Rescission of an auto insurance policy; Pioneer State Mut Ins Co v Wright; Making credibility determinations in deciding a summary disposition motion under MCR 2.116(C)(10); Claim for third-party no-fault benefits; Uninsured driver; MCL 500.3135(2)(c); The security required by MCL 500.3101(1)

The court held that the trial court erred in granting defendant-Progressive summary disposition under MCR 2.116(C)(10), ruling it was entitled to rescission of plaintiff-Nelson’s auto insurance policy, based on a credibility determination. It also held that the trial court erred in granting defendants-Owusu and Hizmo Trucking summary disposition of plaintiff’s claims against them for third-party no-fault benefits on the basis she was an uninsured driver. Thus, it reversed both rulings and remanded. Plaintiff insured her vehicle by adding it and her name to her former boyfriend’s (J) policy, even though they did not live together. She was involved in an accident with a truck driven by Owusu and owned by Hizmo. After initially paying plaintiff first-party no-fault benefits, Progressive rescinded the “policy based on fraud in the procurement . . . .” The trial court determined she “was not ‘innocent’ and the balancing of the equities favored” Progressive, entitling it to rescind its policy and deny coverage. It stated “rescission is ‘an equitable matter,’ so ‘a court may make findings of fact, which are reviewed for clear error.’ The trial court proceeded to ‘find[ ] that Plaintiff’s position of innocent ignorance of the requirements for being added to [J’s] no-fault insurance policy is not believable,’” distinguishing this case from Pioneer State. The “fundamental flaw in this approach . . . is that trial courts are prohibited from making any credibility determinations on summary disposition review under” (C)(10). It noted that “the trial court had reasons to be suspicious of plaintiff’s credibility” and the court may “have accepted those reasons if the trial court had conducted an evidentiary hearing and then concluded that plaintiff’s position of innocent ignorance of those requirements ‘is not believable.’” But it did not conduct any hearing before reaching this conclusion. As to plaintiff’s third-party claim, she “procured no-fault insurance from Progressive before” the accident, so she “actually ‘had in effect for’ her Kia Forte ‘the security required’ by MCL 500.3101(1)” when she was injured. Further, as the trial court erred in granting Progressive summary disposition “on the propriety of rescission, plaintiff has not yet been stripped of the insurance coverage from Progressive, so she manifestly cannot yet be viewed as an uninsured driver subject to” MCL 500.3135(2)(c).