Post Acquisition Fraud Can Support Rescission in Michigan
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Meemic Insurance Company appealed a trial court’s order granting summary disposition in favor of all defendants to its suit for declaratory judgment that it had no duty to defend or indemnify under a no-fault policy issued to its insured, defendant Patricia Musser, in connection with an automobile accident.
In Meemic Insurance Company v. Estate Of Brendon Pearce, et al , No. 352724, Court of Appeals of Michigan (November 23, 2021) the Court of Appeals resolved the issue and returned the case to the trial court.
BACKGROUND
This appeal involves Meemic’s obligation to provide insurance coverage.
Meemic averred its insurance policy was void because of Patricia’s alleged fraud in procuring the policy and her alleged failure to inform Meemic about changes to the members of Patricia’s household.
CONCEALMENT OR FRAUD
Patricia testified that Melissa did not drive the Focus because it had a manual transmission, which Melissa did not know how to operate. According to a Meemic representative, if Meemic had known about Melissa’s alcohol-related conviction, it would not have continued to insure Patricia’s vehicles.
ANALYSIS
The crucial distinction between the two types of post and pre-procurement fraud is when the fraud occurred. Consequently, evidence of fraud obtained during the course of litigation can be used to void an insurance contract as long as it relates to fraud that occurred before litigation began.
POSTPROCUREMENT FRAUD
To be entitled to rescission on the basis of postprocurement fraud, Meemic must demonstrate that Patricia substantially breached the insurance contract. The insurance contract required Patricia, in relevant part, to inform Meemic of any changes to her household as well as any changes to the drivers of her vehicles.
Who drives a vehicle on a regular basis is an integral part of a car-insurance policy. Thus, if Patricia failed to disclose sufficient information, then it amounted to a substantial breach of contract because Meemic no longer knew the actual terms of the contract it had entered into. Such a substantial breach would permit Meemic to rescind the contract.
The trial court’s order granting summary disposition to defendants was reversed and remanded for further proceedings consistent with this opinion.
ZALMA OPINION
Insurance companies are entitled to rely on the good faith of those they insure to advise the insurer of the risks they are being asked to take. From the evidence discussed by the appellate court Patricia lied about who lived in her residence, what vehicles existed in the residence and who drove the vehicles both before and after the inception of the policy.
© 2022 – Barry Zalma
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Karacson’s Arson for Profit Attempt Required Skill & Experience to Succeed
In Steve Ellis Karacson v. David Shaver, Warden, No. 25-1089, United States Court of Appeals, Sixth Circuit (May 20, 2026) Steve Karacson was convicted in Michigan state court of arson and insurance fraud after evidence showed he burned his own insured home. Investigators found multiple points of origin, gasoline odor, and evidence tying him to the scene, including cell-phone location data and a receipt showing he had purchased a gas can and gloves shortly before the fire.
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Post number 5348
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FACTUAL BACKGROUND
In ...
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Post number 5386
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No Contract Claim No Bad Faith Claim
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After SADI submitted a claim, MAIC ultimately paid $1,099,614.02 for undisputed physical damage plus the $210,000 income-loss policy limit. SADI later sued for breach of contract and statutory bad faith, contending MAIC failed to fully investigate and adjust the claim; MAIC sought summary judgment, arguing SADI failed to cooperate and withheld material repair-cost information.
LAW:
Louisiana insurance policies are interpreted as contracts according to their plain meaning, and the insured bears the burden ...
Deprive Insurer of the Ability to Properly and Timely Investigate Claim & Recover Nothing
Posted on July 2, 2026 by Barry Zalma
Post number 5385
No Contract Claim No Bad Faith Claim
In South Alexander Development I, LLC v.Markel American Insurance Co., Civil Action No. 23-1436-JWD-SDJ, United States District Court, M.D. Louisiana (June 24, 2026) South Alexander Development I, LLC (SADI) owned and operated a solar farm in Springfield, Louisiana that allegedly sustained significant Hurricane Ida damage.
After SADI submitted a claim, MAIC ultimately paid $1,099,614.02 for undisputed physical damage plus the $210,000 income-loss policy limit. SADI later sued for breach of contract and statutory bad faith, contending MAIC failed to fully investigate and adjust the claim; MAIC sought summary judgment, arguing SADI failed to cooperate and withheld material repair-cost information.
LAW:
Louisiana insurance policies are interpreted as contracts according to their plain meaning, and the insured bears the burden ...
