Background
Robert Banker Jr. obtained a CURE Auto Insurance policy covering two Jeeps but failed to list his parents, Robert Banker Sr. and Theresa Banker, as household members. Banker Sr., who primarily drove one of the insured vehicles, was not present for the application and supplied no information for it, although he had told his son to make sure the vehicle was insured.
After the policy took effect, Banker Sr. called CURE at his son’s request to replace one vehicle on the policy with another. He later suffered injuries while driving an insured Jeep and sought personal protection insurance benefits. CURE rescinded the policy from its inception based on Banker Jr.’s misrepresentations and argued that the rescission should also apply to Banker Sr. 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 Allstate’s competing motion.
The Court’s Holding
The Court of Appeals affirmed. The record contained no evidence that Banker Sr. participated in fraudulently procuring the policy. Banker Jr. applied on his own, and Banker Sr.’s instruction to obtain insurance did not show that he directed or assisted his son in omitting household members. Banker Sr.’s later call to modify the covered vehicles occurred after procurement and did not establish fraud in obtaining the original policy.
CURE waived its agency theory by failing to raise it in the circuit court and did not adequately explain why adding a vehicle created a new insurance contract rather than amending the existing policy. CURE also failed to challenge the factors underlying the circuit court’s equitable determination, leaving no basis to disturb its refusal to extend rescission to Banker Sr.
The court declined to consider CURE’s arguments concerning the third-party medical providers. The circuit court had not ruled on rescission as to those providers, and CURE voluntarily resolved those claims through the final consent judgment. CURE therefore was not an aggrieved party with appellate jurisdiction to challenge that disposition.
Key Takeaways
- A person who participates in fraudulently procuring an insurance policy is not an innocent third party, but mere knowledge that another person obtained insurance does not establish participation in procurement fraud.
- Allegedly misleading conduct after a policy is issued does not, without more, prove fraud in the policy’s original procurement.
- An appellant must preserve distinct legal theories below and address the actual basis of the trial court’s equitable ruling.
- A party generally cannot appeal claims it voluntarily resolved through a consent judgment because the resulting injury does not arise from a trial-court ruling.
Why It Matters
The decision reinforces that rescission based on one insured’s application fraud does not automatically extend to another claimant. When the claimant did not participate in procuring the policy, the court must treat the claimant as an innocent third party and determine through equitable balancing whether rescission should apply.
It also underscores two appellate limits: reframing an argument under a new agency theory does not preserve it, and a reserved right to appeal cannot create appellate jurisdiction over claims resolved only by the parties’ consent.