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Balancing the Equities: Justice Markman Sheds Light on Legal Standard for Policy Rescission Following Bazzi

Motor Vehicle Litigation / December 17, 2018

In Bazzi v Sentinel, 502 Mich 390 (2018), the Michigan Supreme Court held that no-fault carriers may rescind policies that were obtained on the basis of fraud. This is true even when there are claims by innocent third-parties, so long as “the result thus obtained” would not be “unjust or inequitable.” Id. at 410. In addition, “Where two equally innocent parties are affected,” a trial court presented with a rescission defense is “required, in the exercise of its equitable powers, to determine which blameless party should assume the loss….” Id. at 410-411. The Michigan Supreme Court did not provide a specific legal standard or test in this regard. Justice Markman’s concurrence in Farm Bureau v Ace American Ins. Co. provides some guidance for trial judges in ruling on fraud cases involving innocent third parties in a post-Bazzi era.

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