Background
Robert Banker Jr. obtained a CURE Auto Insurance policy covering two Jeeps but did not identify his father, Robert Banker Sr., or his mother as household members. Banker Sr., who primarily drove one of the insured vehicles, knew his son was obtaining insurance and told him to make sure the vehicle was insured, but the evidence showed that Banker Jr. completed the application without his father’s assistance.
After the policy was issued, Banker Sr. called CURE at his son’s request to replace one vehicle on the policy with another. He made statements that arguably obscured his identity, but explained during the call that he was acting for his son. Banker Sr. was later injured while driving an insured Jeep. CURE denied his personal protection insurance benefits and rescinded Banker Jr.’s policy from its inception based on Banker Jr.’s failure to disclose household members.
Allstate, which received Banker Sr.’s claim through the Michigan Assigned Claims Plan, argued that CURE remained the higher-priority insurer because Banker Sr. was an innocent third party and the equities weighed against extending rescission to him. The circuit court agreed, denied CURE’s summary-disposition motion, granted Allstate’s competing motion, and later entered a consent judgment preserving CURE’s right to appeal those rulings.
The Court’s Holding
The Court of Appeals affirmed. It held that no evidence showed Banker Sr. participated in fraudulently procuring the CURE policy. His instruction that his son obtain insurance did not establish fraud, and his later call to modify the vehicles covered by the existing policy did not show that he helped procure the original policy through fraud. CURE’s agency theory—that Banker Jr.’s application fraud could be imputed to Banker Sr.—was waived because CURE had not raised it below.
Because Banker Sr. was an innocent third party, the circuit court properly conducted an equitable analysis before deciding whether rescission should extend to him. CURE did not meaningfully challenge the factors underlying the circuit court’s conclusion that the equities weighed against rescission, so it failed to establish an abuse of discretion.
The appellate court declined to consider CURE’s arguments concerning the medical providers. The circuit court had not decided whether rescission applied to those providers, and CURE later resolved its claims against them by consent judgment. CURE therefore was not an aggrieved party entitled to appeal any provider-related ruling.
Key Takeaways
- A person who merely knows that a household member obtained insurance, without participating in application fraud, remains an innocent third party for rescission purposes.
- Potentially misleading conduct occurring after a policy was procured does not, without more, establish participation in fraudulent procurement.
- An appellant must address the trial court’s equitable analysis and preserve distinct legal theories below to obtain appellate review.
- A party ordinarily cannot appeal claims it voluntarily resolved through a consent judgment when no adverse trial-court ruling caused the asserted injury.
Why It Matters
The decision distinguishes fraud in procuring an insurance policy from questionable conduct occurring after issuance. For Michigan no-fault insurers, proof that a claimant knew about a policy or later communicated inaccurately with the insurer does not automatically eliminate innocent-third-party status.
The opinion also underscores two appellate limits: arguments must be preserved as the particular legal theories later advanced, and consent judgments cannot manufacture appellate jurisdiction over claims the trial court never decided adversely.