21 Fla. L. Weekly Supp. 1100a

Online Reference: FLWSUPP 2110IMPEInsurance — Personal injury protection — Void policy — Material misrepresentations on application — Declaratory action is proper vehicle for insurer to obtain judicial determination that it may void policy ab initio due to a material mispresentation — Policy in instant case may be voided ab initio where insured incorrectly stated on application that he had not been involved in any automobile accidents in the past three years as driver or passenger and had not made a claim for medical injuries in Florida within the past three years — Misrepresentations were material where insurer would not have accepted the risk had application disclosed the true facts — Final summary judgment entered in favor of insurer — Final judgment extinguishes claims of others whose rights were derived under the insurance policy

IMPERIAL FIRE AND CASUALTY INSURANCE COMPANY, Plaintiff, v. JORGE RODRIGUEZ, ANUA ABELLA, LIANA CURBELO, HHR REHAB MEDICAL CENTER, INC., LOP MEDICAL REHABILITATION CENTER, INC., ATLANTIC MOBILE SERVICES, INC., A & O SERVICE CORP., FREDERICK W. STORER, D.C., and ALL X RAY DIAGNOSTIC SERVICES CORP., Defendants. County Court, 15th Judicial Circuit in and for Palm Beach County. Case No. 50-2011-CC004451XXXXMB, Division RE. July 30, 2014. Nancy Perez, Judge. Counsel: David B. Pakula and Benjamin C. Mordes, Miami, for Plaintiff.

FINAL SUMMARY JUDGMENT

This cause came before the court on the plaintiff Imperial Fire and Casualty Insurance Company’s Amended Motion for Final Summary Judgment. The court makes the following findings of fact and conclusions of law:

1. In the complaint, the plaintiff requested a declaration that the subject insurance policy may be voided ab initio due to material misrepresentations by the insured, Jorge Rodriguez, on the insurance application. There are no genuine issues of material facts, and as a matter of law the plaintiff is entitled to the declaratory relief requested in the complaint.

2. On October 8, 2010, Rodriguez completed and signed an application for motor vehicle insurance in which he represented that he had not been involved in any automobile accidents as a driver or passenger whether or not at fault, and had not made a claim for medical injuries (Florida No-Fault-PIP), within the last 3 years. A representative of the insurance agent assisted Mr. Rodriguez in a language he spoke and understood. Mr. Rodriguez was asked about prior accidents and claims and specifically stated that he had not been involved in any automobile accidents as a driver or passenger whether or not at fault, and had not made a claim for medical injuries (Florida No-Fault-PIP), within the last 3 years.

3. Based on the representations in the insurance application, Imperial Fire & Casualty Insurance Company issued policy no. 00240905 to Mr. Rodriguez with effective dates of October 9, 2010 through April 9, 2011. On page 14 of the policy, under the heading “Misrepresentation and Fraud,” the policy provides:

This policy was issued in reliance on the information provided on your insurance application. We may void coverage under this policy if you or an insured person have made incorrect statements of representations to us with regard to any material fact or circumstance, or concealed or misrepresented any material fact or circumstance, or engaged in fraudulent conduct, at the time application was made or at any time during the policy period.

. . . We may void this policy or deny coverage for fraud or misrepresentation even after the occurrence of an accident or loss. This means that we will not be liable for any claims or damages, which would otherwise be covered.

4. Mr. Rodriguez, Anua Abella, and Liana Curbelo were involved in a motor vehicle accident on October 18, 2010. Following the accident, they each assigned insurance benefits to and received medical services from defendants HHR Rehab, LOP Medical, Atlantic Mobile, A & O Services, Storer, and All X-Ray. These medical providers each submitted claims for no fault Personal Injury Protection (PIP) directly to the plaintiff.

5. During its investigation of the claims, the plaintiff through its investigations discovered that Mr. Rodriguez had made two prior PIP medical claims: (1) a motor vehicle accident on March 30, 2009, claim number 1657310254, under policy number 048917688 with Allstate Insurance Company; and (2) a motor vehicle accident on May 15, 2010, claim number 0167987015, under policy number 000941968650 with Allstate Insurance Company.

6. As a result of the investigation, the plaintiff denied the PIP claims due to material misrepresentations on the insurance application. According to the plaintiff’s underwriting representative, if Mr. Rodriguez had indicated on the insurance application that he had been made prior claims for medical injuries (Florida No Fault — PIP) within the past three years before the application date, Imperial Fire and Casualty Company would not have accepted the risk.

7. In view of these undisputed facts, the plaintiff is entitled as a matter of law to a judicial declaration that it may void the insurance policy ab initio due to a material misrepresentation on the insurance application and/or deny coverage.

8. In addition, on February 20, 2014, the court entered final default judgment against defendant Jorge Rodriguez. In the judgment, the court found Mr. Rodriguez had admitted the allegations of the original complaint, including the following: (a) that Mr. Rodriguez “falsely represented on the insurance application that neither he nor any resident of his household had been involved in an automobile accident as a driver or passenger. . . in the last three years” and that “neither he nor any resident member of his household had made a claim for medical injuries (Florida No Fault — PIP) within the last three years”; (b) that Imperial Fire issued the subject insurance policy based on these false representations; (c) that “Imperial Fire would not have issued the insurance policy or would have issued it at a higher premium rate if Rodriguez had disclosed on the application his and resident household members’ prior accidents and No Fault PIP medical injury claims within the prior three years”; (d) that therefore the misrepresentations of Mr. Rodriguez on the insurance application “were material, rendering the policy voidable ab initio.” The final default judgment states: “Accordingly, the court hereby enters final declaratory relief pursuant to § 86.111, Florida Statues, and finds and declares that Imperial Fire and Casualty Insurance Company is entitled to void the subject insurance policy ab initio.”

9. The final default judgment against Mr. Rodriguez is binding on the other defendants whose rights derive from Mr. Rodriguez under the subject insurance policy. By the clear terms of the insurance policy, and by operation of law, once the insurance policy is voided ab initio, the rights of other persons claiming under the voided insurance policy are also voided.

DISCUSSION

A declaratory action is a proper vehicle for an insurer to obtain a judicial declaration that it may void a policy ab initio due to a material misrepresentation on the insurance application. See Transportation Cas. Ins. Co. v. Soil Tech Distributors, Inc., 966 So. 2d 8 (Fla. 4th DCA 2007) [32 Fla. L. Weekly D1862a]; United Servs. Auto. Ass’n v. Clarke, 757 So. 2d 554, 555 (Fla. 4th DCA 2000) [25 Fla. L. Weekly D1022c]. “An insurer may want to know whether an insurance policy is, in fact, voidable before seeking to rescind the policy, and a declaratory judgment is an appropriate means to that end.” Transp. Cas. Ins. Co., supra (finding that it does not follow that the insurer must allege a return of premiums when seeking a declaratory judgment that it is entitled to void the policy). A party is entitled to final summary judgment if there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. See Carpinteta v. Shields, 70 So. 2d 573 (Fla. 1954); Clark v. City of Atlantic Beach, 124 So. 2d 305 (Fla. 1st DCA 1960).

Section 627.409, Florida Statutes provides that a misrepresentation, omission, concealment of fact, or incorrect statement may prevent recovery under an insurance policy if: “(a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer” or “(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.” According to the plain meaning of the statute, “where either an insurer would have altered the policy’s terms had it known the true facts or the misstatement materially affects risk, a nonintentional misstatement in an application will prevent recovery under an insurance policy.” Bleasdell v. Underwriters Guar. Ins. Co., 707 So. 2d 411, 412 (Fla. 1st DCA 1998) [23 Fla. L. Weekly D782a]. Florida law gives an insurer the unilateral right to rescind an insurance policy on the basis of a misrepresentation on the application for insurance. See United Auto. Ins. Co. v. Salgado, 22 So. 3d 594, 599 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D1578a]. An insurer is entitled, as a matter of law, to rely on the accuracy of the information contained in the application and has no duty to make additional inquiry. Independent Fire Ins. Co. v. Arvidson, 604 So. 2d 854 (Fla. 4th DCA 1992) (citing New York Life Ins. Co. v. Nespereira, 366 So. 2d 859 (Fla. 3d DCA 1979).

Here, the undisputed facts show that the insurance application incorrectly stated that Mr. Rodriguez had not been involved in any automobile accidents in the past three years as driver or passenger, whether or not at fault, within the past three years, and he had not made a claim for medical injuries (Florida No Fault — PIP) within the past three years, and that if the application had disclosed the true facts the plaintiff would not have accepted the risk. Therefore, the misrepresentations or incorrect facts stated on the application were material as defined in §627.409, as a matter of law, entitling the insurer to void the policy ab initio or deny coverage

Furthermore, the final default judgment against Mr. Rodriguez declares that due to the material misrepresentation the plaintiff is entitled to void the policy ab initio. A default admits liability as claimed in the pleading by the party seeking affirmative relief against the party in default. it operates as an admission of the truth of the well pleaded allegations of the pleading, except those concerning damages. Bd. of Regents v. Stinson-Head, Inc., 504 So. 2d 1374 (Fla. 4th DCA 1987). See also Williams v. Williams, 227 So. 2d 746, 748 (Fla. 2d DCA 1969) (a defendant against whom a default has been entered who has not responded to the plaintiff’s complaint admits all the well-pleaded facts and acquiesces to the relief requested).

The other defendants derive their rights under the insurance policy from Mr. Rodriguez and step into his shoes. Once the insurance policy is voided ab initio, the other defendants whose rights came into existence by assignment after the initiation of the policy no longer have any rights to enforce. Therefore, the final default judgment against Mr. Rodriguez extinguishes the other defendants’ claims, entitling the plaintiff to entry of final summary judgment against all defendants, as a matter of law. See Amer. Employers’ Ins. Co. v. King Resources Co., 556 F. 2d 471 (10th Cir. 1977) (judgment voiding insurance policy ab initio due to material misrepresentations barred rights of a party claiming under the policy).Conclusion

Final Summary Judgment is hereby entered in favor of the plaintiff, Imperial Fire and Casualty Insurance Company, and against all remaining defendants declaring that the subject insurance policy may be voided ab initio, and/or that the plaintiff may deny coverage, due to a material misrepresentation on the application for insurance. This Final Summary Judgment disposes of all claims and counter-claims in this action. The parties shall bear their own attorney’s fees and costs.

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