If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
LATASHA NELSON, UNPUBLISHED
September 15, 2022
Plaintiff-Appellant,
v No. 358984
Wayne Circuit Court
KWADWO OWUSU, HIZMO TRUCKING, LLC, LC No. 17-012095-NI
and PROGRESSIVE MICHIGAN INSURANCE
COMPANY,
Defendants-Appellees.
Before: CAVANAGH, P.J., and GARRETT and YATES, JJ.
PER CURIAM.
Plaintiff, Latasha Nelson, bought a Kia Forte and insured the vehicle by adding her name
and her vehicle to an automobile-insurance policy of her former boyfriend, Christopher Johnstone,
even though plaintiff and Johnstone did not live together. Shortly thereafter, plaintiff and the Kia
Forte were struck by a truck driven by defendant Kwadwo Owusu and owned by defendant Hizmo
Trucking, LLC. Defendant Progressive Michigan Insurance Company (Progressive) initially paid
first-party no-fault benefits to plaintiff under the policy, but Progressive eventually rescinded that
policy based on fraud in the procurement of coverage for plaintiff and her vehicle. The trial court
authorized rescission by Progressive and foreclosed recovery from Owusu and Hizmo Trucking
because plaintiff was an uninsured motorist at the time of the collision. On appeal of those two
rulings rendered on summary disposition under MCR 2.116(C)(10), we reverse and remand.
I. FACTUAL BACKGROUND
We have seen this case before. When it was previously before us, we offered the following
detailed summary of the salient facts:
Plaintiff and [Christopher] Johnstone previously had a dating relationship. At the
time of the events of this case, plaintiff lived in Sterling Heights and Johnstone
lived in Hillsdale. Plaintiff and Johnstone both assert that they never lived together
at Johnstone’s Hillsdale address, but that plaintiff occasionally spent a few days at
Johnstone’s home. On those occasions, plaintiff parked her car at his home.
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In December 2016, Johnstone obtained a no-fault insurance policy from
Progressive. In January 2017, plaintiff purchased a Kia Forte. Plaintiff testified
that while at the Kia dealership, she was told that she would need proof of insurance
to purchase the vehicle. She called Johnstone, who told her to call his insurance
agent, Cory Richardson of Stop 1 Insurance Agency (Stop 1). When plaintiff called
Richardson, he told her that the request to add her and the Kia to Johnstone’s policy
needed to be made by Johnstone, as the policy holder.
Plaintiff waited at the dealership while Johnstone called Richardson and
requested that plaintiff and the Kia be added to his policy. Richardson then called
plaintiff and asked for her identification, registration, and payment. Plaintiff sent a
copy of her driver’s license to Richardson, which showed her address in Sterling
Heights. Plaintiff testified during her deposition that she told Richardson that she
did not live with Johnstone, and that he assured her that it was not a problem to add
her to Johnstone’s policy, stating “that’s okay, we do this all the time.” Plaintiff
denied that Richardson told her that Johnstone needed to own the vehicle, or that
she needed to be living at Johnstone’s home, for her to be added to his insurance
policy.
Johnstone testified that when plaintiff purchased the Kia, she asked him to
add her to his insurance policy because she could not afford her own policy.
Johnstone testified that he called Richardson and explained the situation, and the
agent told him that “they do that all the time.” Johnstone maintained that he told
Richardson that he and plaintiff lived at different addresses, and that the agent told
him that it did not matter. Johnstone also testified that at the time plaintiff was
added to his policy, he and plaintiff were no longer dating.
Richardson testified that Stop 1 arranges the issuance of insurance policies
from various insurers, including Progressive. With regard to adding plaintiff to
Johnstone’s policy, Richardson recalled that the Kia dealership called him, and he
spoke with plaintiff and told her that he would need to speak to Johnstone because
he was the policy holder.
Richardson then spoke to Johnstone by telephone. Richardson testified that
he told Johnstone that plaintiff could not be added as an additional driver on
Johnstone’s policy unless Johnstone had a financial interest in the new vehicle or
plaintiff resided with Johnstone. He recalled that Johnstone told him that he did
not have a financial interest in plaintiff’s vehicle, but that plaintiff was his girlfriend
and lived with him. Richardson explained that Johnstone seemed hesitant when
providing this information, and he therefore asked Johnstone to electronically sign
the household members acknowledgment statement, which stated that all of the
information he had given regarding members of his household was accurate.
Richardson testified that he did not ask plaintiff whether she lived with Johnstone,
and instead relied on Johnstone’s statement that plaintiff lived with him.
Richardson testified that he was concerned when he received a copy of plaintiff’s
driver’s license stating an address different from Johnstone’s address. Richardson
processed the application, and plaintiff was added to Johnstone’s policy.
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Approximately one month after purchasing the Kia, plaintiff was driving
the vehicle when, while stopped at a traffic light in Detroit, her vehicle was struck
by a truck driven by defendant Kwadwo Owusu and owned by defendant Hizmo
Trucking. Plaintiff claimed injuries as a result of the collision. Initially,
Progressive paid benefits to plaintiff under Johnstone’s policy. However, in April
2018, Progressive informed Johnstone that his no-fault policy had been rescinded
as of the date it was issued because Progressive had determined that Johnstone or
an insured person under the policy, had “concealed, misrepresented or made
incorrect statements or representations regarding a material fact or circumstance;
or engaged in fraudulent conduct in connection with your application.” [Nelson v
Owusu, unpublished per curiam opinion of the Court of Appeals, issued
December 22, 2020 (Docket No. 347963).]
In the first appeal that we considered, a majority of the panel affirmed nearly all of the trial
court’s decision, but remanded the case for a determination of the propriety of rescission under the
analysis suggested by Justice MARKMAN in his concurrence in Farm Bureau Gen Ins Co of Mich
v ACE American Ins Co, 503 Mich 903, 906-907; 919 NW2d 394 (2020), and adopted by us in
Pioneer State Mut Ins Co v Wright, 331 Mich App 396, 411; 952 NW2d 586 (2020).1 See Nelson,
unpub op at 10-11. We identified the five guiding considerations for the trial court in the following
language derived from Pioneer State, 331 Mich App at 411:
Reduced to their essence, five factors were identified and they address: (1) the
extent to which the insurer could have uncovered the subject matter of the fraud
before the innocent third party was injured; (2) the relationship between the
fraudulent insured and the innocent third party to determine if the third party had
some knowledge of the fraud; (3) the nature of the innocent third party’s conduct,
whether reckless or negligent, in the injury-causing event; (4) the availability of an
alternate avenue for recovery if the insurance policy is not enforced; and (5) a
determination of whether policy enforcement only serves to relieve the fraudulent
insured of what would otherwise be the fraudulent insured’s personal liability to
the innocent third party. [Nelson, unpub op at 10-11.]
With that guidance, we sent the case back to the trial court to determine whether Progressive was
entitled to the equitable remedy of rescission. See Bazzi v Sentinel Ins Co, 502 Mich 390, 412;
919 NW2d 20 (2018) (similar remand order).
On remand, the trial court ordered the parties to file renewed summary disposition motions.
Accordingly, Defendant Progressive moved for relief under MCR 2.116(C)(10), plaintiff filed her
own cross-motion for summary disposition, and defendants Owusu and Hizmo Trucking joined in
the process by requesting summary disposition. The trial court elected not to conduct any hearing
on the competing motions. Instead, the trial court issued an opinion denying plaintiff’s request for
1
Under Bazzi v Sentinel Ins Co, 502 Mich 390, 409; 919 NW2d 20 (2018), “a claim to rescind a
transaction is equitable in nature,” so “it ‘is not strictly a matter of right’ but is granted only in ‘the
sound discretion of the court.’ ” Hence, Progressive was not automatically entitled to rescind the
insurance policy if “two equally innocent parties are affected.” Id. at 410.
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summary disposition because she was not “innocent” and the balancing of equities weighed against
her. Consequently, the trial court awarded summary disposition to all three defendants, thereby
ending the case based on the absence of any genuine issue of material fact. Plaintiff appealed the
trial court’s ruling in favor of all three defendants.
II. LEGAL ANALYSIS
The trial court’s award of summary disposition to the defendants under MCR 2.116(C)(10)
is subject to de novo review on appeal. El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159;
934 NW2d 665 (2019). Because such a motion “tests the factual sufficiency of a claim[,]” id., “a
trial court must consider all evidence submitted by the parties in the light most favorable to the
party opposing the motion.” Id. “A motion under MCR 2.116(C)(10) may only be granted when
there is no genuine issue of material fact.” Id. “ ‘A genuine issue of material fact exists when the
record leaves open an issue upon which reasonable minds might differ.’ ” Id.
In opinions and orders issued on October 1, 2021, the trial court resolved the entire case on
the parties’ competing motions for summary disposition. The trial court concluded in one of the
opinions that plaintiff was not “innocent” and the balancing of the equities favored the insurer,2
Progressive, so it was entitled to rescind its insurance policy and deny coverage to plaintiff. Along
the way, the trial court stated that rescission is “an equitable matter,” so “a court may make findings
of fact, which are reviewed for clear error.” The trial court proceeded to “find[ ] that Plaintiff’s
position of innocent ignorance of the requirements for being added to Mr. Johnstone’s no-fault
insurance policy is not believable, which distinguishes this case from the more understandable
facts in Pioneer State[,]” 331 Mich App 396. The fundamental flaw in this approach, however, is
that trial courts are prohibited from making any credibility determinations on summary disposition
review under MCR 2.116(C)(10). Pioneer State Mut Ins Co v Dells, 301 Mich App 368, 377; 836
NW2d 257 (2013), citing Skinner v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994). To
be sure, the trial court had reasons to be suspicious of plaintiff’s credibility when she disclaimed
knowledge of the requirements for her to be added to Johnstone’s no-fault insurance policy, and
we may well have accepted those reasons if the trial court had conducted an evidentiary hearing
and then concluded that plaintiff’s position of innocent ignorance of those requirements “is not
believable.” See, e.g., Farm Bureau Gen Ins Co of Mich v ACE American Ins Co, 337 Mich App
88, 104-105; 972 NW2d 325 (2021). But the trial court conducted no hearing of any kind before
reaching that conclusion in its opinion. Consequently, the trial court was “not permitted to assess
credibility, weigh the evidence, or resolve factual disputes” and then award “summary disposition
2
Applying the five factors identified by Justice MARKMAN and subsequently adopted in our
opinion in Pioneer, 331 Mich App at 411, the trial court concluded that two factors favored
plaintiff, two factors favored the insurer, Progressive, and one factor was “neutral.” The trial court
ruled in favor of Progressive by assigning more weight to the two factors that supported its
position, reasoning that “[t]he Court finds unconvincing Plaintiff’s assertion that she had no idea
of the requirements for no-fault insurance and that what Mr. Johnstone did was something other
than fraudulent.”
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under MCR 2.116(C)(10)” on the basis of a credibility determination. See Pioneer State, 301 Mich
App at 377. The trial court erred in doing so.
In a separate written opinion, the trial court awarded summary disposition to defendant
Owusu and his employer, defendant Hizmo Trucking, on plaintiff’s claim for third-party no-fault
benefits because plaintiff was an uninsured motorist at the time Owusu—driving a truck for Hizmo
Trucking—ran into plaintiff and her Kia Forte. The no-fault act ordinarily forecloses an uninsured
motor-vehicle driver from pursuing third-party benefits.3 MCL 500.3135(2)(c); see also Brickley
v McCarver, 323 Mich App 639, 648; 919 NW2d 412 (2018). But that statutory preclusion arises
when the motor-vehicle driver “did not have in effect for that motor vehicle the security required
by [MCL 500.3101(1)] at the time the injury occurred.” MCL 500.3135(2)(c). As an initial matter,
plaintiff procured no-fault insurance from Progressive before she was hit by the truck that Owusu
was driving, so plaintiff actually “had in effect for” her Kia Forte “the security required” by MCL
500.3101(1) at the time she was injured in the collision.4 Moreover, because the trial court erred
in granting summary disposition to Progressive on the propriety of rescission, plaintiff has not yet
been stripped of the insurance coverage from Progressive, so she manifestly cannot yet be viewed
as an uninsured driver subject to the preclusive effect of MCL 500.3135(2)(c). Thus, the trial court
erred in awarding summary disposition under MCR 2.116(C)(10) to Owusu and Hizmo Trucking
on plaintiff’s claims against them for third-party no-fault benefits. As a result, we must reverse all
of the trial court’s awards of summary disposition to the defendants and remand the case for further
consideration.
Reversed and remanded. We do not retain jurisdiction.
/s/ Mark J. Cavanagh
/s/ Kristina Robinson Garrett
/s/ Christopher P. Yates
3
We have held that the preclusion prescribed by MCL 500.3135(2)(c) applies to claims for third-
party benefits under the threshold exception in MCL 500.3135(1), but not to claims for third-party
benefits under the intentional-act exception in MCL 500.3135(3)(a). See Gray v Chrostowski, 298
Mich App 769, 776-779; 828 NW2d 435 (2012). Accordingly, we have chosen to use the term
“ordinarily” in describing the preclusive effect of MCL 500.3135(2)(c).
4
In our previous opinion in this case, we relied upon Esurance Prop & Cas Ins Co v Mich Assigned
Claims Plan, 330 Mich App 584, 593; 950 NW2d 528 (2019), for the proposition that “when a
policy of no-fault insurance is rescinded, the policy is considered to have not existed.” As it turns
out, however, that Esurance decision was subsequently reversed by our Supreme Court. Esurance
Prop & Cas Ins Co v Mich Assigned Claims Plan, 507 Mich 498; 968 NW2d 482 (2021). We do
not offer any opinion about how our Supreme Court’s decision affects this case.
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