7 Fla. L. Weekly Supp. 728a
Insurance — Automobile — Private passenger automobile insurer who wishes to charge an additional premium according to section 627.7282 must set policy’s cancellation within 45 days of issuance of the notice of additional premium due — Upon cancellation of private passenger automobile policy, insurer must make gross instead of net refund of unearned premiums, which means that refund must include agent’s unearned commission — Cancellation of policy results in creation of debt of unearned premium, and interest is owed by company on that debt if not immediately paid
Reversed at 26 Fla. L. Weekly D1476b
ROBERTO DE ARMAS, Plaintiff, v. SEMINOLE CASUALTY INSURANCE COMPANY, Defendant. Circuit Court, 11th Judicial Circuit in and for Miami-Dade County, General Jurisdiction Division. Case No. 96-8754 CA 30. August 7, 2000. Murray Goldman, Judge. Counsel: Carlos Lidsky, for Plaintiff. Paul Ezatoff, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGEMENT
This matter came before the Court on July 19, 2000, for hearing on Plaintiffs’ motion for partial summary judgment. Plaintiffs ask the Court to enter partial summary judgment on several liability issues raised by the pleadings. Plaintiffs have labeled these issues as follows: “NO A.P. NOTICE”, “EQUITY DATING”, “GROSS v. NET”, “LATE REFUND”, and “LATE `NET’ REFUND”. The Court will use this nomenclature in this order. The Court heard oral argument of counsel for Plaintiffs (by Mr. Lidsky) and for Defendant (by Mr. Ezatoff) on the NO A.P. NOTICE and the EQUITY DATING issues. The Court has reviewed the documents submitted by the parties on the issues not argued orally.1 Furthermore, this Court is familiar2 with the issues presented in this class action and has reviewed the relevant authorities provided by the parties. Accordingly, the Court ORDERS AND ADJUDGES:
NO A.P. NOTICE
Plaintiffs concede that the affidavit filed by Defendant from Mr. Peter Bergman raises a dispute of fact. Therefore, with respect to the “NO A.P. NOTICE” issue, Plaintiffs’ motion is denied.
EQUITY DATING
The Court agrees with Plaintiffs that a private passenger automobile insurer who wishes to charge an additional premium according to § 627.7282, Florida Statutes, must set the policy’s cancellation within 45 days of issuance of the notice of additional premium due, as prescribed by Florida Administrative Code Rule 4-167.002, which states:
(2) Such notice [of additional premium] shall include a period of time no less than ten (10) days and no greater than forty-five (45) days within which the policyholder has the option to pay the additional premium due or to cancel the policy and demand a refund of any unearned premiums.
See also the authorities cited by Plaintiffs: Harris v. United States Fidelity & Guaranty Company, 569 F.2d 850 (5th Cir. 1978); Lumbermen’s Mutual Casualty Company v. Beaver, 355 So.2d 441 (Fla. 4th DCA 1978); Robertson v. PHF Life Insurance Company, 702 So.2d 555 (Fla. 1st DCA 1997), rev. den. 717 So.2d 537 (Fla. 1998); Ball v. Florida Podiatrist Trust, 620 So.2d 1018 (Fla. 1st DCA 1993); Reedy Creek Improvement District v. Department of Environmental Regulation, 486 So.2d 642 (Fla. 1st DCA 1986); Davilla v. Merchants and Business Men’s Mutual Insurance Company, 5 Fla.L.Weekly Supp. 155 (Fla. 15th Cir. Miami-Dade Co. 1997). Therefore, with respect to the “EQUITY DATING” issue, Plaintiffs’ motion is granted.
GROSS v. NET
The Court agrees with Plaintiffs that an insurer, upon cancellation of a private passenger automobile policy (to which § 627.848, Florida Statutes, as amended, does not apply), must make a “gross” instead of a “net” refund of the unearned premiums. That is, the refund must include the agent’s unearned commission.
Additionally, Defendant’s policy states:
If this policy is canceled, you may be entitled to a premium refund. If so, we will send you the refund. The premium refund, if any, will be computed according to our manuals. However, making or offering to make refunds is not a condition of cancellation.
The policy does not specify whether the refund will or will not include the agent’s unearned commission. Seminole’s manuals are not in evidence, however, the Court is guided by Florida Administrative Code Rule 4-167.001(1), which requires that the refund be “gross”:
Unless otherwise provide in the contract, upon cancellation of a fire and casualty policy by the company or the insured, the return of gross premium is to be mailed within fifteen (15) working days after the effective date of cancellation, except where the provisions of Sections 627.7283 and 627.848(6), Florida Statutes, apply.
See also Florida Automobile Underwriters Association, Inc. v. Department of Insurance and Treasurer, 17 F.A.L.R. 2457 (Fla. Dept. of Insurance 1995), affirmed, 670 So.2d 943 (Fla. 1st DCA 1996). The Court also notes that at common law, an insurer generally has the duty to make gross unearned premium refunds. J. J. Newberry Co. v. Globe & Rutgers Fire Ins. Co., 177 N.E. 414 (N.Y. App. 1931); Kartinos v. John L. Walker Company, 227 Ill. App. 289 (Ill. App. 1922); Independence Sharing Corporation v. Fidelity & Deposit Co. of Maryland, 260 N.Y.S. 622 (N.Y. Mun. Ct. 1932); Perlman v. The Prudential Insurance Company of America, Inc., 686 So.2d 1378 (Fla. 3d DCA 1997), rev. den. 697 So.2d 512 (Fla. 1997), fn. 9. Therefore, with respect to the “GROSS v. NET” issue, Plaintiffs’ motion is granted.
LATE REFUND
The Court agrees with Plaintiffs’ contention that cancellation of policy results in the creation of a debt of the unearned premium, and that interest is owed by the company on that debt if not immediately paid. See the following authorities cited by Plaintiffs: Couch on Insurance 3d, §79:24 (Clark Boardman Callaghan, 1996); Hammonton Investment and Mortgage Company v. Empire Mutual Fire Insurance Company, 128 A.2d 73 (Pa. 1956); Lovell v. St. Louis Mutual Life Ins. Co., 4 S.Ct. 390 (1884); Perlman v. The Prudential Insurance Company of America, Inc., 686 So.2d 1378 (Fla. 3d DCA 1997), rev. den. 697 So.2d 512 (Fla. 1997); Mutual Reserve Fund Life Ass’n v. Ferrenbach, 144 F. 342 (8th Cir. 1906); Lofton v. Great American Insurance Company, 213 So.2d 333 (La. 3d Cir. 1968). Therefore, with respect to the “LATE REFUND” issue, Plaintiffs’ motion is granted.
LATE “NET” REFUND
In their motion, Plaintiffs acknowledged that “their Late “Net” Refund theory is derivative of their Gross v. Net and Late Refund claims. The outcome of the Court’s ruling on those theories of recovery will likely be dispositive of this claim.” The Court agrees with Plaintiffs’ characterization of this issue. Therefore, with respect to the “LATE “NET” REFUND” issue, Plaintiffs’ motion is granted.
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1See Millstream Corporation v. Dade County, 340 So.2d 1276, 1278 (Fla. 3d. DCA 1977) (“Millstream also asserts that the trial court’s dismissal denied it procedural due process, relying primarily on Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). However, appellant’s position in this regard is not well founded. Boddie and several subsequent cases decided by the United States Supreme Court (FN1) concerned the payment of certain court costs by parties who alleged an inability to pay the required fees and were thus denied access to the courts. Millstream alleges no such inability to pay and, in fact, is only required by statute to pay what it in good faith Admitted to be owing. The Boddie opinion carefully noted that due process does not require that parties must always be given a hearing on the merits in a civil matter. Rather, the Constitution requires that complaining parties be given a meaningful opportunity to be heard. Boddie, 401 U.S. at 378 — 79, 91 S.Ct. 780.
2Jose Rodriguez v. Union American Insurance Company, 93-02469 CA 30; Onelia Aleman v. Aries Insurance Company, No. 95-2394 CA 30; Ramon Valle v. Security National Insurance Company, No. 95-15470 CA 30; Marco Perez v. American Skyhawk Insurance Company, No. 95-16009 CA 30; Eyra Arcia v. U.S. Security Insurance Company, No. 96-23961 CA 30; Hugo Sotomayor v. The Aries Insurance Company, No. 97-27661 CA 30.
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