23 Fla. L. Weekly Supp. 557c

Online Reference: FLWSUPP 2306GARAInsurance — Personal injury protection — Application — Misrepresentations — Where insureds understood at time they signed application for PIP policy that they were and would be using insured vehicles for business purposes, yet they swore on application that vehicles were not and would not be used for business purposes, insurer is entitled to rescind policy

EDUARDO J. GARRIDO, D.C., P.A., a/a/o FRANCISCO J. GARAY, Plaintiff, v. STAR CASUALTY INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Action. Case No. 09-03898 CC 05. January 14, 2015. Lourdes Simon, Judge. Counsel: Christian Carrazana, Miami, for Plaintiff. Manuel I. Negrón, Conroy Simberg, P.A., Miami, for Defendant.

AFFIRMED. (Eduardo J Garrido v. Star Casualty Insurance Co., Case No. 15-133 AP, 6-21-2016)

PETITION FOR CERTIORARI REVIEW FILED 7/18/2016). (Fla. 3DCA, Case No. 3D16-1696)

ORDER ON MOTIONS FOR FINALSUMMARY JUDGMENT REGARDINGMATERIAL MISREPRESENTATION

THIS CAUSE came to be heard by the Court on November 30, 2014 on the Defendant’s Motion for Final Summary Judgment, Plaintiff’s Cross-Motion for Final Summary Judgment and Plaintiff’s Motion for Final Summary Judgment regarding Material Misrepresentation. The Court considered Francisco and Huguett Garay’s Examination Under Oath (“EUO”) testimony and found it was admissible. See, e.g., Millenium Diagnostic Imaging Center a/a/o Alejandro Gonzalez v. AllState Property & Casualty Ins. Co., 14 Fla. L. Weekly Supp. 84a (Fla. 11th Cir. October 12, 2006); see also Fla. Stat. § 90.803(18) and Smith v. Fortune Ins. Co., 404 So.2d 821 (Fla. 1st DCA 1981).UNDISPUTED FACTS

The evidence submitted revealed that Star Casualty Insurance Company (“Star” or “Defendant”) issued an insurance policy, which provided personal injury protection (“PIP”) benefits, to Francisco and Huguette Garay. Huguette Garay filled out the application, wherein she swore that the insured vehicles were not and would not be used for “delivery, business or commercial purposes.”

The Garays were involved in a car accident on May 14, 2008 and sought treatment from Plaintiff for injuries sustained in the accident. Pursuant to an assignment of benefits, Plaintiff billed Star for care rendered to Mr. Garay. Star denied payment because it voided the policy due to a material misrepresentation. The instant lawsuit followed.

At their EUO’s, Mr. and Mrs. Garay testified that they routinely used the insured vehicles to transport merchandise for sale as well as “the whole infrastructure” to sell the merchandise, which consisted of “tarps, tables, sticks, poles.” Mrs. Garay testified that they had been using the vehicles thus for years before she filled out the application.

Upon discovering this, Star returned the premiums to the insureds and cancelled the policy. In support of its Motion, Defendant filed Jose Estrella’s Affidavit. Therein, Mr. Estrella, a Supervisor within Star’s Underwriting Department, swore the Garay’s failure to disclose business use was material to Star’s evaluation and acceptance of the risk and that Star would not have issued the policy had the true facts been disclosed.ANALYSIS

Fla. Stat. § 627.409 provides for rescission of an insurance policy if an insured makes a material misrepresentation in the application for the insurance policy.

(1) Any statement or description made by or on behalf of an insured. . . in an application for an insurance policy. . . is a representation and not a warranty. . . . [A] misrepresentation, omission, concealment of fact, or incorrect statement may prevent recovery under the contract or policy only if any of the following apply:

(a) The misrepresentation, omission, concealment, or statement is fraudulent or is material to the acceptance of the risk or to the hazard assumed by the insurer.

(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.

Fla. Stat. § 627.409; see also Continental Insurance Co. v. Carroll, 485 So.2d 406 (Fla. 1986). When a policy is rescinded, it is treated as if it had never been written. Singer v. Nationwide Mut. Fire Ins. Co., 512 So.2d 1125, 1128-9 (Fla. 4th DCA 1987). Even an unintentional misstatement in an insurance application will preclude recovery where the misstatement materially affects the risk or an insurer’s willingness to accept the risk on the previously agreed terms. de Guerro v. John Hancock Mut. Life Ins. Co., 522 So.2d 1032, 1033 (Fla. 3d DCA 1988); Guaranty Nat. Ins. Co. v. Pachivas, 458 So.2d 306 (Fla. 3d DCA 1984); see also Pina v. General Ins. Co., 443 So.2d 395 (Fla. 3d DCA 1984); Martinez v. General Ins. Co., 483 So.2d 892 (Fla. 3d DCA 1986). Where evidence is clear, materiality of a misrepresentation in an insurance application will be decided as a question of law. de Guerro, 522 So.2d at 1033; see also Government Employees Ins. Co. v. Decheona, 610 So.2d 480 (Fla. 3d DCA 1992).

In the instant case, Huguette Garay swore on the insurance application that the insured vehicles were not and would not be used for business purposes. However, she and her husband both testified that they routinely used both vehicles for their business during the policy term and had been doing so for years before they even took out the subject policy. This amounts to a material misrepresentation entitling Star to rescind the policy.

The Court does not find the policy language at issue herein ambiguous. The test for ambiguity is not whether “business purposes” is ambiguous in the abstract but whether an objectively reasonable person in the applicant’s position would be deprived of a meaningful opportunity, at the time they filled out the application, to answer “yes” or “no” to whether they would use the vehicles for business purposes. See Mercury Ins. Co. of Florida v. Markham, 36 So.3d 730 (Fla. 1st DCA 2010) [35 Fla. L. Weekly D870a]. In this case, the insureds understood that they were and would be using the insured vehicles for their business purposes at the time the application was signed. Notwithstanding, they swore on the application that the insured vehicles were not and would not be used for business.

The Court is not persuaded by Plaintiff’s arguments.¹

Were the Court to rule otherwise, it would be effectively rewriting the policy and providing greater coverage than the parties negotiated, which the Court is not permitted to do. Florida Residential Property & Cas. Joint Underwriting Ass’n v. Kron, 721 So.2d 825, 826 (Fla. 3d DCA 1998) [24 Fla. L. Weekly D12a]; Intervest Const. of Jax, Inc. v. General Fidelity Ins. Co. 133 So.3d 494, 497 (Fla. 2014) [39 Fla. L. Weekly S75a].CONCLUSION

The Court grants Defendant’s Motion for Summary Judgment and denies Plaintiff’s Motions for Summary Judgment. The subject policy is voided due to the insured’s material misrepresentation in the insurance application. The Court reserves jurisdiction to award fees and costs.

__________________

¹While the application does not include “driving to and from work” within business use, the routine use of the insured vehicles for business purposes voids the policy for material misrepresentation regardless of whether the insureds are deemed to have been driving to or from work at the time of the accident. See Caballero v. Oak Casualty Ins. Co., 2 Fla. L. Weekly Supp. 578c (Fla. 11th Cir. App. 1994).

Plaintiff’s reliance on Celtic Life Ins. Co. v. Fox, 544 So.2d 245 (Fla. 2d DCA 1989) is misplaced because the policy in the instant case does not contain a PIP exclusion for business use.

The Court is also unpersuaded by Plaintiff’s argument that the application becomes a part of the policy and thereby the “Statement of Non-Business Use” turns into a policy Exclusion that renders the applicant’s misrepresentation immaterial pursuant to Celtic Life, supra. Before the Court can enforce the policy and any purported exclusions therein, it must first determine whether the parties made a binding and enforceable contract. In this case, due to the material misrepresentation in the application regarding an essential term of the proposed contract, there was no meeting of the minds sufficient to support a binding contract. Business Specialists, Inc. v. Land & Sea Petroleum, Inc., 25 So. 3d 693 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D199a]; see also King v. Bray, 867 So. 2d 1224 (Fla. 5th DCA 2004) [29 Fla. L. Weekly D632a]; Nichols v. Hartford Ins. Co. of the Midwest, 834 So. 2d 217 (Fla. 1st DCA 2002) [27 Fla. L. Weekly D2188a]; Fla. Jur. 2d, Contracts §§ 19 to 24.