10 Fla. L. Weekly Supp. 794a
Insurance — Automobile — Cancellation — Nonpayment of premium — Motion to dismiss class action complaint which alleges that despite written contracts for insurance at set price marked paid in full, insurer cancelled policy and binder for failure to make additional payments — Contracts — Regardless of insurer’s denomination of additional payments demanded as “previous balance,” apparent unilateral action to increase plaintiff’s contract consideration is illegal, and plaintiff has alleged necessary legal requisites for breach of contract — Three-option letter — Plaintiff has stated claim for insurer’s failure to send three-option letter prior to cancellation of policy which was in effect for more than sixty days, but not as to binder that was in effect for less than sixty days — Motion for more definite statement as to dates of claims by members of class other than plaintiff is granted
LLOYD BERNARD, JR., Plaintiff, v. FLORIDA FARM BUREAU GENERAL INSURANCE COMPANY, Defendant. Circuit Court, 4th Judicial Circuit in and for Clay County. Case No. 00-874-CA, Division E. July 29, 2003. McCarthy Crenshaw, Jr., Judge. Counsel: Carlos Lidsky, Lidsky, Vaccaro & Montes, Hialeah, for Plaintiff. Lawrence J. Hamilton II and Peter P. Hargitai, Holland & Knight LLP, Jacksonville, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE AND/OR FOR MORE DEFINITE STATEMENT
This matter is before the Court on the Motion to Dismiss with Prejudice and/or for More Definite Statement, filed by counsel for Florida Farm Bureau General Insurance Company (Defendant), on February 1, 2001. A hearing on this motion was held on April 27, 2001. The Court, having heard arguments of counsel, and having fully considered the record, including the pleadings filed by counsel, and otherwise being fully advised, makes the following findings of fact and conclusions of law.Findings of Fact
1. Counsel for Lloyd Bernard, Jr. (Bernard), on behalf of a class, filed a Complaint on November 13, 2000, consisting of four counts. Count I, seeking a declaration of rights, alleges the unauthorized cancellation of insurance policies for the class. (Compl. at 6.) Count II, also seeking a declaration of rights, alleges no additional premium notices for “policies” cancelled. (Compl. at 11.) Count III alleges money had and received — unearned premiums — based on “no additional premium notice” on “policies” cancelled. (Compl. at 14.) Count IV alleges breach of contract, again based on “no additional premium notice” on “policies” cancelled. (Compl. at 15.)
2. Bernard’s complaint arises from two contracts with Defendant, the first signed by the parties on November 11, 1999, and the second signed by the parties on February 25, 2000. (Compl. at Exs. A, I.) The first contract was in effect until January 27, 2000 (thus, for more than sixty days). (Compl. at Exs. F, G.) The second contract was in effect until March 15, 2000 (thus, for less than sixty days). (Compl. at Exs. K, L.)
3. Bernard alleges that he resides in Clay County, that Defendant sells insurance in Florida, and that on November 11, 1999, he purchased an auto policy from Defendant at a quoted premium of $220 and that, after paying the quoted premium, the policy was issued. (Compl. at 1; ex. B at 1 — “Policy Declaration Renewal.”)
4. Bernard’s exhibit A, dated November 11, 1999, includes the notation, signed by Defendant’s agent, “$220 full payment.” (Ex. A at 1.) Bernard’s exhibit B, Defendant’s “Policy Declaration Renewal,” states “Total term premium $220.” (Ex. B at 1.) Bernard further alleges that Defendant sent Bernard a statement, dated December 6, 1999, claiming a “Previous Balance ($9.56)”; the statement fails to identify the source of this “previous balance” and directly conflicts with the Defendant’s agent’s November 11, 1999 statement “$220 payment in full.” Compare Exs. A and B with Ex. D. Bernard further alleges that he did not pay the $9.56; Defendant subsequently cancelled Bernard’s policy, despite that the policy provides that cancellation is permitted only for “nonpayment of premium.” (Compl. at 2; ex. C at 14.)
5. Bernard further alleges that on February 25, 2000, he entered into a contract with Defendant for insurance coverage at a quoted premium of $117.44 and a binder was issued. (Compl. at Ex. I.) Bernard’s exhibit I, dated February 25, 2000, includes the notation, signed by Defendant’s agent, “$117.44 full payment.” (Id. Ex. I, at 1.) Bernard further alleges that, after the binder was in effect, the Defendant sent Bernard a “Policy Declaration Renewal” dated March 1, 2000, claiming a “Total Term Premium” of $218. (Id. Ex. J.) The “Policy Declaration Renewal fails to identify the discrepancy between the claimed $218 premium and the Defendant’s agent’s February 25, 2000 statement “$117.44 payment in full.” Compare Ex. I with Ex. J. Bernard further alleges that Defendant cancelled Bernard’s binder on March 15, 2000. (Compl. at Exs. K, L.)
6. Bernard alleges that Defendant cancelled the February 2000 “policy,” whereas the record shows that it was the binder that was cancelled. See Compl. at Exs. H, K.Conclusions of Law
A trial court, in acting on a motion to dismiss, may not properly go beyond the four corners of the allegations of the complaint. Lewis State Bank v. Travelers Ins. Co., 356 So. 2d 1344, 1345 (Fla. 1978). If the complaint alleges the necessary legal requisites of a cause of action and the allegations are sufficient to inform the defendant of the nature of the cause against him, then it must be held sufficient. Id. at 1345.Regarding Count I (Unauthorized Cancellation)
The instant Complaint alleges the necessary legal requisites for breach of contract, specifically, a written contract for insurance at a set price, marked paid in full, and then the cancellation of the policy for failure to pay additional consideration demanded at a later time. A party to a contract may not unilaterally change the contract after it is executed. See Mills v. Mills, 339 So. 2d 681, 684 (Fla. 1st DCA 1976) (“Unilateral mistake is not a ground for reformation [of a contract].”); Daniel v. Florida Residential Prop. & Cas. Joint Underwriting Ass’n, 718 So. 2d 936, 937 (Fla. 3d DCA 1998) (“Failure of a policy to express the intended contract of the parties must be occasioned by a mutual mistake, and a mistake on one side is no gound for reformation of a policy.”).
Defendant nevertheless argues that it was entitled to cancel Bernard’s November 1999 policy and February 2000 binder for nonpayment of premium because its claimed “previous balance” was an unpaid “premium.” Defendant’s policy does not define premium. (Ex. C at 16-17.) Defendant instead relies on the definition of “premium” in section 627.403, Florida Statutes (1999): “ ‘Premium’ is the consideration for insurance, by whatever named called. Any ‘assessment,’ or any ‘membership,’ ‘policy,’ ‘survey,’ ‘inspection,’ ‘service,’ or similar fee or charge in consideration of an insurance contract is deemed part of the premium.” § 627.403, Fla. Stat. (1999). Defendant’s argument however ignores the fact that Defendant’s agent and Bernard bargained for a consideration of $220 on November 11, 1999, and Defendant’s agent accepted the bargained-for premium as “full payment” for the policy at issue. Defendant’s agent and Bernard likewise bargained for a consideration of $177.44 on February 25, 2000, and Defendant’s agent again accepted the bargained-for premium as “full payment.” Defendant cannot unilaterally change the consideration for a contract after the bargain is struck, however the Defendant denominates the additional consideration demanded. Mills; Daniel.
Defendant also argues that dismissal is required by Hernandez v. State Farm Fire & Cas. Co., 762 So. 2d 551 (Fla. 3d DCA 2000). Hernandez however is inapplicable to the case at bar; it involved the insured’s failure to pay an increased premium based on state-approved “rate changes.” Id. at 551. No such state-approved increase in premiums is alleged in the instant case, but rather, the apparent unilateral action of the Defendant to increase Bernard’s contract consideration, by whatever denomination. Such unilateral action is illegal. See Jackson v. American Motorists Ins. Co., 388 So. 2d 584 (Fla. 5th DCA 1980).Regarding Count II (No Additional Premium Notice)
Count II is an action based on Defendant’s failure to comply with the notice requirements of section 627.7282, Florida Statues (1999), prior to cancellation of a policy for nonpayment of premium. Section 627.7282 provides in relevant part:
(1) Upon a determination by an insurer that, in accordance with its rate filings and the applicable laws of the state relating to private passenger motion vehicle insurance, a policyholder has been charged a premium that is incorrect for the coverage set forth in the insurance application, the insurer shall immediately provide notice to the policy holder of the amount of additional premium due to the insurer and that the policyholder has one of the three options:
. . . .
(Emphasis added.) It is undisputed that Defendant failed to give Bernard the “three-option letter” notice required by section 627.7282; it also is undisputed that Defendant cancelled Bernard’s November 1999 policy for the stated reason of “non-payment of premium.” See Compl. at Ex. F.
Defendant nevertheless argues that Count II must be dismissed with prejudice because it was under no duty to comply with the “three-option letter” notice requirements of section 627.7282, because Bernard was not a policyholder, but merely a binder-holder. It is true that Bernard was not a “policyholder” as to the February 2000 contract; he was merely a binder-holder. See Compl. at Exs. I, K; see also section 627.420, Florida Statutes (1999) (Binders. “No notice of cancellation or notice of nonrenewal otherwise required by this chapter shall be required unless the duration of the binder exceeds 60 days.”). Bernard’s November 1999 contract nevertheless was in effect for more than sixty days. Compare Compl. Ex. A with Exs. F, G. Bernard’s November 1999 contract thus could not be cancelled without giving the “three-option letter” notice required by law. § 627.7282, Fla. Stat.
Defendant also argues, regarding both the 1999 and the 2000 contracts, that cancellation was not for nonpayment of a “premium” as “premium” is used in section 627.7282. Specifically Defendant argues that the premium was not “incorrect” in accordance with its “rate filings”; rather, the demand for an additional premium was to cover an unpaid “previous balance.” Defendant’s argument however ignores the fact that the statutory definition of “premium” includes any consideration for insurance, by whatever named called, as the Defendant admits in its argument regarding Count I. See § 627.403, Fla. Stat. (“ ‘Premium’ is the consideration for insurance, by whatever named called.”). The “previous balance,” a premium pursuant to section 627.403, presumably increased the amount of insurance the Defendant was permitted pursuant to its rate filings, and thus required Defendant to give Bernard the “three-option letter” required by section 627.7282 regarding “a premium that is incorrect for the coverage set forth.” Id. § 627.7282(1). Defendant’s argument thus fails to undermine the validity of Bernard’s Count II claim insofar as Bernard’s November 1999 contract is concerned.
Therefore, it is
ORDERED and ADJUDGED that:
1. Bernard has stated a claim in Count I (Unauthorized Cancellation) regarding both the November 1999 contract, and the February 2000 binder. Defendant’s Motion to Dismiss with Prejudice Count I hence is DENIED.
2. Bernard, in Count II (No Additional Premium Notice), has stated a claim regarding the November 1999 insurance contract. Defendant’s Motion for Dismissal with Prejudice Count II hence is DENIED regarding the November 1999 contract.
3. Bernard, in Count II, has not stated a claim regarding the February 2000 insurance binder. Defendant’s Motion for Dismissal with Prejudice Count II hence is GRANTED regarding the February 2000 binder.
4. Defendant, if a class is certified, needs a more definite statement of the dates of claimed breaches of contracts by members of the class other than Bernard. Defendant’s Motion for More Definite Statement, hence is GRANTED regarding the dates of claims by members of the class other than Bernard.
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