              If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                   revision until final publication in the Michigan Appeals Reports.




                           STATE OF MICHIGAN

                            COURT OF APPEALS


 NAEL HAYDAW,                                                          FOR PUBLICATION
                                                                       July 9, 2020
                 Plaintiff-Appellant,                                  9:10 a.m.
 and

 PRIORITY PHYSICAL THERAPY AND
 REHABILITATION, LLC, AND MICHIGAN
 PAIN MANAGEMENT, PLLC,

                 Intervening Plaintiffs,

 v                                                                     No. 345516
                                                                       Wayne Circuit Court
 FARM BUREAU INSURANCE COMPANY,                                        LC No. 16-012992-NF

                 Defendant-Appellee.


Before: RONAYNE KRAUSE, P.J., and CAVANAGH and SHAPIRO, JJ.

SHAPIRO, J.

        After finding that plaintiff made false statements at his deposition, the trial court granted
defendant summary disposition pursuant to the insurance policy’s fraud provision. We hold that
fraud provisions in no-fault insurance policies do not provide grounds for rescission based upon
false statements made by the insured during first-party litigation. Accordingly, we reverse and
remand for further proceedings.

                                                  I.

        This case arises out of a motor vehicle accident in which plaintiff claims to have sustained
injuries to his back, neck, and shoulders. Defendant is plaintiff’s no-fault insurer. In October
2016, plaintiff filed the instant lawsuit alleging that defendant wrongfully withheld personal
protection insurance (PIP) benefits that plaintiff was due under his insurance policy and the no-
fault act, MCL 500.3101, et seq. In February 2017, plaintiff signed litigation authorizations to
release all of his medical records, and he was deposed in April 2017. English is not plaintiff’s first
language, and he testified through an interpreter. Plaintiff also underwent two insurance medical

                                                 -1-
examinations in April and May 2017, respectively. Plaintiff communicated with the physicians
via an interpreter.

        After discovery was completed, defendant moved for summary disposition on the grounds
that plaintiff made false statements during discovery regarding his medical history. Plaintiff’s
medical records showed intermittent complaints of back, neck, and shoulder pain and that at times
he had been prescribed pain medication in the years preceding the accident. Given that history,
defendant asserted that plaintiff testified falsely at his deposition when he said that he saw his
primary care physician for “[f]lu, that’s it,” before the accident and that he was prescribed flu
medication.1 Defendant also maintained that plaintiff falsely represented in the medical
examinations that he did not have problems with his back, neck, or shoulders before the accident.
Defendant argued that it was entitled to summary disposition under the policy’s fraud provision2
and Bahri v IDS Prop Cas Ins Co, 308 Mich App 420; 864 NW2d 609 (2014).



1
    The pertinent exchange is as follows:
          Q. Prior to this accident have you ever hurt yourself or injured yourself in any way?

          A. You mean before the accident?

          Q. Yes

          A. No

          Q. Before the accident did you have a doctor that you used to go to?

          A. Yes.

          Q. Who is that doctor?

          A. Nabeel Toma.

          Q. And what did you go to Nabeel Toma for before the accident?

          A. Flu, that’s it.

                                            * * *
          Q. Were you prescribed any medications before this accident happened?
          A. Something, like, normal, like flu or something like that.

2
    The provision states:
          The entire policy will be void if, whether before or after a loss, you, any family
          member, or any insured under this policy has:


                                                   -2-
        In response, plaintiff argued that he testified truthfully at the deposition because his last
two doctor visits before the accident were to address the flu and his understanding of the question
was that it referred to the doctor visits immediately before the accident. Further, plaintiff disclosed
his medical records before the deposition and therefore defendant was aware of his medical history.
If plaintiff did make inaccurate statements at his deposition, he argued that this went to his
credibility, which should be determined by the trier of fact. Plaintiff also questioned the accuracy
of the medical-examination reports considering that he was communicating through an interpreter.

       After hearing oral argument, the trial court found that plaintiff made false statements at his
deposition and granted summary disposition on the basis of the policy’s fraud provision.

                                                  II.

       This case requires us to confront a question not previously addressed in a published opinion
from this Court. That is, whether statements made during litigation after the insured’s claim is
denied constitute grounds to void the policy under a fraud provision. Consistent with the vast
majority of courts that have addressed this issue, we hold that such provisions do not apply to
statements made during the course of litigation.3

      Our research indicates that this issue was first addressed in Republic Fire Ins Co of North
America v Weides, 81 US 375, 382-383; 20 L Ed 894; 14 Wall 375 (1871), in which the United



       1. Intentionally concealed or misrepresented any material fact or circumstance;

       2. engaged in fraudulent conduct; or

       3. made false statements;

       relating to this insurance or to a loss to which this insurance applies.

While we do not decide the case on this basis, we see no basis for a finding that plaintiff
“intentionally concealed or misrepresented” his medical history given that he voluntarily released
all his records.
3
  We review de novo a grant of summary disposition. See Rory v Continental Ins Co, 473 Mich
457, 464; 703 NW2d 23 (2005). In this case, defendant moved for summary disposition under
MCR 2.116(C)(10), which is properly granted when “there is no genuine issue as to any material
fact, and the moving party is entitled to judgment or partial judgment as a matter of law.” We also
review de novo the construction of an insurance contract. Gurski v Motorist Mut Ins Co, 321 Mich
App 657, 665; 910 NW2d 385 (2017). The parties submitted court-ordered supplemental briefs
addressing “whether the fraud provision in the no-fault policy applies to false statements made in
the course of litigation, i.e., after a complaint alleging a breach of contract has been filed.” Haydaw
v Farm Bureau Ins Co, unpublished order of the Court of Appeals, entered March 27, 2020 (Docket
No. 345516).


                                                 -3-
States Supreme Court held that testimony at trial does not implicate an insurance policy’s fraud or
false swearing clause:

                Nor was there error in denying the defendants’ third and fourth prayers. It
       is true the policies stipulated that fraud or false swearing on the part of the assured
       should work a forfeiture of all claim under them. The false swearing referred to is
       such as may be in the submission of preliminary proofs of loss, or in the
       examination to which the assured agreed to submit. But it does not inevitably
       follow from the fact that there was a material discrepancy between the statements
       made by the plaintiffs under oath in their proofs of loss, and their statements when
       testifying at the trial that the former were false, so as to justify the court in assuming
       it, and directing verdicts for the defendants. It may have been the testimony last
       given that was not true, or the statements made in the proofs of loss may have been
       honestly made, though subsequently discovered to be mistaken. It is only
       fraudulent false swearing in furnishing the preliminary proofs, or in the
       examinations which the insurers have a right to require, that avoids the policies,
       and it was for the jury to determine whether that swearing was false and fraudulent.
       [Emphasis added.]

        In what has become a leading authority on this issue, in American Paint Service, Inc v
Home Ins Co of New York, 246 F2d 91 (CA 3, 1957), the Third Circuit Court of Appeals followed
the Supreme Court in holding that trial testimony could not be relied upon by the insurer to show
that fraud had occurred. The Third Circuit provided the following rationale for its holding:

       Trial testimony in a case where fraud and false swearing is in issue serves to
       establish the truth or falsity of the preliminary proofs and the materiality and
       wilfulness of any false proofs. The fraud and false swearing clause is one beneficial
       to the insurer and it reasonably extends to protect the insurer during the period of
       settlement or adjustment of the claim. When settlement fails and suit is filed, the
       parties no longer deal on the non-adversary level required by the fraud and false
       swearing clause. If the insurer denies liability and compels the insured to bring
       suit, the rights of the parties are fixed as of that time for it is assumed that the
       insurer, in good faith, then has sound reasons based upon the terms of the policy
       for denying the claim of the insured. To permit the insurer to await the testimony
       at trial to create a further ground for escape from its contractual obligation is
       inconsistent with the function the trial normally serves. It is at the trial that the
       insurer must display, not manufacture, its case. Certainly the courts do not condone
       perjury by an insured, and appropriate criminal action against such a perjurer is
       always available. [Id. at 94 (emphasis added).]

      The vast majority of the courts that have addressed this issue have followed suit,4 and it is
now considered a general rule that statements made during litigation do not implicate a fraud or


4
 See Rego v Connecticut Ins Placement Facility, 219 Conn 339; 593 A2d 491, 497 (1991);
Dodson Aviation, Inc v Rollins, Burdick, Hunter of Kansas, Inc, 15 Kan App 2d 314; 807 P2d


                                                  -4-
false swearing clause. See e.g., Dodson Aviation, Inc v Rollins, Burdick, Hunter of Kansas, Inc,
15 Kan App 2d 314; 807 P2d 1319, 1326 (1991) (“The overwhelming majority of jurisdictions
hold that only false statements made before legal proceedings have begun can serve to void an
insurance policy.”); Ocean-Clear, Inc v Continental Cas Co, 94 App Div 2d 717, 718; 462 NYS2d
251 (1983) (“[I]t is generally accepted that fraud arising after the commencement of an action on
a policy does not void the policy.”) (citations omitted). That rule has been applied to preclude an
insurer from asserting fraud or false swearing on the basis of the insured’s deposition testimony.
See Mercantile Trust Co v New York Underwriters Ins Co, 376 F2d 502, 504 n 2 (CA 7, 1967);
Third Nat’l Bank v Yorkshire Ins Co, 218 Mo App 660; 267 SW 445, 449 (1924).

        We find these authorities persuasive and adopt their reasoning.5 False statements made
during discovery do not provide grounds to void the policy because, by that time, the claim has
been denied and the parties are adversaries in litigation. Once suit is brought, what is truth and
what is false is a matter for a jury or a judge acting as factfinder. And if it can be shown that a
party intentionally testified falsely, it is up to the court to determine what, if any, sanction is proper.


1319, 1326-1327 (1991); Ocean-Clear, Inc v Continental Cas Co, 94 App Div 2d 717, 718; 462
NYS2d 251 (1983); Mercantile Trust Co v New York Underwriters Ins Co, 376 F2d 502, 504 n 2
(CA 7, 1967); Ichthys, Inc v Guarantee Ins Co, 249 Cal App 2d 555, 557-559; 57 Cal Rptr 734
(1967); Tarzian v West Bend Mut Fire Ins Co, 74 Ill App 2d 314; 221 NE2d 293, 297-298 (1966);
Home Ins Co v Cohen, 357 SW2d 674, 676-677 (Ky App, 1962); Royal Ins Co v Story, 34 Ala
App 363; 40 So 2d 719, 722-723 (1949); American Alliance Ins Co v Pyle, 62 Ga App 156; 8
SEd2d 154, 159-160 (1940); Third Nat’l Bank v Yorkshire Ins Co, 218 Mo App 660; 267 SW 445,
449 (1924); Deitz v Providence Washington Ins Co, 33 W Va 526; 11 SE 50, 58 (1890). A handful
of contra authorities are identified in 64 ALR2d 962. One of those cases was expressly overruled.
See World Fire & Marine Ins Co v Tapp, 279 Ky 423; 130 SW2d 848 (1939), overruled in Cohen,
357 SW2d 674. Most of the cases concern fire insurance policies, but the type of policy had no
bearing on the decision. The underlying reasoning, as first articulated in Weides, 81 US 375, and
American Paint Service, 246 F2d 91, applies with equal force to fraud clauses in no-fault insurance
policies.
5
  Caselaw from sister states and federal courts is not binding precedent but may be relied on for its
persuasive value. Estate of Voutsara by Gaydos v Bender, 326 Mich App 667, 676; 929 NW2d
809 (2019). Defendant refers us to unpublished opinions from this Court that affirmed dismissals
based solely on misrepresentations made by the insured during the course of litigation. See Parker
v Farm Bureau Gen Ins Co of Mich, unpublished per curiam opinion of the Court of Appeals,
issued May 23, 2019 (Docket No. 343289); Sabados v State Farm Mut Auto Ins Co, unpublished
per curiam opinion of the Court of Appeals, issued February 12, 2019 (Docket No. 342088);
Thomas v Frankenmuth Mut Ins Co, unpublished per curiam opinion of the Court of Appeals,
issued July 12, 2016 (Docket No. 326744). Unpublished opinions are also not binding authority
but may be persuasive or instructive. MCR 7.215(C)(1); Kern v Kern-Koskela, 302 Mich App
212, 241; 905 NW2d 453 (2017). However, unlike the out-of-state caselaw we rely on, the
unpublished opinions cited by defendant addressed only whether the plaintiff’s statements were
false and did not analyze whether the policies’ fraud clauses may be read to apply to statements
made during the course of litigation.


                                                   -5-
Indeed, defendant is essentially seeking dismissal of plaintiff’s claim on the basis of alleged
discovery misconduct. Given that questions of credibility and intent are generally left to the trier
of fact, “[i]t is . . . doubtful whether dismissal for intentionally false deposition testimony is ever
appropriate.” Swain v Morse, ___ Mich App ___, ___; ___ NW2d ___ (2020) (Docket No.
346850); slip op at 6. In any event, it is up to the trial court to determine whether a drastic sanction
such as dismissal is warranted for discovery misconduct, including untruthful deposition
testimony. To be clear, once an insurer fails to timely pay a claim and suit is filed, the parties’
duties of disclosure are governed by the rules of civil procedure, not the insurance policy.6

        For similar reasons, statements made during litigation are by their nature incapable of
satisfying the elements for voiding a policy on the basis of post-loss fraud. In order to obtain that
relief under Bahri, 308 Mich App at 424-425,7 the material misrepresentation must have been
made with “the intention that the insurer would act upon it.” Yet an insured’s statements during
discovery are made with the intention that the trier of fact, not the insurer, will act on them. To
the extent that the insurer acts on those statements, it is through counsel for purposes of litigation
strategy rather than processing the claim under the policy’s terms.

         We are also mindful that allowing insurers to void a policy for false statements made during
litigation would create a perverse incentive. For example, an insurer with full knowledge of the
insured’s medical history could seek to bait or lead the insured into making an inaccurate statement
at deposition and then seek summary disposition on those grounds. Such tactics are directly at
odds with the purpose of discovery.8 See People v Burwick, 450 Mich 281, 298; 537 NW2d 813



6
  This does not mean that insureds are free to stonewall the insurer prior to litigation or sue
prematurely. The fact remains that the insured is not entitled to benefits unless he or she has
provided reasonable proof under the no-fault act.
7
 The following elements must be met to void a policy on the basis of an intentional material
misrepresentation:

       (1) the misrepresentation was material, (2) that it was false, (3) that the insured
       knew that it was false at the time it was made or that it was made recklessly, without
       any knowledge of its truth, and (4) that the insured made the material
       misrepresentation with the intention that the insurer would act upon it. [Bahri, 308
       Mich App at 424-425 (quotation marks and citation omitted).]
8
  We also question, but need not decide, whether plaintiff’s deposition testimony and statements
at the medical examinations are protected by the privilege of witness immunity, which the Supreme
Court has summarized as follows:
       Statements made during the course of judicial proceedings are absolutely
       privileged, provided they are relevant, material, or pertinent to the issue being
       tried. Falsity or malice on the part of the witness does not abrogate the privilege.
       The privilege should be liberally construed so that participants in judicial
       proceedings are free to express themselves without fear of retaliation. [Maiden v


                                                  -6-
(1995) (“A primary purpose of discovery is to enhance the reliability of the fact-finding process
by eliminating distortions attributable to gamesmanship.”) (emphasis added). At the same time,
our holding does not prevent defendant from presenting plaintiff’s allegedly false statements to the
jury for purposes of undermining plaintiff’s credibility. Nor does it negate the other “disincentives
for untruthful deposition testimony.” See Swain, ___ Mich App at ___; slip op at 5.

        Finally, we note that a contrary ruling—that a fraud or misrepresentation clause applies to
statements made during the course of litigation—would implicate the first-breach rule. That is, if
the insurer, by the denial of the claim, was first to breach the contract, it may not defend on the
grounds that the plaintiff subsequently failed to adhere to the contract. “An insurance policy is a
contractual agreement between the insured and the insurer.” Farm Bureau Ins Co v TNT Equip,
Inc, 328 Mich App 667, 672; 939 NW2d 738 (2019). “The rule in Michigan is that one who first
breaches a contract cannot maintain an action against the other contracting party for his subsequent
breach or failure to perform. . . . [T]his rule only applies when the initial breach is substantial.”
Michaels v Amway Corp., 206 Mich App 644, 650-51; 522 NW2d 703 (1994) (citations omitted).
Defendant has refused to provide PIP benefits despite the existence of the policy. If the denial is
unjustified it is clearly a substantial breach that would relieve plaintiff of his contractual duties
under the policy. Accordingly, summary disposition on the basis of false statements would not be
warranted unless and until it is determined that the denial of the claim did not breach the contract.

        For the reasons discussed, however, we are convinced that statements made during the
course of litigation do not implicate an insurance policy’s fraud or misrepresentation clause and
that such a clause may not be relied on by the insurer to justify a denial of benefits.9 Reversed and
remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.


                                                                /s/ Douglas B. Shapiro
                                                                /s/ Amy Ronayne Krause
                                                                /s/ Mark J. Cavanagh




        Rozwood, 461 Mich 109, 134; 597 NW2d 817 (1999) (citations omitted; emphasis
        added).]

Statements made at depositions and medical examinations occur during the course of judicial
proceedings because those are discovery mechanisms governed by court rules. See MCR 2.303-
2.308; MCR 2.311. See also Kowalski v Boliker, 893 F3d 987, 1000 (CA 7, 2018) (“The scope of
[witness] immunity is broadly construed to include preparation of testimony, testimony at pretrial
proceedings, depositions, and affidavits.”) (citations omitted). If plaintiff’s statements are
privileged, we are skeptical that defendant may rely on them to void the policy.
9
  Given our ruling that plaintiff’s statements made in the course of litigation are not grounds to
void the policy even if intentionally false, it is not necessary for us to decide whether the trial court
erred in finding intentional misrepresentation.

                                                  -7-
