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Schneider v. Liberty Mutual Insurance Co.

United States District Court, E.D. Michigan, Southern Division

October 18, 2016



          Denise Page Hood Chief Judge, United States District Court


         This case stems from Defendant's denial of Plaintiff's claim for first party no fault benefits following a motor vehicle accident in September 2013. On or about March 25, 2014, Plaintiff filed a complaint in Genesee County Circuit Court, and Defendant removed the case to this Court on May 29, 2014. On May 20, 2016, Defendant filed a Motion for Summary Judgment. [Dkt. No. 41] The motion has been fully briefed. The Court, having concluded that the decision process would not be significantly aided by oral argument, previously ordered that the motion be resolved on the motion and briefs submitted by the parties. E.D. Mich. L.R. 7.1(f)(2). [Dkt. No. 51] For the reasons that follow, the Court denies Defendant's Motion for Summary Judgment.


         Plaintiff is a 58-year old man who has owned more than 250 cars in his lifetime, due in part to a compulsive buying disorder from which Plaintiff suffers. In February 2013, Plaintiff applied for an automobile insurance policy (the “policy”) from Defendant for the following vehicles: a 1999 Jeep Wrangler, a 2004 Mercury Sable (the vehicle he was driving at the time of the accident), and a 2005 Ford Focus, each of which he identified as being insured for personal use. Dkt. No. 41, Ex. 2. The application contained the following provision:

Any person who knowingly and with the intent to injure, defraud or deceive, submits information to an insurer that is false, incomplete or misleading, may be guilty of a crime.

Dkt. No. 41, Ex. 3. On February 7, 2013, Defendant issued Plaintiff a policy of insurance covering those vehicles. Prior to September 2013, an additional five vehicles were insured on the same policy at some point, at least for a period of time, and 11 policy changes were made during that seven month time frame.

         As of September 2013, Plaintiff owned approximately 30 vehicles. On September 27, 2013, he was involved in an automobile accident that caused the injuries that precipitated this cause of action. After Plaintiff made his claim for benefits, Defendant's Special Investigation Unit initiated an investigation due to the “extraordinary amount of activity since the policy was issued, ” and Defendant notified Plaintiff of that investigation. Defendant indicates that, after the investigation was conducted, the matter was referred to Nicholas Marrangoni, the lead compliance analyst for Defendant, then to Defendant's in-house counsel and director of state operations for Michigan. Defendant rescinded the policy, and a notice of rescission, together with a representation that premiums that Plaintiff had paid would be returned, was mailed to Plaintiff on January 9, 2014.


         A. Standard of Review

         Rule 56(a) of the Rules of Civil Procedures provides that the court “shall grant summary judgment if the movant 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 presence of factual disputes will preclude granting of summary judgment only if the disputes are genuine and concern material facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is “genuine” only if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. Although the Court must view the motion in the light most favorable to the nonmoving party, where “the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be “no genuine issue as to any material fact, ” since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Celotex Corp., 477 U.S. at 322-23. A court must look to the substantive law to identify which facts are material. Anderson, 477 U.S. at 248.

         B. Analysis

         Defendant claims that it was entitled to rescind the policy because there is no genuine dispute that Plaintiff misrepresented to Defendant that he used the insured vehicles for personal use. Defendant argues that Plaintiff's deposition testimony establishes that there is no genuine dispute that he was a dealer engaged in the business of buying and selling used vehicles. Plaintiff contends that he was not a dealer and simply bought the vehicles as a hobby. Defendant relies on statements made by Plaintiff that:

1. He has owned over 250 vehicles;
2. He owned and had 30 vehicles in storage at the time of his ...

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