Homeowners Choice Prop. & Cas. Ins. Co. v. Kuwas

• Decision Date: 05 July 2018
• Docket Number: No. 4D17–2383,4D17–2383
• Citation: 251 So.3d 181
• Parties: HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY, INC., Appellant, v. Sanjay KUWAS, Appellee.
• Court: Florida District Court of Appeals

251 So.3d 181

HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY, INC., Appellant,

v.Sanjay KUWAS, Appellee.

No. 4D17–2383

District Court of Appeal of Florida, Fourth District.

[July 5, 2018]

Daniel M. Schwarz of Cole, Scott & Kissane, P.A., Plantation, for appellant.

Gray R. Proctor of Fox & Loquasto, P.A., Richmond, Virginia, and John Salcedo and Lidor Kantor of The Mineo Salcedo Law Firm, P.A., Davie, for appellee.

Conner, J.

Homeowners Choice Property & Casualty Insurance Company, Inc. ("HCI"), appeals the trial court's final judgment entered in favor of Sanjay Kuwas ("Kuwas") and the order denying HCI's post-trial motions. HCI contends the trial court erred by: (1) denying its motion for new trial grounded on Kuwas's improper arguments and questioning of HCI's litigation manager; (2) allowing Kuwas to offer improper impeachment evidence; (3) denying its motion to strike the jury foreperson and motion for new trial on the same ground; and (4) denying its motion for directed verdict and motion to set aside the verdict. Additionally, HCI argues cumulative error as a basis for new trial, if the individual grounds are not sufficient. We reverse on the first issue and remand for a new trial. We affirm as to the second issue (concerning improper impeachment evidence) without discussion. We do not address the remaining issues, as they are rendered moot by our reversal for new trial.

Background

Kuwas sued HCI alleging two counts of breach of contract in connection with the insurance company's denial of coverage for two insurance claims he filed in 2011 and 2015 for property damage as a result of water loss.

HCI asserted affirmative defenses based on the following exclusions to coverage for losses caused by: (1) sewer backups; (2) "neglect of the ‘insured’ to use all reasonable means to save and preserve the property at and after the time of a loss"; (3) constant or repeated seepage or leakage; and (4) inadequate maintenance of the property. Subsequently, HCI withdrew its affirmative defense alleging an exclusion for sewer backups, apparently, not contesting Kuwas's argument that the exclusion did not apply. HCI proceeded to trial on its remaining affirmative defenses.

During the trial, HCI raised objections to various questions posed by Kuwas during the testimony of HCI's litigation manager, as well as various opening and closing arguments by Kuwas.

The jury entered a verdict in favor of Kuwas for a substantial sum. HCI's post-trial motions were denied. HCI gave notice of appeal.

Appellate Analysis

Denial of a motion for new trial based on improper argument is reviewed for abuse of discretion. Las Olas Holding Co. v. Demella , 228 So.3d 97, 107 (Fla. 4th DCA 2017).

HCI argues that the trial court erred in denying its motion for new trial based on improper arguments and witness questioning: (1) implying HCI's bad faith; (2) emphasizing Kuwas's payment of premiums; and (3) disparaging HCI's defense of the claims. HCI contends that such arguments and questioning were so inflammatory and prejudicial that each alone, or combined, denied HCI a fair trial. We discuss each alternative argument below.

The standard applicable to preserved issues of improper argument is "whether the comment was highly prejudicial and inflammatory." Murphy v. Int'l Robotic Sys., Inc. , 766 So.2d 1010, 1012 n.2 (Fla. 2000).

Bad Faith

HCI argues that a new trial is warranted because Kuwas presented his theory of the case in such a way as to improperly imply HCI's bad faith in the handling of the claims in this case and other cases in general. In particular, HCI points to Kuwas's remarks that HCI was "playing the odds" in deciding to deny a claim "in the hope that the party who is seeking to be paid under a policy will not sue them." HCI argues that Kuwas improperly used this phrase in his opening statement, closing argument, and his examination of HCI's litigation case manager.

Review of the record confirms HCI is correct concerning allusions to HCI's purported bad faith. In opening statement, Kuwas said that HCI "decided to play the odds. The odds being that no one will make a claim if they say we're not paying." On direct examination of HCI's litigation manager, Kuwas again used the phrase, stating: "Now then, you would agree with me that if [HCI] is playing the odds, that would be a breach of the policy?" In explaining what he meant by "playing the odds," Kuwas stated: "Well, when I say playing the odds, if [HCI] has made a decision to deny a claim or deny claims in the hope that the party who is seeking to be paid under a policy will not sue them, that would be the wrong thing for [HCI] to be doing." There were multiple other instances during the examination of the litigation manager in which Kuwas used the phrase "playing the odds" or some variation in reference to HCI. Some of HCI's objections were sustained; others were overruled. Finally, Kuwas began his closing argument by stating of HCI that:

"Everything that one needed to know was stuff that they knew from day one. And what they did was, they decided to play the odds. Right? We'll talk a little bit about that. They decided, we're going to play the odds. And we're just going to disregard responsibilities that they have, personal responsibility. "

(emphasis added). HCI objected to this argument as improper, but was overruled.

HCI correctly argues that implications of bad faith should not form a basis to determine liability in a first party insurance coverage action. See Carvajal v. Penland , 120 So.3d 6, 10 (Fla. 2d DCA 2013) (testimony and argument that uninsured motorist insurer shirked its responsibilities and otherwise acted in bad faith warranted new trial where the statements were inappropriate plea to juror's sympathies and focus of trial was injuries and damages, not claims handling and bad faith). "[T]he determination of the existence of liability and the extent of the insured's damages" are prerequisites to a bad faith action. See Cammarata v. State Farm Fla. Ins. Co. , 152 So.3d 606, 612 (Fla. 4th DCA 2014) (emphasis added). We have specifically maintained that "where the insurer's liability for coverage and the extent of damages have not been determined in any form, ... [such] must be determined before a bad faith action becomes ripe." Id. at 613 (first emphasis added).

HCI argues that shifting the focus to bad faith in claims handling denied it a fair trial. See Carvajal , 120 So.3d at 10. Additionally, HCI specifically argues that criticism of its claims handling practices as a business practice, which was not based on matters in evidence, was improper. See Mercury Ins. Co. of Fla. v. Moreta , 957 So.2d 1242, 1251 (Fla. 2d DCA 2007) ("[O]pposing counsel's criticism of [insurer]'s alleged litigation tactics and practices was not based on matters in evidence.... Because there was no evidence before the trial court to support these claims, it was improper for counsel to make them."). HCI points out that "properly preserved improper witness testimony which is highly prejudicial and inflammatory warrants a new trial, particularly where the damaging testimony is compounded by improper argument." Carvajal , 120 So.3d at 9. HCI argues that Kuwas used the questioning of HCI's litigation manager as an opportunity to paint HCI as a carrier that denies policyholders' claims for any or no reason, thereby shifting the focus inappropriately to HCI's claims handling and bad faith, which were not issues before the jury. We agree with HCI's arguments and reject Kuwas's reliance on claims handling case law in the context of uninsured motorist benefits as counterargument. The reliance on such case law is misplaced because the issues in those cases sound more in tort than in contract.

Payment of Premiums

HCI argues that a new trial is also warranted because Kuwas improperly emphasized Kuwas's payment of his premiums during opening statement and closing argument. HCI points to the following comment made by Kuwas's counsel in opening statement:

There was talk yesterday about reading what you sign. What happened in this case was my client had an agreement with [HCI], you see. And let me explain. This is not a contract where two people sit down and negotiate, come to an agreement, and sign it. No. No.

[HCI] says, here's the deal. If you pay us X, we will provide you with an insurance policy. So my client paid X year, after year, after year, after year from back in the '90s, all right, paid X , and they sent him an insurance policy. So what happens? What happens is, we have an insurance company that decided to play the odds. The odds being that no one will make a claim if they say we're not paying.

(emphasis added). HCI objected to this comment as improper, but was overruled. In closing argument, Kuwas's counsel argued that Kuwas "deserves his house back because he paid not to be in this position ." (emphasis added). HCI's objection to that argument was overruled, allowing Kuwas, over a renewed objection, to argue that Kuwas "paid not to be in this position ." (emphasis added).

HCI argues that it was improper for counsel to emphasize Kuwas's payment of premiums in this manner because the length of time that Kuwas paid his premiums was irrelevant to whether HCI breached its policy when it denied his claims. In support the argument, HCI relies on Government Employees Ins. Co. v. Kisha , 160 So.3d 549, 552–53 (Fla. 5th DCA 2015) (determining references to length of time insured had been insured by automobile insurer constituted an impermissible plea for sympathy that impeded jury's ability to fulfill its duty of impartiality, and thus references denied insurer's right to a fair trial in litigation involving personal injury protection benefits; insured's attorney referenced "all the years of" and "thousands of dollars of" payments insured had made and argued that insurer left her "out in the cold" upon her first claim, and attorney argued that insurer owed it to insured to provide coverage after all those years....