Collateral estoppel; Privity; Claim for first-party benefits under the No-Fault Act; Material misrepresentations in policy procurement; Compliance with MCL 500.3020 in cancelling the policy on the basis of nonpayment; MCL 500.3020(1)(b); Rescission; Balancing of the equities; Michigan Automobile Insurance Placement Facility (MAIPF); USA Underwriters (USAU)

In Docket Nos. 364945, 364946, and 364947, the trial court’s order granting summary disposition in favor of defendant-USAU under MCR 2.116(C)(7) based on collateral estoppel was reversed. The orders granting summary disposition under MCR 2.116(C)(10) as to defendants-Austin and Crutch’s policies were vacated, and the cases were remanded to the trial court for a balancing of the equities. As to defendant-MAIPF’s claim the trial court erred in granting USAU summary disposition based on collateral estoppel, the court held that “USAU was not successful in raising the doctrine of collateral estoppel.” It found that “the parties were not so closely aligned in their interests that they could be said to be in privity with each other” in the prior case. MAIPF next argued that “genuine issues of material fact existed with regard to whether (1) Austin and Crutch engaged in fraud in the procurement of the policies, (2) USAU complied with applicable law in cancelling Austin’s policy on the basis of nonpayment of premiums, and (3) the trial court erred in rescinding the no-fault policies as to” plaintiff/defendant-DMA “without first conducting a balancing of the equities.” The court concluded that “because the alleged fraud of Austin and Crutch related to the procurement of their respective no-fault policies with USAU, it was appropriate for USAU to seek rescission of its no-fault policies both on the basis of the contractual provision in its policies as well as under the common law.” Also, it held that there were no factual disputes as to “whether Crutch and Austin knowingly made false misrepresentations on their policy applications, and that these misrepresentations were made with the intention that USAU would issue no-fault policies.” Finally, the evidence did “not indicate that when Austin and Crutch procured their policies, USAU was aware of the fraudulent misrepresentations, and” there was testimony “that the policies would not have issued had USAU been aware of” their fraud. Among other things, MAIPF also challenged “USAU’s notice of cancellation on the basis that USAU did not provide evidence . . . that it complied with the 10-day-written-notice requirement of MCL 500.3020(1)(b).” Given that the notice was mailed on 10/13/20, and the cancellation date was 10/23/20, the court was “of the view that the mailing to Austin did not comply with the statutory standard.” The court also held that while the trial court “did not conduct a balancing of the equities with respect to DMA before extending the rescission of the no-fault policies to him as well, . . . [it] was required to engage in this analysis.”