28 Fla. L. Weekly Supp. 346a

Online Reference: FLWSUPP 2804ROBE

Insurance — Automobile — Application — Misrepresentations — Action for declaratory relief challenging rescission of policy for failure to disclose household member on application and seeking declaration that insured is entitled to PIP and property damage coverage — Materiality — Insurer was entitled to rescind policy based on insured’s failure to disclose that she lived with her brother where insured failed to contradict insurer’s claim that this disclosure would have caused insurer to issue policy at higher premium rate, misrepresentation — Insurer was not required to provide an affidavit in addition to deposition testimony to establish the materiality of misrepresentation — Instruction to provide information for “all persons age 14 or older residing with Applicant (licensed or not)” unambiguously required insured to disclose brother

SUNITA ROBERTS, Plaintiff, v. DIRECT GENERAL INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County. Case No. 18-CC-042484. May 19, 2020. Michael C. Bagge-Hernandez, Judge. Counsel: Timothy A. Patrick, Patrick Law Group, P.A., Tampa, for Plaintiff. John Mollaghan, McFarlane Dolan & Prince, Coral Springs, for Defendant.

Motion for Rehearing Denied FLWSUPP 2805ROBE

ORDER ON DEFENDANT’S MOTION FORSUMMARY JUDGMENT AND PLAINTIFF’SCOMPETING MOTION FOR SUMMARY JUDGMENTON WHETHER DEFENDANT PROPERLYRESCINDED THE PLICY OF INSURANCE

THIS CAUSE having come before the Court on April 23rd, 2020, upon Defendant’s Motion for Summary Judgment, and Plaintiff’s Motion for Summary Judgment and the Court having reviewed the motions, the entire Court file, the case law presented, having heard argument of counsel, having made a thorough review of the matters filed of record, and being otherwise advised in the premises, the Court finds as follows:

Factual Background

SUNITA ROBERTS, (Plaintiff) brought the instant Declaratory Action against DIRECT GENERAL INSURANCE COMPANY (Defendant) to challenge Defendant’s rescission of a policy of automobile insurance and ask this Court declare that Plaintiff is entitled to Personal Injury Protection and Property damage coverage for a reported automobile accident that occurred on June 22, 2018. Defendant rescinded the policy of insurance on the basis that Plaintiff failed to disclose that she resided with her brother, Michael Lawrence, at the time of policy inception and had she disclosed this information the Defendant would not have issued the policy on the same terms, namely Defendant would have charged a higher premium to issue the policy.

Ms. Roberts initially completed an online application for a policy of automobile insurance on April 10, 2017. Plaintiff failed to list her brother, Michael Lawrence, as a household member when completing the following sections of the application:

DRIVER INFORMATION: Complete for Applicant, spouse, all persons age 14 and older residing with Applicant (licensed or not). Also list any other regular operators of the vehicles on this application, including children away from home or in college (licensed or not).

Moreover, on the application for insurance, the Plaintiff electronically signed the pertinent page of the Applicant’s Statement, which provides in part:

“I acknowledge that all regular operators of my vehicle(s) have been reported to the Company. I ALSO ACKNOWLEDGE THAT ALL PERSONS AGES 14 AND OLDER WHO LIVE WITH ME HAVE BEEN REPORTED TO THE COMPANY. . . .”

On April 10, 2018, Plaintiff completed an identical application to renew coverage on said policy of insurance, in which Plaintiff similarly failed to list her brother as a resident of the household over 14 years of age.

Following the June 22, 2018 motor vehicle accident, a recorded statement was taken of Plaintiff wherein Plaintiff disclosed to Defendant that she lived with her brother prior to the initial application, and all times since. Defendant determined that had Plaintiff provided the proper information at the time of the insurance application then Plaintiff would have been charged a higher premium rate. Therefore, the Defendant declared the policy void ab initio due to material misrepresentations and returned the paid premiums to Plaintiff. Due to the policy being declared void ab initio the Defendant denied coverage for the subject motor vehicle accident.

At the April 23, 2020 Hearing on competing Motions for Summary Judgment, Plaintiff argued that the presence of the brother in the household was not material as the brother never drove the vehicle and thus the misrepresentation by not listing the brother on the application was not a material misrepresentation. Plaintiff further argued that the application language was ambiguous as it failed to define the terms Driver, Excluded Driver, Household Resident, Household Member and Regular Operator. Plaintiff’s position was that Defendant could not rescind the policy at issue based on an unlisted household member as the terms were ambiguous within the application. Plaintiff relied upon a number of circuit and county court decisions to support this position. Plaintiff also claimed that bolding the headings on the application meant that the accompanying definitions became overlooked or ambiguous.

Plaintiff further argued that Defendant’s underwriting deponent lacked the personal knowledge necessary to be a record custodian or testify with personal knowledge that the undisclosed resident would have caused the policy to be issued at a higher premium because: Ms. Robison did not enter the information into the computer system; did not initially underwrite the application; did not create the Underwriting guidelines; and could not testify to the workings or accuracy of the AS/400 system that created the quote upon which Defendant relied for determining that the policy would have been issued at a higher premium. Additionally, Plaintiff argued that Defendant was burdened to provide an affidavit in support of the rescission in addition to the deposition testimony.

Defendant argued in their summary judgment that, as both the statute and the binding appellate decisions state, materiality of the risk is determined by the insurer, not the insured, and thus Plaintiff’s contention that the undisclosed resident could not be material was irrelevant. See Fla. Stat. 627.409. As the Fla. Supreme Court ruled “[t]he statute recognizes the principals of law that a contract issued on a mutual mistake of fact is subject to being voided and defines the circumstances for the application of this principle. This Court cannot grant [**10] an exception to a statute nor can we construe an unambiguous statute different from its plain meaning.” Continental Assurance Co. v. Carroll, 485 So. 2d 406, 409, (Fla. 1986). Therefore, the insurer determines materiality. Additionally, as an insurer rates risks based on the likelihood of a future event, such as an accident, then the insurer may treat any resident as a potential risk. For example, a resident relative may be covered under an automobile insurance policy if struck by a vehicle whilst walking, and thus an insurer must determine rates accordingly. See Travelers Ins. Co. v. Furlan, 408 So.2d 767 (Fla. 5th DCA 1982). Therefore, to ensure both parties enter the contract with full understanding, the Defendant is entitled to all information that Defendant deems necessary to determine the risk. Additionally, the Legislature allows an insurer to rescind for a material misrepresentation, regardless of the insured’s intent, and thus the Legislature clearly burdened the applicant with the duty to fully disclose all requested information. See United Auto. Ins. Co. v. Salgado, 22 So.3d 594 (Fla. 3rd DCA 2009) [34 Fla. L. Weekly D1578a].

Defendant further argued that Defendant’s deponent satisfied the requirements of the business records exception to testify that the misrepresentation was material. “(P)roper authentication by a witness for the purposes of the business records exception requires that the witness demonstrate familiarity with the record-keeping system of [the] business that prepared the document and knowledge of how the data was uploaded into the system.” Nationstar Mortg., LLC v. Berdecia, 169 So. 3d 209, 213 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D1502a]. “However, “[t]he law does not require an affiant who relies on computerized bank records to be the records custodian who entered or created the data, nor must the affiant identify who entered the data into the computer.” Id. Defendant argued that as Ms. Robison testified at the deposition that she managed the department that determined the relevant quote, explained how the quote was created, was familiar with the underwriting guidelines, and acquired personal knowledge from review of the file, then she met the requirements to authenticate the quote. Defendant maintained that Ms. Robison was not required to testify to the underlying programming of the computer system, did not have to be the person who entered the information into the system, and that an additional affidavit was not required. “Uncontradicted deposition testimony or affidavit of an underwriter that he or she would not have offered the subject policy if the true facts had been known may satisfy the requirements of section 627.409(1)(c). National Union v. Sahlen, 999 F.2d at 1536; Jackson National Life Insurance Co. v. Proper, 760 F.Supp. at 905.” Carter v. United of Omaha Life Ins., 685 So. 2d 2, 6 (Fla. 1st DCA 1996) [21 Fla. L. Weekly D2259d]. As Plaintiff provided no relevant testimony in opposition, then Defendant was entitled to summary judgment on this issue.

Finally, Defendant contended that Plaintiff cannot simply claim a term is ambiguous but must also prove that the Plaintiff believed the provision had a different meaning with which the applicant complied. See Mercury Ins. Co. v. Markham, 36 So. 3d 730, 733, (Fla. 1st DCA 2010) [35 Fla. L. Weekly D870a] Fla. App. Plaintiff’s simple claim that it was ambiguous, was insufficient. Additionally, Defendant specifically defined Driver in the application as including “all persons age 14 and older residing with Applicant (licensed or not).” As Plaintiff’s brother was over 14 at the time of application he clearly met this definition. Defendant further argued that “a provision is not ambiguous, however, simply because it is complex or requires analysis.” State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So. 3d 566, (Fla. 2011) [36 Fla. L. Weekly S469a]. Defendant claimed that when read in combination with the Applicant Statement, “I ALSO ACKNOWLEDGE THAT ALL PERSONS AGES 14 AND OLDER WHO LIVE WITH ME HAVE BEEN REPORTED TO THE COMPANY” it is clear that the applicant is required to state with whom they live. Defendant argued that no reasonable interpretation of the question could lead to the conclusion that Plaintiff was not required to list her brother with whom she lived for a number of years.

Analysis Regarding Whether theUndisclosed Resident was Material

The Court ruled that the question of materiality is considered from the perspective of the insurer and therefore Plaintiff’s claims that the failure to list a resident relative who did not drive on the insurance application could not be material lacked support. Rather, the Court found that “[a] material misrepresentation in an application for insurance, whether or not made with knowledge of its correctness or untruth, will nullify any policy issued and is an absolute defense to enforcement of the policy.” United Auto. Ins. Co. v. Salgado, 22 So.3d 594 (Fla. 3rd DCA 2009) [34 Fla. L. Weekly D1578a]. The Court also found instructive a Federal ruling that similarly found such a misrepresentation is sufficient to rescind the policy. “Where a misrepresentation in an application meets these requirements, “the insurer, as a matter of right, may unilaterally rescind.” Braddy v. Infinity Assur. Ins. Co., 2015 U.S. Dist. LEXIS 29372, *6, 2015 WL 1056068. The Court ruled that despite Plaintiff’s claim that regardless of the persuasive decisions provided, the Court is bound to find that the failure to disclose a household member that would have cause the insurer to issue the policy at a higher rate is sufficient to support a rescission. See Privilege Underwriters Reciprocal Exch. v. Clark, 174 So. 3d 1028, 1031 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D1810a]. Additionally, the Court found that as Plaintiff failed to provide testimony to contradict Defendant’s claim that the disclosure would have caused Defendant to issue the policy at a higher premium rate, then Defendant was entitled to rescind. See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d 1532 (1993).

Analysis Regarding Whether Defendant’s Corporate Representative Testimony Satisfied the Business Records Exception.

The Court reviewed the provided authority and rejected Plaintiff’s argument that Defendant required an affidavit in addition to the deposition testimony to establish the materiality of the misrepresentation. See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d 1532 (1993). Additionally, the Court found that the deponent testified to knowledge of the system used to generate the quote, how the information was entered into the system, and could claim personal knowledge from a review of the records, therefore, Defendant’s deponent satisfied the threshold to satisfy the business records exception. See Nationstar Mortg., LLC v. Berdecia, 169 So. 3d 209, 213. Consequently, Defendant established without contrary evidence that the misrepresentation was material.

Analysis Regarding Whether the Term“Driver” and “Residing” are Ambiguous

The Court found that the definition of driver provided by Defendant could only be construed as to require disclosure of Plaintiff’s brother. The Court reviewed the county and circuit opinions provided by Plaintiff concerning ambiguity. However, Plaintiff failed to persuade the Court that such decisions were binding. Additionally, such decisions did not deal with the specific clause at issue in this matter. The Court agreed that ambiguity is not created “simply because it is complex or requires analysis.” State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So. 3d 566 (Fla. 2011) [36 Fla. L. Weekly S469a]. The Court found that simply claiming a word or phrase is ambiguous does not strike the phrase or word. Rather Plaintiff required to persuade the Court that Plaintiff that the claimed ambiguous word caused the Plaintiff to understand the requirement in another manner, with which she complied. See Mercury Ins. Co. v. Markham, 36 So. 3d 730, 733, (Fla. 1st DCA 2010) [35 Fla. L. Weekly D870a]. Plaintiff not only failed to provide another understanding of the provision that did not require disclosure of her brother, Plaintiff failed to provide any other possible understanding of the requirement. The Court was not persuaded that the bolding of the word Driver caused the application to be ambiguous because the definition was provided as a continuation. The Court also ruled that the provision requiring disclosure of “all persons age 14 and older residing with Applicant (licensed or not)” in the Driver section was not ambiguous. The Court found that the application unambiguously required Plaintiff to disclose her brother, with whom, as both parties agreed, she lived at the time of the application.

Conclusion

This Court finds that the Defendant’s application unambiguously required Plaintiff to disclose her brother as a household member, that Defendant provided the required testimony to establish said that Plaintiff’s failure to disclose was a material misrepresentation because Defendant would not have issued the policy on the same terms, and thus Defendant properly rescinded the subject policy of insurance. Consequently, Defendant properly denied coverage for the loss at issue.

Based on the foregoing, it is hereby ORDERED AND ADJUDGED as follows:

· Plaintiff’s Motion for Summary Judgment is hereby DENIED.

· Defendant’s Motion for Summary Judgment is hereby GRANTED.

· That the Parties go henceforth without day.