Declaratory judgment seeking to rescind an insurance policy based on misrepresentations & omissions; Bazzi v Sentinel Ins Co; “Material” misrepresentation; Oade v Jackson Nat’l Life Ins Co of MI; Recission; Lake States Ins Co v Wilson; Rosenthal v Triangle Dev Co; Titan Ins Co v Hyten; “Motor vehicle liability policy”; MCL 257.520(a); Multiple vehicles; MCL 257.520(b)

The court held that summary disposition against defendants-named insured (Cole) and additional insured (Wilson) was proper based on misrepresentations made in the insurance application process, but that remand was required as to defendant-driver (Williams). Thus, it reversed and remanded for the trial court to grant summary disposition for plaintiff-insurer as to Cole and Wilson, and to determine whether the same is appropriate as to Williams on the basis of the equities. After defendants were injured in an accident involving both of the insured vehicles, plaintiff sought to rescind the insurance policy based upon “the numerous misrepresentations and omissions committed by Cole during the application process.” The trial court granted plaintiff partial summary disposition, finding Cole made a material misrepresentation in her application because the two cars were not solely owned by and registered to her, holding as a matter of law that plaintiff would not have issued the policy as to the Crown Victoria because it was co-owned by Wilson. As to the Dodge Charger, however, it could not find as a matter of law that plaintiff would have refused to insure it. As such, it ordered reformation of the insurance policy to rescind coverage for the Crown Victoria but not for the Charger. On appeal, the court agreed with plaintiff that the material misrepresentations made in the application for insurance rendered the policy voidable in its entirety with respect to Cole and Wilson. However, it noted that “plaintiff concedes that this matter should be remanded for the trial court to determine whether rescission of the contract is appropriate as to Williams, who was by all accounts, innocent of the misrepresentations made by her codefendants.” Summary disposition against Cole and Wilson “is proper because no genuine issue of material fact exists regarding their innocence with respect to the misrepresentations made in this case, nor whether plaintiff would have issued the policy in question had it been aware of the same.” However, the trial court “should balance the equities as they pertain to plaintiff and Williams, an innocent third party, and determine within its discretion whether plaintiff is entitled to rescind the contract as it pertains to Williams.”