Date: Apr 22, 2026

Rescission on MCR 2.116(C)(10): De Novo “No Fact Issue” Review, Then Abuse-of-Discretion Review of the Equitable Remedy

Introduction

Janice Sherman v Progressive Michigan Insurance Company (Mich Sup Ct, April 20, 2026) arose from a no-fault auto policy issued by Progressive to plaintiff Janice Sherman covering two vehicles. After Sherman was injured as a passenger in one of those vehicles in a hit-and-run rear-end collision, she sought personal protection insurance (PIP) benefits. Progressive denied the claim and announced it was rescinding the policy ab initio after discovering that Sherman had made material misrepresentations in her application regarding (1) where the vehicles were garaged and (2) who resided with her/regularly drove the vehicles.

The trial court denied Progressive’s motion for summary disposition and ordered reformation of the policy (effectively rewriting the contract to reflect the “correct” address and premium). The Court of Appeals reversed, holding rescission was proper because the equities were one-sided: misconduct by Sherman and no wrongdoing by Progressive. The Supreme Court, in a unanimous opinion by Justice Zahra (Justice Hood not participating), affirmed and used the case to resolve confusion about standards of appellate review when rescission is sought via MCR 2.116(C)(10).

Key issues: (1) What is the proper standard of appellate review for a trial court’s grant/denial of rescission when raised in a (C)(10) motion? (2) Did the trial court abuse its discretion by reforming rather than rescinding? (3) Must an appellate court remand for “rebalancing” equities after finding abuse?

Summary of the Opinion

The Court held that appellate courts must review a trial court’s decision to grant or deny rescission for an abuse of discretion (even though equitable issues often receive de novo review).
When rescission is requested through a motion under MCR 2.116(C)(10), appellate review proceeds in two steps:
1. De novo review to confirm there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.
2. Then review for abuse of discretion of the trial court’s ultimate equitable choice to grant/deny rescission.
Applying that framework, the Court agreed there was no genuine factual dispute that Sherman made material misrepresentations and that Progressive relied on them. Because Progressive engaged in no wrongdoing and the equities were one-sided, the trial court’s reformation order was an abuse of discretion; rescission was required.
The Court further held that the Court of Appeals was not required to remand for reweighing/rebalancing equities where the trial court already engaged in a rescission analysis and the equities are overwhelmingly one-sided.

Analysis

Precedents Cited

1) Summary disposition and “no fact-finding” under MCR 2.116(C)(10)

Maiden v Rozwood: Anchors the rule that (C)(10) rulings are reviewed de novo and that the motion tests factual sufficiency, requiring evidence to be viewed in the nonmovant’s favor. The Supreme Court uses Rozwood to emphasize that trial courts do not “find facts” on (C)(10).
West v Gen Motors Corp: Defines a “genuine issue of material fact” (reasonable minds could differ), reinforcing the de novo gateway step before equity is considered.
Patrick v Turkelson: Cited to underscore that courts may not make findings of fact on summary disposition; conflicting evidence defeats (C)(10).

2) Rescission as an equitable remedy and the standard of review

Wilmore-Moody v Zakir: Central to the Court’s clarification. While Wilmore-Moody notes equitable doctrines can be reviewed de novo, it also reiterates that rescission is granted only in the court’s “sound discretion.” Sherman leverages Wilmore-Moody to distinguish (a) legal availability questions (de novo) from (b) discretionary balancing (abuse of discretion).
Bazzi v Sentinel Ins Co: Provides (i) the modern framework for rescission in the auto-insurance misrepresentation context and (ii) the key phrase that rescission does not operate “automatically.” Sherman uses Bazzi both substantively (balancing equities) and procedurally (remand is needed when the trial court never exercised discretion).
Lenawee Co Bd of Health v Messerly and Amster v Stratton: Older Supreme Court authority reinforcing that rescission is discretionary equitable relief.

3) Equity generally vs specific equitable remedies (injunction analogy)

McDonald v Farm Bureau Ins Co and Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan: Cited for the broader proposition that many equitable questions are reviewed de novo, setting up the need to explain why rescission is different.
Pontiac Fire Fighters Union Local 376 v City of Pontiac and Dep't of Environmental Quality v Gomez: Used to illustrate that some equitable remedies (injunctions) are reviewed for abuse of discretion, and that rescission has “traditionally aligned” with injunctions for standard-of-review purposes.

4) The “confusion” in the Court of Appeals and the Court’s correction

Pioneer State Mut Ins Co v Wright: Identified as a source of confusion because it invoked “clear error” review of factual findings while reviewing a (C)(10) decision—an awkward fit because (C)(10) entails no fact-finding.
The opinion references an unpublished case, Allstate Ins Co v Fremont Ins Co (dissent), to highlight the critique that “clear error” review of “factual findings” is conceptually mistaken in the (C)(10) posture.

5) Substantive misrepresentation/rescission rules in insurance

Oade v Jackson Nat'l Life Ins Co: Supplies the materiality test—misrepresentation is material if the insurer would have rejected the risk, charged more, or issued a different contract.
Titan Ins Co v Hyten: Cited for categories of misrepresentation (fraudulent, innocent, silent fraud) and the broader point that traditional remedies include cancellation, rescission, and reformation. Sherman builds on Titan via Bazzi’s post-Titan rescission framework.
21st Century Premier Ins Co v Zufelt: Supports the proposition that rescission can be justified “without regard to the intentional nature of the misrepresentation,” so long as it is material and relied upon.
Johnson v QFD, Inc: Quoted (via Bazzi) for the requirement that courts “must balance the equities” when deciding rescission.
US Fidelity & Guaranty Co v Black: Used for the remedial menu in innocent misrepresentation cases and the idea that the most equitable remedy depends on circumstances.

6) Reformation limits and public policy

Johnson v USA Underwriters: Cited for when reformation may be proper (e.g., contracts violating public policy) and the clear-and-convincing standard for reformation based on mutual mistake or unilateral mistake plus fraud. Sherman uses this to show why reformation was not justified here: no mutual mistake and no fraud by Progressive.

7) Remand vs no remand after finding abuse of discretion

Bazzi v Sentinel Ins Co and C-Spine Orthopedics, PLLC v Progressive Mich Ins Co: Distinguished because in those cases the trial court had not conducted a rescission balancing analysis in the first instance (or operated under an incorrect categorical rule), making remand appropriate. In Sherman, by contrast, the trial court performed an equity analysis but reached an inequitable result, so remand was unnecessary given the one-sided equities.

Legal Reasoning

Step 1 (de novo): Was summary disposition appropriate?
The Court treated the misrepresentations as undisputed and material: Sherman’s garaging location and household driver/resident-relative information was inaccurate; truthful disclosure would have increased the premium by 83.2%. Applying Maiden v Rozwood and related (C)(10) principles, the Court concluded there was no genuine issue of material fact that (a) Sherman misrepresented material information and (b) Progressive relied on it and would have issued a different contract.
Step 2 (abuse of discretion): Was rescission the proper equitable remedy?
The Court emphasized the equitable balancing required by Bazzi v Sentinel Ins Co: rescission is not “automatic.” But the balancing here was straightforward because the record contained no allegation or evidence of wrongdoing by Progressive in procuring the policy, while Sherman’s misrepresentations were the sole cause of the inaccurate risk/pricing. The trial court’s reformation order effectively shifted the loss to the non-wrongdoing party; in the Supreme Court’s view, “there was no plausible basis” for that equity choice.
No remand required:
The Court held that once the Court of Appeals identified an abuse of discretion, it did not need to send the case back for another equity weighing exercise where (a) the trial court already performed that task and (b) the equities were “one-sided” (no third-party interests; misrepresentation by the insured; no improper insurer conduct).

Impact

Clarified appellate review framework in rescission-on-(C)(10) cases: Sherman supplies a clean, two-step approach that eliminates the misfit “clear error” language associated with Pioneer State Mut Ins Co v Wright when the posture is summary disposition (where no fact-finding occurs).
Greater predictability in insurance rescission litigation: Parties can better brief and preserve issues by separating (i) whether material facts are genuinely disputed (de novo) from (ii) whether rescission is the right equitable remedy (abuse of discretion).
Limits on trial-court “premium reformation” as a fairness substitute: The decision signals that reformation to “what the premium should have been” is not a proper equitable compromise where the insurer is blameless and the insured’s misrepresentations were material and relied upon.
Procedural efficiency: By allowing appellate courts to affirm rescission without remand when the record is complete and equities are overwhelmingly one-sided, Sherman reduces “second-round” equity hearings that would not change the result.

Complex Concepts Simplified

PIP benefits / no-fault: Under Michigan’s no-fault system (MCL 500.3101 et seq.), an insured typically receives certain benefits (like medical expenses and wage loss) regardless of who caused the crash. But insurers can still contest coverage when the policy itself was obtained through material misrepresentations.
Rescission ab initio: “Rescission” cancels the contract; “ab initio” means “from the beginning.” If rescinded ab initio, the policy is treated as though it never existed (often accompanied by premium refund). Importantly, Sherman reiterates (from Bazzi/Wilmore-Moody) that rescission is not automatic; it is discretionary and depends on equity.
Reformation: Reformation is the court’s equitable power to rewrite a contract to reflect what it should have said (typically when there was mutual mistake, or unilateral mistake plus fraud by the other side). Sherman treats reformation as improper here because the misstatements came from the insured and there was no fraud or mistake by the insurer in creating the written terms.
MCR 2.116(C)(10) summary disposition: Michigan’s rule for summary judgment based on the evidence. The court asks whether there is a genuine dispute of material fact; it must view evidence in the nonmoving party’s favor and does not decide credibility or “find facts.”
Standards of review: de novo vs abuse of discretion: De novo means the appellate court decides the issue fresh, without deference. Abuse of discretion means the appellate court gives deference and reverses only if the decision falls outside the range of reasonable outcomes. Sherman’s key procedural holding is that both standards can apply in one appeal: de novo for the (C)(10) merits gateway and abuse of discretion for the rescission remedy.
Material misrepresentation: A misstatement that matters to the insurer’s underwriting decision—e.g., it would charge more, reject the risk, or issue a different contract if it knew the truth (as articulated in Oade).

Conclusion

Sherman establishes a practical and doctrinally coherent rule for rescission disputes litigated through MCR 2.116(C)(10): appellate courts must (1) review de novo whether undisputed evidence supports summary disposition and then (2) review for abuse of discretion the trial court’s ultimate equitable choice to grant or deny rescission. On the merits, the Court reinforces that when an insured’s material misrepresentations drove the insurer’s risk and pricing and the insurer engaged in no improper conduct, equity strongly favors rescission over judicial “premium reformation.” Finally, it narrows when remand is necessary—remand is not required where the trial court already conducted a rescission analysis and the equities are plainly one-sided.