Campbell v. Liberty Mutual Group
OPINION and ORDER Granting 12 MOTION for Summary Judgment - Signed by Magistrate Judge Laurie J. Michelson. (JJoh)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Case No. 10-14179
Hon. Laurie J. Michelson
Liberty Mutual Group,
OPINION AND ORDER GRANTING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT 
This matter is before the Court on the Motion of Defendant Liberty Mutual Group a/k/a
Liberty Mutual Insurance (“Liberty Mutual”) for Summary Judgment. (Dkt. 12.) Pursuant to the
Court’s Scheduling Order, Plaintiff’s Response was due no later than June 3, 2011. (Dkt. 15.)
Plaintiff did not file a response and, therefore, the Court construes Defendant’s Motion as
unopposed. E.D. Mich. LR 7.1(c)(1) (“A respondent opposing a motion must file a response,
including a brief and supporting documents then available.”). The parties have consented to a
decision by this Court. (Dkt. 14.) For the reasons set forth below, Defendant’s Motion is
The Undisputed Facts
On August 28, 2009, Plaintiff Derreck Campbell (“Campbell”) submitted an Application for
a homeowner’s insurance policy with Liberty Mutual for property located in Detroit, Michigan
(“Property”). (Dkt. 12, Def.’s Mot. Summ. J. Ex. A, Att. 1.) The Application asked, “During the
past five years, have you or other occupants of the premises had a claim or loss?” (Id.) Mr.
Campbell responded “No.” (Id., p. 4). The Application also advised the insurance applicant that:
Signing this form does not bind the applicant to complete the
insurance, but it is agreed that this form shall be the basis of the
contract should a policy be issued. If any questions appearing above,
or elsewhere on this application, have been answered falsely or
fraudulently, this entire insurance is null and void and all claims
thereunder shall be forfeited.
Id., p. 5.
The Application also included a Michigan Property Supplement Application which asked,
“At this time, are the real property taxes on the dwelling to be insured delinquent?” Mr. Campell
answered “No.” (Id. at ECF 12). In submitting the Application, Mr. Campbell electronically signed
at the bottom of the page under the following statement:
I hereby declare to the best of my knowledge and belief that all of the
foregoing statements are true and that these statements are offered as
an inducement to the company to issue the policy for which I am
On August 31, 2009, a policy of insurance was issued to Mr. Campbell for the Property.
(Def.’s Mot. for Summ. J., Ex. B.) Mr. Campbell subsequently submitted a claim for losses alleged
to have occurred as a result of a fire at the Property on or about December 16, 2009. An
investigation conducted by the Liberty Mutual Claims Department revealed a number of facts that
were undisclosed, concealed, or otherwise misrepresented in the application process by Mr.
Campbell. (Def.’s Mot. Ex. A, ¶ 3.) Liberty Mutual learned that, at the time Mr. Campbell prepared
his insurance application, the property taxes on the subject property were delinquent as follows:
(Id. ¶ 5.) Additionally, despite Mr. Campbell’s answer to the contrary on the Application, he did
have a prior insurance claim – a fire loss in 2008 involving another property in Detroit, Michigan
– for which he received benefits from Michigan Basic Insurance Company. (Id. ¶ 6; Ex. C).
Based upon Plaintiff’s misrepresentations to Liberty Mutual in his application for insurance,
as well as the underwriting standards and rules in effect at that time and the Michigan Insurance
Code, Mich. Comp. Laws § 500.2100 et seq., Liberty Mutual sent Mr. Campbell a letter rescinding
the insurance policy. (Def.’s Mot. Ex. A, Att. 3). The letter explained:
This is to notify you that we are rescinding the above policy and
hereby declaring it to be null and void as of its effective date of
August 31, 2009. Therefore, no insurance exists or will be deemed
to have existed with Liberty Insurance Company.
A refund check including the return of all premiums paid to the
Company for this policy, will be mailed to you shortly.
This action has been taken by the company because of what is
believed to be material misrepresentations on your application for
homeowner insurance. Specifically, the following information was
undisclosed, concealed or otherwise misrepresented:
• At the time you applied for this policy, real property taxes were
delinquent for two or more years.
• The dwelling was not owner occupied.
• You failed to disclose a 2008 fire loss on your application.
Had we known about this information, we would not have issued this
Your claim, # HD414-132 75264-0 I, for the loss reported to have
occurred on or about 12/16/09 is not covered and is hereby
specifically denied, since your policy is void, as indicated above.
(Def.’s Mot. Ex. A, Att. 2.)
As indicated in the letter, Liberty Mutual subsequently sent Mr. Campbell a check for
$3,110.00 as a refund of the policy premiums prepaid by Mr. Campbell. (Def.’s Mot. Ex. A, Att. 4.)
On August 2, 2010, Mr. Campbell deposited the check. (Def.’s Mot. Ex. A, Att. 1.)
Following the rescission of the insurance policy, on September 28, 2010, Plaintiff filed a
breach of contract and breach of the Michigan Uniform Trade Practices Act lawsuit in Wayne
County Circuit Court which Defendant Liberty Mutual removed to this Court on the basis of
diversity. (Dkt. 1.) On April 5, 2011, Liberty Mutual filed this Motion for Summary Judgment
contending that, as the Plaintiff’s insurance policy was rescinded, there can be no breach of contract
(for failing to pay on the rescinded policy) and that Plaintiff’s acceptance of the refund of premiums
constitutes an accord and satisfaction.
Standard of Review
Summary judgment is proper “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A
fact is material only if it might affect the outcome of the case under the governing law. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). On a motion for summary judgment,
the court must view the evidence, and any reasonable inferences drawn from the evidence, in the
light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986) (citations omitted); Redding v. St. Eward, 241 F.3d 530, 531 (6th
The moving party has the initial burden of demonstrating an absence of evidence to support
the non-moving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving
party carries this burden, the party opposing the motion “must come forward with specific facts
showing that there is a genuine issue for trial.” Matsushita, 475 U.S. at 587. The Court must
determine whether the evidence presents a sufficient factual disagreement to require submission of
the challenged claims to a jury or whether the evidence is so one-sided that the moving party must
prevail as a matter of law. Anderson, 477 U.S. at 252 (“The mere existence of a scintilla of evidence
in support of the plaintiff’s position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.”).
Liberty Mutual’s Motion is unopposed. “‘The fact that there has been no response to a
summary judgment motion does not, of course, mean that the motion is to be granted
automatically.’” Sobczak v. Daniel Spitters, P.A., No. 1:09-cv-57, 2011 U.S. Dist. LEXIS 19884,
at *7 (W.D. Mich. Feb. 3, 2011) (quoting Champion v. Artuz, 76 F.3d 483, 486 (2nd Cir. 1996)).
However, “when a motion for summary judgment is unopposed, ‘[n]othing in either the Rules or
case law supports an argument that the trial court must conduct its own probing investigation of the
record.’” Id. (quoting Guarino v. Brookfield Township Trustees, 980 F.2d 399, 405 (6th Cir.
Liberty Mutual Rescinded the Policy
Liberty Mutual contends that Plaintiff made material misrepresentations in his application
for insurance, it would not have issued the policy had it known the true facts, it properly rescinded
the policy and Plaintiff acknowledged this rescission by accepting the refund of premiums. (Def.’s
Br. Supp. Mot. Summ. J. at 6.)
Another Court in this District recently granted summary judgment in a virtually identical
case and aptly summarized the controlling Michigan law as follows:
“It is the well-settled law of [Michigan] that where an insured makes
a material misrepresentation in the application for insurance,
including no-fault insurance, the insurer is entitled to rescind the
policy and declare it void ab initio. Rescission is justified without
regard to the intentional nature of the misrepresentation, as long as it
is relied upon by the insurer. Reliance may exist when the
misrepresentation relates to the insurer’s guidelines for determining
eligibility for coverage.” Lake States Ins. Co. v. Wilson, 231 Mich.
App. 327, 330, 586 N.W.2d 113 (1998). “Rescission is justified in
cases of innocent misrepresentation if a party relies upon the
misstatement, because otherwise the party responsible for the
misstatement would be unjustly enriched if he were not held
accountable for his misrepresentation.” Lash v. Allstate Ins. Co., 210
Mich. App. 98, 103, 532 N.W.2d 869 (1995). See also Wheatonn v.
Geico Ins. Co., No. 265338, 2006 WL 740080 at * 4 (Mich. Ct. App.
March 23, 2006) (noting that a misrepresentation need not be
intentional for an insurer to raise the misrepresentation as a basis for
rescission and that “no duty is owed to the insured to investigate or
verify representations or to discover intentional misrepresentations.”)
It is equally clear that “an insurer does not owe a duty to the insured
to investigate or verify that individual’s representations or to discover
intentional material misrepresentations.” Hammoud v. Metropolitan
Prop. and Cas. Ins. Co., 222 Mich. App. 485, 489, 563 N.W.2d 716
(1997). Finally, “a fact or representation in an application is
‘material’ where communication of it would have had the effect of
‘substantially increasing the chances of loss insured against so as to
bring about a rejection of the risk or the charging of an increased
premium.’” Oade v. Jackson Nat’l Life Ins. Co. of Michigan, 465
Mich. 244, 253, 632 N.W.2d 126 (2001) (discussing materiality in the
context of misrepresentations made in an application for life
insurance) (quoting Keys v. Pace, 358 Mich. 74, 82, 99 N.W.2d 547
Brooks v. Uberty Mutual Fire Insurance Co., No. 09-cv-10352, 2009 WL 5171728, at *5 (E.D.
Mich. Dec. 30, 2009).
The record is undisputed concerning Plaintiff’s material misrepresentations in his insurance
application. While Plaintiff indicated he had no other insurance claim or loss in the last five years,
he testified during his Examination Under Oath that, in fact, he had received insurance benefits for
a fire from Michigan Basic Insurance Company in 2008– benefits he ultimately used to purchase the
subject property. (Def.’s Mot. Ex. C, at 15, 20, 24.) Additionally, the tax records pertaining to this
property further make clear that, despite Plaintiff’s representation to the contrary on the insurance
application, there were delinquent property taxes at the time Plaintiff submitted the application. (Id.
Ex. A, Att. 2.)
The record is equally undisputed regarding Liberty Mutual’s reliance on these
misrepresentations. In support of its Motion, Liberty Mutual attaches the affidavit of Robbie
Meitler, its Assistant Vice President and Manager, Personal Market Product Management
Compliance. (Def.’s Mot. Ex. A.) Meitler reviewed the underwriting information pertaining to the
decision to rescind the Policy issued to Plaintiff. (Id. ¶ 2.) Meitler testified that the subject property
would have been ineligible for homeowners insurance and no such policy would have been written
had Liberty Mutual known about the prior fire loss claimed by Plaintiff or the delinquent taxes on
the Property. (Id. ¶¶ 4-7.) Additionally, in signing the application, Plaintiff “declare[d] to the best
of [his] knowledge and belief that all of the foregoing statements are true and that these statements
are offered as an inducement to the company to issue the policy for which I am applying.” (Def.’s
Mot. Ex. A, Att. 1 (emphasis added).)
There is simply no genuine issue of fact as to whether Plaintiff’s misrepresentations
regarding a prior fire claim and delinquent property taxes were material to Liberty Mutual’s decision
to issue Plaintiff the Policy. Brooks, 2009 WL 5171728, at *10. And “‘rescission is justified
without regard to the intentional nature of the misrepresentation, as long as it is relied upon by the
insurer.’” General Motors Acceptance Corp. v. Titan Ins. Co. and Towner, No. 244722, 2004 WL
2256170, *6 (Mich. Ct. App. Oct. 7, 2004) (unpublished) (quoting Lash, 210 Mich. App. at 103).
Moreover, Liberty Mutual “restore[d] the insured to [its] former status by refunding all
premiums paid.” Continental Assurance Co. v. Shaffer, 157 F. Supp. 829, 834 (E.D. Mich. 1957).
It is undisputed that the prepaid premiums of $3,110.00 were returned to Mr. Campbell and he
cashed the check. (Def.’s Mot. Ex. A, ¶¶ 9-10.)
Accordingly, as Liberty Mutual properly rescinded Plaintiff’s policy of insurance, Liberty
Mutual is entitled to summary judgment on Plaintiff’s claims alleging failure to pay on this policy.1
Accord and Satisfaction
Liberty Mutual also contends that Plaintiff acknowledged there was an accord and
satisfaction resolving his claims against Liberty Mutual with regard to the subject policy by
accepting the letter of rescission and cashing the check that refunded the premiums paid. (Def.’s
Br. Supp. Summ. J. at 13.) “We recognize the Michigan rule that to constitute an accord and
satisfaction, the tender of payment as being in full should be made in unequivocal terms so that the
creditor in accepting the payment will do so understandingly.” Allstate Insurance Co. v. Springer,
269 F.2d 805, 809 (6th Cir. 1959), cert denied, 361 U.S. 932 (1960). Liberty Mutual’s July 2, 2010
letter clearly advised the Plaintiff that Liberty Mutual was rescinding the policy, the bases for this
decision, and that a refund check of the premiums paid would be forthcoming – because the policy
was being rescinded. (Def.’s Mot. Ex. A, Att. 3.) The letter also specifically advised Plaintiff that,
“Your claim . . . for the loss reported to have occurred on or about 12/16/09 is not covered and is
Even if the policy had not been rescinded it would have been void according to its
terms. The policy provides: “2. Concealment or Fraud. The entire policy will be void if, whether
before or after a loss, an ‘insured’ has: a. Intentionally concealed or misrepresented any material
fact or circumstance; b. Engaged in fraudulent conduct; or c. Made false statements; relating to
this insurance.” (Def.’s Mot. Ex. C, §§1, 2 - Conditions at 17.)
hereby specifically denied, since your policy is void, as indicated above.” (Id.)
There is no genuine issue of material fact that, having received this letter, Plaintiff cashed
the check for $3,110.00 with full knowledge that it was for return of insurance premiums and that
his policy had been rescinded. See Howard v. Farm Bureau Ins., No. 289407, 2009 WL 4985469,
at *3 (Mich. Ct. App. Dec. 22, 2009) (holding that the insured’s cashing of a check which refunded
insurance premiums and rescinded the policy constituted an accord and satisfaction). Based on the
Court’s ruling above, however – that the proper rescission of the policy precludes Plaintiff’s claims
for failure to pay on this policy – the Court does not reach the issue of whether Plaintiff’s action of
cashing the check, and acknowledging the rescission of the policy, was an accord and satisfaction
of the claims asserted against Liberty Mutual.
For the reasons set forth above, the Court GRANTS Liberty Mutual’s Motion for
Summary Judgment and dismisses the Complaint WITH PREJUDICE.
IT IS SO ORDERED.
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES MAGISTRATE JUDGE
Dated: June 14, 2011
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served on the attorneys and/or parties of record by
electronic means or U.S. Mail on June 14, 2011.
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