Volume XXVIII, No. 25, September 6, 2016 

From the Law Offices of Garan Lucow Miller, P.C.

From the Editor: Sarah Nadeau



By Emily S. Ross

Another published opinion issued by the Michigan Court of Appeals affirmed the result in Bazzi v Sentinel ___ Mich App___ (Docket No. 316869). In State Farm v Michigan Municipal Risk Management Authority, ___ Mich App___ (Docket No. 319710), the Court of Appeals found that based upon the decision in Bazzi, QBE could rescind a policy based upon misrepresentation by its insured, relieving QBE of any liability for no-fault benefits to an “innocent third-party” claimant.

In this case, State Farm sought to recoup payments that it had made to a claimant for no-fault benefits on the basis that the other insurers were higher priority carriers. QBE filed a motion for summary disposition on the basis that it was entitled to rescind its policy of insurance due to misrepresentations made by its insured. QBE insured a 1999 Oldsmobile Cutlass. The policy listed Whitney Gray as the named insured. However, the Cutlass was actually titled and registered to Tina Poole.  In the subject accident, William Johnson was operating a 1998 Pontiac Grand Prix. Johnson had purchased the Grand Prix, but it was titled and registered to his girlfriend Whitney Gray, because Johnson was unable to obtain a vehicle registration due to his lack of a driver’s license and bad driving record. The Grand Prix was uninsured. Johnson, who was fleeing from police, struck Martin Bongers, who was operating a motorcycle.

The trial court denied QBE’s motion for summary disposition, ruling that the “innocent third-party rule” prevented QBE from rescinding the policy issued to Gray. The effect of the trial court’s ruling was to determine that QBE was the insurer of the titled owner or registrant of the Grand Prix which was involved in the accident. As a result, QBE would be responsible for payment of Bonger’s no-fault benefits on a pro rata basis with the insurer of the other “involved’ vehicle, the police vehicle that was in pursuit

In its original unpublished decision dated February 19, 2015, the Court of Appeals affirmed the trial court’s ruling, rejecting QBE’s argument that Titan Ins Co v Hyten, 491 Mich 547 (2012) effectively overruled the “innocent third party-rule.” The Court distinguished Titan v Hyten, noting “Bongers’s entitlement to PIP benefits is statutory, however, not contractual.” The court noted that in Titan v Hyten the insurance carrier sought to avoid payment of liability damages above the minimal financial responsibility limits required by statute, not no-fault benefits which are statutorily mandated. However, QBE appealed this decision to the Michigan Supreme Court, which vacated the Court of Appeals decision, remanded the case to the Court of Appeals, and ordered that the case be held in abeyance pending a decision in Bazzi.

On June 14, 2016 the Michigan Court of Appeals issued its opinion in Bazzi, and the decision in this case followed on August 30, 2016. In its opinion on remand, the State Farm Court declared “As Bazzi has now been decided, we consider the instant case, and conclude that the ‘innocent third-party rule’ did not bar QBE’s claim of fraud as a defense to an insurance contract, and that the trial court therefore erred in denying summary disposition….” The Court noted that if Gray had truthfully completed the application, QBE would not have issued the subject policy. Specifically, Gray had affirmatively represented on the application that she was the registered owner of the Cutlass, when in fact she was not. The application itself specifically warned that the named insured “must be the registered owner” of the insured vehicle.

The State Farm Court further noted that it agreed with the Bazzi panel that any public policy considerations caused by the abrogation of the “innocent third-party rule” should be addressed on a legislative level, not by the court. Although the Court vacated the trial court’s ruling with respect to the “innocent third-party rule”, it remanded the case to the trial court for further proceedings based upon the trial court’s findings that there might be questions of fact relative to the defense of fraud.

A concurring opinion echoed the recent opinion in SE Mich Surgical Hospital, LLC v Allstate Ins Co, ___ Mich App___ (Docket No. 323425). The concurrence noted that although Bazzi is binding authority, the decision in Titan v Hyten “plainly and unambiguously reflects that the Supreme Court itself accepted the notion that remedies for actionable fraud are limited in relation to statutorily-mandated insurance coverage and benefits.”



Editor’s Note:

In our August 18, 2016, edition of Law Fax, we reported on the published Michigan Court of Appeals decision in Southeast Michigan Surgical Hospital, LLC v Allstate Ins Co, ___ Mich App ___; ___ Nw2d ___ (8/9/16) (Docket No. 323425), where two Judges disagreed with Bazzi’s holding, opining that it “continue[s] the trend of eroding injured plaintiff’s recovery options.”  Accordingly, though bound by MCR 7.215(J)(1) to follow Bazzi, the two-Judge majority declared a conflict with Bazzi that resulted in the entire Court of Appeals voting on whether to reconsider Bazzi’s holding. 

The Court of Appeals has now voted on the conflict and has determined that a special panel will not be convened pursuant to MCR 7.215(J) to resolve the conflict.  Thus, Bazzi remains good law for the time being.





 The Troy Breakfast Seminar will take place on Thursday, September 8, 2016, at the
Troy Marriott. This is a complimentary seminar for our clients.  

Click HERE for a seminar agenda.

If you wish to attend please  register with Eileen Carty, at






The Buckeye Seminar will take place on Thursday, October 13, 2016, at  the Greater Columbus
Convention Center.  Watch Law Fax for registration and further details.  This is a complimentary
seminar for our clients.





 Garan Lucow Miller, P.C. is pleased again to offer this in-depth,
educational course to our clients.  It will be taught each Tuesday evening,
from September 27, 2016 through November 22, 2016, from 6:00 p.m. to 8:00 p.m.

In an effort to facilitate our clients in the Detroit metro area,
the course will be held at the DoubleTree by Hilton,
located at 42100 Crescent Blvd. Novi, MI 48375.

The cost of the 9 week course is $350.00 per person,
with a discount of $50.00 per person
for more than 2 registrants from the same company.

Click HERE for an agenda.

Please contact Eileen Carty to register at or 248-641-7600.




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