Root v. Palmer

1

THERESE ROOT, Plaintiff-Appellant, and BEAUMONT HEALTH, Intervening Plaintiff, v. HOLLY PALMER, Defendant, and FALLS LAKE NATIONAL INSURANCE COMPANY, Defendant-Appellee,

No. 361722

Court of Appeals of Michigan

June 29, 2023

UNPUBLISHED

Macomb Circuit Court LC No. 2021-000976-NI

Before: Markey, P.J., and Jansen and K. F. Kelly, JJ.

Per Curiam.

In this no-fault insurance action, plaintiff, Therese Root, appeals by right the trial court's order granting summary disposition in favor of defendant, Falls Lake National Insurance Company (Falls Lake), under MCR 2.116(C)(10). The trial court determined as a matter of law that Root made a material misrepresentation in her application for insurance with Falls Lake; therefore, she was not entitled to any personal protection insurance (PIP) benefits from Falls Lake after she was injured in a motor-vehicle accident. We affirm.

Root who had a no-fault policy issued by Falls Lake, was injured in a car crash involving defendant, Holly Palmer, on April 7 2020. Intervening plaintiff, Beaumont Health, subsequently provided medical treatment to Root for her accident-related injuries. Root filed suit against Palmer and Falls Lake. Pertinent here, she alleged that Falls Lake unreasonably refused to pay PIP benefits in connection with her injuries sustained in the motor-vehicle accident. Falls Lake denied liability asserting that the insurance policy was void ab initio because in her application for insurance Root had misrepresented the number of vehicles that she owned or were registered in her name. Although Falls Lake alleged that Root made additional material misrepresentations in the insurance application, the trial court ultimately ruled in favor of Falls Lake solely on the basis of the misrepresentation regarding vehicle ownership or registration by Root, which is the focus of her appellate argument.

Root owned a Ford Escort, and she was driving the Escort when the accident occurred. In the insurance application, she only listed the Escort with respect to identifying vehicles registered in her name or owned by Root. In the application for insurance, Root further and expressly indicated that she did not own any other insured or uninsured vehicles and that there were no other insured or uninsured vehicles registered in her name. As part of that particular question, the application warned:

It is unacceptable to not list all vehicles registered in your name as they may cause a premium increase or a declination of coverage. The listing of all vehicles registered in your name is a conditional precedent to binding coverage.

The application also contained the following acknowledgement by the applicant: "I agree that if I conceal or misrepresent a material fact or circumstance relating to the insurance, the policy shall be null and void."

In his deposition, Root's husband, Douglas Root, testified that he and Root jointly owned the Escort. Douglas further stated that he owned a Chevy van. Root testified in her deposition that the van was kept at the couple's residence. She also indicated that the van was drivable or operable. Douglas testified to his belief that the van was uninsured at the time of the accident. He additionally observed that they had the van when Root applied for auto insurance on the Escort. There was testimony that Douglas had used the van in the past for work, at which time it was insured; however, he was not using the van during the period when the insurance application was made and the accident took place because he was not working at the time.

In its brief on appeal, Falls Lake asserts that the van was registered in Root's name. But the record citations given by Falls Lake in support of that proposition do not reveal that the van was registered in Root's name. We could not locate any documentary evidence in the record demonstrating that Root was an owner or registrant of the van. At the summary disposition hearing, counsel for Falls Lake contended that "[according to the Michigan Secretary of State that [van] is owned both by Therese Root and Douglas Root." Root's attorney did not challenge that assertion or voice an objection. Indeed, Root has never challenged Falls Lake's claim that Root owned the van or that it was registered in her name at the time she applied for the insurance policy. And in her brief on appeal, Root actually states that "[i]t is undisputed that Ms. Root owned the Chevy van." Accordingly, we proceed on the basis that at the time Root submitted the application for insurance, she owned the van and/or the van was registered in her name.

Paul Serota, the Vice President of the automobile division of Arrowhead Group, which was the entity in control of Falls Lake's underwriting function, explained that Falls Lake required all vehicles to be listed on an insurance application, whether operable or not. Falls Lake also required that all of an applicant's operational vehicles be insured. Serota testified that had Root disclosed in the insurance application that she owned the van or that it was registered in her name, the policy premium would have increased by $845. In an e-mail to Michael Keough, a personal-injury-protection adjuster, Serota stated that he would not have written the policy for Root had he known that there was an unlisted vehicle that was owned, registered, or regularly operated by applicant Root. In the e-mail, Serota also confirmed that adding the operable and uninsured unlisted van to the policy would have increased the premium by $845. Falls Lake's Rules Manual for Michigan provided:

11. All operable motor vehicles registered or owned by the name insured must be listed on the application.

12. The listing of all operable motor vehicles registered or owned by the name insured on the application is a condition precedent to binding coverage, and coverage will not or would not have been bound without the disclosure of operable motor vehicles registered or owned by the name insured because the non-disclosure of said vehicle or vehicles constitutes an unacceptable risk.

Falls Lake moved for summary disposition, arguing that Root's failure to list the van constituted a material misrepresentation that allowed Falls Lake to rescind the insurance policy, or, at a minimum, to deny Root's claim because the policy was procured through fraud. Root responded by arguing that Falls Lake was obligated to pay the claim because her failure to list the van was not material. Root reasoned that it was not material because the failure to list the van did not affect the decision by Falls Lake to insure the Escort-the relevant vehicle. The trial court granted the motion for summary disposition, ruling that Root's failure to list the van in the insurance application was a material misrepresentation because it may have exposed Falls Lake "to additional responsibility." The court also ruled that the van was jointly owned by Root and Douglas and that the premium was affected by Root's failure to disclose the van.^[1]

On appeal, Root contends that the trial court erred by concluding as a matter of law that her failure to disclose the van in the insurance application amounted to a material misrepresentation. Root argues, therefore, that the trial court erred by granting Falls Lake's motion for summary disposition.

This Court reviews de novo a trial court's ruling on a motion for summary disposition. El-Khalil v Oakwood Healthcare Inc, 504 Mich. 152, 159; 934 N.W.2d 665 (2019). We also review de novo the interpretation and application of an insurance contract. Cohen v Auto Club Ins Ass 'n, 463 Mich. 525, 528; 620 N.W.2d 840 (2001).^[2] MCR 2.116(C)(10) provides that summary disposition is appropriate when, "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." A motion brought pursuant to MCR 2.116(C)(10) tests the factual support for a party's action. Pioneer State Mut Ins Co v Dells, 301 Mich.App. 368, 377; 836 N.W.2d 257 (2013). "Affidavits, depositions, admissions, or other documentary evidence in support of the grounds asserted in the motion are required . . . when judgment is sought based on subrule (C)(10)," MCR 2.116(G)(3)(b), and such evidence, along with the pleadings, must be considered by the court when ruling on the (C)(10) motion, MCR 2.116(G)(5). "When a motion under subrule (C)(10) is made and supported . . ., an adverse party may not rest upon the mere allegations or denials of his or her pleading, but must, by affidavits or as otherwise provided in this rule, set forth specific facts showing that there is a genuine issue for trial." MCR...