                       STATE OF MICHIGAN

                       COURT OF APPEALS



DANA HARRIS,                                    UNPUBLISHED
                                                December 14, 2017
          Plaintiff-Appellee,
and

STAR BRIGHT IMAGE GROUP, LLC, doing
business as OAK PARK IMAGING, SILVER
PINE IMAGING, LLC, and ALWAYZ ON TIME
TRANSPORTATION,

          Intervening Plaintiffs,
and

MENDELSON ORTHOPEDICS, PC, and
SYNERGY SPINE AND ORTHOPEDIC
CENTER, LLC,

          Intervening Plaintiffs-
          Appellees/Cross-Appellants,

v                                               No. 332764
                                                Macomb Circuit Court
TERRY GERALD BOOKER,                            LC No. 2014-002049-NI

          Defendant,
and

PIONEER STATE MUTUAL INSURANCE
COMPANY,

          Defendant/Cross-Defendant-
          Appellant/Cross-Appellee,
and

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

          Defendant/Cross-Plaintiff-Appellee.



                                         -1-
PIONEER STATE MUTUAL INSURANCE
COMPANY,

               Plaintiff-Appellant,
and

OAK PARK IMAGING,

               Plaintiff,

v                                                                   No. 335025
                                                                    Macomb Circuit Court
VANETTA WRIGHT, DANA REYNARD                                        LC No. 2015-002978-CZ
HARRIS, and STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY,

               Defendants-Appellees,
and

MENDELSON ORTHOPEDICS, PC, and
SYNERGY SPINE AND ORTHOPEDIC
SURGERY CENTER, LLC,

               Intervening Defendants-Appellees.


Before: TALBOT, C.J., and BORRELLO and RIORDAN, JJ.

PER CURIAM.

         These consolidated appeals involve claims arising under the no-fault act, MCL 500.3101
et seq., in connection with injuries Dana Harris sustained in a motor vehicle accident. In Docket
No. 332764, Pioneer State Mutual Insurance Company (“Pioneer”) appeals by leave granted the
trial court’s grant of partial summary disposition in favor of Harris and its grant of summary
disposition in favor of State Farm Mutual Automobile Insurance Company (“State Farm”). The
trial court’s summary disposition decisions were based upon its determination that Harris was a
resident relative domiciled in the home of Pioneer’s insured, Vanetta Wright, on the date of the
accident underlying the lawsuit, as well as its application of the innocent-third party rule with
respect to Harris. Mendelson Orthopedics, PC, and Synergy Spine and Orthopedic Surgery
Center, LLC (collectively “the provider plaintiffs”) cross-appeal the trial court’s denial of their
motions for summary disposition. We affirm the trial court’s denial of the provider plaintiffs’
motions for summary disposition and its determination that Harris was a resident relative
domiciled with Wright. However, we reverse the portion of the court’s order applying the
innocent third-party rule to Harris and remand for further proceedings.

       In Docket No. 335025, Pioneer appeals as of right the trial court’s order summarily
disposing of Pioneer’s separate complaint for declaratory relief on the basis of laches. We

                                                -2-
reverse the trial court’s grant of summary disposition in Pioneer’s declaratory relief action and
remand for further proceedings.

                                         I. BACKGROUND

       On September 13, 2013, Harris was injured in a motor vehicle accident while riding as a
passenger in an automobile owned by Laurie Francen. Francen’s car was covered by a policy
issued by State Farm. Harris did not own a vehicle or have a no-fault insurance policy at the
time of the accident and, therefore, sought personal protection insurance (PIP) benefits from
Pioneer under a policy it issued to Harris’s mother, Vanetta Wright.

        On May 20, 2014, after Pioneer failed or refused to pay PIP benefits to Harris, he filed a
complaint against Pioneer and the driver of the other vehicle involved in the accident. Harris
later amended his complaint in March 2015 to add State Farm as a defendant. The provider
plaintiffs intervened in the action, seeking to recover the amounts owing to them for treatment of
Harris’s accident-related injuries. State Farm also brought a cross-claim against Pioneer,
asserting that Pioneer was responsible for Harris’s PIP benefits as the first in priority insurer
under the no-fault statutory scheme.1

        In August 2015, Pioneer initiated a separate declaratory relief action, seeking rescission
of the insurance policy it issued to Wright. Pioneer averred that by failing to identify Harris as a
resident of her household when she applied for insurance in April 2013, she made a material
misrepresentation that warranted rescission of the policy. State Farm was permitted to intervene
as a defendant in that action, as were the provider plaintiffs.

                                    II. STANDARD OF REVIEW

        This Court reviews de novo a trial court’s decision on a motion for summary disposition.2
“A motion made under MCR 2.116(C)(10) tests the factual support for a claim and should be
granted when there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law.”3 The Court considers “the pleadings, admissions, affidavits, and
other relevant documentary evidence of record in the light most favorable to the nonmoving
party . . . .”4 “A genuine issue of material fact exists when the record, drawing all reasonable
inferences in favor of the nonmoving party, leaves open an issue upon which reasonable minds
could differ.”5



1
    State Farm also sought recovery of the amounts it paid to the provider plaintiffs.
2
    Nuculovic v Hill, 287 Mich App 58, 61; 783 NW2d 124 (2010).
3
    Id. (citations omitted).
4
 Seldon v Suburban Mobility Auth for Regional Transp, 297 Mich App 427, 437; 824 NW2d
318 (2012) (quotation marks and citation omitted).
5
    Nuculovic, 287 Mich App at 62.


                                                  -3-
       This Court also reviews a trial court’s equitable decisions de novo, but the findings of
fact supporting an equitable decision are reviewed for clear error.6 “A decision is clearly
erroneous if, although there is evidence to support it, this Court is left with a definite and firm
conviction that a mistake was made.”7

                                     III. HARRIS’S RESIDENCY

        Pioneer first argues that the trial court erred by holding that Harris was a resident relative
domiciled in Wright’s household on September 13, 2013, thereby making Pioneer the priority
insurer with respect to payment of Harris’s PIP benefits. We disagree.

        MCL 500.3114 governs the priority of insurers under the no-fault act.8 Subject to
exceptions that are not implicated in this case, MCL 500.3114 provides that “a personal
protection insurance policy described in [MCL 500.3101(1)] applies to accidental bodily injury
to the person named in the policy, the person’s spouse, and a relative of either domiciled in the
same household, if the injury arises from a motor vehicle accident.”9 Thus, “the no-fault
insurance policies for the injured person’s household are first in order of priority of responsibility
for payment of no-fault benefits . . . .”10 In the absence of such a policy, the injured person may
look elsewhere for coverage as otherwise provided in MCL 500.3114. Pertinent to this instant
matter is subsection (4), which states:

          Except as provided in subsections (1) to (3), a person suffering accidental bodily
          injury arising from a motor vehicle accident while an occupant of a motor vehicle
          shall claim personal protection insurance benefits from insurers in the following
          order of priority:

          (a) The insurer of the owner or registrant of the vehicle occupied.

          (b) The insurer of the operator of the vehicle occupied.[11]

Thus, if the trial court correctly determined that Harris was a resident relative domiciled with
Wright, then Pioneer is the insurer of highest priority under MCL 500.3114(1). If, on the other
hand, Harris was not domiciled with Wright, then State Farm, as the insurer of the vehicle Harris
occupied at the time he was injured, would be the insurer of highest priority under MCL
500.3114(4).



6
    Tenneco Inc v Amerisure Mut Ins Co, 281 Mich App 429, 444; 761 NW2d 846 (2008).
7
    Id.
8
    Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 254; 819 NW2d 68 (2012).
9
    MCL 500.3114(1).
10
     Corwin, 296 Mich App at 255 (quotation marks and citation omitted).
11
     MCL 500.3114(4).


                                                   -4-
       Although determination of a claimant’s domicile generally involves a question of fact, it
becomes a question of law for the court to decide when the underlying facts are undisputed.12 In
determining domicile, the following factors should be weighed or balanced:

           (1) the subjective or declared intent of the claimant to remain indefinitely in the
           insured’s household, (2) the formality of the relationship between the claimant
           and the members of the household, (3) whether the place where the claimant lives
           is in the same house, within the same curtilage, or upon the same premises as the
           insured, and (4) the existence of another place of lodging for the person alleging
           domicile.[13]

Additionally, when a child’s purported domicile with a parent is at issue, as it is here, the court
should also consider

           (1) whether the child continues to use the parents’ home as the child’s mailing
           address, (2) whether the child maintains some possessions with the parents, (3)
           whether the child uses the parents’ address on the child’s driver’s license or other
           documents, (4) whether a room is maintained for the child at the parents’ home,
           and (5) whether the child is dependent upon the parents for support.[14]

        While the parties disagree concerning the significance of the facts pertaining to Harris’s
domicile, the facts themselves are not in dispute. At all relevant times, Wright resided in an
apartment in Warren. When she submitted an application for insurance to Pioneer in April 2013,
she did not identify Harris as a driver or resident in her household. Additionally, Harris’s
information on file with the Secretary of State at the time of the accident reflected an address in
Macomb. The same Macomb address was listed on the police report from the accident, as well
as personnel records provided by Harris’s part-time employer. Although these facts suggest that
Harris did not reside with Wright, a review of the remaining evidence clearly weighs in favor of
finding that Harris was, in fact, domiciled with Wright at the time of the accident.

         In a recorded interview with Pioneer representative Fred Jernigan on October 14, 2013,
Wright indicated that Harris moved into her apartment around December 2012. Jernigan noted
that Wright had opened a bedroom door and showed him the inside of Harris’s bedroom.
According to Wright, Harris received some, but not all, of his mail at the Warren apartment.
Jernigan also spoke to Shawnie McMichael Brown, who resided at the Macomb address reflected
on Harris’s identification. During Jernigan’s December 5, 2013 conversation with Brown,
Brown explained that Harris had lived with her for approximately three years until they ended
their relationship around the end of summer in 2012. Brown believed that Harris had moved into
Wright’s apartment, as she visited him there occasionally after they broke up. Brown indicated
that Harris took all of his belongings when he moved out of her home and he no longer received


12
     Fowler v Auto Club Ins Ass’n, 254 Mich App 362, 364; 656 NW2d 856 (2002).
13
     Id.
14
     Id. at 364-365.


                                                   -5-
mail there. Additionally, Harris provided Wright’s Warren address on a medical treatment
intake form dated September 19, 2013.

       When he was deposed in July 2015, Harris testified that he moved from Brown’s
Macomb residence to Wright’s Warren apartment in September or October 2012. He had his
own bedroom and bed at Wright’s apartment and intended to stay there, though he did not
formally change his address through the postal service. Harris further testified that he had no
other place to live. He received, and was responsible for, a cable bill at the Warren apartment,
but Wright paid the rent and utility bills and bought him personal items such as deodorant and
socks. Harris testified that when he left Brown’s Macomb residence he had no intention of going
back.

        Wright testified consistent with her previous recorded statement, though she provided
additional details concerning her living arrangements with Harris. When Harris moved in around
November or December of 2012, he brought all of his clothing, kept his toothbrush and personal
items in the bathroom, and received mail at the apartment. Harris told her he would be living
with her for a while and she intended that he could remain with her as long as he wanted. Harris
helped with the rent and groceries when he was working, but she paid most of the bills and
supported him. Wright testified that she did not disclose that Harris was living with her when
she applied for insurance because she took care of her own business, he did not drive her car, and
she did not intend to let him drive it.

        Even viewing the evidence in the light most favorable to Pioneer, the trial court did not
err by finding that Harris was a resident of Wright’s household at the time of the accident. The
evidence demonstrates that Harris, Wright’s biological son, had a subjective and declared intent
to remain indefinitely in Wright’s household. Wright, too, intended that Harris could live with
her for as long as he needed. Harris did not have any other place of lodging at the time and was
at least partially dependent on Wright for financial support. Harris had his own bedroom at
Wright’s apartment, maintained his belongings there, and received mail there. These facts weigh
heavily in favor of finding that Harris was domiciled in Wright’s household, and the trial court
did not err in concluding so. Pioneer’s position to the contrary relied primarily on Harris’s
address on file with the Secretary of State, which we find unpersuasive in light of the remaining
evidence suggesting that Harris had lived with Wright for approximately 10 months before the
accident. As the trial court aptly observed, “[Harris]’s failure to update his address with the
Secretary of State and his employer does not detract from the essentially uncontroverted
evidence which demonstrates that [Harris] was then residing with [his] mother, and intended to
so remain.”

                           IV. INNOCENT-THIRD PARTY RULE

        Next, Pioneer argues that the trial court erred by finding that Harris was entitled to PIP
benefits from Pioneer under the innocent third-party doctrine. We agree.

       In response to Harris’s motion for partial summary disposition, Pioneer maintained that if
Harris resided in Wright’s household, Wright made a material misrepresentation on her
application for insurance when she failed to list him as a driver or resident. Thus, argued
Pioneer, it was entitled to rescind Wright’s policy and declare it void ab initio. Without ruling

                                               -6-
on Pioneer’s right to rescind the policy, the trial court acknowledged that Wright’s failure to
identify Harris in her insurance application “could arguably be seen as an intentional
misrepresentation.” However, noting Pioneer’s failure to present any evidence suggesting that
Harris participated in Wright’s purported fraud, the court concluded that Harris, as an innocent
third-party, would still be entitled to PIP benefits from Pioneer.

       Regardless of the propriety of the trial court’s ruling at the time it was made, this Court
has since examined, and rejected, the applicability of the innocent third-party rule in the context
of a no-fault insurance contract. Summarizing its holding in Bazzi v Sentinel Ins Co, the Court
explained,

         (1) there is no distinction between an easily ascertainable fraud rule and an
         innocent-third-party rule, (2) the Supreme Court in Titan [Ins Co v Hyten, 491
         Mich 547; 817 NW2d 562 (2012)] clearly held that fraud is an available defense
         to an insurance contract except to the extent that the Legislature has restricted that
         defense by statute, (3) the Legislature has not done so with respect to PIP benefits
         under the no-fault act, and (4) the judicially created innocent-third-party rule has
         not survived the Supreme Court’s decision in Titan. Therefore, if an insurer is
         able to establish that a no-fault policy was obtained through fraud, it is entitled to
         declare the policy void ab initio and rescind it, including denying the payment of
         PIP benefits to innocent third parties.[15]

Given the Bazzi Court’s unequivocal rejection of the rationale relied on by the trial court in this
case—i.e., that Harris could recover PIP benefits from Pioneer regardless of whether Pioneer
could rescind its policy on the basis of Wright’s purported fraud—the portion of the trial court’s
order relying on the innocent third-party rule must be reversed. Additionally, because the trial
court declined to directly address whether Wright’s policy was voidable, we remand for further
proceedings.

                                            V. LACHES

         Next, Pioneer argues that the trial court erred by applying the equitable doctrine of laches
to its declaratory action seeking rescission of Wright’s policy. We agree.

        “If a plaintiff has not exercised reasonable diligence in vindicating his or her rights, a
court sitting in equity may withhold relief on the ground that the plaintiff is chargeable with
laches.”16 For the doctrine of laches to apply, there must be an unreasonable delay that results in
“circumstances that would render inequitable any grant of relief to the dilatory plaintiff.”17 It is


15
  Bazzi v Sentinel Ins Co, 315 Mich App 763, 781-782; 891 NW2d 13 (2016) (opinion by
SAWYER, J), lv gtd 500 Mich 990 (2017) (emphasis added).
16
     Knight v Northpointe Bank, 300 Mich App 109, 114; 832 NW2d 439 (2013).
17
  Twp of Yankee Springs v Fox, 264 Mich App 604, 611; 692 NW2d 728 (2004) (quotation
marks and citation omitted).


                                                  -7-
“triggered by the plaintiff’s failure to do something that should have been done under the
circumstances or failure to claim or enforce a right at the proper time.”18 Additionally, laches
does not apply unless prejudice to the other party results from the unreasonable delay. 19

        There is little doubt that Pioneer did delay in attempting to rescind Wright’s insurance
policy in this matter. Within approximately one month of the accident, Pioneer had reason to
believe that Wright had misrepresented the residents of her household when she applied for
insurance. On October 13, 2013, Wright indicated that Harris resided with her at the time of the
accident and even showed Pioneer’s representative Harris’s bedroom. Harris’s former girlfriend,
the occupant of the Macomb residence appearing on Harris’s identification and employment
records, corroborated Wright’s assertions in December 2013, agreeing that Harris had moved
into Wright’s apartment in 2012. Moreover, it is evident that Pioneer understood the
implications of Harris’s residency. In an October 15, 2013 email, a Pioneer agent observed, “If
we do not have enough strength to rescind this policy (Dana Harris will argue that he is an
innocent third party), we need to assign a PIP adjuster to the file.” Thus, it is clear that nearly
two years before Pioneer filed its action for declaratory relief, it was well aware of Wright’s
alleged misrepresentation, its potential ability to rescind the policy, and Harris’s likely defense.

        However, given the state of the law during the pendency of the lower court proceedings,
we do not believe that Pioneer’s delay was unreasonable or inexcusable. Pioneer cancelled
Wright’s policy shortly after the accident due to nonpayment and, thus, had little reason to seek
rescission while Michigan courts continued to apply the innocent third-party rule to PIP claims.
It was not until June 2016, when this Court concluded in Bazzi that an insurer could deny PIP
benefits to an innocent third party if the underlying policy had been procured through fraud, that
Pioneer had cause to rescind Wright’s policy so as to avoid liability for Harris’s PIP benefits.
Following this development in the law, Pioneer acted with diligence in asserting its right to
rescind Wright’s policy by initiating its declaratory relief action on August 18, 2015. While we
acknowledge that Harris was likely prejudiced as a result of this delay—the one-year back rule
set forth in MCL 500.3145(1) may preclude recovery of a significant portion of Harris’s claim
against another insurer—laches should not be applied in the absence of an unreasonable delay.20
Accordingly, we reverse the trial court’s order dismissing Pioneer’s declaratory relief action on
the basis of laches.

                                    VI. PROVIDER CLAIMS



18
  Attorney General v PowerPick Player’s Club of Mich, LLC, 287 Mich App 13, 51; 783 NW2d
515 (2010).
19
     Twp of Yankee Springs, 264 Mich App at 612.
20
  Id. at 611 (“The doctrine of laches is concerned with unreasonable delay . . . .”). See also
Regents of Univ of Mich v State Farm Mut Ins Co, 250 Mich App 719, 734; 650 NW2d 129
(2002) (stating that laches requires proof of a lack of diligence on the part of the plaintiff),
overruled in part on other grounds by Covenant Med Ctr, Inc v State Farm Auto Ins Co, 500
Mich 191; 895 NW2d 490 (2017).


                                                -8-
       Lastly, the provider plaintiffs cross-appeal the trial court’s denial of their motions for
summary disposition with respect to their claims for expenses incurred in Harris’s care and
recovery. They further contend that the trial court erred in failing to award them interest for
overdue benefits under MCL 500.3142 and attorney fees under MCL 500.3148(1).

          Although the parties have not submitted supplemental briefing as to this issue, we note
that, once again, recent developments in the field of no-fault law are dispositive of this issue. In
Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, our Supreme Court conclusively held that
a healthcare provider possesses no statutory right to sue a no-fault insurer.21 The Court found
that while MCL 500.3112 undoubtedly provides that no-fault insurers can directly pay healthcare
providers for the benefit of an injured person, it does not “grant healthcare providers a statutory
cause of action against insurers to recover the costs of providing products, services, and
accommodations to an injured person.”22 Moreover, this Court has also determined that
Covenant Med Ctr’s rejection of direct provider claims is to be given full retroactive effect.23 In
light of this development, the provider plaintiffs in this case do not have a statutory entitlement
to proceed with their action for no-fault benefits against Pioneer and, it follows, no claim to
statutory interest and fees for overdue benefits under the no-fault act. Accordingly, we affirm
the trial court’s order denying the provider plaintiffs’ motions for summary disposition, albeit on
different grounds.24

                                           VII. CONCLUSION

       In Docket No. 332764, we affirm the trial court’s denial of the provider plaintiffs’
motions for summary disposition and its determination that Harris was a resident relative
domiciled with Wright. However, in light of this Court’s holding in Bazzi,25 we reverse the
portion of the court’s order applying the innocent third-party rule to Harris and remand this
matter for further proceedings. We also reverse the trial court’s grant of summary disposition in
Docket No. 335025 and remand for further proceedings.

          We do not retain jurisdiction.

                                                             /s/ Michael J. Talbot
                                                             /s/ Stephen L. Borrello
                                                             /s/ Michael J. Riordan



21
     Covenant Med Ctr, 500 Mich at 196.
22
     Id. at 195-196.
23
  W A Foote Mem Hosp v Mich Assigned Claims Plan, __ Mich App __, __; __ NW2d __
(2017) (Docket No. 333360); slip op at 19.
24
   See Zdrojewski v Murphy, 254 Mich App 50, 70-71; 657 NW2d 721 (2002) (explaining that
this Court will not reverse a trial court’s decision when the correct result was reached).
25
     Bazzi, 315 Mich App at 781-782 (opinion by SAWYER, J).


                                                 -9-
