Action for personal injury protection (PIP) benefits; Reliance on a policy exclusionary clause as an affirmative defense; Shelton v. Auto-Owners Ins. Co.; Voiding a policy based on fraud; Bahri v. IDS Prop. Cas. Ins. Co.; Effect of false statements an insured makes during first-party litigation; Haydaw v. Farm Bureau Ins. Co.; Fashho v. Liberty Mut. Ins. Co.; Meemic v. Fortson

In light of Haydaw and Meemic, the court held that the trial court erred in granting defendant-insurer (Farm Bureau) summary disposition under the policy’s fraud exclusion based on plaintiff-insured’s deposition testimony that was inconsistent with video of his post-accident activities. Thus, it vacated the trial court’s order and remanded. The trial court relied entirely on plaintiff’s testimony, which it “found to be false because the testimony contradicted the contents of surveillance videos showing plaintiff’s post-accident conduct. The facts of this case fit squarely within Haydaw[.]” In an issue on which the trial court did not rule, Farm Bureau also relied on the monthly statements plaintiff submitted “for household services as grounds for invoking the fraud provision in its contract.” It asserted that he claimed he was entitled to reimbursement for such services, even though the surveillance video showed him “performing those types of services for himself.” The court noted that each of those “videos was taken after plaintiff filed the complaint in this case. Thus,” the first-breach rule was implicated. If Farm Bureau’s initial denial of PIP benefits “was unjustified, it constituted a substantial breach that relieved plaintiff of his contractual duties under the no-fault policy.” In addition, the court found that Meemic had bearing here, as this case also involved “‘a contractual fraud defense to a claim for coverage mandated by’” the No-Fault Act. Three medical providers intervened here as plaintiffs and sought payment for “services rendered to plaintiff for injuries he sustained in the accident.” Similar to the situation in Meemic, Farm Bureau did “not assert a statutory defense to the payment of PIP benefits to the” medical providers, but asserted a contractual defense based on the language of the policy it sold to plaintiff. “And, as in Meemic, ‘the fraudulent activity at issue here did not relate to the inception of the contract’ of insurance, and Farm Bureau ‘could not possibly have relied on’ any of the fraudulent representations made by plaintiff in 2018 when it agreed to insure plaintiff ‘because, at the time, [he] had not yet made any of the alleged misrepresentations.’” Thus, under Meemic, Farm Bureau’s attempt to void its insurance with him based on its anti-fraud provision failed.