April 11, 2014
In Micou v Progressive Michigan Ins Co, No 311937 (Mich App March 13, 2014), the Court of Appeals determined that Plaintiff could not rely on the common law doctrines of equitable estoppel, mutual mistake of fact, or impossibility to prevent enforcement of Defendant’s cancellation of Plaintiff’s insurance policy.
Plaintiff had maintained a policy of no-fault insurance with Defendant but failed to make his monthly premium payment in August 2010. On September 13, 2010, Defendant sent Plaintiff a cancellation notice which provided that the policy would be cancelled on September 26, 2010 if the $221.73 premium was not received. On September 23, 2010, during a telephone conversation, Plaintiff told Defendant’s employee that his church was willing to assist him with the payment but that he needed one more day, to September 27, 2010, to make the payment. Defendant told Plaintiff that she could not stop the cancellation, but represented that Defendant would provide continuous coverage if payment was received by September 27th. Defendant also stated to Plaintiff that if the premium was not paid on September 27th, the policy “would revert back to the original cancel . . . on the 26th.”
On September 27th, Plaintiff was unable to obtain the money from his church because it was closed and he did not pay the premium payment, yet he did not contact Defendant to advise that he would not be making the payment on September 27th. Plaintiff was then involved in a motor vehicle accident on the evening of September 27th.
After Defendant denied Plaintiff’s claim for first-party benefits as a result of the accident, Plaintiff initiated a lawsuit seeking a declaration that the policy was in effect and damages under the policy. The trial court granted Defendant’s summary disposition motion on the basis that the policy was cancelled on September 26th when Plaintiff failed to pay the premium on September 27th. In reaching this decision, the trial court rejected Plaintiff’s common-law defenses under the doctrine of impossibility, mutual mistake, and/or equitable estoppel.
On appeal, the Court of Appeals affirmed the trial court’s order granting summary disposition in favor of Defendant. The Court determined that no coverage existed on the day of the accident since the policy cancelled on September 26th because Plaintiff failed to make a premium payment on September 27th. The Court determined that equitable estoppel does not apply because there was no act, representation, admission or silence on the part of Defendant’s employee that arguably may have induced Plaintiff to believe that the policy would remain in effect past September 26th even if payment was not made on September 27th.
The Court also determined that Plaintiff’s mutual mistake/impossibility defenses were without merit. Plaintiff argued that the fact that the church was closed on Monday rendered his performance impossible or in the alternative that the agreement was marred by a mutual mistake of fact and should be reformed in favor of Plaintiff. Impossibility excuses a party to a contract from liability for a breach in the event his or her contractual promise becomes objectively impossible to perform. The Court determined that the mere lack of funds is not the sort of “impossibility” that warrants the application of this common-law doctrine. Moreover, while recognizing that a mutual mistake of fact occurs when the parties share an erroneous belief about a mistake of fact that affects the substance of the transaction, the Court concluded that the fact that the church was closed is not a material fact that affects the substance of the transaction nor was there evidence that the mistaken belief that the church was open was shared by both parties.
The Court of Appeals, therefore, held that Plaintiff could not escape the cancellation of the policy under theories of equitable estoppel, mutual mistake of the doctrine of impossibility.
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