Background
Robert Banker Jr. obtained a CURE Auto Insurance policy covering two vehicles 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 had obtained insurance and had told him to make sure the vehicle was insured, but he was not present for the application and supplied no information for it.
After the policy was issued, Banker Sr. called CURE at his son’s request to replace one covered vehicle with another. He later suffered injuries while driving an insured Jeep and sought personal-injury-protection benefits. CURE rescinded the policy based on Banker Jr.’s application misrepresentations and argued that rescission should extend to Banker Sr. The circuit court found no evidence that Banker Sr. participated in procuring the policy through fraud, treated him as an innocent third party, and concluded that the equities weighed against rescission as to him. It granted summary disposition to Allstate, the assigned-claims insurer, and denied CURE’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 CURE policy. Merely telling his son to obtain insurance did not establish fraud, particularly when Banker Sr. neither assisted with the application nor instructed Banker Jr. to omit household members. CURE’s agency theory was waived because it had not been raised below, and CURE did not establish that the later addition of another vehicle created a new insurance policy.
The court also declined to disturb the circuit court’s equitable balancing because CURE failed to address the factors underlying that ruling on appeal. It further held that it lacked jurisdiction to consider CURE’s arguments concerning the medical providers: the circuit court had not ruled on rescission as to those providers, and CURE later resolved those claims by consent judgment, leaving it unaggrieved by any trial-court decision concerning them.
Key Takeaways
- A person who participates in fraudulently procuring an insurance policy is not an innocent third party, but knowledge that insurance was obtained does not itself prove participation in procurement fraud.
- An appellant cannot obtain review of a new agency theory that was not presented to the trial court and must address the grounds supporting the trial court’s equitable ruling.
- A party generally cannot appeal claims it voluntarily resolved through a consent judgment when no adverse trial-court ruling caused the alleged injury.
Why It Matters
The decision emphasizes that rescission based on an insured’s application fraud does not automatically extend to a resident relative seeking no-fault benefits. Insurers must produce evidence connecting the claimant to the policy’s fraudulent procurement or, for an innocent third party, persuasively challenge the trial court’s equitable analysis.
It also highlights two appellate limits: theories must be preserved in the trial court, and a reservation of appellate rights in a consent judgment cannot create appellate jurisdiction over issues the trial court never decided.