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Baker v. Marshall

Court of Appeals of Michigan

April 5, 2018

ERCY BAKER, Plaintiff-Appellant,
v.
EDWARD DARRELL MARSHALL, HERTZ VEHICLES, LLC, ERNEST BRADFIELD, and KENDRA BRADFIELD, Defendants, and SYNERGY SPINE AND ORTHOPEDIC SURGERY CENTER, Intervening Plaintiff, and IDS PROPERTY CASUALTY INSURANCE COMPANY, Defendant-Appellee.

          Wayne Circuit Court LC No. 15-006433-NI

          Before: M. J. Kelly, P.J., and Jansen and Meter, JJ.

          M. J. Kelly, P.J.

         In this action for uninsured motorist insurance and personal protection insurance (PIP) benefits, the trial court granted summary disposition to defendant, IDS Property Casualty Insurance Company (IDS), on the grounds that plaintiff, Percy Baker, had committed fraud, which, under a fraud-exclusion clause in her automobile insurance policy, voided her coverage.

         Baker appeals as of right, challenging the grant of summary disposition in IDS's favor.[1] Because IDS failed to plead fraud as an affirmative defense in its answer, amended answer, or a motion for summary disposition filed in lieu of a responsive pleading, we conclude that it waived the defense. Accordingly, the trial court erred by granting summary disposition on the basis of fraud. We reverse and remand for reinstatement of Baker's claim against IDS.

         I. BASIC FACTS

         The basic facts are undisputed. Baker sustained injuries when a vehicle driven by Edward Marshall ran a red light and broadsided the vehicle in which she was a passenger. At the time of the accident, Baker had a no-fault insurance policy with IDS, which included uninsured motorist coverage. Baker asserted that, as defined in her no-fault policy, Marshall was an uninsured motorist, as was Hertz Vehicles, LLC, the owner of the vehicle Marshal was driving. She submitted a claim for benefits to IDS, but it was denied. She also sought PIP benefits under the policy, which were likewise denied by IDS.

         In May 2015, Baker filed a complaint, asserting in relevant part that she was entitled to uninsured motorist insurance benefits under the terms of her policy with IDS. She also asserted that IDS had failed to pay her first-party benefits under the same policy. IDS filed its answer in June 2015. Generally, it denied the allegations that it had wrongfully failed to pay uninsured motorist benefits and PIP benefits under the policy issued to Baker. In its answer, IDS asserted numerous affirmative defenses and reserved the right to file additional affirmative defenses as they "may become known during the course of investigation and discovery." The affirmative defenses raised in the answer did not include a defense that the insurance policy was void ab initio on the basis of fraud. In response, Baker filed a denial of each of the affirmative defenses and demanded that, as required by MCR 2.111(F)(3), IDS set forth "a detailed statement of fact constituting each and every Affirmative Defense and a recitation of the legal basis therefore . . . ."[2] Baker later amended her complaint, adding claims against additional parties. In its answer to the amended complaint, IDS again generally denied the allegations against it and set forth numerous affirmative defenses, but it once more failed to raise contractual fraud as an affirmative defense.

         In February 2016, IDS moved for partial summary disposition, asserting that Baker was not entitled to uninsured motorist benefits under her no-fault policy with IDS because Marshal and Hertz had valid insurance policies or were self-insured at the time of the accident. In doing so, it directed the trial court to the relevant terms of the policy. It did not, at that time, raise any argument that the policy's fraud-exclusion clause was applicable for any reason. Before the court ruled on that motion, in May 2016, IDS moved for summary disposition on the entirety of

          Baker's claim. For the first time, IDS claimed that Baker had fraudulently misrepresented facts and that the fraud-exclusion clause in her policy with IDS therefore applied and barred her from receiving any coverage. Although Baker argued that IDS had waived its fraud defense by failing to raise it as required by MCR 2.111(F), the trial court granted summary disposition on the basis that the fraud-exclusion clause applied.

         II. WAIVER OF AFFIRMATIVE DEFENSES

         A. STANDARD OF REVIEW

         On appeal, Baker argues that the trial court erred by granting summary disposition on the basis of fraud because the defense of fraud was waived by IDS's failure to properly raise it as an affirmative defense under MCR 2.111(F). Our review of a grant of summary disposition is de novo. Barnard Mfg Co, ...


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