could not rescind coverage even as to an “innocent third party.” Judge Boonstra was on the Court of Appeals’ panel in State Farm, and was also on the panel that decided Bazzi. In fact, in Bazzi, Judge Boonstra issued a concurring opinion in which he explained how he had changed his mind on this issue, given the extensive briefing submitted by both parties in Bazzi. Readers will recall that the Supreme Court likewise vacated the Court of Appeals’ earlier decision and remanded this matter back to the Michigan Court of Appeals for reconsideration, once Bazzi had been decided. See State Farm Mut’l Ins Co v Michigan Municipal Risk Mgmt Authority, 498 Mich 870; 868 NW2d 898 (2015).
The Court of Appeals issued its published decision, on remand, on August 30, 2016. In its decision, the Court of Appeals affirmed the ability of the no-fault insurer to rescind coverage even as to the “innocent third party” and remanded the matter back to the circuit court in order to allow QBE Insurance Company to establish proper grounds for rescinding coverage, based upon its insured’s failure to disclose the actual ownership of the vehicle being insured under the QBE policy.
Of more interest is Judge Murphy’s concurring opinion, which reads almost like a dissent. In his concurring opinion, Judge Murphy points out that in Hyten, the Michigan Supreme Court expressly recognized that an insurer’s ability to rescind coverage may be “limited in relation to statutorily-mandated insurance coverage and benefits.” Specifically, Judge Murphy pointed out that at the end of the Court’s opinion in Hyten, the Supreme Court stated:
Should Titan prevail on its assertion of actionable fraud, it may avail itself of a traditional legal or equitable remedy to avoid liability under the insurance policy, notwithstanding that the fraud may have been easily ascertainable. However, as discussed earlier in this opinion, the remedies available to Titan may be limited by statute. Titan Ins Co v Hyten, 491 Mich 547, 572; 817 NW2d 562 (2012).
Judge Murphy then made note of the footnote that was attached to the end of this sentence, “For example, MCL 500.3009(1) provides the policy coverage minimums for all motor vehicle liability insurance policies.”
The minimum insurance policy limits specified in the cited statute, of course, are $20,000/$40,000. As noted by Judge Murphy:
When footnote 17 is read in conjunction with the sentence to which it was appended, it necessarily signified the Supreme Court’s stance that the $20,000.00/$40,000.00 residual liability coverage mandated by MCL 500.3009(1) cannot be diminished or limited by legal or equitable remedies generally available to an insurer for actionable fraud. There can be no other reasonable construction of the sentence and corresponding footnote. Optional insurance coverage above the minimum liability limits contained in a policy procured by fraud might not be reached by an injured third party seeking damages arising out of a motor vehicle accident, but footnote 17 in Titan makes abundantly clear that the mandatory liability minimums are to be paid by the insurer under the policy despite any fraud. [State Farm, slip op at pp 1-2 (Murphy, J., concurring).]
Judge Murphy then observed that like the minimum policy limits set forth in MCL 500.3009, PIP benefits are likewise mandated under MCL 500.3101(1). Therefore, according to Judge Murphy:
Given the mandatory nature of PIP coverage under the No-Fault Act, and considering the logic gleaned from examining footnote 17 of Titan, one can reasonably extrapolate that MCL 500.3101(1) (requiring PIP coverage) would be another example, along with MCL 500.3009(1), of a statute that limits the availability of remedies for actionable fraud.