Court Opinion

ID: 4682679
Source: CourtListenerOpinion
Date Created: 2021-04-30 09:07:10.89887+00
Date Added: 2024-06-11T08:04:10.410567
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                revision until final publication in the Michigan Appeals Reports.

                             STATE OF MICHIGAN

                              COURT OF APPEALS

FARM BUREAU GENERAL INSURANCE                                    FOR PUBLICATION
COMPANY OF MICHIGAN,                                             April 29, 2021
                                                                 9:05 a.m.
                Plaintiff/Counterdefendant-Appellant,

v                                                                No. 352753
                                                                 Kent Circuit Court
ACE AMERICAN INSURANCE COMPANY,                                  LC No. 13-010616-CK

                Defendant/Cross-Defendant-Appellee,
and

MARK RUECKERT and MARYAN PETOSKEY,

                Defendants,
and

ROBYNN RUECKERT,

                Defendant/Counterplaintiff/Cross-
                Plaintiff,
and

BRISTOL WEST PREFERRED INSURANCE
COMPANY,

                Defendant.

Before: SHAPIRO, P.J., and CAVANAGH and REDFORD, JJ.

SHAPIRO, P.J.

       In this insurer-priority dispute, plaintiff Farm Bureau General Insurance Company of
Michigan (Farm Bureau) appeals by right the trial court’s opinion and order denying Farm
Bureau’s request for equitable rescission as to third party Robynn Rueckert following an
evidentiary hearing. For the reasons stated in this opinion, we affirm.

                                               -1-
                                        I. BACKGROUND

        This case concerns a no-fault policy that Mark Rueckert and his step-daughter Maryan
Petoskey procured from Farm Bureau. Robynn is Mark’s wife and Maryan’s mother; all three
lived together when the policy was obtained. On February 25, 2013, Mark and Maryan went to
the Farm Bureau office near their home to purchase a no-fault policy for a 1996 Dodge Ram van
that they jointly own. Jeffry Brandt was the Farm Bureau insurance agent at the office. Both Mark
and Maryan testified that Robynn was present, and Brandt, testifying years later, could not recall
if she was.1 Brandt’s main recollection was that Mark and Maryan were adamant that they would
be the only drivers of the vehicle.2

        Mark and Maryan were required to complete an insurance application for Farm Bureau,
and a membership application for Farm Bureau’s parent company, Michigan Farm Bureau. Either
Brandt or his assistant read the questions to Mark and Maryan and then recorded their verbal
answers. The membership application was completed in Mark’s name. Under “spouse
information,” Robynn’s name is listed, along with her date of birth and partial social security
number. On the insurance application, only Mark and Maryan are listed as owners or drivers of
the vehicle. The next section, which directed the applicants to “[l]ist all vehicle owners, residents
of household, and/or separate spouse not listed above,” was left blank. Mark’s marital status is
listed as “M.” The application also contained a list of eligibility questions. Three questions are
relevant to this case. Question 1 asks, “Do all drivers have a valid Michigan driver license?” The
applicants answered affirmatively. Questions 9 asks if any driver within the last 36 months has
been convicted of “operating a motor vehicle under the influence or while impaired by liquor or
controlled substance, whether or not causing serious injury or death?”3 The applicants answered
negatively. Question 13 asks, “Has the Applicant or a member of the Applicant’s household driven
or moved any vehicle owned by the Applicant which has NOT had the required insurance in force
for the preceding six months?” The applicants answered negatively and listed Bristol West
Preferred Insurance Company (Bristol West) as the previous insurer, providing the policy number
and an expiration date of May 2, 2013. Mark provided a certificate of insurance for the Bristol
West policy showing that the policy covered a 2006 Chevrolet Trailblazer LMT.

       The first premium payment was made at the time of application, and the application was
preapproved by Farm Bureau on March 4, 2013. Larry Clark was the Farm Bureau underwriter
who reviewed Mark and Maryan’s application. Clark determined that the application contained
incomplete or inaccurate information. Specifically, the application indicated that Mark was
married but did not contain his spouse’s name or other required information. There was also
inconsistent address information pertaining to Maryan. On March 22, 2013, Clark sent an e-mail
to Brandt asking for information about Mark’s wife and Maryan’s address. After Brandt did not
respond for a week, Clark decided to cancel the policy. On April 22, 2013, Farm Bureau sent

1
    Robynn was unable to testify due to her medical condition resulting from the accident.
2
    There is no evidence that Robyn or anyone other than Mark or Maryan drove the van.
3
 The application informed that if the applicant answered yes to any question 6 through 13, the
applicant would be ineligible for insurance coverage through Farm Bureau.

                                                 -2-
Mark a letter informing him that the policy was being cancelled because of an incomplete or
inaccurate application and that his coverage would end on May 25, 2013.

       On May 22, 2013, three days before the cancellation date, Robynn was severely injured as
a pedestrian when she was struck by a garbage truck at 4:20 a.m. The truck was making a left-
hand turn and hit Robynn while she was in the crosswalk when the “walk” sign was on. Robynn
suffered traumatic brain injuries resulting in permanent cognitive deficits. The garbage truck was
insured by defendant ACE American Insurance Company (ACE). The 1996 Dodge Ram was not
involved in the accident.

         Farm Bureau was made of aware of Robynn’s claim for benefits under the policy when it
received a bill from her hospital on June 21, 2013. Kurt Simon, a special investigator for Farm
Bureau, investigated Robynn’s claim. After his investigation, Simon informed Mark and Maryan
in a letter dated October 22, 2013, that their policy was being rescinded and declared null and void
from its inception date for material misrepresentations in the application. Simon detailed the
findings of his investigation, including that Robynn was Mark’s wife; that she resided at his home;
and that Robynn’s driving record contained multiple convictions for operating under the influence
of liquor or while intoxicated. Simon also determined that the Bristol West policy relating to the
Chevy Trailer Blazer listed on Mark and Maryan’s February 25, 2013 application had been
rescinded in November 2012, and that Robynn had been driving the uninsured vehicle on
February 18, 2013, when she received a citation for driving with a suspended license. Simon
concluded that the insurance application contained material misrepresentations because Robynn
should have been disclosed as a driver of the insured vehicle and eligibility questions 1, 9, and 13
were answered incorrectly.

        In November 2013, Farm Bureau filed a two-count complaint seeking rescission of the
policy and a declaratory judgment that ACE was first in priority to pay Robynn’s claim of no-fault
benefits. In October 2014, Farm Bureau moved for summary disposition under MCR 2.116(C)(10)
(no genuine issue of material fact).          Farm Bureau argued that there were material
misrepresentations in the application for insurance and therefore it properly rescinded the policy
pursuant to the antifraud clause. The trial court denied summary disposition to Farm Bureau and
granted summary disposition to ACE on the grounds that Farm Bureau’s decision to cancel the
policy prevented it from later rescinding the policy.

        On appeal, this Court reversed, reasoning that “the insurer cannot be estopped from
[rescinding the policy] on the basis of facts of which the insurer was actually unaware, even if
those facts could have been easily ascertained.” Farm Bureau Gen Ins Co of Mich v ACE American
Ins Co (Farm Bureau I), unpublished per curiam opinion of the Court of Appeals, issued
January 19, 2017 (Docket No. 329585), p 2. The panel also rejected ACE’s argument that Farm
Bureau could not rescind the policy as to Robynn, an innocent third party, because the innocent-
third-party doctrine was no longer viable in Michigan. Id. at 3. The panel concluded that there
was “room for disagreement whether Robynn could or should be considered a ‘driver’ within the
meaning of the policy application,” but noted that eligibility question 13 pertained to “any other
member of the household,” which Robynn indisputably was. The panel also noted that ACE made
a persuasive argument that Mark and Maryan did not engage in intentional fraud, but concluded
that Farm Bureau could seek rescission on the basis of an innocent misrepresentation. Id. at 4. In
sum, the panel concluded that there was no genuine question of fact that Mark and Maryan made

                                                -3-
a material misrepresentation that entitled Farm Bureau to rescind the policy. Accordingly, the
panel reversed the trial court’s order granting summary disposition to ACE and remanded for entry
of summary disposition in Farm Bureau’s favor. Id. at 5.

        ACE applied for leave to appeal with the Michigan Supreme Court. On July 18, 2018, the
Supreme Court decided Bazzi v Sentinel Ins Co, 502 Mich 390, 396; 919 NW2d 20 (2018), in
which it held that Titan Ins Co v Hyten, 491 Mich 547, 562-571; 817 NW2d 562 (2012), abrogated
the innocent-third-party rule. However, the Court clarified that rescission was an equitable
remedy, and that insurers did not have an “automatic” right to rescind an insurance policy with
respect to third parties. Id. at 411. Following Bazzi, in lieu of granting leave to appeal in this case,
the Supreme Court vacated the Court of Appeals opinion “only to the extent it held that Farm
Bureau was automatically entitled to rescission as a matter of law,” and remanded to the trial court
“to determine whether rescission is available as an equitable remedy as between Farm Bureau and
Robynn Rueckert.” The Court denied leave in all other respects. Farm Bureau Gen Ins Co of
Mich v ACE American Ins Co (Farm Bureau II), 503 Mich 903 (2018). In a concurring statement,
Justice MARKMAN identified five nonexclusive factors for trial courts to consider in “innocent-
third party cases” to determine whether rescission would be equitable. Id. at 906-907 (MARKMAN,
C.J., concurring).

        On remand, Farm Bureau and ACE engaged in additional discovery before filing
competing motions for summary disposition under MCR 2.116(C)(10), with each party arguing
that it was entitled to summary disposition based on application of the five factors identified by
Justice MARKMAN. The trial court determined that it could not decide whether rescission would
be equitable as to Robynn under the (C)(10) standard and so scheduled an evidentiary hearing. At
the hearing, the court heard testimony from Brandt (agent), Clark (underwriter), Detective Robert
Zabriskie (investigating officer), Justin Klaver (claims adjuster) and Simon (investigator). Mark
and Maryan’s deposition transcripts were admitted into evidence along with numerous other
exhibits. In a written opinion and order, the trial court found that multiple factors weighed against
rescission and ultimately determined that rescission as to Robynn would not be equitable. The
court reasoned that Robynn was “truly blameless, whereas Farm Bureau should be assigned some
blame for the problems at the root of this case.” This appeal followed.

                                           II. ANALYSIS

       Farm Bureau argues that the trial court abused its discretion by denying rescission in this
case. We disagree.4

4
  In Pioneer State Mutual Ins Co v Wright, 331 Mich App 396, 405, 414-415; 952 NW2d 586
(2020), this Court set forth the applicable standards of review:

       The remedy of rescission is “granted only in the sound discretion of the court.”
       Lenawee Co Bd of Health v Messerly, 417 Mich 17, 26; 331 NW2d 203 (1982); see
       also [Bazzi], 502 Mich at 409. An abuse of discretion occurs when the decision
       falls outside the range of reasonable and principled outcomes. Berryman v Mackey,

                                                  -4-
      The Supreme Court’s decision in Bazzi provided the following guidance in determining
whether rescission is warranted:

               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.”
       Accordingly, courts are not required to grant rescission in all cases. For example,
       “rescission should not be granted in cases where the result thus obtained would be
       unjust or inequitable,” or “where the circumstances of the challenged transaction
       make rescission infeasible.” Moreover, when two equally innocent parties are
       affected, the court is “required, in the exercise of [its] equitable powers, to
       determine which blameless party should assume the loss. . . .” “[W]here one of two
       innocent parties must suffer by the wrongful act . . . of another, that one must suffer
       the loss through whose act or neglect such third party was enabled to commit the
       wrong.” “The doctrine is an equitable one, and extends no further than is necessary
       to protect the innocent party in whose favor it is invoked.” [Bazzi, 502 Mich at
       410-411 (citations omitted).]

The Supreme Court adopted a case-by-case approach to determine whether rescission is equitable
as to third parties, stating that “an absolute approach would unduly hamper and constrain the proper
functioning of such remedies.” Id. at 411.

        As noted, following Bazzi the Supreme Court partly vacated this Court’s prior opinion in
this case and remanded to the trial court “to determine whether rescission is available as an
equitable remedy as between Farm Bureau and Robynn Rueckert.” Farm Bureau II, 503 Mich
903. Justice MARKMAN wrote separately and identified five nonexclusive factors for courts to
consider in determining whether rescission as to a third party is equitable. Id. at 906-907
(MARKMAN, C. J., concurring). He also noted that the party seeking rescission has the burden of
establishing that the remedy is warranted. Id. at 905 (MARKMAN, C. J., concurring), citing Gardner
v Thomas R Sharp & Sons, 279 Mich 467, 469; 272 NW 871 (1937).

       Justice MARKMAN’s concurring statement is not binding on this Court. See People v
Lampe, 327 Mich App 104, 115 n 4; 933 NW2d 314 (2019). However, in Pioneer State Mutual
Ins Co v Wright, 331 Mich App 396, 405, 411; 952 NW2d 586 (2020), we adopted Justice
MARKMAN’S factors, concluding that they “present[] a workable framework as well as necessary
guidance to the lower courts and the litigants . . . .” We summarized the five factors as follows:

       (1) [T]he 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

       327 Mich App 711, 717; 935 NW2d 94 (2019). An abuse of discretion necessarily
       occurs when the trial court makes an error of law. Id. The trial court’s factual
       findings are reviewed for clear error, and a finding is clearly erroneous if the
       reviewing court is left with a definite and firm conviction that a mistake has been
       made. Id. at 717-718.

                                                -5-
         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 414-415.]

       In this case, the trial court considered the five factors, as well as an additional consideration,
and concluded that, as to Robynn, rescission of the Farm Bureau policy would not be equitable.
We will address each factor in turn.

         The trial court reasoned that the first factor5 weighed against rescission because “[t]he lack
of critical information from Mark Rueckert about his wife on the application he submitted months
before the collision put Farm Bureau on notice that something could be awry,” yet Farm Bureau
chose to cancel the policy instead of “conducting an investigation that in all likelihood would have
revealed an obvious basis for rescission, i.e., Robynn Rueckert’s history of drunk driving.” The
record supports the trial court’s conclusion that Farm Bureau exhibited a lack of professional
diligence. Although Brandt, testifying six years after the event, could not recall if Robynn was
present when the application was completed, both Mark and Maryan testified that she was. Brandt
therefore had a full opportunity to ask her questions. In any event, even assuming Robynn was
not present, the insurance application indicated that Mark was married; the membership
application listed Robynn as his spouse; and Brandt agreed that it is assumed that a married couple
lives together. Despite all of this, Brandt approved the insurance application that did not identify
Robynn as a household member. Although Brandt ran a “C.L.U.E” (comprehensive loss
underwriting exchange) report that did not identify any other drivers for the residence, the
application asked more broadly for any household residents to be listed. Thus, based on the record
before us, there is no justification for Brandt ignoring this obvious discrepancy.

        Farm Bureau argues that, because the underwriter is the person with ultimate responsibility
to determine eligibility for coverage, giving “partial information” to the insurance agent did not
give effective notice to Farm Bureau that there was a household resident not identified in the
insurance application. To the extent that Farm Bureau is arguing that it is not responsible for
Brandt’s lack of diligence, it cites no legal authority in support of that position. Brandt testified

5
    Justice MARKMAN provided the following explanation of the first factor:

                 First, the extent to which the insurer, in fact, investigated or could have
         investigated the subject matter of the fraud before the innocent third party was
         injured, which may have led to a determination by the insurer that the insurance
         policy had been procured on a fraudulent basis. If the insurer could have with
         reasonable effort obtained information indicating that the insured had committed
         fraud in procuring the insurance policy, equity may weigh against rescission
         because the insurer may be deemed to have acted without adequate professional
         diligence in issuing and maintaining the policy. [Farm Bureau II, 503 Mich at 906
         (MARKMAN, C. J., concurring).]

                                                  -6-
that he was a captive agent for Farm Bureau and a Farm Bureau employee, so there is no question
that Brandt’s principal was Farm Bureau, the insurance company. See Harts v Farmers Ins Exch,
461 Mich 1, 6-7; 597 NW2d 47 (1999). “The relationship between the insurer and its agent is
controlled by the principles of agency.” Id. at 7. “[A] duly authorized agent has the power to act
and bind the principal to the same extent as if the principal acted.” In re Estate of Capuzzi, 470
Mich 399, 402; 684 NW2d 677 (2004). We therefore see no basis for concluding that Farm Bureau
is not responsible for Brandt’s lack of diligence, which we conclude weighs heavily against
rescission as the trial court found.

        Even focusing only on the underwriter’s actions, the record still supports the court’s
conclusion that Farm Bureau could have discovered the grounds for rescission with reasonable
efforts. Clark knew there was a problem with the application because it indicated that Mark was
married but gave no information about his spouse. However, Clark merely e-mailed Brandt for
additional information, and when he received no response after a week, he decided to cancel the
policy effective at a future date rather than: (a) follow up with Brandt; (b) contact the insureds; or
(c) perform any additional investigation. Indeed, Clark could have easily obtained identifying
information about Robynn from the membership application, which provided her name, date of
birth, and partial security number.6 While Clark testified that it was not a typical part of the
underwriting process to obtain a copy of the membership application, he agreed that he could have
done so.

        Farm Bureau also argues that an additional investigation into Robynn would not have
provided grounds for rescission on eligibility question 13 because her driving record would not
have shown that she had driven an uninsured vehicle in the past six months. Recall that in this
Court’s prior opinion, we concluded that rescission was warranted for the applicants’ response to
question 13 (pertaining to drivers and household residents) and indicated that there was a question
of fact whether questions 1 and 9 (pertaining to drivers only) were falsely answered because there
was “room for disagreement” whether Robynn should have been disclosed as a driver of the
insured vehicle. Farm Bureau I, unpub op at 4. Thus, Farm Bureau argues, Robynn’s driving
record was not relevant to the only grounds for rescission that have been judicially determined in
this case. But the fact remains that Farm Bureau sought rescission, in part, on the basis of Robynn

6
  Farm Bureau argues that the trial court’s ruling imposes a legal duty on it to discover fraud,
contrary to Titan Ins Co, 491 Mich 547. But in Pioneer we rejected that the first factor is
inconsistent with Titan Ins Co:

       In Titan Ins Co[, 491 Mich at 572-573], our Supreme Court held that “an insurer
       may seek to avoid liability under an insurance policy using traditional legal and
       equitable remedies including cancellation, rescission, or reformation, on the ground
       of fraud made in an application for insurance, notwithstanding that the fraud may
       have been easily ascertainable and the claimant is a third-party.” The first factor
       does not impose a duty to investigate upon insurers, contrary to Titan Ins Co, but
       merely addresses the process of procurement of insurance and any information
       disclosed. [Pioneer, 331 Mich App at 412 n 6.]

                                                 -7-
not being disclosed as a driver of the insured vehicle who did not have a valid license and who had
been convicted of operating while intoxicated in the past 36 months. Thus, an investigation into
Robynn and her driving record before the accident would have led Farm Bureau to rescind the
policy. Whether a jury would have ultimately agreed with Farm Bureau that Robynn should have
been disclosed as a driver of the insured vehicle is a different question.7 In sum, the trial court did
not clearly err by concluding Farm Bureau exhibited a lack of professional diligence that prevented
it from discovering the grounds for rescission that it later claimed.

        As to the second factor,8 the trial court noted that there was “scant evidence that Robynn
Rueckert played an active role in procuring the policy from Plaintiff Farm Bureau,” but
nonetheless found that this factor weighed in favor of rescission because the court “need not
engage in a leap of logic to presume that Robynn Rueckert had some understanding that her
husband had procured family automobile insurance for himself and her daughter without
disclosing her driving record.” ACE argues that the court’s ruling is based on a presumption, not
evidence, because it acknowledged there was little evidence of Robynn’s role in obtaining the
policy. However, this 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.
Considering Robynn’s close relationship to the insureds, as well as the insured’s testimony that
Robynn was present when the policy was obtained, the trial court did not clearly err by finding
that this factor weighed in favor of rescission.

        Next, the trial court concluded that the third factor9 weighed against rescission because the
court found that Robynn was blameless for the accident. Indeed, it is undisputed that Robynn was

7
  We also note that there is nothing in the record to suggest that Farm Bureau could not have
discovered before the accident that the Bristol West policy had been rescinded. Further, while
Farm Bureau wants to limit “the fraud” to the Bristol West policy for the first factor, it otherwise
makes no such distinction and argues that Robynn was culpable for not disclosing her driving
record at the insurance office. Farm Bureau cannot have it both ways. Either the fraud relates
solely to the application question relating to uninsured vehicles, or it concerns all of the purported
misrepresentations.
8
    Justice MARKMAN provided the following guidance on the second factor for courts to consider:

                 Second, the specific relationship between the innocent third party and the
         fraudulent insured. If the innocent third party possessed some knowledge of the
         fraud—perhaps because of a familial or other relationship—equity may weigh in
         favor of rescission because that individual is seeking to recover from the insurer
         despite knowledge of the fraud. [Farm Bureau II, 503 Mich at 906 (MARKMAN,
         C.J., concurring).]
9
    The third factor identified by Justice MARKMAN concerns

         the precise nature of the innocent third party’s conduct in the injury-causing event.
         Where the innocent third party acted recklessly or even negligently in the course of

                                                 -8-
in the crosswalk while the walk signal was on. Farm Bureau notes that Robynn had a high blood
alcohol content (BAC) at the time of the accident and that the investigating officer, Detective
Zabriskie, opined that, based on the position of Robynn’s arms in the video, that she could have
been walking quickly or running through the crosswalk. However, a high BAC and moving
quickly through a crosswalk does not establish negligence, let alone recklessness. We also note
that the trial court reviewed the dashcam footage that shows Robynn entering the crosswalk in a
light-colored shirt as the truck begins to make its turn. For these reasons, the court did not clearly
err by finding that Robynn was not at fault in the accident.

         The court concluded that the fourth factor10 favored rescission because, if the Farm Bureau
policy was rescinded, Robynn would be entitled to no-fault benefits from ACE, the insurer of the
accident vehicle. We see no error in this determination. The trial court also noted that this result
would be inconsistent with the no-fault priority scheme, i.e., absent rescission, Farm Bureau would
be first in priority. This comment has spawned arguments from both parties, but it had no bearing
on the court’s weighing of the factor. Further, it is unremarkable that rescission will result in the
next-in-line insurer having priority. In weighing this factor, the court correctly focused on whether
the third party had an alternative avenue for relief, and here Robynn could obtain benefits from
ACE if rescission was granted.11

      The trial court determined that the fifth factor12 weighed against rescission because Mark
(and Maryan) would not be relieved of tort liability if the Farm Bureau policy was enforced. Farm

          the injury-causing event, equity may weigh in favor of rescission because the
          innocent third party could have avoided the injury by acting more prudently. [Farm
          Bureau II, 503 Mich at 906 (MARKMAN, C.J., concurring).]
10
     Justice MARKMAN provided the following explanation for the fourth factor:

                  Fourth, whether the innocent third party possesses an alternative avenue for
          recovery absent enforcement of the insurance policy. Such an avenue for recovery
          may include, for example, the assigned claims plan or health insurance. 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.
          [Farm Bureau II, 503 Mich at 906-907 (MARKMAN, C.J., concurring).]
11
   The availability of other coverage should not be found where the claimant would be barred from
recovery from a different insurer because of the one-year-back rule. See Pioneer, 331 Mich App
at 412.
12
     The fifth factor concerns

          whether enforcement of the insurance policy would merely relieve the fraudulent
          insured of what would otherwise be the insured’s personal liability to the innocent
          third party. That is, whether enforcement of the insurance policy would subject the
          insurer to coverage for tort liability for an at-fault insured. In such a case, equity
          may weigh in favor of rescission because enforcement of the policy would transfer

                                                   -9-
Bureau maintains that when the fraudulent insured is not involved in the accident, this factor is
simply inapplicable. Indeed, after the trial court issued its opinion, we concluded in Pioneer that
the fifth factor was inapplicable under these circumstances. See Pioneer, 331 Mich App at 414.
Accordingly, consistent with Pioneer, the fifth factor is not applicable in this case, and it does not
weigh either in favor of or against rescission.

         As noted, the five factors identified by Justice MARKMAN are nonexclusive. In this case,
the trial court determined that the timing of the premium refund check, which was issued six
months after Farm Bureau initially cancelled the policy and a month after Farm Bureau decided to
rescind the policy, weighed against rescission. It is unclear how much weight the trial court gave
to this factor, and while we do not view it is as particularly weighty, we decline to conclude that
the trial court erred by considering it. Farm Bureau’s failure to act to promptly, both in rescinding
the policy and issuing the premium refund check, was a proper consideration.13

        In sum, two of the factors identified by Justice MARKMAN weighed against rescission, two
weighed in favor, the fifth factor was inapplicable and a sixth factor identified by the trial court
weighed against rescission. But the factors are not to be merely counted up, and the ultimate issue
is which innocent party should bear the loss. Farm Bureau II, 503 Mich 905, 907 (MARKMAN,
C.J., concurring). The trial court carefully weighed the equities in this case after holding a
multiday evidentiary hearing and concluded that rescission would be inequitable. We are also
mindful that the burden was on Farm Bureau to show that rescission was warranted. Based on the
record before us, the trial court did not abuse its discretion or commit legal error by denying
rescission under the circumstances of this case.

       Affirmed.

                                                              /s/ Douglas B. Shapiro
                                                              /s/ Mark J. Cavanagh
                                                              /s/ James Robert Redford

       liability to the innocent third party from the insured who committed the fraud to the
       insurer that did not commit wrongdoing. [Farm Bureau II, 503 Mich at 907
       (MARKMAN, C.J., concurring).]
13
  Farm Bureau argues that, in considering the equities, the trial court should have considered that
ACE was the only insurer who had been paid a premium for the period covering the accident.
However, Farm Bureau did receive a premium payment and was attempting to collect the unpaid
premiums until it decided to rescind the policy. In any event, the trial court did not abuse its
discretion by not taking the unpaid premiums into account.

                                                -10-