Background
Robert Banker Jr. obtained a CURE automobile policy covering two Jeeps but failed to list his father, Robert Banker Sr., or his mother as household members. Although Banker Sr. had told his son to insure the Jeep that Banker Sr. primarily drove, the evidence showed that Banker Jr. completed the application alone and without information or assistance from his father.
After issuance of the policy, Banker Sr. called CURE at his son’s request to replace one insured vehicle with another. Banker Sr. was later injured while driving one of the covered Jeeps. CURE rescinded the policy based on Banker Jr.’s application misrepresentations and denied Banker Sr.’s personal protection insurance benefits. The circuit court found Banker Sr. to be an innocent third party, concluded that the equities weighed against extending rescission to him, denied CURE’s summary-disposition motion, and granted summary disposition to Allstate, the insurer assigned through the Michigan Assigned Claims Plan.
The Court’s Holding
The Court of Appeals affirmed. The record contained no evidence that Banker Sr. participated in fraudulently procuring the policy. His instruction that his son obtain insurance did not show fraud, and his later call to change the vehicles on the policy occurred after procurement. CURE’s theory that Banker Jr.’s fraud could be imputed to Banker Sr. through an agency relationship was waived because CURE had not raised that distinct argument below.
CURE also failed to meaningfully challenge the circuit court’s balancing of the equitable factors governing whether rescission should extend to an innocent third party. Its conclusory appellate argument did not address the grounds underlying the circuit court’s analysis. The Court of Appeals declined to consider CURE’s arguments concerning the medical providers because the circuit court had never decided the rescission issue as to them; those claims were resolved only through CURE’s consent judgment, leaving CURE unaggrieved by any trial-court ruling concerning the providers.
Key Takeaways
- A resident relative is not stripped of innocent-third-party status merely because the relative knew insurance was being obtained or told the policyholder to obtain it.
- Allegedly misleading conduct occurring after a policy was procured does not, without more, establish participation in fraudulent procurement.
- An appellant must preserve each distinct theory below, address the actual basis of the trial court’s equitable ruling, and establish that it was aggrieved by a trial-court decision.
Why It Matters
The decision distinguishes participation in an insured’s fraudulent application from later conduct involving an existing policy. When the claimant did not participate in procuring the policy through fraud, a court must treat the claimant as an innocent third party and determine through equitable balancing whether rescission should apply to that claimant.
The opinion also underscores two appellate limits: a party cannot preserve an agency theory merely by making a broader fraud argument below, and it generally cannot appeal claims resolved by its own consent judgment when the trial court made no adverse ruling on those claims.