MENDELSON ORTHOPEDICS PC and SYNERGY SPINE AND ORTHOPEDIC SURGERY CENTER LLC Plaintiffs, and DONALD DEVORE, Intervening Plaintiff-Appellant
v.
EVEREST NATIONAL INSURANCE COMPANY and MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY, formerly known as MICHIGAN ASSIGNED CLAIMS PLAN, Defendants-Appellees, and LARRY MORGAN, Intervening Plaintiff and FARMERS INSURANCE EXCHANGE, Defendant.
Wayne
Circuit Court LC No. 15-014600-NF
Before: Redford, P.J., and Markey and K. F. Kelly, JJ.
Per
Curiam.
Intervening
plaintiff, Donald DeVore, appeals as of right from the trial
court's orders granting summary disposition in favor of
defendant, Everest National Insurance Company (Everest), and
defendant, Michigan Automobile Insurance Placement Facility
(MAIPF). We reverse both rulings and remand for further
proceeding consistent with this opinion.
I.
BACKGROUND
While
driving a motor vehicle owned by Cracynthia Havlicsek in
Birmingham, Michigan on June 2, 2015, intervening plaintiff,
Larry Morgan, and DeVore, his passenger, were rear ended by
another driver. Both Morgan and DeVore suffered injuries.
Havlicsek had recently obtained an auto insurance policy
issued by Everest on her vehicle. Everest paid some but not
all of Morgan's and DeVore's medical bills. Everest
covered Morgan's and DeVore's claims for personal
protection insurance (PIP) benefits from June 2, 2015 until
December 31, 2015, when it terminated each of their benefits
based on the results of independent medical examinations.
Plaintiffs,
Mendelson Orthopedics, PC (Mendelson) and Synergy Spine and
Orthopedic Center, LLC (SSOC) sued Everest to recover
payments for medical services rendered to Morgan related to
the injuries he suffered in the June 2, 2015 accident.
Pursuant to the parties' stipulation, the trial court
permitted Mendelson and SSOC to amend their complaint to add
the Michigan Assigned Claims Plan (MACP) as a defendant.
Morgan and DeVore sued Everest in a separate action in
Oakland County, but on September 2, 2016, they moved to
intervene in this action. The trial court granted their
motion and ordered them to dismiss their pending lawsuit
against Everest without prejudice. In their intervening
complaint, Morgan and DeVore alleged claims against Everest
and the MAIPF. They alleged that Everest insured the vehicle
in which they were injured and that they were entitled to PIP
benefits under the policy which Everest refused to pay. They
also alleged claims against the MAIPF that it had the
obligation to immediately assign their benefits claims to an
insurer to immediately provide them PIP benefits. Everest
defended Morgan's and DeVore's claims on the ground
that it rescinded Havlicsek's policy because she
misrepresented material facts in her insurance application.
The MAIPF denied having any obligations to provide Morgan and
DeVore PIP benefits. Among the affirmative defenses, it
stated that Morgan and DeVore failed to provide proof of loss
as required under the no-fault act and failed to provide
notice of their claims within the time permitted for filing
an action for PIP benefits.
Everest
moved for summary disposition under MCR 2.116(C)(10) of
Morgan's and DeVore's claims for PIP benefits on the
ground that it rescinded Havlicsek's insurance policy
because she misrepresented her address on the policy
application. Everest explained that it learned of
Havlicsek's misrepresentation in August and September
2016, about one year and three months after the accident,
during depositions of Havlicsek's mother and DeVore.
Everest argued that Michigan law permitted its rescission of
Havlicsek's policy because misrepresentations in the
application justified rescission and declaration that the
policy was void ab initio. Everest contended that
its rescission of Havlicsek's policy precluded all
plaintiffs from seeking coverage under the policy. Everest
argued that, even though Morgan and DeVore may have been
innocent of fraud, rescission of Havlicsek's policy
precluded them from any recovery of benefits from it.
In
opposition to Everest's motion, Morgan and DeVore argued
that, because they were innocent third parties and Everest
failed to raise the alleged misrepresentation in its
reservation of rights letters to them, and only raised the
fraud defense after the no-fault act's one-year
limitation period expired, their ability to seek benefits
from the MAIPF would be substantially prejudiced if Everest
was not equitably estopped from asserting rescission as a bar
to their innocent third-party claims. Morgan and DeVore
asserted that Everest could not raise the fraud defense to
deny them PIP benefits and that Havlicsek's
misrepresentations did not automatically permit Everest to
rescind the policy as to all parties. They contended that the
trial court should consider whether Everest had a right to
the equitable remedy of rescission under the circumstances.
The
trial court ruled that Everest had the absolute right to
rescind the policy for material misrepresentation. The trial
court held that no genuine issue of material fact existed
regarding that a material misrepresentation had been made by
Havlicsek in her application for insurance. The trial court,
therefore, granted Everest summary disposition. However, the
trial court dismissed Everest without prejudice subject to
the case being reinstated if our Supreme Court reversed this
Court's decision in Bazzi v Sentinel Ins Co, 315
Mich.App. 763, 770; 891 N.W.2d 13 (2016).
The
MAIPF moved under MCR 2.116(C)(8) and (10) for summary
disposition of DeVore's claims on the grounds that he
never submitted an application for benefits or notice of a
claim until more than one year after his June 2, 2015
accident which resulted in his ineligibility for no-fault
benefits under MCL 500.3172 and MCL 500.3174. The MAIPF
argued that DeVore lacked eligibility because he failed to
provide his first notice of his claim within one year after
his accident, and first gave it notice of his claim by filing
his suit against it on September 19, 2016, one year and three
months after his accident, which absolutely barred his
claims. DeVore opposed the MAIPF's motion by arguing that
Jesperson v Auto Club Ins Ass'n, 499 Mich. 29,
39; 878 N.W.2d 799 (2016), clarified that the one-year time
limit for submitting a claim is extended under MCL
500.3145(1) when previous payments have been made to or for
the benefit of an injured person by an insurer. DeVore
explained that Everest rescinded Havlicsek's policy
months after the one-year anniversary of his accident which
triggered his suit against the MAIPF. He argued that his suit
against the MAIPF, nevertheless, fell within one year after
the last payment made by Everest. He argued that he complied
with the no-fault act's notice requirement set forth in
MCL 500.1374 in conjunction with MCL 500.3145(1). The trial
court disagreed and granted the MAIPF's motion. DeVore
now appeals both orders.
II.
STANDARDS OF REVIEW
We
review de novo the trial court's decisions on motions for
summary disposition under MCR 2.116(C)(10). Latham v
Barton Malow Co, 480 Mich. 105, 111; 746 N.W.2d 868
(2008). A motion brought pursuant to MCR 2.116(C)(10) tests
the factual support of a plaintiff's claim and is
reviewed "by considering the pleadings, admissions, and
other evidence submitted by the parties in the light most
favorable to the nonmoving party. Summary disposition is
appropriate if there is no genuine issue regarding any
material fact and the moving party is entitled to judgment as
a matter of law." Id. A genuine issue of
material fact exists "when reasonable minds could differ
on an issue after viewing the record in the light most
favorable to the nonmoving party." Allison v AEW
Capital Mgt, LLP, 481 Mich. 419, 425; 751 N.W.2d 8
(2008). We review de novo questions of statutory
interpretation and the proper interpretation of a contract.
Titan Ins Co v Hyten, 491 Mich. 547, 553; 817 N.W.2d
562 (2012). We also review de novo motions for summary
disposition under MCR 2.116(C)(8). Bedford v Witte,
318 Mich.App. 60, 64; 896 N.W.2d 69 (2016). A motion under
MCR 2.116(C)(8) tests whether the opposing party has failed
to state a claim on which relief can be granted. Id.
"When deciding a motion under (C)(8), this Court accepts
all well-pleaded factual allegations as true and construes
them in the light most ...