Background
Rawaa Sabah Essa was injured on October 30, 2022, while riding in a GMC Yukon driven by her husband, Dali Shawkat, after another vehicle rear-ended them on I-75. Essa, then slightly more than three months pregnant, required immediate hospital care; her son was born prematurely in January, weighing less than two pounds. She sought personal injury protection benefits from Progressive Marathon Insurance Company, which had issued Dali a policy with unlimited PIP benefits. Progressive denied the claim on November 4, stating that Essa was neither a named insured nor Dali’s resident relative and that Progressive therefore was not in the order of priority for first-party no-fault benefits.
Dali had applied for the policy in March 2022 through his brother, Shawkat Oraha, who spoke better English and telephoned Progressive on Dali’s behalf. A Progressive agent completed the application, which Dali signed. It listed Dali’s residence as Chesterfield Drive in Troy, although he, Essa, and her two daughters lived on Almont Drive in Sterling Heights. It also incorrectly identified Shawkat as Dali’s spouse and omitted other resident relatives. The Yukon was primarily garaged on Almont, while Shawkat’s Dodge Challenger was garaged on Chesterfield. At the September 2022 renewal, Shawkat was reclassified as a resident relative, Dali’s parents and his father’s Honda Odyssey were added, but Dali remained listed at Chesterfield and Essa and the children were not identified.
Essa sued the Michigan Automobile Insurance Placement Facility in August 2023 and obtained leave to add Progressive in July 2024. In 2025, MAIPF and Progressive filed competing summary-disposition motions. Progressive sought rescission for material application misrepresentations, supported by Janeen Copic’s affidavit stating that Progressive would not have issued the policy had the separate household and vehicle locations been disclosed. MAIPF argued that Progressive remained the highest-priority insurer and that an assigned claim’s $250,000 limit would be inadequate. The trial court granted Progressive’s motion and denied MAIPF’s. MAIPF and Essa later settled and stipulated to dismissal, but MAIPF appealed the ruling favoring Progressive.
The Court’s Holding
The unpublished per curiam opinion affirmed. The court reviewed summary disposition under MCR 2.116(C)(10) de novo, asking whether the documentary evidence, viewed favorably to the nonmoving party, presented a genuine issue of material fact. It separately reviewed the equitable decision to permit rescission for abuse of discretion.
The court rejected MAIPF’s “mend the hold” argument. Although an insurer’s stated defenses can produce waiver or estoppel, those doctrines cannot create coverage or liability contrary to the parties’ contract. When Progressive denied Essa’s claim, it had not been told that Dali was married to her or that the family lived on Almont. Its initial resident-relative denial therefore did not bar rescission on these facts.
Progressive also did not have to prove deliberate deception. The court held that all elements of innocent misrepresentation were satisfied without a genuine factual dispute: the household information was material and false; it was supplied in connection with the insurance contract; Dali benefited by obtaining a policy Progressive otherwise would not have issued; Progressive relied on the representations, as shown by Copic’s affidavit; and Progressive was injured by assuming a risk it would not have accepted. Dali’s signature declaration bound him to the application’s contents despite the agent’s completion of it, his limited English, and his reliance on his brother. The court distinguished speculation about an application signed in blank, which was not alleged here. Copic’s statements about underwriting practice and reliance, rather than residence facts independently established by depositions, supported summary disposition.
Applying the five-factor equitable test from Pioneer State Mut Ins Co v Wright, the court acknowledged that factors two and three weighed against rescission and factor five was inapplicable. It found the trial court’s first-factor discussion misdirected, but concluded that any error omitted reasons favoring rescission: the application contained no red flags requiring further scrutiny, and an insurer has no duty to investigate an applicant’s representations. On the dispositive fourth factor, the trial court could consider uncertainty concerning the one-year-back rule because Progressive joined the litigation late and the parties had not developed how that rule would limit recovery. Nor did the undeveloped record establish Essa’s recoverable expenses, whether they would exceed the assigned-claim cap, or her son’s independent entitlement. MAIPF therefore failed to show an abuse of discretion.
Key Takeaways
- An initial coverage denial did not waive Progressive’s later rescission defense where it lacked the underlying household information, and estoppel could not create contractual liability.
- Innocent misrepresentation can support rescission without proof that the applicant intentionally deceived the insurer.
- The signer remained responsible for the application’s accuracy despite language limitations and assistance from an agent and family member.
- The affirmance rested on this record’s equitable balance and evidentiary gaps, not a universal rule that rescission always outweighs an innocent claimant’s interests.
Why It Matters
The decision separates de novo review of summary disposition from abuse-of-discretion review of rescission and illustrates how an insurer may establish innocent misrepresentation through material application errors and underwriting evidence. It also confirms that equitable rescission remains circumstance-specific: factors favoring the injured claimant did not require denial where alternative recovery and the practical effects of the one-year-back rule and benefit cap were uncertain.
For priority litigation, the opinion underscores the need to develop concrete evidence about recoverable medical expenses, statutory timing limitations, assigned-claim limits, and other potential beneficiaries. General assertions about inadequate alternative coverage may not establish an abuse of discretion without that record.