Clam for reformation to add an additional insured for property coverage; Rescission of an insurance policy; Balancing of equities; Distinguishing Bazzi v Sentinel Ins Co; Doa Doa, Inc. (DDI); Garden City Real Estate, LLC (GCRE)

The court affirmed the trial court’s order granting defendant-PrimeOne’s renewed motion for summary disposition as to plaintiff-GCRE’s reformation claim seeking to be added as an additional insured. But it reversed the trial court’s opinion and order holding PrimeOne liable for property coverage to GCRE on the basis of a balancing of the equities, and remanded for entry of judgment for PrimeOne as to GCRE’s claim for property coverage. This commercial insurance dispute arose from a fire that destroyed a bar and restaurant business owned by plaintiff-DDI on property owned by GCRE. PrimeOne “insured DDI under a policy that included coverage for general liability and property damage. GCRE was named as an additional insured for the general liability coverage only.” On appeal, PrimeOne argued that the trial court erred by declining to rescind the “policy as against GCRE and requiring it to provide” GCRE property coverage. On cross-appeal, GCRE argued that the trial court erred by dismissing its claim to reform the “policy to include it as an additional insured for property coverage.” Because GCRE failed to show a genuine issue of material fact as to the requirements necessary to reform the policy, the court affirmed “the trial court’s decision granting PrimeOne’s motion for summary disposition on GCRE’s claim for reformation.” As to rescission and the trial court’s application of Bazzi, because GCRE was “not an insured or an additional insured under the property coverage portion of the policy, and because property coverage benefits are not otherwise mandated by statute, GCRE does not have any claim for property coverage benefits under the policy or otherwise.” And because it did “not have any claim for property coverage benefits in the first instance, the trial court erred by proceeding to balance the equities to determine whether GCRE may recover property coverage benefits because of its status as an innocent party to DDI’s fraud.”