24 Fla. L. Weekly Supp. 386a
Online Reference: FLWSUPP 2405GARAInsurance — Personal injury protection — Application — Material misrepresentations — Commercial use of vehicle — Transcript of insured’s examination under oath is not admissible in summary judgment proceeding to prove that insureds who did not disclose business use of vehicle on insurance application were using vehicle for business purposes on date of accident — EUO is not among material on which movant for summary judgment may rely pursuant to rule 1.510 — EUO transcript is not affidavit or deposition and does not qualify as “other materials as would be admissible in evidence” because it is hearsay evidence that would only be admissible for impeachment purposes — Misrepresentation concerning commercial use of vehicle was not material where application contained provision excluding from coverage any losses arising from business use, so that failure to disclose business usage could not have impacted insurer’s decision to assume risk — Application is part of agreement between parties, and policy and application together form contract of insurance — Fact that PIP section of policy, unlike other sections of policy, had no exclusion for business use does not give rise to irreconcilable conflict between application and policy — Argument that application never attached to policy because policy was void ab initio also lacks merit — Policy was voidable, not void
EDUARDO J. GARRIDO D.C. P.A. a/a/o Huegett Garay, Plaintiff, v. STAR CASUALTY INS. CO. Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. 09-1104 CC 26 (3). May 16, 2016. Gloria Gonzalez-Meyer, Judge. Counsel: Christian Carrazana, Christian Carrazana P.A., Miami, for Plaintiff. Manuel Negron, Conroy Simberg, et.al., for Defendant.
[Editor’s note: Appeal pending. (11th Circuit, Case No. 16-000255 AP)
REVERSED. FLWSUPP 2507GARA (11 Jud. Cir., Star Casualty Ins. Co. v. Eduardo J. Garrido, D.C., P.A., Case No. 16-255,AP, October 3, 2017)
ORDER GRANTING PLAINTIFF’S MOTIONSUMMARY JUDGMENT; AND DENYINGDEFENDANT’S MOTION FOR SUMMARY JUDGMENT
THIS ACTION came before the Court on the parties competing motions for final summary judgment; and after hearing arguments on April 20, 2016, reviewing the parties’ respective motions and being otherwise fully advised in the premises, the Court makes the following findings of fact and analysis law:
FINDINGS OF FACT
1. This is a breach of contract action for damages arising from Defendant’s failure to pay personal injury protection insurance benefits.
2. Defendant issued an automobile insurance policy to Huegette Garay and her husband, Francisco Garay (“Garays”) on or about October 15, 2007; which provided personal injury protection insurance coverage.
3. Subsequent to the issuance of the policy, the Garays were involved in a motor vehicle accident on May 14, 2008.
4. Mrs. Garay suffered personal injuries as a result of said accident.
5. Mrs. Garay sought treatment and care with the Plaintiff for her injuries.
6. The Plaintiff submitted $9146 in medical expenses to Defendant for reimbursement of pip benefits for said services and care.
7. Defendant, however, failed to pay the medical expenses.
8. Plaintiff commenced a breach of contract action to enforce the policy due to Defendant failure to pay the subject claim.
9. In the answer to the complaint, Defendant alleges as an affirmative defense that recovery is barred pursuant to § 627.409, Fla. Stat., where Mrs. Garay allegedly made a material misrepresentation on the policy application.1
10. Mrs. Garay was asked in the policy application whether “any vehicles listed on [the] application [is] used for delivery (pizza or newspaper) commercial or business purposes or used in the scope of your employment?2 Mrs. Garay responded “no.”3
11. Defendant, however, alleges that contrary to her answer, the Garays were in fact using their vehicles for commercial purposes on the date of the application.
12. Both parties filed competing motions for summary judgment.
13. Defendant contends that is it entitled to summary judgment where Garay misrepresented on the application that insured vehicles were not being used for commercial purposes; and that the misrepresentation is “material” because if Defendant had known the true facts, it would not have issued the policy.
14. In support of Defendant’s motion, Defendant relies on the examination under oath transcripts (“EUOs”) of Huegette and Francisco Garay to establish that on the date of the policy application, the Garays were using their vehicle for business purposes.
15. Plaintiff, on the other hand, argues that Defendant’s motion must be denied because Defendant failed to meet its burden of proof where the EUOs in the present care are inadmissible for substantive purposes — specifically, to prove that the vehicles were being used for business on the date of the application.
16. In Plaintiff’s competing motion for summary judgment, Plaintiff contends that there is no genuine issue of material fact whether the treatment and bills are reasonable, related and necessary; and that the alleged misrepresentation is immaterial as a matter of law where the policy has an exclusion for business use.
ANALYSIS OF LAWI.WHETHER THE EUOs ARE ADMISSIBLETO PROVE THE GARAYS WERE USINGTHEIR VEHICLES FOR BUSINESS
17. Whether the EUOs are admissible to prove that the Garays were using their vehicle for business purposes on the date of the application is governed in part by Fla. R. Civ. P. 1.510. The rule, however, must analyzed in accordance with the principles of statutory construction. See Brown v. State, 715 So.2d 241, 243 (Fla.1998) [23 Fla. L. Weekly S266a] (“rules of construction applicable to statutes also apply to the construction of rules.”). When a rule of procedure is clear and unambiguous, it must be construed by its plain and ordinary meaning. Metcalfe v. Lee, 952 So.2d 624, 628 (Fla. 4th DCA 2007) [32 Fla. L. Weekly D896a] The rules of interpretation, moreover, do not apply where the rule is clear and unambiguous. R.T.G. Furniture Corp. v. Coates, 93 So.3d 1151 (Fla. 4th DCA 2012) [37 Fla. L. Weekly D1836b] When construing a rule by its plain and ordinary meaning, the Court may refer to the dictionary. See Metcalf, 952 So.2d at 628. With these principles in mind, the Court now turns to the summary judgment rule.
18. Fla. R. Civ. P. 1.510(c) provides in relevant part that a motion for summary judgment “shall specifically identify any affidavits, answers to interrogatories, admissions, depositions and other materials as would be admissible in evidence on which the movant relies.” The rule is clear and unambiguous — as such, it must be construed by its plan and ordinary meaning without relying on other aids of interpretation.
19. In construing the plain and ordinary language in Rule 1.510(c), the Court draws two conclusions. First, EUOs are not expressly authorized. Second, they are not affidavits, depositions, answers to interrogatories nor admissions.
20. An “affidavit” is defined by the dictionary as a “written or printed declaration of facts, made voluntarily, and confirmed by oath or affirmation of the party making it, taken before a person having authority to administer such oath or affirmation.” Black’s Law Dictionary, 54 (5th ed. 1979) (emphasis added). An affidavit is also defined as a “written report which is signed by a person who promises that the information is true.” http://www.merriam-webster.com/dictionary/affidavit. (emphasis added). An EUO, on the other hand, is not voluntary written statement made by the person making it and signed before a notary. An EUO instead, “is a formal proceeding which an insured, under oath and in the presence of a court reporter, is questioned by an insurance company representative.”4 Although EUOs are transcribed by a stenographer thereafter, that does not morph them into an affidavit within the latter’s plain dictionary meaning.5
21. Likewise, a review of Florida statutes supports the conclusion that EUOs are not affidavits. For example, § 92.525, Fla. Stat., authorizes the verification of a document when authorized or required by statute, rule or court order. Crain v. State, 914 So.2d 1015, 1019 (Fla. 5th DCA 2005) [30 Fla. L. Weekly D2607a] Affidavits are subject to this statute because an affidavit is a “document.”6 Section 92.525(1) provides a document may be verified where the person swears an oath before an officer authorized to administer oaths that what the document says is true.7 In the context of an EUO, however, a document is not being verified when the insured is placed under oath. The insured instead is placed under oath before giving oral testimony. A stenographer thereafter transcribes what is said.
22. Although similar in some respects, EUOs are not depositions.8 For instance, the obligation to sit for an EUO is contractual whereas a deposition is legal proceeding governed by a rule of civil procedure. Goldman v. State Farm Fire Gen. Ins. Co., 660 So.2d 300, 305 (Fla. 4th DCA 1995) [20 Fla. L. Weekly D1844a]. EUOs are part of the claims investigation process before a claim is denied or paid, depositions are not. Id; Nationwide Ins. Co. v. Nilson, 745 So.2d 264, 268 (Ala. 1999). Further, and unlike depositions, there is no right of cross examination in an EUO. See Shelter Ins. Companies v. Spence, 656 S.W.2d 36, 38 (Tenn. App. 1983).
23. Finally, no analysis is needed to conclude that EUOs are not answers to interrogatories or admissions. They are obviously not the same thing.
24. Defendant, however, argues that EUOs are substantially the same as affidavits. In furtherance of this position, Defendant relies on Stinnett v. Longi Inc., 460 So.2d 528 (Fla. 2d DCA 1984) where the Second District Court concluded that the use of a deposition in a summary proceeding is permissible where the deposition was taken without notice to adverse party. In reaching that conclusion, the Court held that the deposition was in affidavit form or the “equivalent” of an affidavit. Id. at 530.
25. Although not cited by Defendant, the Fourth District Court in Avampato v. Markus, 245 So.2d 676 (Fla. 4th DCA 1971) concluded that a defendant’s deposition in a personal injury action filed in support of a motion for summary judgment but taken without the presence of plaintiff’s counsel was not invalid. Id. at 678. The Court, in characterizing the deposition as a sworn statement, reasoned that it was similar to but no less reliable than an affidavit.9 Id.
26. The Court, however, finds that Stinnett and Avampato are distinguishable. Unlike here, both cases involved the use of a deposition in a summary proceeding where the depositions were taken without the presence of the adverse party. Further, depositions are expressly authorized by Rule 1.510(c), EUOs are not.
27. More importantly, the “substantial similarity” test invoked in both cases is no longer applicable. Rule 1.510(c) was amended after Stinnett and Avampato were decided to “expand the types of evidence to be considered in a summary judgment motion, by adding “other materials as would be admissible in evidence.” ” In re Amendments to the Florida Rules of Civil Procedure, 917 So.2d 176, 177 (Fla. 2005) [30 Fla. L. Weekly S848a] (emphasis added). Therefore, whether EUOs are a permissible form of summary judgment evidence, including the scope of their admissibility, is controlled by the 2005 amendment to Rule 1.510(c) and evidence code.
28. The Court, moreover, cannot accept Defendant’s invitation to re-write Rule 1.510(c). The rule says “affidavits,” not “materials that are substantially similar.” Again, “[i]f a statute or rule is plain and unambiguous, it must be enforced according to its plain meaning.” Gervais v. City of Melbourne, 890 So.2d 412, 413 (Fla. 5th DCA 2004) [30 Fla. L. Weekly D70a]; See also Stowe v. Universal Property & Cas. Ins. Co., 937 So.2d 156, 157 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D1859a] (explaining that the recent trend in Florida case law requires courts to construe and apply the rules of procedure in accordance with their plain meaning)
29. Although EUOs are not expressly mentioned in the rule, EUOs could fit within the category of “other materials as would be admissible in evidence.” See Rule 1.510(c). But in order to determine the scope of their admissibility under this category, EUO(s) must be analyzed through the lens of the evidence code. See Rose v. ADT Sec. Services, Inc., 989 So.2d 1244, 1249 (Fla. 1st DCA 2008) [33 Fla. L. Weekly D2162b] (“a trial court cannot consider inadmissible evidence in determining the disposition of a motion for summary judgment.”)
30. Plaintiff’s contends that the EUOs are rank hearsay and solely admissible for impeachment purposes. This position is well taken. For instance, the EUOs are hearsay whereas here, they are an out of statement being offered to prove the truth of the matter asserted — i.e., the vehicles were being used for business on the date of the application.10 There is no exception under the hearsay rule to allow their admissibility for that purpose.
31. The EUOs, however, are “other materials that would be admissible in evidence” — but solely for impeachment in this case.11 See State v. Smith, 573 So.2d 306, 313 (Fla. 1990) (“evidence of a prior inconsistent statement offered as impeachment is admissible only for that purpose . . . .”); § 90.608(1), Fla. Stat (“Any party, including the party calling the witness, may attack the credibility of a witness by: (1) Introducing statements of the witness which are inconsistent with the witness’s present testimony.”).
32. Defendant argues that affidavits and depositions are hearsay too. The Court agrees. But the difference is that affidavits and depositions are expressly authorized by the rule. Thus in a summary proceeding, affidavits and depositions are not hearsay documents — instead, only statements therein are subject to the hearsay rule. See e.g., Doss v. Steger & Steger P.A., 613 So.2d 136 (Fla. 4th DCA 1993) (hearsay statements within affidavits cannot support a summary judgment); Fla. R. Civ. P. 1.510(e) (“Supporting and opposing affidavits . . . shall set forth such facts as would be admissible in evidence . . . .”) (emphasis added)
33. Defendant also argues that the EUOs are admissible for substantive purposes as an admission by a party under § 90.803(18), Fla. Stat. This reliance, however, is misplaced because the Garays are non-parties. Section 90.803(18) only applies to parties.12
34. Defendant relies Smith v. Fortune Ins. Co., 404 So.2d 821 (Fla. 1st DCA 1981) to establish that the EUOs are an admission by a party. The First District Court in Smith held that non party’s out of court statement is admissible as admission by a party where the non-party could be named as a party. This reliance is misguided because the Garays cannot not be named as parties where they assigned their rights to the Plaintiff. See Citizens Property Ins. Co. v. Ifergane, 114 So.3d 190 (Fla. 3rd DCA 2012) [37 Fla. L. Weekly D2205a] (holding that where an insured assigns his rights under a policy of insurance, the insured-assignor cannot be named as a party)
35. Defendant, moreover, overlooks that as a consequence of EUOs not being expressly authorized by the summary judgment rule, the EUOs are hearsay within hearsay13 — the statements in the transcript regarding the vehicle’s usage is hearsay; and the transcript itself is a hearsay document where the latter is not a statement by the Garays’ but instead one by the stenographer memorializing what the Garays’ allegedly said. See Williams v. State, 185 So.2d 718, 718 (Fla. 3rd DCA 1966) (“The transcribed record was a statement or memorandum of the stenographer as to what the appellant said, but was not a statement of the appellant and consequently, was not admissible in evidence as such.”) Accordingly, the transcript is inadmissible for substantive purposes unless it’s accuracy is acknowledged by the declarant — in the case, the Garays. See Id. at 719.
36. In the case at bar, there is no acknowledgement in the record by the Garays as to the accuracy of the transcripts. Thus, even if we assume the statements in the transcript are an admission by a party as Defendant asserts, the transcript itself is inadmissible since there is no acknowledgment.
37. The EUO transcripts, moreover, do not reveal whether the Garays’ waived their right to read them. But even if they waived reading or decided to read them instead, that does not constitute an acknowledgment of the transcripts’ accuracy. See Marshall v. State, 339 So.2d 723, 724 (Fla. 1st DCA 1976) (“The testimony of the witness that appellant waived reading the alleged statement prior to its being transcribed does not constitute an acknowledgment by her that the alleged statement is correct. It is only when a defendant acknowledges the transcription of the statement as a correct transcription of what she said that the transcript becomes admissible in evidence.”)
38. In conclusion, the EUOs in the case at bar are “materials that would be admissible evidence” — but solely for impeachment, not substantive purposes. Thus, the burden did not shift to Plaintiff to demonstrate the existence of a genuine issue of material fact where Defendant did not meet its burden of proof. See Lenhal Realty Inc., v. Transamerica Commercial Finance Corp., 615 So.2d 207, 208 (Fla. 4th DCA 1993) (“only when the movant has tendered competent evidence in support of its motion does the burden shift and fall on the other party to come forward with opposing evidence to show that a question of material fact exists.”)
II.WHETHER THE ALLEGED FAILURE TODISCLOSE BUSINESS USE IS MATERIALTO THE RISK ASSUMED BY DEFENDANT
39. The Court now confronts the issue raised in Plaintiff’s motion for summary judgment concerning whether the alleged misrepresentation is material to Defendant’s acceptance of the risk. The controlling statute on this issue is § 627.409, Fla. Stat. “This statute recognizes the principle of law that a contract issued on a mistake of fact is subject to being voided and defines the circumstances for the application of this principle.”14 Continental Assur. Co. v. Carroll, 485 So.2d 406, 409 (Fla. 1986)
40. Section 627.409 bars recovery on a policy of insurance if a misrepresentation in the policy application is “material” to the acceptance of the risk. The statute provides in part that a misrepresentation is “material” where had the true facts had been known, the insurer would not have issued the policy or the policy would not have been issued on the same terms:
“Except as provided in subsection (3), 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.”
§ 627.409(1), Fla. Stat.A.THE MISREPRESENTATION REGARDINGBUSINESS USE IS IMMATERIAL
41. Plaintiff argues that the alleged failure to disclose commercial usage is “immaterial” as a matter of law whereas here, there is an exclusion that bars coverage for any losses that arise from such use. Thus, the alleged failure to disclose this usage could not have impacted Defendant’s decision to assume the risk. In advancing this argument, Plaintiff relies on Celtic Life v. Fox, 544 So.2d 245 (Fla. 2d DCA 1989) where the Second District held that a misrepresentation concerning a subject matter, condition or risk subject to an exclusion is immaterial. In applying that rule of law, the Second District concluded that the trial court in Celtic Life did not err in finding that the insured’s failure to disclose that she had TMJ syndrome is immaterial where TMJ syndrome is a dental condition that is subject to an exclusion. As such, disclosure of the true facts from the onset would not have increased the risk to the insurer. Id.
42. The Court finds that the holding in Celtic Life controls whereas here, the policy application contains a provision that excludes from coverage any losses arising from business usage. Further, the underlying rational in Celtic Life makes perfect sense as applied here. For instance, Defendant cannot charge an additional premium for business use where Defendant explicitly stated it would not assume that risk under the terms of the policy — otherwise, charging an additional premium for an excluded risk yields the proverbial “heads I win, tails you lose” scenario where the insured pays an additional premium for nothing. Further, Defendant’s argument that it would not have assumed the risk had it known the true facts cannot be reconciled with the fact that Garay’s failure to disclose commercial usage could not have impacted Defendant’s decision to issue the policy. In other words, Defendant would have issued the policy had it known the true facts from the onset because commercial usage is an excluded risk.
43. In reviewing the cases cited by the parties, the Court observes that an Eleventh Circuit panel sitting in its appellate review capacity in Caballero v. Oak Cas. Ins. Co., 2 Fla. L. Weekly Supp. 578c (Fla. 11th Jud. Cir. App. 1994) decided the same issue here — but the Caballero Court came to an opposite result. Like the present case, the policy in Caballero contained an exclusion for business use. The circuit panel found that exclusion did not apply because the insured’s pip claim did not arise from business use. But the panel, however, affirmed the judgment on the basis that the insured misrepresented on the application that vehicle was not being used for business; and that the misrepresentation is “material.” In reaching this conclusion, the Caballero panel overlooked that the policy in that case contained an exclusion for business use.
44. The outcome in Caballero cannot be reconciled with Celtic Life. Recall that under Celtic Life, a misrepresentation regarding a matter barred by an exclusion is immaterial. Caballero says the opposite.15
45. Although a decision by the circuit court in its appellate review capacity is binding on all county courts within the circuit, see Fieselman v. State, 566 So.2d 768, 770 (Fla. 1990), the Court is bound by Celtic Life, not Caballero. In the absence of interdistrict conflict, district court decisions are binding on all trial courts. See Pardo v. State, 596 So.2d 665, 666 (Fla. 1992). Both county and circuit courts are trial courts. See §§ 26.012(5) and 34.01(5), Fla. Stat.
B.THE PROVISION IN THE POLICY APPLICATIONBARRING LOSSES FOR COMMERCIALUSAGE IS AN EXCLUSION
46. Defendant advances a number of arguments against the application of Celtic Life. First, Defendant argues that the provision in the policy application upon which Plaintiff relies is not an exclusion. The Court disagrees. The provision clearly and unambiguously states that there is no coverage for business usage; and that any losses that occur from such usage “may” be denied by the company (i.e., Defendant). Under the “Statement of Non Business Use,” the application states:
“I hereby state that each vehicle listed on this application and any vehicle endorsed to my policy at a later date are not and will not be used for delivery, business or commercial purposes other than commuting to/from work locations. During the policy term, if I begin using any vehicles listed on this application or any vehicle endorsed to my policy at a later date for delivery, business or commercial purposes other than commuting to/from work locations, I must notify the Company in writing. I understand that coverage for this type of vehicle use is not provided under my policy. Any losses resulting from each vehicle listed on this application or any vehicle endorsed to my policy at a later date being used for delivery, business or commercial purposes other than commuting to/from work locations may be denied by the Company.”
Policy Application at p. 2 (emphasis added)
47. The italicized language in the above provision meets the criteria of an exclusionary clause because it excepts certain events or conditions from coverage — in this case, business use. See Black’s Law Dictionary, 585-86 (7th Ed. 1999) (an exclusionary clause is “an insurance policy provision that excepts certain events or conditions from coverage.”)
48. Defendant nonetheless argues that the provision is not an exclusion because the provision says any losses from such usage “may” be denied by the company. The provision does not say “shall” or “will not.” The fact that the provision says “may” instead of “shall” or “will not” is inconsequential for two reasons. First, context gives “may” the mandatory meaning of “shall” because in the preceding sentence, the provision states that there is no coverage under the policy for commercial usage. See Comcoa v. Coes, 587 So.2d 474, 477 (Fla. 3rd DCA 1991) (explaining that depending on context, “shall” could be read as “may” and vice versa). Second, even if “may” is construed by its ordinary permissive meaning, the provision still permits Defendant (at its discretion) to disclaim coverage for any losses that occur from such usage under this provision.
C. THE APPLICATION IS PART OF THE POLICY
49. Defendant attempts to distinguish Celtic Life by asserting that unlike Celtic Life where the exclusion was in the policy, the provision at issue here is in the application. Celtic Life cannot be distinguished on this basis because § 627.419(1), Fla. Stat., provides that “[e]very insurance contract shall be construed to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, modified by any application thereof or any rider or endorsement thereto.” (emphasis added). “This statute has been construed to mean that “[t]he application becomes a part of the agreement between the parties and the policy together with the application form the contract of insurance.” ” Nugget Oil Inc., v. Universal Sec. Ins. Co., 584 So.2d 1068, 1070 (Fla. 1st DCA 1991) (quoting Mathews v. Ranger Ins. Co., 281 So.2d 345, 348 (Fla.1973)).
50. Another case inapposite to Defendant’s argument is Zenith Ins. Co. v. Commerical Forming Corp., 850 So.2d 568 (Fla. 2d DCA 2003) [28 Fla. L. Weekly D1337a]. There, the insurer made the same argument that Defendant makes here. In Zenith, the insurer argued that a venue provision is unenforceable where the provision is in the application and not in the actual policy itself. The Second District, however, rejected that contention and concluded the provision is enforceable because the application is part of the policy. Id.
D. “VOID AB INITIO” VERSUS “VOIDABLE”
51. Defendant argues that Celtic Life is inapplicable because the application did not attach to policy because the policy is “void ab initio” (i.e., it never existed). The Court rejects this contention. A contract that offends public policy or harms the public is void ab initio. New Testament Baptist Church Inc., of Miami v. State, Dept. of Transp., 993 So.2d 112, 116 (Fla. 4th DCA 2008) [33 Fla. L. Weekly D2462b]. Voidable contracts instead are those that offend an individual where there is fraud, misrepresentation, or mistake. Id. The policy in the present case is not void ab initio, but instead voidable.16
52. Defendant insists that the policy never came into existence because there was no “meeting of the minds” as a result of the alleged misrepresentation (and therefore, the application did not attach). Defendant cites to the following cases on this point: Business Specialists Inc., v. Sea Petroleum Inc., 25 So.2d 693 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D199a]; 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]. These cases stand for the proposition that where the parties fail to agree on essential terms, no contract comes into existence.17 Also on this point, Defendant relies on United Auto. Ins. Co. v. Salgado, 22 So.3d 594, 599 (Fla. 3rd DCA 2010) [34 Fla. L. Weekly D1578a] and GRG Transport Inc., v. Certain Underwriters at Lloyd’s, London, 896 So.2d 922, 925 (Fla. 3rd DCA 2005) [30 Fla. L. Weekly D600a]. The latter two cases, however, did not concern a situation where there is no contract at all because the parties did not agree on essential terms. Both cases instead involved a situation where a contract was formed, but a mistake or misrepresentation rendered the contract voidable.
53. Defendant’s argument on this point is flawed where Defendant misapprehends the difference and consequences that flow between no contract at all (because essential terms were not agreed upon) and a contract that is formed but later deemed unenforceable. In the former situation, the contract is also “void ab initio”; but in the latter, the contract is “voidable.” The present case involves the latter situation, not the former. An analysis of Florida case law also draws this distinction; and clarifies that unlike a contract that is “void ab initio,” a contract that is “voidable” is one that did exist but is no longer enforceable if disaffirmed.
54. The Third District Court in Leitman v. Boone, 439 So.2d 318 (Fla. 3rd DCA 1983) addressed a situation where an award of attorney fees was based on a contractual fee provision where the contract never came into existence. There was no meeting of the minds in Leitman where the offer was not accepted by the offeree. In the analysis, the Court drew a distinction between no contract at all (i.e, no meeting of the minds) and where a contract is formed but later deemed unenforceable. In describing the latter situation, the Court stated that “enforcement of a contract may be prevented by equitable considerations, such as that the contract was fraudulently induced. In such a case, [ ] a contract exists, even though later declared to be void or voidable . . . .” Id. at 321 n.3 (emphasis added)
55. The Florida Supreme Court in Katz v. Van Der Noord, 546 So.2d 1047 (Fla. 1989) dealt with the exact opposite situation from the one addressed by the Third District Court in Leitman. In Katz, the Supreme Court decided whether a prevailing party is entitled to attorney fees under a contractual fee provision where the contract was rescinded. The Court concluded that the party was entitled to fees despite the fact that the contract was rescinded. In reaching that conclusion, the Court held that “[t]he legal fictions which accompany . . . rescission do not change the fact that a contract did exist.” Id. at 1049 (emphasis added).
56. In deciding whether a rescinded policy of insurance can be resurrected by waiver or estoppel, the First District Court in Echo v. MGA Ins. Co., Inc., 157 So.3d 507 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D442a] held that where an insurer deems a policy void due a material misrepresentation, it does not mean that the policy never existed (i.e., void ab initio). Rather, it means that the policy is voidable; and as such, it can be resurrected by subsequent acts. Id. at 511; See also United Auto. Ins. Co. v. Cranofacial Pain Therapeutics Inc., a/a/o Natalia Hernandez, 14 Fla. L. Weekly Supp. 317a (Fla. 11th Jud. Cir. App. 2006) (“While § 627.409 permits a defense of material misrepresentation, the statute provides that the insurance policy is voidable, not automatically void, upon discovery of the misrepresentation.”) (emphasis added).
57. To support the contention that the policy never existed, Defendant relies on Third District’s dicta in United Auto. Ins. Co. v. Salgado, 22 So.3d 594 (Fla. 3rd DCA 2002) [34 Fla. L. Weekly D1578a] where the Court stated that “[w]hen a contract is rescinded, it is as if the contract never existed in the first place.” Id at 603. The Court’s remark is not the holding of the case. The Salgado Court instead held that the no fault law did not usurp a pip insurer’s right to unilaterally rescind a pip policy when the statutory criteria under § 627.409 is present. Id. Further, Defendant overlooks that the Court’s remark in Salgado described the effect of rescission — but the Court did not hold that a contract that is formed but subsequently disaffirmed is one that never existed in the first place (i.e., void ab initio).
58. Although, “the effect of rescission is to render the contract abrogated and of no force and effect from the beginning,” Borck v. Holewinski, 459 So.2d 405 (Fla. 4th DCA 1984), it does not necessarily mean that a voidable contract never existed at all as Defendant insists. See e.g., Katz, 546 So.2d at 1049. Rather, a voidable contract is one that does exist but may be rendered unenforceable if disaffirmed.
59. Defendant’s argument is also flawed when you consider that a contract that is void ab initio can never be resurrected or affirmed by subsequent acts. See Gotshall v. Taylor, 196 So.2d 479, 481 (Fla. 4th DCA 1967) (concluding that subsequent events will not breathe life into a contract that is void ab initio) But voidable contracts such where there is fraud, misrepresentation or mistake can be. See e.g., Mazzoni Farms Inc., v. E.I. DuPont De Nemours and Co., 761 So.2d 306 (Fla. 2000) [25 Fla. L. Weekly S446a]; Echo, 157 So.3d at 511.
E.THE ABSENCE OF A BUSINESS USEEXCLUSION IN THE PIP SECTION OFTHE POLICY CAN BE RECONCILEDWITH THE APPLICATION
60. Defendant argues that the policy controls over the application because the pip section (unlike other sections of the policy) has no exclusion for business use. It is here where Defendant invokes the principle that the terms of the policy of govern where the policy conflicts with the application. See Quick v. National Indem. Co., 231 So.2d 22, 23 (Fla 4th DCA 1970) But there are two prequisites that must be present in order to invoke this rule.
61. The first prequisite is that there must be an ambiguity, conflict or inconsistency so as to allow the Court to invoke the rules of interpretation. U.S. Fire Ins. Co. v. Morejon, 338 So.2d 223, 225 (Fla. 3rd DCA 1976), cert. denied, 345 So.2d 426 (Fla.1977) As always, where the policy language is unambiguous, it must be construed by its plain and ordinary meaning without resorting to other aids of interpretation. Id.; See also Nugget Oil Inc., v. Universal Sec. Ins. Co., 584 So.2d 1068 (Fla. 1st DCA 1991) (rejecting appellant’s attempt to invoke the principle that the policy controls over the application where the policy, when read together with the application, is clear and ambiguous)
62. The second prequisite that must be present in order to enforce the policy over the application is that there must be an ambiguity or conflict between the two that cannot be reconciled. See Joseph Uram Jewelers Inc., v. Liberty Mut. Fire Ins. Co., 273 So.2d 111, 113 (Fla. 3rd DCA 1972).
63. The first prequisite is present. Here, there is ambiguity or inconsistency between the policy and application where unlike other sections of the policy and application, the pip section has no exclusion for business use. Due to the absence of this exclusion, the pip section (if read in isolation) could be construed to provide coverage for losses that arise from such usage. Further, and as a consequence of this interpretation, the failure to disclose such usage is “material” since it theoretically impacts Defendant’s decision to issue the policy — in other words, if Defendant had known the true facts, it would not have issued the policy because Defendant would have faced exposure the under policy’s pip coverage for such usage. But on the other hand, if the pip section of the policy is construed together with the application, there is no exposure since the application (where the exclusion lies) modifies the pip section of the policy by operation of statute. See § 627.419(1) As a consequence of this second interpretation, the nondisclosure is “immaterial” due to the exclusion. Accordingly, we have two competing interpretations that yield ambiguity — i.e., one providing more coverage since there is no exclusion for commercial usage; and the other limiting coverage by reading the exclusion within the application together with the pip section. Where “relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the [other] limiting coverage, the insurance policy is considered ambiguous.” Swire Pacific Holdings Inc., v. Zurich Ins. Co., 845 So.2d 161, 165 (Fla. 2003) [28 Fla. L. Weekly S307d] (emphasis added).
64. The second prequisite, however, is not present because the inconsistency between the application and policy can be reconciled. For instance, there is no provision in the pip section of the policy that expressly and directly conflicts with the business use exclusion in the application — therefore, the exclusion in the application merges perfectly with the pip section by operation of § 627.419(1). This interpretation, moreover, is consistent with principle that when construing insurance policies, every provision in the policy should be given meaning and effect; and apparent inconsistencies reconciled if possible. Nugget Oil Inc., 584 So.2d at 1070; See also State Farm Mut. Auto. Ins. Co. v. Mallard, 548 So.2d 733, 734 (Fla. 3rd DCA 1989) (“Where the policy is “amplified, extended, or modified” by inconsistent terms or conditions in the application, the inconsistent provisions are not disregarded. Rather, the policy is then construed taking into consideration those provisions.”) (emphasis added)
F. THE APPLICATION CONTROLS OVER THE POLICY
65. The Court also rejects Defendant’s contention that the policy controls over the application whereas here, the enforcing the application instead yields coverage for claim. The general rule that the policy controls over the application is qualified in cases where reliance on the application will result in coverage. Joseph Uram Jewelers, 273 So.2d at 113. The Third District Court applied this qualification to the general rule in Jewelers. That case involved a claim for lost merchandise where the application indicated that the policy provided coverage for mysterious disappearances of merchandise and goods. After procuring the policy, the jewelry store made a claim for merchandise that disappeared from the store’s premises. The insurer denied coverage because the policy contained an exclusion for mysterious disappearances. The Third District Court found that the application could not be reconciled with the policy. But instead of applying the general rule that the policy controls over the application, the Court enforced the application over the policy instead because it resulted in coverage for the claim. Id.
66. As in Jewelers, the application controls over the policy in the present case because it results in coverage whereas here, giving force to the application — specifically, the exclusion therein — renders the alleged misrepresentation “immaterial” (and therefore, the policy is not voidable).
67. The Court, moreover, declines to distinguish this case from Jewelers on the grounds that in Jewelers, the application expanded the scope of coverage more so than the policy; and whereas here, we have the opposite situation — the pip section of the policy (if read in isolation) expands the scope of coverage more so than the application (since there is no commercial use exclusion in the pip section.) Generally, the application controls over the policy where the application expands or broadens the scope of coverage more so than the policy. See e.g., Jewelers, supra. But the facts here present an anomaly where enforcing the application over the policy limits the scope of coverage, but yields coverage for the claim; whereas enforcing the pip section of the policy over the application expands the scope of coverage — but yields the opposite effect (i.e., no coverage).18 Despite this anomaly, the Court finds that the application should control over the policy because it results in coverage. This outcome, moreover, is consistent with the one reached by the Third District Court in Jewelers.G.
THE INCONSISTENCY IS CONSTRUEDAGAINST DEFENDANT
68. Assuming the ambiguity or inconsistency between the application and policy cannot be reconciled by other aids interpretation, the doctrine of contra proferentem (i.e., construction against the drafter) applies.19 Under this doctrine, any ambiguity, inconsistency or conflict is construed in favor of the insured and against the drafter of the policy — i.e., the insurer. See U.S. Fidelity & Guaranty Co. v. Rood Investments, Inc., 410 So.2d 1373, 1374 (Fla. 5th DCA 1982)
69. Generally, “[w]hen language in an insurance policy is ambiguous, a court will resolve the ambiguity in favor of the insured by adopting the reasonable interpretation of the policy’s language that provides coverage as opposed to the reasonable interpretation that would limit coverage.” Travelers Indem. Co. v. PCR Inc., 889 So.2d 779, 785-86 (Fla. 2004) [29 Fla. L. Weekly S774a] But here, the interpretation that limits the scope of coverage (by giving force to the exclusion in the policy application) favors the insured.20 As such, the Court adopts this interpretation since all ambiguities are liberally construed in favor of the insured and strictly against the insurer. U.S. Fidelity & Guaranty Co., 410 So.2d at 1374.
70. Finally, Defendant argues that by ruling for Plaintiff, the Court is rewriting the policy and providing greater coverage than the parties negotiated. This argument is illogical. By giving meaning to the exclusion in the application, the Court is limiting the scope of coverage, not expanding it. See LaMarche v. Shelby Mut. Ins. Co., 390 So.2d 325, 326 (Fla. 1980) (“[A]n exclusion does not provide coverage but limits coverage.”)
71. The Court observes that Defendant did not allege as an affirmative defense that the instant claim is barred by the exclusion in the policy application. Needless to say, Defendant presumably would have asserted that defense if the Garays were using their vehicle for business when the accident occurred. Although Defendant could argue that it could not assert the exclusion in any event where the exclusion is unauthorized by the pip statute, the Court finds that Defendant is estopped from asserting that position.21 Insurance policies are contracts in adhesion where the insured has no bargaining power whatsoever. See Seaboard Finance Co. v. Mutual Bankers Corp., 223 So.2d 778, 782 (Fla. 2d DCA 1969) Being the drafter of the contract, Defendant cannot turn its back on portions of the contract, specifically the exclusion, that it finds distasteful. Here, Defendant ratified the validity of the exclusion by drafting it.22 As such, Defendant cannot both have his contract and defeat it too.23 To rule otherwise would sanction the proverbial “Gotcha.”
CONCLUSION
72. Based on the Court’s analysis of law, the Court finds that the insured’s alleged failure to disclose commercial usage of her vehicle on the policy application is immaterial as a matter of law whereas here, the policy excludes business usage as a covered risk.24 As such, the failure to disclose business usage could not have impacted Defendant’s decision to assume to the risk.
73. ACCORDINGLY, it hereby ORDERED & ADJUDGED that Plaintiff’s motion for final summary judgment is GRANTED25; and Defendant’s motion for final summary judgment is DENIED.FINAL JUDGMENT
74. It is further ORDERED & ADJUDGED by this Court that final judgment is hereby entered for Plaintiff, EDUARDO J. GARRIDO D.C. P.A., as assignee of Huegette Garay, and Defendant, STAR CASUALTY INSURANCE COMPANY. Plaintiff, EDUARDO J. GARRIDO D.C. P.A., as assignee of Huegette Garay, shall recover from Defendant, STAR CASUALTY INSURANCE COMPANY, compensatory damages in the principle sum of $6548.80, statutory prejudgment late interest penalties in the sum of $3181.64, totaling $9694.44 that shall bear interest at the legal rate established pursuant to § 55.03, Fla. Stat., for which let execution issue.26
75. The Court also finds that Plaintiff is entitled to costs and attorney fees for prosecution of this action pursuant §§ 57.041 and 627.428, Fla. Stat. The Court shall reserve jurisdiction to tax or award the reasonable amount of same.
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1This is the only affirmative defense asserted by Defendant in the answer.
2Policy Application at p. 3
3Id.
4http://www.claimsjournal.com/news/national/2012/03/27/203719.htm
5EUOs are not voluntary like affidavits where instead, an insured is coerced to cooperate under penalty of forfeiture. See Goldman v. State Farm Fire Gen. Ins. Co., 660 So.2d 300, 305 (Fla. 4th DCA 1995) [20 Fla. L. Weekly D1844a]. (“An insured’s refusal to comply with a demand for an examination under oath is a willful and material breach of an insurance contract which precludes the insured from recovery under the policy.”) (citation omitted)
6See § 92.525(4) (“As used in this section: . . . (b) The term “document” means any writing including, without limitation, any form, application, claim, notice, tax return, inventory, affidavit, pleading, or paper.”) (emphasis added)
7Section 92.525(1), Fla. Stat. states in part:
“If authorized or required by law, by rule of an administrative agency, or by rule or order of court that a document be verified by a person, the verification may be accomplished in the following manner:
(a) Under oath or affirmation taken or administered before an officer authorized under s. 92.50 to administer oaths;
(b) Under oath or affirmation taken or administered by an officer authorized under s. 117.10 to administer oaths[.]”
8No analysis is needed to conclude that EUOs are not answers to interrogatories or admissions. They are obviously not the same thing.
9There is ambiguity in the Fourth District Court’s opinion in Avampato. In its discussion of the facts, the Court states that the “statement was taken as upon an oral deposition, but without the presence of plaintiff’s counsel.” Avampato, 245 So.2d at 677 (emphasis added) Indeed, it is possible that a deposition can be taken without notice to the adverse party — it has happened before. See e.g., Stinnett, 460 So.2d at 528. But the Avampato Court also referred to the deposition in that case as a sworn statement. A deposition of course can be characterized as a sworn statement — but the vernacular “sworn statement” does not necessarily mean a deposition either.
10“Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” § 90.801(1)(c), Fla. Stat. “Except as provided by statute, hearsay evidence is inadmissible.” § 90.802, Fla. Stat.
11The only exception permitting impeachment evidence, specifically a prior inconsistent statement, to come in for substantive purposes is where a witness testifies at trial; and the prior statement of the witness is given under oath at trial, hearing, other proceeding or deposition. Pearce v. State, 880 So.2d 561, 570 (Fla. 2004) [29 Fla. L. Weekly S330a]; § 90.801(2)(a), Fla. Stat. This exception does not apply here because an EUO is not a legal proceeding nor a deposition.
12Section 90.803(18), Fla. Stat., states in relevant part that “the following are not inadmissible as evidence, even though the declarant is available as a witness:* * *
ADMISSIONS. — A statement that is offered against a party and is:
(a) The party’s own statement in either an individual or a representative capacity;
(b) A statement of which the party has manifested an adoption or belief in its truth;
(c) A statement by a person specifically authorized by the party to make a statement concerning the subject;
(d) A statement by the party’s agent or servant concerning a matter within the scope of the agency or employment thereof, made during the existence of the relationship; or
(e) A statement by a person who was a coconspirator of the party during the course, and in furtherance, of the conspiracy. Upon request of counsel, the court shall instruct the jury that the conspiracy itself and each member’s participation in it must be established by independent evidence, either before the introduction of any evidence or before evidence is admitted under this paragraph.
13“Hearsay within hearsay is not excluded under s. 90.802, provided each part of the combined statements conforms with an exception to the hearsay rule as provided in s. 90.803 or s. 90.804.” § 90.805, Fla. Stat.
14Section 627.409 is a remedial statute that prohibits insurers from treating representations as warranties where the statute provides in part that “[a]ny 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.” (emphasis added). The purpose of the statute is to eliminate the harsh consequences that result where a statement in the policy application is a warranty instead of a representation. Unlike a representation, an insurer is not required to prove “materiality” in order to justify rescission of the policy where a false statement is a breach of warranty. See R. Keeton, Basic Text on Insurance Law § 6.5(a) at 369-70 (1971) (“ ‘a warranty is a statement or promise set forth in the application by the insured ‘the untruth or nonfulfillment of which in any respect . . . renders the policy voidable . . . wholly irrespective of the materiality of such statement or promise.’ ”) (quoting Vance, The Law of Insurance 408 (3d ed. Anderson 1951)).
15The circuit panel opinion in Caballero opinion does not refer to nor mentions Celtic Life. It is possible, however, that Celtic Life may not have been brought panel’s attention when it decided Caballero.
16This assumes of course, that the alleged misrepresentation is “material.”
17The string of cases on this point were cited by defense counsel in Defendant’s proposed order submitted to the Court.
18It yields the opposite effect because the failure to disclose commercial usage renders the policy voidable since there is no exclusion for such usage where the pip section of the policy is read in isolation.
19Contra proferentum is a rule of last resort that is to be applied only if all other aids of construction fail to resolve the ambiguity. See Sch. Bd. of Broward Cty., Fla. v. Great Am. Ins. Co., 807 So.2d 750, 752 (Fla. 4th DCA 2002) [27 Fla. L. Weekly D412a]; Richard A. Lord, Williston on Contracts, § 32.12 (4th ed. 1999) (“The rule of contra proferentem is a rule of last resort and is applied only where other secondary rules of interpretation have failed to elucidate the contract’s meaning.”)
20As the assignee of the insured, Plaintiff stands in the shoes of the insured. See Indiana Lumbermens Mut. Ins. Co. v. Pennslyvania Lumbermen’s Mut. Ins. Co., 125 So.3d 263, 266 (Fla. 4th DCA 2013) [38 Fla. L. Weekly D562a] (“[A]n assignee of an insurance claim stands to all intents and purposes in the shoes of the insured . . . .”)
21Generally, in the context of statutorily mandated policies such as pip, exclusions or limitations on coverage unauthorized by the statute are invalid. See Custer Medical Center v. United Auto. Ins. Co., 62 So.3d 1086, 1089 n.1 (Fla. 2010) [35 Fla. L. Weekly S640a]
22The branch of estoppel being invoked on this point is the doctrine of “estoppel by benefit.” This derivative of estoppel operates to prevent a party from taking inconsistent positions where for example, a party has benefited from a transaction, but then questions its validity. See Head v. Lane, 495 So.2d 821, 824 (Fla. 4th DCA 1986). This doctrine, moreover, has been applied in the context where a party assumes inconsistent positions in attacking a contractual provision. See e.g., In re Weekly Homes L.P., 180 S.W.3d 127 (Tex. 2005) (concluding that non-party to a contract is estopped from asserting that an arbitration clause in the contract is unenforceable as to him where the non-party insists that he is a party to the contract.)
23In cases where exclusions or limitations were deemed invalid by the courts, it is usually the insured, not the insurer, who invoked the principle that limitations on coverage are invalid when unauthorized by the statute. This principle is usually applied where it favors the insured, not the insurer. But since Defendant is the drafter of the contract, Defendant does not get the benefit of this principle here. If, however, this case arose from an accident that occurred during commercial usage, then Defendant would have a stronger argument that the exclusion is invalid and therefore, the policy is voidable since non-disclosure of commercial usage is “material.” In such a case, there is no coverage based on either the exclusion or rescission theory. But those are not the facts here where the accident did not occur during commercial usage.
24The Court is aware that another County Court ruled for Defendant in Eduardo J. Garrido D.C. P.A., a/a/o Francisco Garay v. Star Cas. Ins. Co., 23 Fla. L. Weekly Supp. 557c (Fla. Miami-Dade Cty. Ct. 2015) This Court, however, disagrees with the ruling by the County Court in the companion case; which is currently pending appeal before the Eleventh Circuit. See Eduardo J. Garrido D.C. P.A., a/a/o Francisco Garay v. Star. Cas. Ins. Co., Case No.: 15-133 AP (Notice of Appeal filed on April 27th, 2015).
25Plaintiff’s motion for summary judgment on Plaintiff’s prima facie case is granted. Defendant filed no opposing affidavits to contradict Plaintiff’s affidavits; which establish that the bills and treatment were reasonable, related and necessary. Although counsel for the parties did not argue this issue when the Court heard arguments on April 20, 2016, the failure to do so is not fatal for two reasons. First, this point of argument was not withdrawn by Plaintiff’s counsel on the record. Second, the Court has the discretion to decide this issue based on the record before it without the need for further argument whereas here, the issue was specifically raised in Plaintiff’s motion; the motion was properly noticed for hearing; and Defendant filed nothing in opposition.
26The statutory late prejudgment interest penalties shall run from July 22, 2008 back to April 20, 2016 nunc pro tunc.
