If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

FARM BUREAU INSURANCE COMPANY,

Plaintiff/Counterdefendant-Appellee,

UNPUBLISHED

January 12, 2023

v No. 358188

Wayne Circuit Court

RHONDA LEE MEADOWS, LC No. 19-011363-NI

Defendant/Cross-Defendant,

and

PIONEER STATE MUTUAL INSURANCE 

COMPANY,

Defendant/Counterplaintiff/CrossPlaintiff/Third-Party PlaintiffAppellant,

and

ROBERT SEPPALA, Personal Representative of the 

ESTATE OF RONALD SEPPALA, and VHS OF 

MICHIGAN, INC., doing business as DETROIT 

MEDICAL CENTER,

Third-Party Defendants-Appellees.

Before: CAVANAGH, P.J., and O’BRIEN and RICK, JJ.

PER CURIAM.

In this action seeking reimbursement under the no-fault act, MCL 500.3101 et seq., Pioneer 

State Mutual Insurance Company (Pioneer) appeals as of right, challenging the trial court’s order 

denying its motions for summary disposition under MCR 2.116(C)(10) (no genuine issue of 

material fact), and granting summary disposition in favor of Farm Bureau Insurance Company 
-2-

(Farm Bureau) pursuant to MCR 2.116(I)(2).1 We reverse and remand for entry of an order 

granting Pioneer’s motion for summary disposition.

I. FACTS AND PROCEEDINGS

This case arises from a motor vehicle accident that occurred on May 22, 2017. Rhonda 

Meadows was the driver of a 1999 Ford Explorer insured by Pioneer, in which her ex-husband, 

Ronald Seppala,2 was a passenger. After the accident, Seppala submitted an application for 

personal protection insurance (PIP) benefits to the Michigan Automobile Insurance Placement 

Facility, which assigned Farm Bureau to his claim. Farm Bureau eventually paid PIP benefits to 

or on behalf of Seppala, then filed this action against Meadows to obtain reimbursement. After 

finding out that Meadows was insured by Pioneer at the time of the accident, Farm Bureau filed 

an amended complaint seeking recoupment from Pioneer.

With its answer to Farm Bureau’s complaint, Pioneer filed a cross-claim against Meadows 

seeking rescission of the policy on the basis of fraud. As the basis for its claim, Pioneer alleged 

that Seppala was living with Meadows when she applied for insurance, and that Meadows 

misrepresented this fact when she submitted her application to Pioneer. Meadows never filed an 

answer or otherwise defended this claim, and so a default judgment was entered against her. The 

default judgment rescinded Pioneer’s policy with Meadows, declaring it void ab initio.

As noted in footnote 1, the trial court consolidated this action with two other actions, adding 

VHS of Michigan, Inc. (VHS) and Seppala’s Estate as parties. After its policy with Meadows was 

rescinded, Pioneer moved for summary disposition against the remaining parties under MCR 

2.116(C)(10). Pioneer argued that the equities weighed in favor of declaring Meadows’ policy 

with Pioneer void ab initio as to Seppala, which would in turn defeat the claims made by VHS and 

Farm Bureau. The trial court denied Pioneer’s motion for summary disposition and granted 

summary disposition in favor of Farm Bureau under MCR 2.116(I)(2).

II. SUMMARY DISPOSITION

Pioneer argues that the equities weigh in favor of rescinding the policy as to Seppala and 

those claiming through him, and therefore, the trial court erred by denying its motions for summary 

disposition. We agree.

 

1 On July 24, 2020, the trial court consolidated this matter with two other pending actions, LC Nos.

20-004366-NF and 20-003542-NF. In those actions, VHS of Michigan, Inc. (VHS) filed claims 

against Farm Bureau and Pioneer, respectively, seeking reimbursement for services provided to 

Ronald Seppala (who is now deceased). As a result of the consolidation, the Estate of Ronald 

Seppala and VHS were added as parties to this action. Although VHS, on behalf of Seppala, was 

the plaintiff in those actions, VHS and Seppala’s Estate are designated as third-party defendants 

in this appeal.

2 As noted, Seppala is now deceased and his estate is a party.
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A. STANDARD OF REVIEW

This Court reviews de novo a trial court’s decision to grant summary disposition. Pioneer 

State Mut Ins Co v Wright, 331 Mich App 396, 405; 952 NW2d 586 (2020).

When considering a motion brought pursuant to MCR 2.116(C)(10), the trial court 

must review the evidence in the light most favorable to the nonmoving party. 

Summary disposition is only appropriate when there is no genuine issue of material 

fact. A genuine issue of material fact exists when the record presents an issue upon 

which reasonable minds might differ. [Id. (citations omitted).]

The trial court denied Pioneer’s motion under MCR 2.116(C)(10) and granted summary 

disposition to Farm Bureau under MCR 2.116(I)(2). That rule provides, “If it appears to the court 

that the opposing party, rather than the moving party, is entitled to judgment, the court may render 

judgment in favor of the opposing party.” MCR 2.116(I)(2).

Pioneer’s motion sought rescission of a contract. As rescission is an equitable remedy, a

trial court’s decision whether to grant rescission is reviewed for an abuse of discretion. Pioneer, 

331 Mich App at 405. Findings of fact in support of such a decision are generally reviewed for 

clear error. See id. However, because this issue was decided at the summary disposition stage, 

the trial court was not permitted to make any factual findings. See Price v Kroger Co of Michigan, 

284 Mich App 496, 500; 773 NW2d 739 (2009) (“A court may not make findings of fact when 

deciding a summary disposition motion.”). Instead, to grant summary disposition in favor of Farm 

Bureau on Pioneer’s request for recession, the trial court needed to view the evidence in the light 

most favorable to Pioneer.

3

 Conversely, to grant summary disposition in favor of Pioneer, the trial 

court needed to view the evidence in the light most favorable to Farm Bureau and the nonmoving 

parties. In light of our conclusion that Pioneer is entitled to summary judgment, we will view the 

evidence in the light most favorable to Farm Bureau, Seppala, and VHS.

B. ANALYSIS

The parties do not dispute that Seppala was riding as a passenger in a vehicle operated by 

Meadows when he was injured, and that this vehicle was insured under a policy of no-fault 

insurance issued by Pioneer to Meadows. The trial court granted Pioneer a default judgment on 

its claim that it was entitled to rescind its policy with Meadows on the basis of Meadows’ alleged 

fraud in her application for insurance. At issue in this case is whether Pioneer is also entitled to 

rescind the policy as to Seppala, an alleged innocent third party, and others claiming through him.

“[I]nsurers are not categorically entitled to rescission.” Pioneer, 331 Mich App at 410 

(quotation marks and citation omitted). Rescission abrogates a contract and restores the parties to 

the relative positions that they would have occupied if the contract had never been made.” Id. at 

409 (quotation marks and citation omitted). When two innocent parties are affected, the trial court 

 

3 As we will discuss, the trial court failed to adhere to this standard throughout its opinion, and 

often resolved factual disputes in favor of Farm Bureau.
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is required “to balance the equities to determine whether the equitable remedy of rescission [is]

appropriate.” Id. at 409. See also Bazzi v Sentinel Ins Co, 502 Mich 390, 410; 919 NW2d 20 

(2018) (“When a plaintiff is seeking rescission, the trial court must balance the equities to 

determine whether the plaintiff is entitled to the relief he or she seeks.”) (quotation marks and 

citation omitted). Here, there is no dispute that Pioneer was an innocent insurer, and Pioneer 

concedes that “Seppala is the innocent third party in this case.”

“The ultimate issue in innocent-third-party cases, in particular those that concern both an 

innocent third party and an innocent insurer, pertains to which of these parties should bear the 

ultimate burden of the insured’s fraud.” Farm Bureau Gen Ins Co of Michigan v ACE Am Ins Co, 

503 Mich 903, 903 (2018) (MARKMAN, J., concurring) (Farm Bureau I). In his concurrence in

Farm Bureau I, Justice MARKMAN listed five “nonexclusive” factors that courts could consider in 

determining this “ultimate issue.” Id. In Pioneer, this Court adopted those factors and condensed 

them into the following:

(1) the extent to which the insurer could have uncovered the subject matter of the 

fraud before the innocent third party was injured; (2) the relationship between the 

fraudulent insured and the innocent third party to determine if the third party had 

some knowledge of the fraud; (3) the nature of the innocent third party’s conduct, 

whether reckless or negligent, in the injury-causing event; (4) the availability of an 

alternate avenue for recovery if the insurance policy is not enforced; and (5) a 

determination of whether policy enforcement only serves to relieve the fraudulent 

insured of what would otherwise be the fraudulent insured’s personal liability to 

the innocent third party. [Id. at 411.]

This Court later cautioned, however, that these “factors are not to be merely counted up,” but are 

instead to be weighed in an effort to determine “which innocent party should bear the” burden of 

the insured’s fraud. Farm Bureau Gen Ins Co of Mich v ACE American Ins Co, 337 Mich App 88, 

108; 972 NW2d 325 (2021) (Farm Bureau II). See also Farm Bureau I, 503 Mich at 903. The 

party seeking rescission has the burden of establishing that rescission is warranted. Id.

The trial court concluded that the first factor—the extent to which Pioneer could have 

uncovered the misrepresentation before Seppala was injured—favored Seppala because Pioneer 

failed to establish that any fraud occurred in Meadows’ application for insurance. This conclusion 

is legally incorrect. A default judgment was entered against Meadows declaring her policy with 

Pioneer void ab initio as to Meadows. The entry of the default judgment had the effect of admitting 

all well-pleaded allegations. Wood v Detroit Auto Inter-Ins Exch, 413 Mich 573, 578; 321 NW2d 

653 (1982) (explaining that “[i]t is an established principle of Michigan law that a default settles 

the question of liability as to well-pleaded allegations”). In its cross-claim, Pioneer alleged that 

Meadows committed fraud or misrepresentation by failing to identify other drivers or residents on 

her insurance application. The resulting default judgment thus established Meadows’ fraud or 
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misrepresentation in her insurance application, and the trial court erred by finding that Pioneer 

failed to establish that any fraud occurred.

4

To properly address the first factor, the trial court should have analyzed whether Pioneer 

could have uncovered Meadows’ fraud before the accident. In Pioneer, 331 Mich App at 412, this 

Court reasoned that this factor was neutral because “[t]here is no evidence to suggest that there 

could or could not have been a more diligent effort on [the insurer’s] part to discover contradictions 

or omissions in [the insured’s] application any earlier.” Here, the nonmoving parties did not 

present any evidence tending to suggest that Pioneer could have discovered Meadows’ fraud 

sooner.5 On the other hand, Pioneer did not present any evidence establishing that it could not 

have discovered Meadows’ fraud sooner.6 Thus, contrary to the trial court’s conclusion that this 

factor weighed against Pioneer, this factor “does not truly weigh in either party’s favor.” Id.

For the second factor—whether Seppala had knowledge of the fraud—the trial court 

concluded that it favored Seppala because there was no evidence that he was aware of the policy, 

let alone any fraud. Viewing the evidence in the light most favorable to Farm Bureau and the 

nonmoving parties, we agree. When Seppala testified as part of a separate litigation, he said that 

he had only seen the 1999 Explorer one time before the accident, that he had never driven the 

vehicle, and that, while he was unsure if Meadows had insurance on the vehicle, he believed she 

did not. It can be reasonably inferred from this evidence that, if Seppala did not even know the 

1999 Explorer was insured, then he would not have knowledge about any fraud Meadows 

committed when applying for the insurance. Thus, this factor weighs against rescission.7

 

4 Even if the default judgment did not establish Meadows’ fraud, it is not apparent that the trial 

court viewed the evidence in the light most favorable to Pioneer when it concluded that Pioneer 

failed to establish any fraud. Pioneer presented evidence that, when Meadows submitted her 

application, Seppala and Meadows had some type of ongoing relationship despite being divorced, 

and that Seppala was living at Meadows’ residence. While the opposing parties presented evidence 

that Seppala was not living at Meadows’ residence, the trial court did not explain why Pioneer’s 

proffered evidence did not create a question of fact as to the issue of fraud.

5 Meadows and Seppala were not married, so Meadows’ failure to list Seppala on the application 

was not an obvious discrepancy that Pioneer should have been aware of. Compare Farm Bureau 

II, 337 Mich App at 102.

6 As the party seeking rescission, Pioneer had the burden of establishing that this factor weighed 

in its favor. Instead of doing so, Pioneer argues only that no evidence suggests that Pioneer had 

any knowledge of Meadows’ fraud. While this evidence tends to establish that this factor should 

not weigh against Pioneer, it is not sufficient to establish that it weighs in favor of Pioneer.

7 We note that in Farm Bureau II, this Court explained that the second factor “looks to the 

relationship between the insured and the third party, suggesting that a close relationship allows for 

an inference that the third party knew of the fraud.” Farm Bureau II, 337 Mich App at 105. In 

the trial court, Pioneer presented evidence suggesting that Seppala and Meadows had a close 

relationship, and argued that Seppala’s knowledge of Meadows’ fraud could be inferred from this 
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For the third factor—the nature of Seppala’s conduct, whether reckless or negligent, in the 

injury-causing event—the trial court concluded that it weighed against rescission because Seppala 

was merely a passenger and could not have been negligent in causing the accident. Continuing to 

view the evidence in the light most favorable to Farm Bureau and the nonmoving parties, we agree. 

Simply no admissible evidence supported that Seppala was responsible for the accident.8 

Therefore, this factor weighs against rescission.

Turning to the fourth factor—the availability of an alternate avenue for recovery if the 

insurance policy is not enforced—the trial court concluded that it favored Pioneer “because Farm 

Bureau is the alternative source of recovery.” This was the extent of the trial court’s analysis of 

this factor. Analyzing this factor further, we conclude that it heavily favors rescission. In Pioneer, 

331 Mich App at 413, this Court explained that “the fourth factor considers the present situation”

of the parties. The “present situation” in this case is that Seppala has not only a theoretical alternate 

source of recovery, but he has already recovered benefits from that alternate source, and that 

alternate source will continue as his insurer for any remaining liability. Thus, this factor weighs 

heavily in favor of rescission.9

 

close relationship. In response, the nonmoving parties presented evidence that Seppala and 

Meadows did not, in fact, have a close relationship, and that Seppala did not otherwise have 

knowledge of Meadows’ fraud. In granting summary disposition in favor of Farm Bureau, it is 

not apparent that the trial court considered evidence about the alleged relationship between Seppala 

and Meadows in the light most favorable to Pioneer, nor that the trial court considered whether 

Seppala’s knowledge about Meadows’ fraud could be inferred from the relationship as alleged by 

Pioneer.

8

In the trial court, Pioneer attempted to admit hearsay statements that, according to Pioneer, 

established that Seppala was assaulting Meadows at the time of the accident and was thus the one 

ultimately responsible for the crash. The trial court refused to consider these statements, 

concluding that they were hearsay without an exception. Pioneer argues on appeal that this 

conclusion was error, but because we conclude that Pioneer is entitled to summary disposition 

even if those statements were inadmissible, we decline to address the issue.

9 Farm Bureau argues that “this factor should not be weighed heavily against Farm Bureau, if at 

all,” because the factor will “almost always weigh against the MACP or a MACP-assigned insurer 

in cases involving an assigned insurer.” This argument is unconvincing for several reasons. First, 

the pertinent analysis weighs the equities between the innocent insured and the innocent third 

party, and Farm Bureau points to no authority to support its assertion that factor four should also 

consider whether rescission would be fair to the alternate source of recovery. Indeed, it would be 

odd to insert such a requirement for this factor given that Justice MARKMAN’s concurrence, which 

is the source of all the factors, specifically listed the MACP as an alternate source of recovery to 

be considered under factor four, but did not say that the factor should consider the equity to the 

MACP. See Farm Bureau I, 503 Mich at 903 (MARKMAN, J., concurring). Second, even 

considering the fairness issue, the MACP or an MACP-assigned insurer would only be required to 

cover a claim that was properly made to the MACP, regardless of whether the properly-made claim 
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Finally, with respect to the fifth factor—a determination of whether policy enforcement 

only serves to relieve the fraudulent insured of what would otherwise be the fraudulent insured’s 

personal liability to the innocent third party—the trial court concluded that it did not weigh in 

favor of either party because, while Seppala might have a third-party action against Meadows, 

Pioneer claimed that Seppala was a negligent party. On appeal, Pioneer contends that it was 

improper for the trial court to assume that Pioneer “would raise the issue of Seppala’s contributory 

negligence in an action against Meadows . . . .” In response, Farm Bureau argues that the trial 

court properly considered this factor neutral. We decline to address whether the trial court properly 

weighed factor five as neutral because, regardless of whether the factor favors Pioneer or is neutral, 

our conclusion is the same.

Thus, to summarize, when viewing the five factors in the light most favorable to the 

nonmoving parties, two factors are neutral, two weigh against rescission, and one weighs heavily 

in favor of rescission. While it is true that more factors weigh against rescission than in favor of 

rescission, the “factors are not to be merely counted up,” but are instead to be weighed in an effort 

to determine the ultimate issue of “which innocent party should bear the” burden of the insured’s 

fraud. Farm Bureau II, 337 Mich App at 108. See also Farm Bureau I, 503 Mich at 903 

(MARKMAN, J., concurring) (explaining that “[t]he ultimate issue in innocent-third-party cases” is 

which innocent party “should bear the ultimate burden of the insured’s fraud”). As explained when 

discussing factor four, the “present situation” in this case, Pioneer, 331 Mich App at 413, is that 

Seppala has already recovered benefits from an alternate source, and that source will continue as 

Seppala’s insurer for any remaining liability. It follows that, practically speaking, if the at-issue 

policy is rescinded, neither Pioneer nor Seppala would bear the burden of Meadows’ fraud. On 

the other hand, if the contract is not rescinded, Pioneer would bear the burden for Meadows’ fraud. 

Under this practical reality, the only reasonable outcome is rescission of the policy. Accord Farm 

Bureau I, 503 Mich at 903 (MARKMAN, J., concurring) (“Where the innocent third party possesses 

an alternative means of recovery, equity may weigh in favor of rescission because the insurer need 

not suffer loss because of the fraud.”).10

 

was the result of a rescinded policy. With that being the case, it is unclear what is unfair about the 

MACP or an MACP-assigned insurer covering a claim that was properly made to the MACP.

10 We emphasize that this holding, like most holdings addressing equitable remedies, is unique to 

the facts of this case. It is not the law that whenever an alternate source has provided benefits to 

an innocent third party, the policy with the innocent insurer must be rescinded with respect to the 

third party. Rather, our holding is that, under the facts of this case, rescission is the only reasonable 

outcome. As explained by our Supreme Court, whether rescission is appropriate is handled case 

by case because “an absolute approach would unduly hamper and constrain the proper functioning 

of” an equitable remedy like rescission. Bazzi, 502 Mich at 411. See also Tkachik v Mandeville, 

487 Mich 38, 46; 790 NW2d 260 (2010) (“Equity allows complete justice to be done in a case by 

adapting its judgments to the special circumstances of the case.”) (Quotation marks, citation, and 

alterations omitted.)
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III. CONCLUSION

For the reasons explained in this opinion, the trial court erred by denying Pioneer’s motion 

for summary disposition, and otherwise abused its discretion by refusing to grant Pioneer’s request 

for the equitable relief of recession.11

Reversed and remanded for the trial court to enter an order granting Pioneer’s motion for 

summary disposition. We do not retain jurisdiction.

/s/ Mark J. Cavanagh

/s/ Colleen A. O’Brien

/s/ Michelle M. Rick

 

11 Pioneer raises several other arguments on appeal that we decline to address, including (1) 

whether the trial court erred by not considering how Pioneer was prejudiced by the delay between 

when the accident occurred and when Pioneer was informed of the accident (2) whether the trial 

court properly excluded certain evidence submitted by Pioneer because it constituted hearsay 

without an applicable exception, and (3) whether the trial court properly denied Pioneer’s motion 

for a qualified protective order to view Meadows’ medical records from after the May 2017 crash.