Court of Appeals Publishes Opinion Addressing Bazzi Equities and “Payment Exception” to MCL 500.3174

Mendelson Orthopedics (DeVore) v Everest National Ins Co, et al., ___ Mich App ___ (2019) (Docket No. 341013), is the first published Court of Appeals decision applying Bazzi v Sentinel Ins Co, 502 Mich 390 (2018). Last summer, the Supreme Court in Bazzi confirmed that insurers may rescind an automobile no-fault policy based on material misrepresentations in the insurance application, but as to innocent third-parties, any such rescission is subject to a “balancing of the equities.”

In Mendelson Orthopedics, the trial court granted summary disposition to Everest based on rescission, without “balancing the equities.” Because the claimants were innocent third-parties, the Court of Appeals reversed the summary disposition ruling and remanded the case to the trial court to “determine the equities as between Everest and DeVore,” consistent with Bazzi.

In Mendelson Orthopedics, the panel also tackled a question of apparent first impression regarding whether Jesperson v Auto Club Ins Ass’n, 499 Mich 29 (2016) applies to MCL 500.3174, which establishes the time period for making claims with the Michigan Automobile Insurance Placement Facility (“MAIPF”).

Jesperson confirmed that there is a “payment exception” to the one year statute of limitations contained in MCL 500.3145(1) – a claimant may file suit up to a year from the last payment made by an insurer – and Mendelson Orthopedics, ___ Mich App at ___; slip op at 9 held that, as a matter of statutory construction, this “payment exception” applies to § 3174 as well.

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