Banker v. CURE Auto Insurance

Banker v. CURE Auto Insurance: Court of Appeals Holds That a Resident Relative Who Did Not Participate in Fraudulently Procuring an Insurance Policy Is an Innocent Third Party Entitled to Equitable Protection

By Pratheep Sevanthinathan, Esq. The Seva Law Firm

Case: Banker v. Citizens United Reciprocal Exchange, No. 374356 (Mich. Ct. App. August 10, 2026) (Unpublished)

Court: Michigan Court of Appeals

Panel: Letica, P.J., and O’Brien and Redford, JJ.

Decision: Affirmed — Per Curiam

Lower Court: Wayne Circuit Court, Case No. 23-004606-NF

Read the full opinion here

1. Introduction

The Michigan Court of Appeals has affirmed a trial court’s refusal to extend the rescission of a no-fault insurance policy to an innocent third-party claimant. In Banker v. Citizens United Reciprocal Exchange, the Court upheld the lower court’s determination that Robert Banker Sr. — a resident relative who was not listed on his son’s CURE Auto Insurance policy — did not participate in the fraudulent procurement of the policy and was therefore an innocent third party. Because Banker Sr. was an innocent third party, the trial court properly balanced the equities under the framework established in Bazzi v. Sentinel Insurance Co., 502 Mich 390 (2018), and the MARKMAN factors adopted in Pioneer State Mutual Insurance Co. v. Wright, 331 Mich App 396 (2020). The Court found no error in the trial court’s conclusion that the equities weighed against rescission as to Banker Sr., making CURE — not Allstate through the Assigned Claims Plan — the priority insurer responsible for paying Banker Sr.’s PIP benefits.

2. Facts

Robert Banker Jr. lived with his father, Robert Banker Sr., and his mother, Theresa Banker. Banker Jr. owned two vehicles — a 1999 Jeep Cherokee and a 2000 Jeep Cherokee. Banker Sr. primarily drove the 2000 Jeep.

On December 16, 2022, Banker Jr. applied for an auto insurance policy with CURE covering both vehicles. The application required Banker Jr. to list all household members as potential drivers or residents. Banker Jr. listed only “Robert Banker” with his own birthdate — he did not include Banker Sr. or Theresa. CURE issued the policy and sent Banker Jr. a letter requesting that he confirm whether his household member list was accurate. Banker Jr. never responded.

On December 30, 2022, Banker Jr. asked Banker Sr. to call CURE to remove the 1999 Jeep from the policy and add a recently purchased 2016 Jeep Cherokee. During the call, Banker Sr. identified himself using the policyholder’s name and policy number, but when the CURE representative asked for an email address, Banker Sr. provided a different one and then said to leave it as it was, explaining that he was “just doing it for him cause he’s at work.” Banker Sr. provided vehicle information and answered questions about how the 2016 Jeep would be used and titled.

On January 6, 2023, Banker Sr. was driving the 2000 Jeep when another vehicle failed to yield and struck him head-on. He filed a claim for PIP benefits. CURE investigated, identified Banker Sr. and Theresa as unlisted household members, and refused to pay benefits. CURE then declared Banker Jr.’s entire policy “void from the date of inception” based on Banker Jr.’s failure to disclose all household members.

Banker Sr. filed suit against CURE, and when CURE refused to pay, he applied for benefits through the Michigan Assigned Claims Plan. The claim was assigned to Allstate, which was added as a party. CURE also filed a third-party complaint against several medical providers who had treated Banker Sr.

CURE and Allstate filed competing motions for summary disposition. CURE argued it was entitled to rescind the policy and extend that rescission to Banker Sr. because he was not an innocent third party — he had allegedly “taken an active role” in the fraud by instructing Banker Jr. to buy insurance and by calling CURE to modify the policy without disclosing himself as a household member. Allstate argued that CURE was the higher-priority insurer because Banker Sr. was Banker Jr.’s resident relative, and that the rescission should not extend to Banker Sr. as an innocent third party.

The trial court found no evidence that Banker Sr. participated in the fraudulent procurement of the policy. While acknowledging that some of Banker Sr.’s statements during the phone call “may have been fraudulent,” the court emphasized that those statements were made after the policy was already procured. The court treated Banker Sr. as an innocent third party, balanced the equities under the MARKMAN factors, and concluded that the equities weighed against rescission. CURE’s motion was denied and Allstate’s was granted.

3. Issues

The central issue on appeal was whether the trial court erred by treating Banker Sr. as an innocent third party and balancing the equities under Bazzi and the MARKMAN factors, rather than simply extending the rescission of Banker Jr.’s policy to Banker Sr.

CURE raised several specific arguments:

1. Whether Banker Sr.’s instruction to Banker Jr. to “make sure he got insurance” on the 2000 Jeep, combined with Banker Sr.’s phone call to CURE, constituted participation in the fraudulent procurement of the policy — which would make Banker Sr. a non-innocent party and eliminate the need for equitable balancing.
2. Whether Banker Jr. was acting as Banker Sr.’s agent when procuring the policy, such that Banker Jr.’s fraud could be imputed to Banker Sr.
3. Whether Banker Sr.’s phone call to add the 2016 Jeep to the policy created a new contract (rather than amending the existing one), making Banker Sr. a participant in procuring a new policy through fraud.
4. Whether, even if the equities were balanced, they should have weighed in CURE’s favor.
5. Whether CURE could raise arguments regarding the third-party medical providers.
6. Holding

The Court of Appeals affirmed on all grounds.

Banker Sr. did not participate in fraudulently procuring the policy. The Court found that the record was clear: Banker Jr. procured the policy entirely on his own, without Banker Sr.’s involvement. While Banker Sr. told his son to “make sure he got insurance” on the 2000 Jeep, this instruction did not constitute fraud — Banker Sr. never told Banker Jr. to omit household members from the application, and he was not present when the application was completed. Under Webb v. Progressive Marathon Insurance Co., 335 Mich App 503 (2021), only a party who “participates in the fraudulent procurement” of a policy is excluded from innocent-third-party status. Banker Sr. did not.

The agency argument was waived. CURE argued for the first time on appeal that Banker Jr. was acting as Banker Sr.’s agent when procuring the policy, so Banker Jr.’s fraud should be imputed to Banker Sr. The Court held this argument was waived because CURE never raised it below. CURE’s argument in the trial court — that Banker Sr. “took an active role” in the fraud — was a different argument than an agency theory, and the Court declined to treat one as a more sophisticated version of the other.

The phone call did not create a new policy. CURE argued that when Banker Sr. called to add the 2016 Jeep, the parties effectively entered into a new contract, making Banker Sr. a participant in procuring that new policy through fraud. The Court rejected this, noting that CURE failed to explain why adding a vehicle to an existing policy created a new contract rather than simply amending the existing one.

The equitable balancing was not challenged. CURE devoted only a four-sentence paragraph to arguing that the equities favored rescission, without addressing any of the specific MARKMAN factors that the trial court analyzed at length. The Court noted that when an appellant fails to dispute the basis of the trial court’s ruling, the appellate court need not consider granting relief.

No jurisdiction over provider claims. The trial court had explicitly declined to rule on rescission as to the third-party medical providers, finding that CURE had not adequately raised the issue. Those claims were resolved only through the consent judgment — not by any court ruling. Because CURE was not “aggrieved” by any trial court action regarding the providers, the Court of Appeals lacked jurisdiction to address CURE’s arguments about provider claims, including its challenge to Mota-Peguero v. Falls Lake National Insurance Co., 350 Mich App 692 (2024).

5. Conclusion

The Court of Appeals affirmed the trial court’s orders denying CURE’s motion for summary disposition and granting Allstate’s motion. The rescission of Banker Jr.’s policy was not extended to Banker Sr. as an innocent third party. CURE remains the priority insurer responsible for Banker Sr.’s PIP benefits. The Court also declined to address CURE’s arguments about medical provider claims for lack of jurisdiction.

6. What Does This Mean for Our Clients?

This decision provides important protection for Michigan residents who file no-fault claims under a policy obtained by a family member. Here is what you should know:

If a family member’s insurance policy is rescinded for fraud, you may still be protected as an innocent third party. Under Bazzi and its progeny, an insurer cannot automatically void your coverage just because someone else in your household made a misrepresentation on their application. If you did not participate in the fraud, the court must balance the equities before deciding whether to extend the rescission to you — and as this case demonstrates, courts often find that the equities weigh in the claimant’s favor.

Merely knowing about a policy or asking a family member to get insurance does not make you a participant in fraud. Banker Sr. told his son to get insurance and even called CURE on his son’s behalf to make a policy change. The Court still found he was an innocent third party because he did not participate in the actual procurement of the policy or instruct his son to omit information from the application. This is an important distinction — asking someone to get insurance is not the same as participating in how they fill out the application.

Post-procurement conduct is different from procurement fraud. Even if a claimant makes questionable statements to an insurer after the policy is already in place, that does not retroactively make them a participant in the original fraud. The trial court acknowledged that some of Banker Sr.’s statements during his phone call with CURE “may have been fraudulent,” but correctly recognized that those statements had nothing to do with how the policy was originally obtained.

Insurance companies must raise their arguments properly or lose them. CURE’s failure to raise its agency theory in the trial court, and its failure to meaningfully brief the MARKMAN factors on appeal, cost it dearly. This is a reminder that procedural rules matter in insurance litigation, and that courts will hold insurers to the same standards as any other litigant.

Your PIP benefits are at stake. When an insurer rescinds a policy, it is trying to avoid paying your medical bills, lost wages, and other no-fault benefits. Cases like Banker v. CURE ensure that innocent family members are not left without coverage because of someone else’s misrepresentation.

If your insurance company has denied your PIP benefits or attempted to rescind your policy, contact The Seva Law Firm. We understand the complexities of Michigan no-fault law and fight to protect your right to the benefits you are owed.

Pratheep Sevanthinathan is the owner and managing attorney of The Seva Law Firm, located at 100 W. Big Beaver Rd, Suite 500, Troy, MI 48084. He can be reached at (248) 385-5704.

This article is for informational purposes only and does not constitute legal advice. Every case is different, and past results do not guarantee future outcomes.