Court Opinion

ID: 7800013
Source: CourtListenerOpinion
Date Created: 2022-08-12 05:07:58.38885+00
Date Added: 2024-06-11T16:29:01.355925
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

MARIAN OLIVER,                                                      UNPUBLISHED
                                                                    August 11, 2022
               Plaintiff-Appellant,

v                                                                   No. 355699
                                                                    Wayne Circuit Court
ESURANCE INSURANCE COMPANY and                                      LC No. 19-001917-NF
ESURANCE PROPERTY AND CASUALTY
INSURANCE COMPANY,

               Defendants-Appellees.

MARIAN OLIVER,

               Plaintiff-Appellee,

v                                                                   No. 356886
                                                                    Wayne Circuit Court
ESURANCE INSURANCE COMPANY and                                      LC No. 19-001917-NF
ESURANCE PROPERTY AND CASUALTY
INSURANCE COMPANY,

               Defendants-Appellants.

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

PER CURIAM.

       After an automobile accident in 2018, plaintiff sued defendants,1 insurer of the vehicle she
occupied, for no-fault personal protection insurance (“PIP”) benefits following defendants’ denial

1
  Plaintiff named both Esurance Insurance Company and Esurance Property and Casualty
Insurance Company as defendants. There was no attempt to distinguish these apparently related
parties in the lower court proceedings.

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of her claim. The trial court granted defendants’ motion for summary disposition under MCR
2.116(C)(10), holding that an antifraud provision in defendants’ insurance policy barred plaintiff’s
claim. Defendants thereafter moved for costs and attorney fees under MCR 2.625, MCL 500.3148,
and MCL 600.2591, but the trial court denied defendants’ motion. In Docket No. 355699, plaintiff
appeals as of right the trial court’s order granting defendants summary disposition. In Docket
No. 356886, defendants appeal as of right the trial court’s order denying their motion for costs and
attorney fees. We reverse in Docket No. 355699, affirm in Docket No. 356886, and remand for
further proceedings.

                                 I. FACTUAL BACKGROUND

       On March 8, 2018, plaintiff rode as a passenger in a vehicle driven by her brother-in-law,
Bernard Thompson, whose vehicle became involved in a chain-reaction rear-end collision. She
used her phone on Facebook Live at the time and recorded the events shortly after the accident.
Thompson’s vehicle had minimal damage. Plaintiff exited the vehicle on her own.

        The day of the accident, plaintiff planned to drive to Georgia with other family members
to attend a family party. She proceeded with those plans after the accident, but stated that other
relatives did the driving and she had to limit her activity in Georgia because of the pain and
discomfort she experienced. When plaintiff returned to Michigan approximately a week later, she
sought treatment for a variety of symptoms that she attributed to the March 2018 accident. She
primarily complained of headaches, pain and tingling in her arms, and pain in her neck and back.
Her doctor diagnosed herniated discs in her cervical spine or neck, and radiculopathy in the lumbar
spine. She underwent a cervical fusion for disc herniations.

        Approximately six years earlier, in 2012, plaintiff suffered a work-related injury when she
slipped and fell, injuring her left arm. Her doctor diagnosed a pinched nerve on her left side. She
had a second work-related injury in 2013 that included an injury to her neck or cervical spine. She
received worker’s compensation benefits and also was awarded Social Security disability benefits
for her injuries.

        Defendants contended that plaintiff’s injuries were not related to the March 2018 accident,
but were preexisting injuries that predated the accident. Defendants filed two motions for
summary disposition. After the trial court denied defendants’ first motion, defendants alleged in
their second motion that plaintiff violated an antifraud provision in defendants’ insurance policy
which barred her from recovering no-fault benefits. In support of their fraud claim, defendants
relied on the Facebook Live video recording made by plaintiff just after the accident during which
she made statements that she should claim an accident injury, despite showing no overt signs of
pain or discomfort immediately following the accident. Defendants also argued that plaintiff made
false statements regarding her medical history during a presuit examination under oath and in her
deposition after she filed suit, and to physicians who treated her after the accident, wherein she
generally denied a history of prior neck or back injuries, and denied having previously received
physical therapy and diagnostic testing for her neck.

       The trial court found that plaintiff misrepresented her medical history and that the false
statements triggered the antifraud provision in defendants’ insurance policy, permitting defendants
to deny coverage for all PIP benefits to plaintiff. The trial court granted defendants’ motion under

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MCR 2.116(C)(10) and dismissed plaintiff’s action. Defendants thereafter moved for costs and
attorney fees, but the trial court denied their motion. These appeals followed.

                                         II. ANALYSIS

         A. DOCKET NO. 355699: SUMMARY DISPOSITION BASED ON FRAUD

        Plaintiff argues that the trial court erred by granting defendants summary disposition under
the antifraud provision in defendants’ insurance policy. We agree.

         We review de novo a trial court’s decision on a motion for summary disposition. Spiek v
Dep’t of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). The trial court granted defendants’
motion under MCR 2.116(C)(10). A motion under MCR 2.116(C)(10) tests the factual support
for a claim. A court must consider the pleadings, affidavits, depositions, admissions, and any other
documentary evidence submitted by the parties, and view that evidence in the light most favorable
to the nonmoving party to determine if a genuine issue of material fact exists. MCR 2.116(G)(5);
Maiden v Rozwood, 461 Mich 109, 118-120; 597 NW2d 817 (1999). Summary disposition should
be granted “where the proffered evidence fails to establish a genuine issue regarding any material
fact,” and the moving party is entitled to judgment as a matter of law. Id. at 120. “A genuine issue
of material fact exists when the record, giving the benefit of reasonable doubt to the opposing
party, leaves open an issue upon which reasonable minds might differ.” Bahri v IDS Prop Cas Ins
Co, 308 Mich App 420, 423; 864 NW2d 609 (2014) (quotation marks and citation omitted).

       In their second motion for summary disposition, defendants argued that they were entitled
to summary disposition because plaintiff made false statements in violation of an antifraud
provision in the policy, barring all coverage for PIP benefits. The antifraud provision provided for
voiding of the policy if fraud or misrepresentations were made in the application but also stated in
pertinent part:

              “We” do not provide coverage or benefits for any person who has made
       fraudulent statements or engaged in fraudulent conduct in connection with any
       “accident” or “loss” for which coverage or benefits are sought under this policy.

In support of their motion, defendants relied on Bahri in which this Court held that a general fraud
exclusion in an insured’s policy applied to bar a claim for replacement services.

        Plaintiff argues that more recent decisions from our Supreme Court and this Court now
clarify that defendants were not entitled to rely on the antifraud provision in their policy to deny
statutorily mandated no-fault coverage under the circumstances of this case. We agree.

        It is undisputed that plaintiff was not the policyholder and that her claim for no-fault
benefits arose under the no-fault act, which entitled plaintiff to seek benefits from the insurer of
the vehicle involved in the accident. In Shelton v Auto-Owners Ins Co, 318 Mich App 648; 899
NW2d 744 (2017), this Court distinguished Bahri on facts similar to those in this case. The
plaintiff, a passenger involved in a motor vehicle accident, did not have no-fault coverage in her
own name or reside with a relative who had coverage. She sought no-fault benefits from the insurer
of the vehicle’s driver. Id. at 651. The defendant insurer contended that the policy’s exclusionary
clause barred coverage when a person seeking benefits made fraudulent statements or engaged in

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fraudulent conduct respecting either procuring the policy or any occurrence for which a claimant
sought coverage. Id. at 651-652. The defendant asserted that the plaintiff made fraudulent
statements concerning her need for replacement services, and therefore, the policy’s exclusionary
fraud clause applied to bar coverage for all no-fault benefits. Id. at 650.

         This Court held that Bahri did not apply because the plaintiff in Shelton sought no-fault
benefits mandated by statute, not pursuant to any contractual agreement with the defendant.
Because the claim for no-fault benefits depended solely on the no-fault act and not the insurance
policy, the exclusionary clause in the policy did not apply to bar the plaintiff’s claim. Id. at 652-
655. This Court remarked that the defendant could deny a fraudulent claim and should the claimant
file suit the claimant would have to prove entitlement to benefits. Id. at 655.

        After this Court decided Shelton, our Supreme Court clarified in Meemic Ins Co v Fortson,
506 Mich 287, 293, 297-298; 954 NW2d 115 (2020), that coverage for statutory PIP benefits is
governed by the terms of the no-fault act, whereas the insurance policy contract controls coverages
that are not governed by the no-fault act. Addressing the applicability of a contractual fraud
defense to a claim for coverage mandated by the no-fault act, the Court held that “a provision in
an insurance policy purporting to set forth defenses to mandatory coverage is only valid and
enforceable to the extent it contains statutory defenses or common-law defenses that have not been
abrogated” by the no-fault act. Id. at 302-303.

        Our Supreme Court first observed that “[t]he no-fault act . . . does not provide a fraud
defense to PIP coverage,” and therefore, “Meemic’s antifraud defense is not statutory.” Id. at 303-
304. Therefore, the Court considered whether Meemic’s contract-based fraud defense was a
common-law defense that had not been abrogated by the act. In this regard, the Court held that
Michigan law allows a party to rescind a contract because of preprocurement fraud, consisting of
fraud “related to the inducement to or inception of the contract,” or postprocurement fraud
involving a party’s failure to perform a substantial part of the contract or one of its essential terms.
Id. at 304-307.

       More recently, in Williams v Farm Bureau Mut Ins Co of Mich, 335 Mich App 574, 586-
587; 967 NW2d 869 (2021), this Court stated:

               Meemic held that antifraud provisions in no-fault policies apply to fraud in
       the inducement but not to allegations of postprocurement fraud. Accordingly, the
       policy provision on which defendant and the trial court relied is “invalid and
       unenforceable” to the degree a no-fault insurer seeks to apply it to allegations of
       postprocurement fraud in a claim under mandatory coverage, as in this case.
       Meemic, 506 Mich at 316. The order of summary disposition is reversed and the
       case is remanded for proceedings consistent with this opinion.

        There is no dispute in this case that defendants have alleged only postprocurement fraud.
They do not rely on anything relating to the procurement or inception of the policy to avoid paying
benefits. Indeed, plaintiff is not a party to the contract and did not procure the policy. Accordingly,
under Meemic and Williams, defendants cannot rely on the policy’s antifraud provision to defeat
plaintiff’s claim for mandatory PIP benefits. The trial court, therefore, erred by granting
defendants’ motion for summary disposition.

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        That is not to say that defendants cannot reject fraudulent claims. However, whether a
specific claim is fraudulent is an issue distinct from an antifraud provision. A claimant must still
establish that any PIP benefits are actually payable. See MCL 500.3107. A claimant would not
be entitled to recover benefits for any fraudulent claims, but the claimant is not precluded from
recovering other no-fault benefits to which the claimant can prove entitlement. In this case, the
trial court did not examine plaintiff’s entitlement to any specific claims, but instead granted
defendants summary disposition based on the antifraud provision that, under Meemic and
Williams, is invalid and unenforceable as applied to plaintiff’s claims for mandatory PIP benefits.
Therefore, reversal is required.

         Plaintiff also argues that the trial court erred by relying on her allegedly false statements
made during discovery to establish factual support for defendants’ claim of fraud. Plaintiff argues
that this was impermissible under Haydaw v Farm Bureau Ins Co, 332 Mich App 719; 957 NW2d
858 (2020), which this Court decided approximately a week after the trial court entered its order
granting defendants’ motion for summary disposition. We agree.

        In Haydaw, like the instant case, the defendant insurer moved for summary disposition
pursuant to Bahri, and the trial court granted the defendant summary disposition by applying the
antifraud provision in the insurance policy. Haydaw, 332 Mich App at 722-723. On appeal, this
Court addressed whether statements made during the course of litigation could be used to void an
insurance policy under a fraud provision. This Court held that statements made during the course
of litigation cannot be used to void a policy under its antifraud provision. Id. at 723-730. As
explained in Fashho v Liberty Mut Ins Co, 333 Mich App 612, 619; 963 NW2d 695 (2020),
Haydaw stands “for the unremarkable proposition that an insurer cannot assert that it denied a
claim because of fraud that occurred after litigation began; the fraud must have occurred before
the commencement of legal proceedings.”

        Defendants’ motion for summary disposition relied heavily on allegedly false statements
made by plaintiff in her deposition, after this litigation commenced. The record indicates that the
trial court relied on those postlitigation statements to conclude that no genuine issue of material
fact existed that they implicated the antifraud provision in defendants’ policy. Under Haydaw,
those statements could not be used to implicate the antifraud provision in defendants’ policy.

       Defendants argue that plaintiff also made false statements in an examination under oath
before she commenced this action, and it also relied on statements made by plaintiff in the video
recording that she made on the day of the accident. Defendants argue that because these statements
preceded the commencement of this litigation, they are not implicated by Haydaw. The trial court,
however, expressly found that plaintiff’s statements in the video recording did not support
defendants’ claim of fraud, and the court did not distinguish between plaintiff’s statements made
under oath before this litigation was commenced and her postlitigation statements. In any event,
as explained previously, such statements involve postprocurement fraud that cannot be used to
implicate the antifraud provision in defendants’ policy, which the trial court relied upon for its
order granting summary disposition for defendants. Therefore, reversal is required.

        We note that, on appeal, defendants now argue that they are entitled to summary
disposition, not because of fraud and application of the antifraud provision of the insurance policy,
but because plaintiff cannot prove her entitlement to benefits under the no-fault act. They contend

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that she cannot establish that her injuries are actually related to the March 2018 accident. It is
defendants’ theory that plaintiff suffered from chronic conditions that preexisted the March 2018
accident. Defendants did not make this argument in the trial court, nor did the trial court render
its summary disposition decision on that ground. Rather, defendants relied on the antifraud
provision to bar coverage for all claims, and the trial court also determined that the provision barred
coverage for all claims without examining how any allegedly false statements related to any
specific claims for statutory benefits. The record reflects that plaintiff testified at her deposition
that, after the March 2018 accident, she experienced neck pain, back pain, and recurrent headaches
that she did not experience before the accident. She presented medical evidence documenting her
postaccident treatment for these conditions. Such evidence sufficed to create a genuine issue of
material fact whether plaintiff’s injuries were linked to the March 2018 accident. Although
defendants question plaintiff’s motive and credibility, summary disposition is not appropriate
where motive and intent are at issue, or where the credibility of a witness is critical. Foreman v
Foreman, 266 Mich App 132, 135-136; 701 NW2d 167 (2005). Accordingly, defendants are not
entitled to summary disposition on this new theory.

                        B. DEFENDANTS’ AFFIRMATIVE DEFENSES

         Plaintiff also argues that the trial court erred by granting defendants summary disposition
because they failed to plead with particularity fraud as an affirmative defense. In Glasker-Davis
v Auvenshine, 333 Mich App 222, 232; 964 NW2d 809 (2020), this Court clarified that “the
affirmative defense of fraud, see MCR 2.111(F)(3)(a), is a notable exception to the general notice-
pleading requirements and requires significantly more detailed and stringent allegations.” Thus,
it is insufficient to merely allege that a plaintiff’s conduct was fraudulent. Id. at 232-233.

        We agree that defendants failed to plead fraud with the requisite particularity. As already
discussed, however, reversal is required for other reasons, independent of defendants’ failure to
plead fraud with particularity. But because leave to amend should be freely given when justice so
requires, MCR 2.118(A)(2), and considering that Glasker-Davis was decided after the trial court
granted defendants’ motion for summary disposition, and that plaintiff had notice of defendant’s
specific allegations of fraud from defendant’s first motion for summary disposition, defendants
should be permitted on remand to file an appropriate motion to amend their affirmative defenses
if they wish to still pursue fraud as an affirmative defense insofar as such defense may prove
applicable. See generally Weymers v Khera, 454 Mich 639, 658; 563 NW2d 647 (1997).

                                     C. DOCKET NO. 356886

        In Docket No. 356886, defendants argue that the trial court erred by denying their motion
for costs and attorney fees. Defendants moved for costs and attorney fees under MCR 2.625(A)
(authorizing taxable costs), MCL 600.2591 (authorizing attorney fees where an action is frivolous),
and MCL 500.3148 (authorizing attorney fees where a no-fault claim is in some respect
fraudulent). However, defendants must be prevailing parties to be entitled to sanctions under these
provisions. See 1300 LaFayette East Coop, Inc v Savoy, 284 Mich App 522, 534-535; 773 NW2d
57 (2009). Because we reverse the trial court’s order granting defendants summary disposition,
defendants are no longer prevailing parties, and therefore, are not entitled to costs or attorney fees.
Accordingly, we affirm the trial court’s order denying defendants’ motion for costs and attorney
fees.

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                                      III. CONCLUSION

        In Docket No. 355699, we reverse the trial court’s order granting defendants summary
disposition and remand for further proceedings. In Docket No. 356886, we affirm the trial court’s
order denying defendants’ motion for costs and attorney fees. We do not retain jurisdiction.

                                                           /s/ David H. Sawyer
                                                           /s/ Douglas B. Shapiro
                                                           /s/ James Robert Redford

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