Sherman v. Progressive (MSC April 20, 2026):
Michigan Supreme Court Strengthens Rescission as a Remedy for Material Misrepresentation in No-Fault Applications
Janice Sherman applied for a Progressive no-fault policy in November 2020, listing Clinton Township as both her residence and the garaging location for her two insured vehicles. She identified herself as the sole resident and driver. After she was injured as a passenger in a July 2021 rear-end collision and sought PIP benefits, Progressive's investigation uncovered that Sherman actually resided in Detroit with her adult son, garaged one vehicle at her brother's address, and had additional resident-relatives she never disclosed. Accurate disclosure would have driven her premium up by 83.2%. Progressive denied the claim, declared the policy rescinded ab initio, and refunded the $1,491.54 in premiums paid. The trial court refused to enforce rescission and instead reformed the policy, requiring Sherman to pay the delta in premium. The Court of Appeals reversed and directed entry of judgment for Progressive.
The Supreme Court took the case to resolve a recurring point of confusion in Michigan appellate practice: what standard of review governs a trial court's decision to grant or deny rescission of an insurance policy procured by material misrepresentation, particularly when that decision is rendered on an MCR 2.116(C)(10) motion. Lower courts had drifted into applying a clear-error standard to trial court "factual findings" on rescission, a standard fundamentally incompatible with summary disposition practice, which permits no findings of fact at all. The Court also addressed whether, upon finding an abuse of discretion, the Court of Appeals was required to remand for the trial court to rebalance the equities.
The New Rule. The Court announced a clean two-step appellate framework. First, the appellate court reviews de novo whether there is no genuine issue of material fact and whether the movant is entitled to judgment as a matter of law under MCR 2.116(C)(10). Second, the appellate court reviews the trial court's decision to grant or deny the equitable remedy of rescission for abuse of discretion, aligning rescission with injunctive relief and abrogating the clear-error gloss that crept in through Pioneer State Mut Ins Co v Wright. Applied to the facts, the Court held the equities were one-sided: Sherman committed material misrepresentations, Progressive engaged in no wrongdoing, and no third-party interests were implicated. Reformation under these circumstances was an abuse of discretion, and no remand to rebalance the equities was required. The takeaway for carriers and defense counsel is direct. When misrepresentation is clean, reliance is documented through underwriting, and the insurer's conduct is unimpeachable, rescission should be pressed at summary disposition with confidence, and trial courts no longer have cover to substitute reformation as a compromise remedy.
Michigan Supreme Court Strengthens Rescission as a Remedy for Material Misrepresentation in No-Fault Applications
Janice Sherman applied for a Progressive no-fault policy in November 2020, listing Clinton Township as both her residence and the garaging location for her two insured vehicles. She identified herself as the sole resident and driver. After she was injured as a passenger in a July 2021 rear-end collision and sought PIP benefits, Progressive's investigation uncovered that Sherman actually resided in Detroit with her adult son, garaged one vehicle at her brother's address, and had additional resident-relatives she never disclosed. Accurate disclosure would have driven her premium up by 83.2%. Progressive denied the claim, declared the policy rescinded ab initio, and refunded the $1,491.54 in premiums paid. The trial court refused to enforce rescission and instead reformed the policy, requiring Sherman to pay the delta in premium. The Court of Appeals reversed and directed entry of judgment for Progressive.
The Supreme Court took the case to resolve a recurring point of confusion in Michigan appellate practice: what standard of review governs a trial court's decision to grant or deny rescission of an insurance policy procured by material misrepresentation, particularly when that decision is rendered on an MCR 2.116(C)(10) motion. Lower courts had drifted into applying a clear-error standard to trial court "factual findings" on rescission, a standard fundamentally incompatible with summary disposition practice, which permits no findings of fact at all. The Court also addressed whether, upon finding an abuse of discretion, the Court of Appeals was required to remand for the trial court to rebalance the equities.
The New Rule. The Court announced a clean two-step appellate framework. First, the appellate court reviews de novo whether there is no genuine issue of material fact and whether the movant is entitled to judgment as a matter of law under MCR 2.116(C)(10). Second, the appellate court reviews the trial court's decision to grant or deny the equitable remedy of rescission for abuse of discretion, aligning rescission with injunctive relief and abrogating the clear-error gloss that crept in through Pioneer State Mut Ins Co v Wright. Applied to the facts, the Court held the equities were one-sided: Sherman committed material misrepresentations, Progressive engaged in no wrongdoing, and no third-party interests were implicated. Reformation under these circumstances was an abuse of discretion, and no remand to rebalance the equities was required. The takeaway for carriers and defense counsel is direct. When misrepresentation is clean, reliance is documented through underwriting, and the insurer's conduct is unimpeachable, rescission should be pressed at summary disposition with confidence, and trial courts no longer have cover to substitute reformation as a compromise remedy.
| sherman-v-progressive-michigan-supreme-court-rescission-no-fault-2026.pdf |