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142774 - Titan Insurance Company v Hyten

Titan Insurance Company,
Ronald M. Sangster
(Appeal from Ct of Appeals
(Oakland – Sosnick, E.)
McKinley Hyten, Howard Holmes, and Martha Holmes,
Carson J. Tucker
Farm Bureau Insurance Company,
Intervening Defendant-Appellee.


​Titan Insurance Company issued an automobile insurance policy to McKinley Hyten with $100,000/$300,000 policy limits. Although Hyten’s driver’s license was suspended at the time, she expected that it would be reinstated by the policy’s effective date. Hyten’s license was not actually reinstated, however, until about a month after the policy went into effect. Some months later, Hyten injured Howard and Martha Holmes in an automobile collision; the Holmeses were insured by Farm Bureau Insurance Company and had underinsured motorist’s coverage.

Titan Insurance filed a declaratory action against Hyten, the Holmeses, and Farm Bureau, seeking to reform its policy with Hyten to reduce the coverage to the statutory minimum of $20,000/$40,000; Titan argued that it was entitled to reform its policy with Hyten, based on her misrepresentation about the status of her driver’s license. But the trial court disagreed, finding that Titan could have easily ascertained whether Hyten had a valid driver’s license at the time the policy was issued. Titan’s failure to do so barred it from reforming the contract to the detriment of the Holmeses and Farm Bureau, the trial court held. Titan appealed, but in a published opinion, the Court of Appeals affirmed the trial court’s ruling. An insurer may not reform an insurance policy to the detriment of innocent third parties after an accident covered by the policy has occurred, the appellate court said. The Court of Appeals also affirmed on the alternate ground that Hyten’s misrepresentation was cured when her license was reinstated: “Once Hyten received her license, the prior innocent misrepresentation lost its effectiveness as a potential ground for contract cancellation.” Titan appeals.