Rescission ab initio; Common-law fraud; Howard v LM Gen Ins Co; Material misrepresentation; Premium-rate impact; Odde v Jackson Nat’l Life Ins Co of MI; Equitable rescission; Wright factors; Pioneer State Mut Ins Co v Wright; Innocent third party; Equity balancing; Bazzi v Sentinel Ins Co; Michigan Assigned Claims Plan (MACP)

The court held that cross-defendant (AAA) validly rescinded the policy at issue based on material misrepresentations and that the balance of equities favored rescission. Defendant’s granddaughter was injured in a crash while driving his insured vehicle, AAA rescinded the policy as void back to 7/1/19, and the MACP assigned the claim to plaintiff-insurer, which paid PIP benefits and sued defendant for subrogation. On appeal, the court held that an insurer may rescind ab initio for a “material misrepresentation” if it proves common-law fraud, and it concluded AAA met that burden through documentary evidence showing the vehicle was regularly driven and garaged in Detroit and that other covered vehicles were garaged and owned inconsistently with the information used to rate the policy, including underwriting testimony that accurate disclosures would have increased premiums and affected eligibility. It further found defendant failed to create a fact issue because his affidavit was conclusory and did not address key rescission grounds, and “a self-serving affidavit containing only conclusory allegations is generally insufficient to establish a genuine issue of material fact.” Turning to equity, the court emphasized rescission is not automatic, noting “rescission does not function by automatic operation of the law” and the trial court must “balance the equites” when an innocent third party may be affected. Applying the Wright factors, it treated one factor as neutral, found one weighed against rescission, and concluded the remaining factors favored rescission, including that the injured claimant still obtained benefits through the assigned-claims process and enforcement would primarily relieve defendant of personal liability. Affirmed.