the subject policy by any owner or registrant at the time of the April 2, 2014 

accident. To make this determination, the validity of the policy’s rescission, effective March 11, 

2014, must be examined. 

 Defendant claims that it properly and validly rescinded the policy in accordance with 

Michigan law based upon Ms. Pean’s failure to list Plaintiffs Alford and Kevin Johnson as 

drivers in the insurance application as well as Plaintiff Alford’s impersonation of her mother in 

order to reinstate the policy and to subsequently file a claim for benefits. (Docket no. 13 at 27-

33.) In Michigan, it is well-settled that “[w]here a policy of insurance is procured through the 

insured's intentional misrepresentation of a material fact in the application for insurance, and the 

person seeking to collect the no-fault benefits is the same person who procured the policy of 

insurance through fraud, an insurer may rescind an insurance policy and declare it void ab 

initio.” Hammoud v. Metro. Prop. & Cas. Ins. Co., 563 N.W.2d 716, 718 (Mich. Ct. App. 1997) 

(citing Cunningham v. Citizens Ins. Co. of America, 350 N.W.2d 283 (Mich. Ct. App. 1984)); see 

also Lash v. Allstate Ins. Co., 532 N.W.2d 869, 872 (Mich. Ct. App. 1995). A misrepresentation 

is material “where 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 charging of an 

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

(Mich. 2001) (quoting Keys v. Pace, 99 N.W.2d 547, 551 (Mich. 1959)). 

 Here, it is undisputed that at 11:09 a.m. on March 11, 2014, Plaintiff Alford, the daughter 

of the named insured, Gwendolyn Pean, called Defendant, represented herself as her deceased 

mother, and made a payment of the policy premium to have the policy reinstated. It is also 

undisputed that when Plaintiff Alford called Defendant to report the April 2, 2014 accident, she 

again misrepresented herself as her mother. Not only is Plaintiff Alford’s impersonation of her 

deceased mother inherently fraudulent, but Plaintiff Alford also committed silent fraud1 by 

failing to disclose to Defendant that her mother had passed away and that she and Plaintiff Kevin 

Johnson would be driving the 2008 Ford Focus. 

 Plaintiffs argue that Plaintiff Alford’s misrepresentations were not material and therefore 

do not justify rescission of the policy because Defendant did not rely on Plaintiff Alford’s 

statements in reinstating the policy. (Docket no. 17 at 13-15.) Specifically, Plaintiffs assert that 

Defendant cannot demonstrate that it relied on Plaintiff Alford’s misrepresentations because on 

the same day that Plaintiff Alford reinstated the policy, Defendant received actual notice from 

Plaintiff Alford’s sister, Artimese Scott, that Ms. Pean had passed away. Therefore, Plaintiffs 

argue, “Defendant had full knowledge of the facts when the policy was reinstated” and “[i]t took 

no action to rescind the policy until after it was asked to pay for benefits.” (Id. at 14 (emphasis 

in original).) 

 Plaintiffs’ argument lacks merit, as Plaintiffs misinterpret the facts with regard to 

Defendant’s knowledge of Ms. Pean’s death relative to the reinstatement of the policy. In fact, 

Plaintiff Alford contacted Defendant at 11:09 a.m. on March 11, 2014 to reinstate the policy; 

 

1

 Michigan’s silent fraud doctrine holds that “when there is a legal or equitable duty of disclosure, a fraud arising 

from the suppression of the truth is as prejudicial as that which springs from the assertion of a falsehood.” Titan Ins. 

Co. v. Hyten, 817 N.W.2d 562, 569 (Mich. 2012) (citations and internal quotation marks omitted). 

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Plaintiff Alford’s sister advised Defendant of Ms. Pean’s passing approximately two hours later, 

at 1:05 p.m. Thus, contrary to Plaintiffs’ assertion, Defendant was not on notice of Ms. Pean’s 

death when it reinstated the policy. While Plaintiff Alford and Ms. Scott’s March 11, 2014 

telephone calls presumably put Defendant on notice of a factual discrepancy involving Ms. 

Pean’s insurance policy after the policy was reinstated, Defendant attests in a sworn affidavit that 

it actually discovered Plaintiff Alford’s misrepresentations after the April 2, 2014 accident, 

through its investigation of the claim for benefits.2 (Docket no. 13-1 at 5; docket no. 13 at 8.) 

Furthermore, in the rescission letter attached as an exhibit to Defendant’s Motion, Defendant 

indicates that it would not have reinstated the policy had it known of Plaintiff Alford’s 

misrepresentations. (Docket no. 13-1 at 16.) Certainly, Defendant would not have reinstated the 

policy as written, i.e., with Ms. Pean as the only authorized driver, had it known that she was 

deceased. 

 Defendant’s Motion is well-supported by the evidence submitted, and Plaintiff has failed 

to come forward with significant probative evidence showing that a genuine issue of material 

fact exists regarding the materiality of Plaintiff Alford’s misrepresentations. Accordingly, the 

undersigned concludes that Plaintiff Alford’s impersonations of her mother to Defendant 

constitute material misrepresentations sufficient to entitle Defendant to rescind the policy under 

Michigan law, and the rescission is therefore valid.3

 Because the policy was validly rescinded as 

of March 11, 2014, the 2008 Ford Focus did not have the requisite security under Michigan’s 

 

2

 Notably, the Michigan Court of Appeals has explicitly stated that it “would not interfere with [a] defendant's right 

to rescind [a] policy ab initio had it chosen to do so upon discovery of the material misrepresentation, regardless of 

whether that discovery occurred before or after the loss.” Burton v. Wolverine Mut. Ins. Co., 540 N.W.2d 480, 482 

(Mich. Ct. App. 1995) (further noting that in rescission cases, discovery of the misrepresentation generally occurs 

after the loss). 

3

 Because the rescission is valid based on Plaintiff Alford’s material misrepresentations alone, the Court does not 

reach the issue of whether Ms. Pean made a material misrepresentation in her insurance application regarding the 

identity of the vehicles’ operators, or whether her alleged misrepresentation forms a proper basis for rescission. The 

Court also need not reach the issue of the effect of the alleged violations of the policy’s fraud provision. 

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No-Fault Act, MCL § 500.3101, et seq., as of the date of the accident, April 2, 2014, and 

Plaintiffs are therefore not entitled to PIP benefits under MCL §§ 500.3113 or 500.3114. 

 Plaintiffs argue that even if the policy was validly rescinded, the rescission is ineffective 

as to Plaintiffs Kevin Johnson and Desota Johnson pursuant to the innocent third-party rule, 

which estops an insurer from asserting fraud to rescind an insurance policy where innocent third 

parties are involved.4 (Docket no. 17 at 15-17 (citing Lake States Ins. Co. v. Wilson, 586 N.W.2d 

113, 115 (Mich. Ct. App. 1998).) As Defendant points out, however, in Bazzi v. Sentinel Ins. 

Co., --- N.W.2d ----, 2016 WL 3263905 (Mich. Ct. App. June 14, 2016), the Michigan Court of 

Appeals recently invalidated Michigan’s innocent third-party rule. (See docket no. 19.) 

Specifically, the Bazzi court held that “if an insurer is able to establish that a no-fault policy was 

obtained through fraud, it is entitled to declare the policy void ab initio and rescind it, including 

denying the payment of benefits to innocent third-parties.” Bazzi, supra. Accordingly, 

Defendant’s valid rescission of the subject policy does indeed apply to Plaintiffs Kevin Johnson 

and Desota Johnson, and they are not entitled to the payment of PIP benefits in this matter. 

 D. Conclusion

 For the above-stated reasons, the court should GRANT Defendant’s Motion for 

Summary Judgment (docket no. 13) and dismiss this matter in its entirety. 

III. NOTICE TO PARTIES REGARDING OBJECTIONS 

 The parties to this action may object to and seek review of this Report and 

Recommendation, but are required to act within fourteen (14) days of service of a copy hereof as 

provided for in 28 U.S.C. § 636(b)(1) and Eastern District of Michigan Local Rule 72.1(d). 

Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. 

 

4

 The parties do not dispute whether Plaintiffs Kevin Johnson and Desota Johnson are innocent third parties; the 

Court will assume that they are for purposes of this motion only. 

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Arn, 474 U.S. 140, 149 (1985); Howard v. Sec’y of Health & Human Servs., 932 F.2d 505 (6th 

Cir. 1991); U.S. v. Walters, 638 F.2d 947, 949-50 (6th Cir. 1981). Filing of objections which 

raise some issues but fail to raise others with specificity, will not preserve all the objections a 

party might have to this Report and Recommendation. Willis v. Sec’y of Health & Human 

Servs., 931 F.2d 390, 401 (6th Cir. 1991); Smith v. Detroit Fed’n Of Teachers Local 231, 829 

F.2d 1370, 1373 (6th Cir. 1987). Pursuant to E.D. Mich. LR 72.1(d)(2), a copy of any objections 

is to be served upon this Magistrate Judge. 

 Any objections must be labeled as “Objection #1,” “Objection #2,” etc. Any objection 

must recite precisely the provision of this Report and Recommendation to which it pertains. Not 

later than fourteen days after service of an objection, the opposing party must file a concise 

response proportionate to the objections in length and complexity. The response must 

specifically address each issue raised in the objections, in the same order and labeled as 

“Response to Objection #1,” “Response to Objection #2,” etc. 

Dated: January 4, 2017 s/ Mona K. Majzoub 

 MONA K. MAJZOUB 

 UNITED STATES MAGISTRATE JUDGE 

 

 

PROOF OF SERVICE

 I hereby certify that a copy of this Report and Recommendation was served upon counsel 

of record on this date. 

Dated: January 4, 2017 s/ Lisa C. Bartlett 

 Case Manager

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