Notice Requirements under Florida Statute 627.7015 Did Not Apply Where Insured Initiated Litigation

Am. Integrity Ins. Co. v. Gainey (Fla. 2d DCA 2012)

A claim was brought under a homeowner’s insurance policy for damage caused by a water leak. The insurer issued a check to its insured as partial payment of the damages, indicating that additional funds may be issued following further investigation. The insured responded by filing a sworn proof of loss statement and a breach of contract complaint. The insurer advised its insured that it disagreed with her estimate of loss, provided the statutory notice of mediation under section 527.7015, and then moved to dismiss the complaint, urging the trial court to abate litigation in favor of appraisal.

After a mediation proved unsuccessful, the trial court initially granted the insurer’s request for appraisal. However, the insured successfully moved to enjoin the appraisal and lift the stay of litigation by contending that the insurer had waived its right of appraisal by failing to provide timely notice of mediation under section 627.7015.

The second district reversed, explaining that section 627.7015 merely describes mediation as a viable option before an insured resorts to litigation and that the notice requirement was inapplicable since the insured had first initiated the breach of contract action: “[S]ection 627.7015 permits insureds and insurers to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims prior to commencing the appraisal process, or commencing litigation. Here, because Gainey prematurely commenced litigation against American, we conclude that the notice requirement under section 627.7015(7) does not apply. Accordingly, Gainey cannot rely on the statute to avoid appraisal proceedings where her filing of the lawsuit rendered the statute inapplicable.”

Florida 4th DCA Opines on the Definition of “Marring” under an Insurance Policy

Ergas v. Universal Property & Casualty Co., Case No. 4D11-3803 (Fla. 4th DCA April 24, 2013)

This case came out this week detailing the definition of “marring” in the 4th DCA and upholding the marring exclusion to exclude coverage in dropped object cases.  It held, “Damage caused by the hammer dropping constituted marring and thus was excluded from policy coverage.”

In more detail, the insured brought suit based on the denial of a claim for damage as a result of a dropped hammer on a tile floor. Universal determined that the damage to the tile, about the size of a quarter, was not covered by the insured’s homeowner’s policy as such was excluded under exclusion number 2., which excludes damage  “Caused by: . . . (e) Any of the following:(1) Wear and tear, marring, deterioration . . . .”

Specifically, the marring exclusion was the basis for the denial and on which summary judgment was granted at the trial court level. The Fourth District upheld the order granting the carrier’s Motion for Summary Judgment holding that the loss was a “…disfiguring mark; blemish… ” and not the same as “wear and tear.” The Fourth District concluded that the term marring was unambiguous and not covered based on the relevant exclusion.

 

The Number of Exclusions in a Policy Do Not Render Coverage Illusory

Colony Ins. Co. v. Total Contracting & Roofing, Inc. (U.S. District Court S.D. Fla. 2011)

In this insurance coverage dispute, the Southern District of Florida was faced with cross-motions for summary judgment as to an insurer’s duty to indemnify its insured for damages arising out of the insured’s installation of defective drywall.

Before turning to the insurer’s motion, the court first summarily denied the plaintiff-claimants’ cross-motion for summary judgment, explaining that they were mere third-parties to the insurance contract at issue and thus had “no basis … to assume the role of the insured here and litigate this case as if they were [the insured].”

The court then turned to the insurer’s motion for summary judgment and noted that the parties were all in agreement that the defective drywall claims fell completely within a “hazardous materials exclusion” to the operative policy. The court considered the claimants’ argument that, based on all of the exclusions and limitations cited by the insurer in its declaratory judgment complaint, coverage under the policy was rendered illusory. The court rejected this argument explaining (i) that the “hazardous materials exclusion” did not render the policy illusory as a matter of law because it did not completely contradict the policy’s insuring provisions, and (ii) that the sheer number of exclusions cited in a declaratory complaint could not, standing alone, establish illusory coverage. The court accordingly entered the insurer’s motion for summary judgment.

Late Notice of Insurance Claim that was Twenty Nine Months Late Did Not Necessarily Equate to Prejudice

Kings Bay Condo. Ass’n, Inc. v. Citizens Prop. Ins. Corp. (Fla. 4th DCA 2012)

A circuit court entered final summary judgment in favor of an insurer, summarily finding that the insured’s twenty-nine month belated notice of claim barred its claim as a matter of law. The insured appealed and the fourth district reversed and remanded for the court to reconsider the summary judgment motion, emphasizing that belated notice of a claim bars the claim as a matter of law only when the insured fails to come forward with evidence sufficient to reveal a genuine issue as to whether or not the belated notice prejudiced the insurer.

Question of Material Fact Regarding Whether Hurricanes or Prior Work Caused Property Damage

Landmark Am. Ins. Co. v. Santa Rosa Beach Dev. Corp. I, et al. (Fla. 1st DCA 2012)

After a condominium building sustained damage “resulting from water intrusion through the stucco exterior cladding,” it entered into an agreement with two contractors for warranty repairs. Pursuant to the terms of the agreement, the contractors would undertake corrective work to the stucco exterior cladding of the buildings and in return the condominium development would release the contractors from any claims relating to or arising out of the repairs. The repairs notwithstanding, the buildings then sustained structural damages after a hurricane.

When the development made a claim to its insurer, the insurer denied coverage, citing a policy exclusion for damages resulting from faulty, inadequate or defective construction. The denial resulted in a breach of contract suit against the insurer, which, in turn, prompted the insurer to file a third-party complaint against the deficient contractors.

Cross-summary motions for summary judgment were then filed: the insurer moved for judgment on the underlying breach of contract complaint, arguing that the insured had first breached the contract by entering into an agreement that impaired the insurer’s subrogation rights. The contractors moved for judgment on the third-party complaint, emphasizing that they were released from liability pursuant to the contract with the developer. The lower court granted the contractors’ motion and denied the insurer’s, reasoning that there were disputed issues of material fact concerning whether the damage to the building was caused by the hurricanes or the prior stucco cladding defects.

On appeal, the first district affirmed, ruling that the trial court did not err in interpreting the plain language of the developer-contract agreement for warranty repairs: “The purpose of the work undertaken by [the contractors] was to repair the stucco cladding and to correct damage caused by water intrusion due to the defective stucco cladding. The repair work was not intended to be limited to the stucco. The defective stucco may have been the cause of the water intrusion damage, but it was not the sole issue to be remedied. Thus, the application of the release was broader in scope than simply relating to repair of the stucco. [The insurer’s] third party subrogation action was based on defects in the construction of the condominium, and [the insurer’s] own experts testified below that the damage suffered to the interior of the condominium building was the result of the defective exterior cladding. Thus, the release covered the same matters that were the subject of [the insurer’s] third party action.”

Insurer’s Motion for Remittitur on Damages for Medical Expenses Should Have Been Granted Because the Evidence Did Not Support the Award

GEICO Indem. Co. v. Pollie DeGrandchamp (Fla. 2d DCA 2012)

A jury returned a verdict awarding $1,250,000 in future medical expenses (reduced to a present value of $250,000) to an insured for injuries suffered during an automobile accident. The insurer providing uninsured/underinsured motorists’ coverage to the insured then filed a motion for remittitur to challenge the award. The trial court denied the motion and the insurer appealed.

On appeal, the second district held that the trial court abused its discretion in denying the motion and remanded either for the entry of an order or remittitur or the granting of a new trial on the issue of damages for future medical expenses. The court’s reasoning was that the testimony and record evidence did not support the amount of the jury’s award, but merely supported a finding that the insured was reasonably certain to incur at least some medical expenses in the future.

Failure to Disclose a Previous DUI in Application for an Automobile Liability Policy Led to Rescission of the Policy

State Farm Mut. Auto. Ins. Co. v. Cockram & Powers (U.S. District Court M.D. Fla. 2012)

This case involved an action for declaratory relief to determine an insurer’s responsibilities and obligations under an insurance policy. The background facts were that the insured applied for automobile insurance but failed to disclose that he had recently been issued a DUI ticket. For reasons immaterial to the case, the insurer did not discover this fact until after a claim was made under the policy, at which point it rescinded the policy pursuant to Florida Statute section 627.409.

The Middle District of Florida ruled that the statutory rescission was proper and that the insurer owed no obligations under the circumstances. The court’s rationale was that: (1) “the failure to disclose the DUI ticket received two weeks before the application date constituted a misrepresentation to State Farm within the meaning of Fla. Stat. § 627.409(1)” and (2) “the undisclosed DUI ticket … was material [because it] is a fact which is important to both the acceptance of the risk and to the hazard assumed by State Farm[, and] it is undisputed that State Farm would not have issued the automobile policy had it been informed of the DUI ticket.”

An Insurance Claim That Was Over Three Years Late Was Barred From Recovery

Slominski v. Citizens Prop. Ins. Corp. (Fla. 4th DCA 2012)

Insureds filed a claim with their insurer for wind and water damage purportedly caused by Hurricane Wilma three and a half years prior. The insureds claimed that they delayed filing the claim because they originally believed the damage sustained fell below their policy’s deductible. After an investigation, the claim was denied on the basis that, due to the lapse of time since the purported date of loss, the reported damages could not be attributed to Hurricane Wilma.

After the insureds filed suit, the insurer moved for summary judgment, which was granted on the basis that the insureds’ failure to provide prompt notice of their claim prejudiced the insurer and relieved it of its duty to provide coverage. On appeal, the insureds presented depositions and affidavits of two witnesses. Both affidavits indicated that the damage was caused by Hurricane Wilma, but the depositions, which were taken prior to the affidavits, contradicted those opinions.

The fourth district noted that “a party may not file his or her own affidavit, or that of another, baldly repudiating his or her own deposition testimony to avoid the entry of a summary judgment.” It thus affirmed the trial court, observing that without the affidavits, the insureds failed to meet their burden of proving lack of prejudice to the insurer.

Discovery Aimed at Producing Evidence of Physician’s Bias in Insurance Case Was Permissible

Steinger, Iscoe & Greene, P.A. & Washington v. GEICO Gen. Ins. Co. (Fla. 4th DCA 2012)

In this case, a law firm and its client petitioned the Fourth District for a writ of certiorari to quash a trial court order that compelled the firm to produce discovery pertaining to the firm’s relationship with treating physicians. The underlying case involved a claim against GEICO for uninsured motorist coverage and the order at issue required the claimant’s firm to produce (1) all records of payment by the firm to the four treating physicians who would be rendering expert opinions; (2) all “Letters of Protection” to those medical providers; and (3) all deposition and trial transcripts of those individuals or entities in the firm’s possession, provided, however, that the firm was able to redact the names of clients in cases that settled or where no lawsuit was filed.

The Fourth District began by noting that because the evidence code allows a party to attack a witness’s credibility based on bias, discovery aimed at producing evidence of a treating physician’s bias is permissible. It then acknowledged that Rule 1.280(b)(5)(A)(iii) limits financial bias discovery from retained experts, but emphasized that those limitations “cannot be used as a shield to prevent discovery of relevant information from a material witness—such as a treating physician.”

The court then balanced the need for the discovery against the burden placed upon the witnesses, concluding that:

“where there is a preliminary showing that the plaintiff was referred to the doctor by the lawyer (whether directly or through a third party) or vice versa, the defendant is entitled to discover information regarding the extent of the relationship between the law firm and the doctor. … Here, the law firm is not a party to the litigation and the record currently before us does not establish that the doctor in this situation has a financially beneficial relationship with the law firm. If there is such a relationship, past or present, the jury is entitled to know the extent of the financial connections between the doctor and the law firm. The existence of referral agreements is clearly a permissible ground for impeachment of a doctor.”

Because the Fourth District was unable to determine whether GEICO established the existence of a referral relationship between the health care providers and the law firm, it granted the petition and remanded the case:

“At the very least, the health care providers must provide financial bias discovery like that permitted by rule 1.280(b)(5)(A)(iii) as well as any history of referrals between the health care providers and the law firm. Beyond that, if GEICO can establish that the law firm or health care providers referred plaintiff to the other, more extensive financial bias discovery from both of them may be appropriate. Accordingly, the trial court should not have required the law firm to produce the discovery at issue, as it is premature at this point.”