Echo v. MGA Ins. Co.

• Decision Date: 16 February 2015
• Docket Number: No. 1D14–1444.,1D14–1444.
• Parties: Gwendolyn ECHO, Appellant, v. MGA INSURANCE COMPANY, INC., Appellee.
• Court: Florida District Court of Appeals

157 So.3d 507

Gwendolyn ECHO, Appellant

v.MGA INSURANCE COMPANY, INC., Appellee.

No. 1D14–1444.

District Court of Appeal of Florida, First District.

Feb. 16, 2015.

J. Alistair McKenzie of McKenzie Law Firm, P.A., Pensacola, for Appellant.

Jeffrey E. Bigman and Amanda J. Jacobsen of Smith, Hood, Loucks, Stout, Bigman & Brock, P.A., Daytona Beach, for Appellee.

Opinion

THOMAS, J.

Appellant appeals a final summary judgment in a favor of Appellee MGA Insurance Co. (“MGA”), in which the court determined MGA was entitled to rescind an insurance policy based on Appellant's material misrepresentations. Appellant raises four issues on appeal, asserting that the trial court erred by: 1) rejecting Appellant's argument that MGA waived its misrepresentation defense or confessed judgment when it made personal injury protection (PIP) payments to Appellant's medical care providers after Appellant filed suit; 2) finding Appellant lacked standing to assert her waiver and confession of judgment arguments because she assigned her rights to PIP benefits to her medical care providers; 3) interpreting section 90.409, Florida Statutes, to preclude evidence of the PIP payments in support of those arguments; and 4) finding that there were no genuine issues of material fact as to the misrepresentation issue. For the reasons discussed below, we reverse as to the first three issues. We affirm as to the fourth issue without further comment.

Factual Background

Appellant purchased a 2008 Ford Focus in the name of one Mildred White. Appellant was at no point a registered owner of that vehicle, and only Ms. White's name appears on the documents related to the vehicle. Regardless, Appellant purchased the subject insurance policy covering the vehicle, and hers is the only name appearing on any of the insurance documents. The insurance application Appellant signed listed her as the only driver or resident in her household.

Approximately one year later, Appellant was involved in a motor vehicle accident while she was driving the Focus. Appellant underwent medical treatment with several medical care providers and submitted a claim with MGA. MGA responded with a letter advising Appellant that, pursuant to its investigation, it had learned that, contrary to her assertion in the insurance application, Appellant was not the owner of the Focus. MGA asserted that this constituted “a misrepresentation, omission, concealment of fact and/or incorrect statement and was material.” MGA also asserted that it either would not have issued the policy or would not have issued it for the same premium had it known the truth; thus, there was no coverage for the claim and the “policy is being voided ab initio. ” The letter was accompanied by a check refunding all premiums Appellant had paid, which Appellant did not cash. The record also includes a letter from MGA to one of Appellant's medical providers indicating that it was “unable to make payment on charges submitted because your patient's claim has been denied for Material Misrepresentation.”

Appellant filed a breach of contract action against MGA seeking PIP benefits, payment for vehicle repair costs, and legal representation in the event she was sued for the accident, all pursuant to the subject policy. MGA's answer to the complaint generally denied the substantive allegations and included an affirmative defense asserting that Appellant's misrepresentation “regarding the identity of the owner of the auto she was attempting to insure under said policy” entitled it “to revoke and/or cancel the contract of insurance pursuant to F.S. 627.409,” which it did pursuant to the notice provided in the aforementioned letter and its refund of Appellant's premium payments. MGA also reiterated its position that the policy was void “ab initio. ” Nearly one year after Appellant filed her complaint, however, MGA paid over $10,000 to Appellant's medical care providers.

MGA later amended its affirmative defenses, asserting that Appellant lacked “standing to pursue a claim for PIP benefits” because she “executed an assignment of any and all benefits she may have under the policy ... including but not limited to the right to receive payment; the right to bring suit for an alleged breach of contract” and any claim for fees, costs, and interest. Appellant subsequently filed an amended complaint which omitted any claim for PIP benefits. Appellant also filed a motion for partial summary judgment, asserting as grounds for entitlement the fact that MGA paid PIP benefits pursuant to the policy and, thus, waived its argument that the insurance contract was void ab initio. Appellant argued that the “confession of judgment” doctrine also applied, because MGA made the PIP payments after Appellant filed suit and before a judgment was entered.

After a hearing on the parties' respective motions, the court found that the record established that Appellant completed the application for the subject insurance policy and indicated in it that she was the vehicle's registered owner, “even though she knew at the time of the application” that this was not the case. The court determined that the policy was issued based on this representation and that the “record evidence indicates that the policy would not have been issued had [MGA] known that [Appellant] did not own the vehicle.” The court also found that Appellant's “misrepresentations were material to the risk being assumed by [MGA] and were relied upon by [MGA] in deciding whether the policy of insurance should have been issued,” thus, rescission was appropriate pursuant, to section 627.409(1)(a), (b), Florida Statutes, and case law.

Addressing Appellant's waiver and confession of judgment arguments, the court found that Appellant had “no standing to bring suit for [PIP] benefits under the policy as she assigned those benefits to her treating physicians.” Finally, the court found that section 90.409, Florida Statutes, “prohibits the introduction of evidence of furnishing; offering; or promising to pay medical or hospital expense to prove liability. Therefore [MGA's] payments of PIP benefits to medical providers are inadmissible.” The court entered judgment in MGA's favor, and this appeal followed.

Standard of Review

Because this appeal concerns a final summary judgment, our review is de novo. See Volusia Co. v. Aberdeen at Ormond Beach, L.P.,

760 So.2d 126, 130 (Fla.2000) (holding: “Summary judgment is proper if there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law. Thus, our standard of review is de novo.”) (citation omitted).

Waiver, Confession of Judgment, and Appellant's Standing

We agree with the trial court's finding that Appellant made material misrepresentations in the insurance application, warranting rescission pursuant to section 627.409(1)(a), (b), Florida Statutes. We find that the trial court erred, however, by failing to consider Appellant's waiver and confession of judgment arguments. The trial court found those arguments failed, because Appellant lacked standing to raise them based on her assignment of PIP benefits. As of the time of the hearing, however, Appellant was no longer seeking payment of PIP benefits; she was seeking payment for vehicle repair costs and legal representation, in the event she was sued for the accident. Furthermore, Appellant's position was that because of MGA's payment of PIP benefits after she filed her complaint, MGA could no longer contend that the contract was void, and regardless of assignment of PIP benefits, she still had standing to contest whether MGA waived its right to rescind the contract.

MGA counters Appellant's waiver and confession of judgment arguments by asserting that once it rescinded the contract, because of Appellant's misrepresentations, the contract became “void ab initio. ” Thus, MGA argues the contract could not be “resurrected” even if it took actions inconsistent with the rescission. We disagree.

Simply because MGA deemed the contract void because of Appellant's alleged misrepresentation does not mean the contract never existed. Pursuant to section 627.409(1), Florida Statutes, an insured's material misrepresentation “may prevent recovery under the contract or policy” if certain conditions exist. Thus, the statute does not provide that the contract instantly ceased to ever exist, because of an insured's misrepresentation (i.e., void ab initio ); rather, it gives an insurer the right to rescind an insurance contract if the statutory criteria are met (i.e., the contract is voidable). Furthermore, case law establishes the principle that an insurer can forfeit its right of rescission.

It is “well settled in insurance law that, when an insurer has knowledge of the existence of facts justifying a forfeiture of the policy, any unequivocal act which recognizes the continued existence of the policy or which is wholly inconsistent with a forfeiture, will constitute a waiver thereof.” Johnson v. Life Ins. Co. of Ga., 52 So.2d 813, 815 (Fla.1951). Furthermore, in United Services Automobile Association v. Clarke, the court acknowledged that an insurer can waive its right to void a policy pursuant to section 627.409, but found that the carrier in that case had not done so. 757 So.2d 554, 556 (Fla. 4th DCA 2000). Thus, MGA's position that it could do nothing to “resurrect” or “cure” a contract that was not in existence once void ab initio is not supported in law.

Because of its erroneous conclusion that Appellant lacked standing to raise her waiver argument, the trial court did not address the factors necessary for determining whether MGA waived its right to void the contract. Consequently, we remand this matter for the court to resolve the waiver issue on the merits or, alternatively, submit the matter to a jury. See, e.g., Hill v. Ray Carter Auto Sales, 745 So.2d 1136, 1138 (Fla. 1st DCA 1999)(holding “[w]hether a waiver has occurred in any given situation is generally a question of fact.”); Pajcic v. Am....