45 Fla. L. Weekly D120d
300 So. 3d 1220

Insurance — Automobile — Loss payable clause — Insurer breached its duty to vehicle’s lienholder when it issued settlement check for damage to vehicle to named insured without including lienholder — Trial court erred in finding that policy required insurer to protect interest of lienholder only if the insured vehicle was a total loss

WORLD FINANCE GROUP, LLC, Appellant, v. PROGRESSIVE SELECT INSURANCE COMPANY, etc., et al., Appellees. 3rd District. Case No. 3D18-1854. L.T. Case No. 14-22334. Opinion filed January 15, 2020. An Appeal from the Circuit Court for Miami-Dade County, Mavel Ruiz, Judge. Counsel: Marcus Law Center, LLC, and Alan K. Marcus and Nicholas M. Vicente; Xander Law Group, P.A., and Wayne R. Atkins and Matthew J. Troccoli, for appellant. Kubicki Draper, and Valerie A. Dondero, for appellee Progressive Select Insurance Company.

(Before LOGUE, SCALES and GORDO, JJ.)

(SCALES, J.) After a Ferrari sports car sustained extensive damage in an accident, the car’s owners submitted a claim to Progressive Select Insurance Company (“Progressive”), the appellee and defendant below. Progressive issued a settlement check to its insured, but Progressive did not include the car’s lienholder, World Finance Group, LLC, the appellant and plaintiff below (“World Finance”), as a co-payee on the check or otherwise protect World Finance’s interests. After the Ferrari’s owners did not use the insurance proceeds to repair the car, World Finance sued Progressive, alleging that Progressive breached its duty to World Finance under the insurance policy. Because we conclude that the policy expressly required Progressive to protect the interest of the lienholder, we reverse the trial court’s final summary judgment in favor of Progressive and remand for entry of judgment in favor of World Finance.

I. Facts

Having arranged for financing by World Finance, in 2014, JG Auto, LLC purchased a 2011 Ferrari 458 Italia¹ from a Miami, Florida dealer. Allegedly without the knowledge of World Finance, JG Auto transferred ownership to Joan and Yenly Calvo. The Calvos obtained an automobile insurance policy on the Ferrari from Progressive. The declarations page of the policy named World Finance as the vehicle’s lienholder. In March 2014, the Ferrari sustained extensive damage in an accident, although this damage amounted to something less than a total loss. Progressive issued a settlement check to the Calvos in the amount of $149,000. The Calvos did not use the insurance proceeds to repair the Ferrari or to pay off the car loan, apparently keeping these funds for themselves. The settlement check did not name either World Finance or a repair shop as co-payee. The Loss Payable Clause of the subject insurance policy provides as follows:

Payment under this Part IV for a loss to a covered auto will be made according to your interest and the interest of any lienholder shown on the declarations page or designated by you. At our option, payment may be made both jointly, or to either separately. Either way, we will protect the interest of both. However, if the covered auto is not a total loss, we may make payment to you and the repairer of the auto. (Emphases in original removed.)

Progressive rejected World Finance’s demands for payment, asserting that Progressive had satisfied its obligations under the policy by making payment directly to its insureds, the Calvos. Claiming intended third-party beneficiary status under Progressive’s policy with the Calvos,² World Finance sued Progressive for breach of contract and breach of the implied covenant of good faith and fair dealing.³ Both parties agreed that the dispositive issue was one of contract interpretation, and therefore, they filed cross motions for summary judgment. On June 12, 2018, the trial court heard both motions.

In granting summary judgment for Progressive (and denying World Finance’s summary judgment motion), the trial court read the first sentence of the Loss Payable Clause, above, to mean that only when the “covered auto” is a total loss and not capable of repair is Progressive required to protect the lienholder’s interest in payment of the settlement check.

World Finance appeals both the trial court’s August 3, 2018 final summary judgment for Progressive and the trial court’s denial of its summary judgment motion.

II. Analysis⁴

At the outset, we agree with the parties that the dispositive issue in this case is the interpretation of the Loss Payable Clause of the Progressive policy. Our de novo analysis of the relevant provision is governed by straightforward rules of construction. An insurance contract is construed in accordance with its plain language. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000); Cheetham, 114 So. 3d at 261. A court cannot construe contractual terms beyond their plain meaning. Rezevskis v. Aries Ins. Co., 784 So. 2d 472, 473 (Fla. 3d DCA 2001). Further, a court cannot rewrite the parties’ contract to make it more equitable for one of the parties. Underwater Eng’g Servs., Inc. v. Utility Bd. of Key West, 194 So. 3d 437, 444 (Fla. 3d DCA 2016) (“[C]ourts are ‘powerless to rewrite[a] contract to make it more reasonable or advantageous to one of the parties . . . or to substitute [their] judgment for that of the parties to the contract in order to relieve one of the parties from the apparent hardships of an improvident bargain” (citing Fernandez v. Homestar at Miller Cove, Inc., 935 So. 2d 547, 550 (Fla. 3d DCA 2006)). Simply put, we look at the text of a provision of a contract for insurance, and if the text is clear and unambiguous — as it is in this case — we give the language its plain meaning. U.S. Fire Ins. Co. v. Morejon, 338 So. 2d 223, 225 (Fla. 3d DCA 1976).

The first two sentences of the Loss Payable Clause, quoted above, outline how Progressive will make its loss payments so as to effectuate what the policy plainly articulates in the provision’s third sentence: protecting the interests of both the insured and the lienholder. Consistent with this expressly stated goal, the provision’s fourth sentence explains that if the vehicle’s damage does not result in a total loss, Progressive may make the loss payments to both the insured and the repair shop. Obviously, such a joint payment — both to the insured and the repair shop — ensures that the lienholder’s interest in the collateral is protected.

Progressive argues (and the trial court concluded) that, the conjunction “however” — the word that begins the provision’s fourth sentence — eliminates Progressive’s obligation to protect the lienholder in the event the vehicle is not a total loss. In other words, because this provision allows payment to both the insured and the repair shop, Progressive would have no duty to protect the lienholder if the car is not a total loss.

Not only does this interpretation defy common sense,⁵ it also runs afoul of the plain text of the Loss Payable Clause and requires a judicial rewrite of the provision. Indeed, under Progressive’s interpretation of the policy, the Court should, by judicial fiat, insert the word “total” into the provision’s first sentence so that it would read as follows: “Payment under this Part IV for a total loss to a covered auto will be made according to your interest and the interest of any lienholder shown on the declarations page or designated by you.” (Emphasis added.) We recognize that it seems unfair for Progressive essentially to pay for the same loss twice. Yet, as discussed above, courts are powerless to rewrite a contractual provision to make it more fair or equitable for one of the parties.

Rather than altering Progressive’s obligation to protect the lienholder, the provision’s fourth sentence merely reflects a standard procedure for the payment of car repairs. The use of the conjunction “however” in the Loss Payable Clause does not absolve Progressive from its obligation to protect the lienholder in the event the vehicle is not a total loss.

III. Conclusion

The unambiguous text of the Loss Payable Clause requires Progressive to protect the interest of the lienholder shown on the policy’s declarations page. Progressive failed to do so. We, therefore, reverse the summary judgment for Progressive, and, because World Finance filed a cross motion for summary judgment on the purely legal issue regarding the construction of the relevant provision,⁶ we remand to the trial court to enter summary judgment in World Finance’s favor.

Reversed and remanded with instructions.

__________________

¹The 2011 Ferrari 458 Italia is a luxury sports coupe equipped with a 4.5 liter, 570 horsepower V8 engine and a 7-speed automatic transmission. Its top speed is over 200 mph.

²Progressive does not challenge World Finance’s standing to bring what is essentially a first-party claim against Progressive.

³World Finance’s complaint named other defendants, including the Calvos, against whom World Finance alleged conversion of the $149,000 in insurance proceeds. It appears from the record that World Finance pursued litigation against Progressive only. Consequently, this opinion is limited to the issue of whether the trial court properly interpreted the Loss Payable Clause of the Progressive policy in entering summary judgment in favor of Progressive.

⁴We review de novo an order granting summary judgment. Gidwani v. Roberts, 248 So. 3d 203, 206 (Fla. 3d DCA 2018). We review the interpretation of an insurance policy de novo, as well. Cheetham v. S. Oak Ins. Co., 114 So. 3d 257, 261 (Fla. 3d DCA 2013).

⁵As noted above, an insurance company’s payment to a repair shop to restore a damaged car effectively protects a lienholder’s interest.

⁶We may remand for entry of summary judgment when there were cross motions for summary judgment filed below. See,e.g., Indep. Mortg. & Fin., Inc. v. Deater, 814 So. 2d 1224 (Fla. 3d DCA 2002).