4 Fla. L. Weekly Supp. 377a
Insurance — Personal injury protection — Applicant for insurance was required to disclose name of fiancee who was living with him at time of application and who was not registered owner of a vehicle — Insurer was justified in denying coverage for injuries sustained by fiancee in accident that occurred while she was operating vehicle where omission of fiancee’s name from application prevented insurer from investigating fiancee’s driving record, and insurer would not have issued policy had it discovered fiancee’s poor driving record — Questions on application were not ambiguous with respect to requirement that applicant disclose names of anyone living in household who was not registered owner of a vehicle — Applicant not required to disclose fiancee’s name in response to request for “Names of All Licensed Drivers and/or Drivers of Vehicle” where fiancee’s license was suspended at time of application and she did not at that time drive the insured vehicle — Insurer not required to rescind policy in order to deny coverage for fiancee’s injuries
SUSAN JOYCE and KEVIN SKOLNICK, Plaintiffs/Appellants, vs. FORTUNE INSURANCE COMPANY, a Florida corporation, Defendant/Appellee. 17th Judicial Circuit in and for Broward County. Case No. 93-05931(12). L.T. Case No. 92-2958 (COWE). July 29, 1996. Arthur M. Birken, Judge.
OPINION
THIS CAUSE having come before the Court sitting in its appellate capacity to review a Final Declaratory Judgment, and the Court having heard argument of counsel, having reviewed the briefs submitted by the respective parties, and being otherwise duly advised in the premises, hereby finds:
The Plaintiffs/Appellants, SUSAN JOYCE and KEVIN SKOLNICK, seek review of a final judgment entered by the lower court determining that the Defendant/Appellee, FORTUNE INSURANCE COMPANY, was justified in denying coverage for MS. JOYCE under the policy since MR. SKOLNICK allegedly misrepresented material facts in the application for insurance. The case began on September 26, 1991, when MR. SKOLNICK went to the offices of Auto Insurance World, for the purposes of obtaining PIP insurance and property damage coverage for his 1989 Pontiac Trans Am. MR. SKOLNICK met with Auto Insurance World agent, Michael Lanson, who ran through a series of customary questions routinely asked of all applicants before deciding that FORTUNE INSURANCE COMPANY would underwrite the desired coverage. Lanson then selected a copy of a customized application form, used exclusively for FORTUNE applicants, and began completing the form by entering MR. SKOLNICK’s name, address and miscellaneous information about the vehicle. He then proceeded to read the remaining questions on the application to MR. SKOLNICK, who in turn answered the questions, but his responses were filled in by Mr. Lanson. At trial, Mr. Lanson testified that while he tended to paraphrase most questions on the application, he read verbatim the question on FORTUNE’s application having to do with other drivers in the household.
Specifically, the application called for the “Names of all Non-Dependent Relatives and other Persons living with Named Insured who are not registered owners of a vehicle.” At the time of the meeting, MR. SKOLNICK lived with his fiancee SUSAN JOYCE and their infant daughter. Although MS. JOYCE was not MR. SKOLNICK’s relative, he allegedly considered her to be his dependent, and therefore answered “none” to the above question. In addition, the application called for the “Names of All Licensed Drivers and/or Drivers of Vehicle” residing in the household. At the time the application was completed, MS. JOYCE’s license had already been suspended for Driving Under the Influence. So MR. SKOLNICK responded that there were no other licensed drivers in the household other than himself. Based upon these answers, Auto Insurance World issued a binder, and then FORTUNE INSURANCE COMPANY issued a policy in favor of MR. SKOLNICK as the named insured.
On February 10, 1992, MR. SKOLNICK sold the 1989 Trans Am and sought to substitute in its place under the policy, a 1967 Mustang convertible. Auto Insurance World issued an endorsement reflecting a change in the identity of the covered vehicle so that the Mustang was now covered under the policy. At the time of this transaction, MS. JOYCE still remained unlicensed. On March 12, 1992, MS. JOYCE’s driving privileges were restored. During the next eleven days, MS. JOYCE drove the Mustang on at least two or three separate occasions. (R. 83). On March 23, 1992, MS. JOYCE was involved in an accident while driving the Mustang and suffered extensive injuries. Since MS. JOYCE was the one operating the insured motor vehicle, she completed an application for PIP benefits and submitted same to FORTUNE, seeking payment of all accident-related medical bills in accordance with the PIP statute and the insurance policy1. See, Fla. Stat. §627.736 (West 1992). However, FORTUNE issued a reservation of rights and eventually denied the claim. The Plaintiffs/Appellants brought suit, alleging in their Complaint that FORTUNE’s failure to pay PIP benefits to MS. JOYCE constituted a breach of the policy and a breach of Fla. Stat. §627.736. FORTUNE filed a Counterclaim for the issuance of a declaratory judgment with respect to its duties, if any, under the policy. The lower court entered a Final Declaratory Judgment in favor of FORTUNE, ruling that MS. JOYCE was not entitled to PIP benefits under the policy because MR. SKOLNICK failed to disclose MS. JOYCE on the application which constituted a material misrepresentation. See, Fla. Stat. §627.409 (West 1992). As a result, this appeal ensued.
The primary issue is whether MR. SKOLNICK’s failure to disclose that MS. JOYCE resided with the insured, was not a registered owner of a vehicle, or that she drove at least one of the insured’s automobiles amounted to a material misrepresentation entitling FORTUNE to deny coverage under the policy. The Plaintiffs/Appellants contend that any omissions were made in good faith, thereby precluding a finding of misrepresentation. In addition, they argue there can be no finding of misrepresentation, as a matter of law, since crucial questions on the application were inherently ambiguous and susceptible to conflicting interpretations. Specifically, the Plaintiffs/Appellants contend that the phrase “Non-Dependent Relatives and other persons living with the Named Insured” is ambiguous since it is questionable whether the term “Non-Dependent” applies only to “Relatives” or also to “other Persons.” MR. SKOLNICK believed the term “Non-Dependent” also applied to “other Persons,” and therefore, he did not disclose that MS. JOYCE was not a registered owner of a vehicle, since she was his dependent. They also claim they were not required to list MS. JOYCE as a “Licensed Driver” or as a “Driver of the Vehicle,” because her license was suspended at the time the application was completed.
The Defendant/Appellee argues that the insured’s failure to disclose MS. JOYCE on the application entitles FORTUNE to deny coverage under the policy. They argue that even if the omissions were made in good faith, the misrepresentations themselves were sufficient to void the policy. They also contend that even if the language was ambiguous, it was not ambiguous to MR. SKOLNICK, as a matter of law, since he never read the application.
The Court holds that the Plaintiffs/Appellants’ incorrect statements on the application warranted FORTUNE denying coverage under the policy. The Court’s decision is guided by the well established rule that a lower court’s decision in a declaratory judgment action is accorded a presumption of correctness and will not be rejected on appeal unless based on a misapplication of law or shown to be against the manifest weight of the evidence. Williams v. General Ins. Co., 468 So.2d 1033, 1034 (Fla. 3d DCA 1985), citing General Ins. Co. v. Ramanovski, 443 So.2d 302 (Fla. 3d DCA 1983); Groover v. Adiv Holding Co., 202 So.2d 103 (Fla. 3d DCA 1967). Section 627.409(1), Florida Statutes, provides that misrepresentations in an application for an insurance policy, “…shall not prevent recovery under the policy…unless…(c) [t]he insurer in good faith would…not have issued the policy…if the true facts had been known to the insurer as required either by the application for the policy…or otherwise.” This section applies to the present case because the Plaintiffs/Appellants’ incorrect statements prevented FORTUNE from investigating MS. JOYCE’s driving record, when it otherwise would have done so, had MR. SKOLNICK disclosed in the application that she was living in the household and drove at least one of his cars (R. 83). Moreover, upon the discovery of MS. JOYCE’s driving record, FORTUNE would not have issued the insurance policy due to her poor driving record (R. 137). Consequently, FORTUNE was justified in voiding the policy as a matter of law. Motors Ins. Corp. v. Marino, 623 So.2d 814 (Fla. 3d DCA 1993) (material misrepresentation in an insurance application whether or not made with knowledge of its correctness or untruth, nullifies the policy and is an absolute defense to enforcement of the policy); Continental Assurance Co. v. Carroll, 485 So.2d 406 (Fla. 1986); Singer v. Nationwide Mut. Fire Ins., Co., 512 So.2d 1125 (Fla. 4th DCA 1987).
With respect to the Plaintiffs/Appellants’ second argument that FORTUNE is precluded from denying benefits since questions on the application were ambiguous, the Court finds the policy clearly required MS. JOYCE’s name to be disclosed, since she was not a registered owner of a vehicle. While the case law is clear that ambiguities in an application must be construed against the insurer so as to find coverage, it is also clear that the rule only applies when a genuine inconsistency or uncertainty remains after resort to the ordinary rules of construction. St. Paul Guardian Ins. Co. v. Canterbury School of Florida, Inc., 548 So.2d 1159-1160 (Fla. 2d DCA 1989). Application of the rules of construction to the insurance policy at issue reveals the language “Non-Dependent Relatives and other Persons” required the insured to disclose the names of anyone living in the household who was not a registered owner of a vehicle (R. 144); See, American Motorists Ins. Co. v. Farrey’s Wholesale Hardware Co., Inc., 507 So.2d 642 (Fla. 3d DCA 1987) (the fact that an insurance policy may require some analysis to comprehend its scope does not make the policy ambiguous). Moreover, MR. SKOLNICK’s testimony reveals he never read the application, therefore, as a matter of law, the application cannot be ambiguous to him. Motors Ins. Co. v. Woodcock, 394 So.2d 485, 487 (Fla. 3d DCA 1981).
However, the Court disagrees with the lower court’s interpretation of the phrase “Names of All Licensed Drivers and/or Drivers of Vehicle.” The lower court held that MR. SKOLNICK should have disclosed that MS. JOYCE drove the insured’s other automobiles, because the statement called for the disclosure of all residents in the household who had a valid license and were drivers of any vehicles. This Court finds the question only required MR. SKOLNICK to disclose any resident who had a driver’s license or intended to drive the insured vehicle. Since, MS. JOYCE’s license was suspended and because she did not drive the insured vehicle, MR. SKOLNICK was not required to list her name on this part of the application.
In addition, the Court finds that Florida law does not require rescission in order to find that an insurer can avoid coverage for an accident when the insured makes a material misrepresentation on the application. The Plaintiffs/Appellants argue that once FORTUNE learned of the incorrect statements they were required to either rescind the agreement or ratify the policy and be bound by its terms and obligations. They claim that since FORTUNE, with knowledge of the material omission, chose to keep MR. SKOLNICK’s premiums rather than to rescind the policy from its inception, they effectively reaffirmed the policy and therefore waived their right to deny coverage as to MS. JOYCE’s claims. See, Crown Ice Machine Leasing Co. v. Same Senter Farms, Inc., 174 So.2d 614 (Fla. 2d DCA 1965); Dairyland Insurance Co. v. Kammerer, 327 NW.2d 618 (1982). The Defendant/Appellee contends that rescission is not a condition precedent to §627.409’s application, but is just another option available to the insurer in these types of cases. Moreover, they claim that the policy was in full force and effect as to MR. SKOLNICK on the date of the accident, however, the policy did not provide coverage for MS. JOYCE due to the material misrepresentations on the application.
This Court finds that Florida Statute §627.409 vitiates coverage under a PIP policy when there has been a material misrepresentation regardless of whether the insurer rescinded the policy. In the instant action, the omission in question did not serve to vitiate the policy from its inception for claims unrelated to the omission. Consequently, the failure to list MS. JOYCE on the application precluded coverage only for the claim arising out of her driving the insured vehicle, while MR. SKOLNICK remained covered throughout the entire period the policy was in effect, thus entitling the insurer to retain the premiums. The Court finds that when the misrepresentation goes to the entirety of the coverage, rescission may be a proper remedy, but it is not the only remedy. See, Martinez v. General Insurance Co., 483 So.2d 892, 894 (Fla. 3d DCA 1986)2. Therefore, the trial court properly held that rescission does not have to occur before an insurer can avoid coverage under Florida Statute, §627.409.
Finally, the Court finds that the Plaintiffs/Appellants are precluded from arguing that Florida Statute §627.409 is unconstitutional because this argument was not raised during trial. Morales v. Sperry Rand Corp., 601 So.2d 538 (Fla. 1992). However, even if the argument had been properly raised, the Court finds the proposition is meritless, since there is nothing unconstitutional about precluding recovery under a policy that was entered into by an insurer, due to an insured’s failure to disclose information that was material to the acceptance of the contract itself.
Accordingly, it is hereby,
ORDERED that the trial court’s Final Declaratory Judgment in favor of FORTUNE INSURANCE COMPANY is AFFIRMED.
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1The insurance policy specifically provided that FORTUNE would pay 80% of the medical expenses incurred as a result of bodily injury, caused by an accident arising out of the use of a motor vehicle and sustained by: “(1) the named insured or any relative while occupying a motor vehicle or, while a pedestrian, through being struck by a motor vehicle; or (2) any other person while occupying the insured motor vehicle or, while a pedestrian, through being struck by the insured motor vehicle.” (R. 672).
2The holding in Martinez addresses the same argument as made by the Plaintiffs/Appellants in this case. In Martinez, the insured failed to disclose on the application that her son was living in the household. The son was involved in an accident while driving one of the insured vehicles, and the insurer denied coverage to the son only, due to the material misrepresentation. The appellate court held that rescission of the policy was one remedy available to the insurer, however, the insurer was also entitled to preclude coverage only for a claim arising out of the son driving the insured vehicle due to the omission. The Court specifically stated that they did not agree with the holding in Dairyland Insurance Co. which was cited by the Plaintiffs/Appellants in their brief.
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