Court of Appeals Publishes New Opinion Applying Bazzi’s “Balancing of the Equities”

Pioneer State v Wright, et al. is one of the first published Court of Appeals decisions applying Bazzi v Sentinel Ins Co. In Bazzi, the Michigan Supreme Court confirmed – after years of conflicting decisions in the lower courts – 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 Pioneer State, the panel held “that rescission would be inequitable because Pioneer filed a declaratory judgment action seeking rescission nearly two years after it learned of” its insured’s “insurance representations,” and rescission would preclude an innocent third-party “from recovering most of his PIP claim from any other insurer.”

The panel looked to Justice Markman’s concurring opinion in Farm Bureau Gen Ins Co of Mich v ACE American Ins Co, 503 Mich 903 (2018) as persuasive authority. There, Justice Markman proposed a non-exclusive list of five factors for determining when the “equities” favor rescission.

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