Policy rescission; Interpretation of a policy contract; Fraudulent misrepresentation; Titan Ins Co v Hyten; “Unlicensed” & “not licensed”; Distinguishing Farmers Ins Exch v Anderson & Ahmed v Tokio Marine Am Ins Co; Whether the insurer was entitled to rescission; Distinguishing Webb v Progressive Marathon Ins Co & Lash v Allstate Ins Co

The court affirmed the trial court’s amended order granting plaintiffs-insureds’ summary disposition motion on their breach of contract claim and denying defendant-insurer’s (MemberSelect) “cross-motion for summary disposition in which it had argued that it was entitled to rescind the policy.” The case arose out of a motor vehicle accident that occurred when plaintiff-Desiree Durga was driving a vehicle insured by MemberSelect. Plaintiffs claimed “that defendant breached their automobile insurance contract when it rescinded their policy based upon an allegation that [Desiree] made a fraudulent misrepresentation in the application process.” MemberSelect sought rescission of the policy ab initio. It contended that advising it that plaintiff-Justin Durga “was ‘not licensed,’ ‘unlicensed,’ that he has ‘0’ years licensed, or that he did not have a license, were all false, material representations.” The court disagreed. It did “not find that any of” the dictionary’ definitions it reviewed “foreclose a person whose license has been revoked from being considered ‘unlicensed’ or ‘not licensed.’” It noted that “any perceived ambiguity in language is construed against the drafter in favor of coverage.” In addition, “referring to a person whose license has been revoked as ‘unlicensed’ or ‘not licensed’ is consistent with Michigan law[,]” Also, defendant contended that Desiree “represented that her husband had ‘0’ years licensed in her [6/12] application in light of his license having been revoked in 2007.” The court found “that this does not constitute a false representation for purposes of establishing that prima facie element of a claim for fraud in the application and rescission.” It further found that defendant’s claim, “that responding ‘0’ is the functional equivalent of indicating one has never been licensed to be without merit. Responding with a number of years based upon having been licensed during some past time period, while likewise indicating that they are not licensed due to revocation, would appear be factually conflicting and inconsistent.” Finally, as to rescission, “both Webb and Lash involved people procuring insurance by making a clear material misrepresentation to the insurance company, thereby entitling those respective insurance carriers to rescind the subject policies of insurance.” The court held that “not only has defendant not provided clear and convincing evidence of fraud in this case, [it] has provided no evidence of fraud, meaning it is not entitled to rescission. Thus, neither Webb nor Lash” supported its argument.