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PDFRescission and Res Judicata, PIP Opt Out Coverage Update
Rescission and Res Judicata – Sixth Circuit (Michigan Law)
Michigan 32, LLC v. Travelers Ins. Co.
No. 25-2167, 2026 WL 3086391 (6th Cir. Oct. 15, 2026)
The U.S. Court of Appeals for the Sixth Circuit affirmed the grant of summary judgment in favor of Northfield Insurance Company (Northfield); its parent company, Travelers Insurance Company (Travelers); and Doran Excavating Enterprises, LLC (Doran) and against Michigan 32, LLC (M32) and I.E. Development, LLC (IED).
In June 2023, a fire damaged M32’s property in Michigan, where M32 operated cryptocurrency mining machines owned by IED. After the fire, a Travelers investigator hired Doran to demolish the building, which plaintiffs alleged caused its collapse and allowed thieves to steal the machines. Northfield, which had issued M32’s commercial property policy (policy), denied the claim and rescinded the policy because M32 had misrepresented in its application that the premises had a policy-compliant fire alarm. In a separate declaratory judgment action brought by Northfield, the appellate court affirmed that Northfield was entitled to rescission, rendering the policy void ab initio.
M32 filed the breach-of-contract and negligence action against the insurance carriers. The appellate court held that Travelers and IED were properly dismissed from the breach-of-contract claims. Michigan law requires privity of contract, and only a contracting party or an intended third-party beneficiary may sue on a contract. Only M32 and Northfield were parties to the policy, and nothing showed IED was an intended beneficiary. The appellate court also affirmed dismissal of the negligence claims against all three defendants. A tort claim based on a contract requires a duty separate and distinct from the contractual obligations, but the complaint relied solely on duties arising from “undisclosed contracts and agreements.”
The appellate court next held that res judicata, a legal doctrine that bars parties from re-litigating a cause of action or claim that has already received a final judgment from a competent court, barred M32’s breach-of-contract claim against Northfield. Michigan applies res judicata broadly to bar every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised in the prior action. Because Northfield and M32 were adversaries in both suits, and both claims arose from the same transactions (the application, the policy, the fire, the claim, and the denial and rescission), M32 could have raised its claim in the declaratory judgment action.
Finally, the appellate court rejected the plaintiffs’ procedural arguments, specifically that the carriers were not permitted to file their motions prior to any discovery conferences. The appellate court held that the defendants complied with the district court’s local rules, explaining that a discovery conference was not required before the district court granted dismissal or summary judgment on res judicata grounds. Nor did the district court abuse its discretion in denying leave to amend as the plaintiffs never formally moved to amend, despite ample opportunity.
By: Joshua LaBar
PIP Opt Out – Michigan
Van Heusen v. Michigan Auto. Ins. Placement Facility
No. 373182, 2026 WL 3090062 (Mich. Ct. App. Oct. 15, 2026)
The Michigan Court of Appeals, addressing a question of first impression under the Michigan No-Fault Act, held that a person injured in a motor vehicle accident while not an occupant of a motor vehicle may not claim Personal Protection Insurance (PIP) medical benefits through the Michigan Assigned Claims Plan (MACP) if that person had a PIP policy at the time of the accident but had opted out of PIP medical coverage.
Gary Jack Van Heusen (the plaintiff) was traveling with his wife when they were rear-ended by another driver. Both drivers exited their vehicles to assess the damage. A third driver then struck the rear of the other driver’s vehicle, forcing it forward into the plaintiff, who suffered a broken leg, a pulmonary embolism and other serious injuries. At the time of the accident, the plaintiff had an Auto-Owners Insurance Company policy that included PIP coverage for replacement services and survivor’s benefits. However, as the named insured, the plaintiff opted out of PIP medical coverage under MCL 500.3107d, certifying that he was covered by Medicare Parts A and B and that his spouse and other resident relatives were covered under a qualified health coverage plan or another automobile insurance policy with PIP medical coverage. As a result, the plaintiff paid a reduced premium.
After the accident, the plaintiff sought PIP benefits through the MACP. The Michigan Automobile Insurance Placement Facility (MAIPF) denied the claim because the plaintiff had identifiable, applicable insurance through Auto-Owners and had opted out of PIP medical coverage. The plaintiff sued and the trial court granted summary disposition and declaratory relief in favor of the plaintiff, reasoning that MCL 500.3115 entitled him, as an injured nonoccupant without PIP medical coverage, to claim benefits through the MACP.
The appellate court reversed the trial court’s decision. MCL 500.3115 provides that, except as provided in MCL 500.3114(1), an injured nonoccupant “shall claim” PIP benefits under the assigned claims plan pursuant to sections 500.3171 to 500.3175. The appellate court declined to decide whether the “except” clause categorically bars nonoccupants covered by a PIP policy from the MACP. Instead, assuming without deciding that it did not, the appellate court held that the plaintiff failed to meet the MACP’s own eligibility requirements. Relying on Steanhouse v. Mich. Auto. Ins. Placement Facility (On Remand), 351 Mich. App. 209, N.W.3d 627 (2024), the appellate court explained that a statute directing a claimant to the MACP does not end the analysis. The claimant must also satisfy one of the conditions in MCL 500.3172(1), including that no PIP insurance is “applicable to the injury” or that none “can be identified.”
The appellate court found that the Auto-Owners policy could be identified and was “applicable to the injury.” Under MCL 500.3114(1), a PIP policy “described in” MCL 500.3101(1) applies to injuries to the person named in the policy. The appellate court rejected the plaintiff’s argument that a policy with a Medicare opt-out is not such a policy. It reasoned that the “except as provided in” MCL 500.3107d language in MCL 500.3101(1) merely recognizes that PIP policies need not always carry the full range of PIP benefits and does not change the policy’s character as a PIP policy. The appellate court noted that MCL 500.3107d itself describes the opt-out as an election made for “an insurance policy that provides the security required under” MCL 500.3101(1), and that a contrary reading would render that language nugatory. The appellate court also emphasized that the plaintiff retained PIP replacement-services and survivor’s loss coverage, and it found no basis to bifurcate the policy by looking only to its medical component while ignoring the portions providing those benefits.
The appellate court also rejected the plaintiff’s argument that the Michigan Legislature intended to allow nonoccupant opt-outers to claim MACP benefits because MCL 500.3114(4) expressly excludes opt-outers injured as occupants from the MACP while MCL 500.3115 contains no comparable language. While acknowledging that the argument had some persuasive force, the appellate court concluded that Steanhouse requires an independent MCL 500.3172(1) eligibility analysis. It added that the two provisions are not truly parallel because MCL 500.3114(4) addresses occupants who are not “covered” under a PIP policy, while MCL 500.3115 contains no such language. Finally, the appellate court observed that its holding is consistent with the 2019 No-Fault Reforms’ emphasis on personal choice and cost containment. Allowing insureds who accepted a lower premium in exchange for declining medical coverage to then obtain those benefits from the MACP would undermine those goals and opt-outers by definition maintain qualified health coverage for their injuries. The appellate court remanded for entry of summary disposition in favor of the MAIPF. Because the plaintiff was ineligible under MCL 500.3172(1)(a), the appellate court did not reach the MAIPF’s alternative argument under MCL 500.3173.
