Almerico v. RLI Ins. Co.

• Decision Date: 04 September 1998
• Docket Number: No. 89131,89131
• Citation: 716 So.2d 774
• Parties: 23 Fla. L. Weekly S431 Jason K. ALMERICO, et al., Petitioners, v. RLI INSURANCE COMPANY, Respondent.
• Court: Florida Supreme Court

Page 774

716 So.2d 774

23 Fla. L. Weekly S431

Jason K. ALMERICO, et al., Petitioners, v. RLI INSURANCE COMPANY, Respondent.

No. 89131.

Supreme Court of Florida.

Sept. 4, 1998.

Lee D. Gunn, IV and Kelly K. Griffin of Gunn, Ogden & Sullivan, P.A., Tampa, for Petitioner.

George A. Vaka of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for Respondent.

ANSTEAD, Justice.

We have for review RLI Insurance Co. v. Collado, 678 So.2d 1313 (Fla. 2d DCA 1996), based on express and direct conflict with Gaskins v. General Insurance Co., 397 So.2d 729 (Fla. 1st DCA 1981). We have jurisdiction. Art. V, § 3(b)(3), Fla. Const. For the reasons expressed below, we hold that under section 626.342(2), Florida Statutes (1989), civil liability for an agent's conduct may be imposed upon insurers who cloak insurance agents with sufficient indicia of agency to establish an agency relationship. We quash the decision under review and approve Gaskins.

MATERIAL FACTS ¹ AND PROCEEDINGS BELOW

Eighteen-year-old Daron Collado was the driver of a car involved in an accident in which one passenger was killed and two others, including petitioner Jason K. Almerico (Almerico), were seriously injured. The car, a 1989 Honda, was owned by Daron Collado's parents, Donald and Grace Collado (the Collados). At issue is whether, at the time of the accident, the Collados were insured under an umbrella policy of personal liability insurance obtained by their insurance agent J.R. Pliego from RLI Insurance Company. The resolution of that issue rests in turn on a determination of the nature of the agency relationship between Pliego and RLI.

J.R. Pliego (Pliego), owner of J.R. Insurance Agency, was a licensed insurance agent lawfully authorized to sell insurance in Florida. ² Pliego provided the Collados with liability insurance for a number of years. He represented American Mutual Fire Insurance Company (American) and insured the Collados with a liability policy and an umbrella policy issued by American. When American stopped issuing umbrella policies, Mrs. Collado requested that Pliego obtain umbrella insurance from another company.

Pliego obtained applications for insurance from Poe and Associates (Poe), who had been authorized to market RLI Insurance Company's policies in Florida. Although RLI knew that Poe would obtain subproducers to take applications for insurance, RLI relied on Poe to process the applications and had no direct dealings with the subproducers like Pliego. Nevertheless, there is evidence in the record that Pliego was actually assigned an RLI agent number and had a certain minimum of policies that he had to procure each year for RLI in order to remain within RLI's network of producing agents. In a letter to RLI, Poe identified Pliego and his agency, J.R. Insurance Agency, as "Agent # 2020" and as being recently added as "a new administrator in Florida to our Personal Umbrella Program." Thereafter, that agent number was affixed to the Collados' subsequent application to renew their umbrella policy next to the caption "RLI Agent Number." Under the caption "RLI Agent" was handwritten "J R Insurance." J.R. Pliego himself signed the application of the Collados for a policy from RLI next to the words "Producer's Signature." An RLI umbrella policy was issued to the Collados, and was subsequently renewed through the same process.

Following the automobile accident, RLI filed a declaratory judgment action against the Collados and their primary liability insurer, American. RLI asserted that it was entitled to rescind the umbrella policy since the Collado renewal application contained material misrepresentations, omissions, or incorrect statements. RLI alleged that the insurance application required the Collados to list all drivers in their household under age twenty-six and to list all vehicles that were owned or leased by household members, and the Collados had failed to do so. It was alleged that the application falsely stated there were no drivers in the household under age twenty-six and failed to list a Mazda RX-7 owned by the Collados. RLI alleged that pursuant to its underwriting guidelines, it would not have issued an umbrella policy to any household having either a youthful driver or a high performance car.

In response, the Collados filed an affirmative defense claiming that RLI was estopped from denying coverage because the application was prepared and signed by RLI's agent Pliego. It was further alleged that Pliego and RLI had actual knowledge of the false or missing information and actually possessed a copy of the underlying policy with American also containing all of the missing information including the exact number and type of all vehicles owned by the Collados and the fact that eighteen-year-old Daron was a household resident.

Almerico and his uninsured motorist provider, The Phoenix Insurance Company (Phoenix), were allowed to intervene in the action because of their settlement of claims A series of partial summary judgments were entered by the trial court concluding that: (1) the Collados' misrepresentations in the insurance application were material and RLI would not have issued the policy had it known the true facts; (2) Pliego was RLI's statutory agent pursuant to section 626.342, Florida Statutes, and RLI was estopped from rescinding the policy by reason of its actual knowledge, through its agent, of the alleged false or missing information; and (3) RLI breached its indemnity obligations by wrongfully denying coverage under the umbrella policy.

against the Collados. The settlement provided for a stipulated judgment whereby Almerico and his insurer became judgment creditors and express assignees of the Collados for their liability arising out of the accident. Almerico and Phoenix also asserted the same claim of estoppel as asserted by the Collados that RLI was estopped from relying on any omissions in the application because of RLI's actual knowledge, through its agent Pliego, of the relevant information.

On appeal, the Second District found that Pliego was acting not as RLI's agent, but solely as the Collados' agent, and consequently, the trial court should have entered a summary judgment for RLI. RLI, 678 So.2d at 1315. ³ Further, the court held that RLI was authorized to furnish Pliego with insurance applications without creating an agency relationship with him or his agency pursuant to the exchange of business statute, section 626.752, Florida Statutes (1989). In addition, the court found that since Pliego and his insurance agency were properly licensed to sell the insurance in question, RLI did not violate the provisions of section 626.342(1), Florida Statutes (1989).

LAW AND ANALYSIS

To resolve the issues raised in this case, we must examine the legal standard underlying the theory of agency and the statutory interpretation of Florida's insurance statutes employed by the district courts in RLI and Gaskins and by the federal district court in Brown v. Inter-Ocean Insurance Co., 438 F.Supp. 951 (N.D.Ga.1977).

BROKERS

In essence, the Second District's decision here is predicated upon the conclusion that Pliego was a broker and an agent for the Collados rather than an agent for RLI. One legal treatise defines an "insurance broker" as:

[O]ne who acts as middleman between the insured and insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, placing it with a company selected by the insured or with a company selected by himself or herself; whereas an "insurance agent" is one who represents an insurer under an employment by it. A broker is, in essence, employed in each instance as a special agent for a single purpose, while the very definition of agent indicates an ongoing and continuous relationship. Since many insureds deal with the same broker for long periods of time, it is, in most cases, the continuity of the agency relationship that differs from the broker relationship; brokers and insureds are ordinarily involved in what can be viewed as a series of discrete transactions, while agents and insurers tend to be under some duty to each other during the entire length of the relationship.

3 Lee R. Russ, Couch on Insurance 3d, § 45:1 (1997) (footnotes omitted). As a general principle, an insurance broker is an agent of the insured. See, e.g., Boulton Agency, Inc. v. Phoenix Worldwide Industries, Inc., 698 So.2d 1248 (Fla. 3d DCA 1997); Auto-Owners Ins. Co. v. Yates, 368 So.2d 634 (Fla. 2d DCA 1979).

However, it is equally well settled that the insurance broker may act in the dual capacity of broker for the insured and agent Florida case law provides that an insurer may be held accountable for the actions of those whom it cloaks with "apparent agency". ⁴ Further, a review of the case law on agency indicates that evidence of indicia of agency may be demonstrated if the insurer furnishes an insurance agent or agency with "any blank forms, applications, stationery, or other supplies to be used in soliciting, negotiating, or effecting contracts of insurance." § 626.342(1); see Fidelity & Casualty Co. v. D.N. Morrison Constr. Co., 116 Fla. 66, 156 So. 385 (1934). In Fidelity & Casualty Co., we found an agency relationship based on evidence the insurer gave "blank forms, blank applications, a seal of the corporation, and stationery with the corporate name" to the agent. Id. at 72, 156 So. 385. In that case the insurance company also allowed the agent to execute and deliver bonds and collect premiums and generally held him out as an agent without restrictions on his authority. Id.

of the insurer. American Fire Ins. Co. v. King Lumber & Mfg. Co., 74 Fla. 130, 151, 77 So. 168, 174 (1917); accord Steele v. Jackson Nat'l Life Ins. Co., 691 So.2d 525, 527 (Fla. 5th DCA 1997) (acknowledging that "an independent insurance agent can be the agent of the insurance company for one purpose and the agent of the insured for another"); see also ...