American Fire & Indem. Co. v. Spaulding

• Decision Date: 08 December 1983
• Docket Number: No. 62267,62267
• Citation: 442 So.2d 206
• Court: Florida Supreme Court
• Parties: AMERICAN FIRE & INDEMNITY CO., Petitioner, v. Ruth SPAULDING, Respondent.

Page 206

442 So.2d 206

AMERICAN FIRE & INDEMNITY CO., Petitioner, v. Ruth SPAULDING, Respondent.

No. 62267.

Supreme Court of Florida.

Dec. 8, 1983.

Keith H. Park of Albury, Park & Heuer, and Edna L. Caruso, West Palm Beach, for petitioner.

Majorie Gadarian Graham, of Jones & Foster, West Palm Beach, for respondent.

James C. Blecke of Blackwell, Walker, Gray, Powers, Flick & Hoehl, Miami, for Florida Defense Lawyers Ass'n, amicus curiae.

McDONALD, Justice.

We have for review Spaulding v. American Fire & Indemnity Co., 412 So.2d 367 (Fla. 4th DCA 1981), because of conflict with Kimbrell v. Great American Insurance Co., 420 So.2d 1086 (Fla.1982). ¹ We have jurisdiction pursuant to article V, section 3(b)(3) of the Florida Constitution and quash the instant district court opinion.

On December 1, 1978 Spaulding's minor son, Joseph Spaulding, was injured while a passenger in a vehicle operated by Bradford Suder when it collided with a vehicle operated by Robert V. Troyan and insured by Kenilworth Insurance Company. The Suder vehicle was owned by Bradford's father, Burton Suder, and insured by American Fire & Indemnity Company (AFIC). Spaulding was insured by Fidelity & Casualty Company of New York (F & C).

The AFIC policy issued to Burton Suder provided bodily injury liability coverage of $250,000 per person and $500,000 per occurrence and uninsured motorist coverage of $15,000 per person and $30,000 per occurrence. Spaulding's F & C policy provided uninsured motorist coverage of $10,000 per person and $20,000 per occurrence. Kenilworth's coverage of Troyan was $10,000 per person, and it offered its policy limits to Spaulding to settle her claim on behalf of her son. AFIC failed to timely approve the settlement. Spaulding, therefore, pursuant to subsection 627.727(6), Florida Statutes (1977), instituted an action for damages against Troyan and Kenilworth, for uninsured motorist benefits against AFIC and F & C, and for attorneys' fees from AFIC.

AFIC counterclaimed for declaratory relief to determine the amount of uninsured motorist coverage available to Spaulding, who filed a general denial and sought attorneys' fees. The trial court granted AFIC's motion to strike Spaulding's claims for attorneys' fees in her complaint and in her answer to the counterclaim. The court also granted AFIC's motion to sever the counterclaim. The parties proceeded to nonjury trial on the issue of whether AFIC's uninsured motorist coverage was $15,000 or $250,000.

The evidence before the trial court established that on November 3, 1977 Suder authorized his insurance agent to increase his bodily injury insurance per person from $100,000 to $250,000. At this time he was informed that, pursuant to subsection 627.727(2), Florida Statutes (1977), uninsured motorist coverage of $250,000 was available to him. ² He elected, however, to maintain his uninsured motorist coverage at $15,000 per person. No written rejection was obtained. Suder's express refusal to increase his uninsured motorist coverage was followed by at least two policy changes made prior to the accident: one added Suder's son Bradford and the other added a vehicle to the policy. On these occasions Suder was not again advised that he had the opportunity to increase his uninsured motorist coverage. Suder testified, however, that he intended for his uninsured motorist coverage to remain at the lower limits because of the additional expense of increased coverage.

Based upon the evidence adduced at trial, the trial court found that the uninsured motorist coverage was $15,000 per person. On appeal the district court reversed the trial court's decision and found the uninsured motorist coverage to be $250,000. The district court initially affirmed the striking of the plaintiff's claims for attorneys' fees, but on rehearing the court reversed its position and held that Spaulding was entitled to attorneys' fees at the trial level.

In holding that the correct amount of uninsured motorist coverage was $250,000, the district court construed subsection 627.727(1), Florida Statutes (1977), as requiring that the insurer inform the insured, Burton Suder, of his statutory right to higher uninsured motorist coverage with every "material" policy endorsement. ³ The fourth district advanced the view that any "material" policy change constitutes the issuance of a separate contract of insurance as opposed to a "renewal" and, therefore, the insurer is required to provide the insured with an opportunity to reject or select uninsured motorist coverage. ⁴ Since AFIC did not expressly offer increased uninsured motorist coverage when Suder's policy was altered to accommodate an additional driver and vehicle, the district court found that the uninsured motorist coverage automatically increased to $250,000, an amount equal to the general liability coverage.

We cannot agree with the district court's interpretation of the statute. While the statute clearly provides that uninsured motorist coverage is by operation of law equal to general liability coverage unless the named insured selects otherwise, it does not mandate that this selection be in writing or any other specific form. "What the statute does require is that a rejection of uninsured motorist coverage or a selection of lower limits of coverage must be knowingly made." Kimbrell v. Great American Insurance Co., 420 So.2d 1086, 1088 (Fla.1982). In Kimbrell we noted that the question...