Hassen v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 07 March 1996
• Docket Number: No. 85300,85300
• Citation: 674 So.2d 106
• Parties: 21 Fla. L. Weekly S102 Diane S. HASSEN, et al., Petitioners, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent.
• Court: Florida Supreme Court

Page 106

674 So.2d 106

21 Fla. L. Weekly S102

Diane S. HASSEN, et al., Petitioners, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent.

No. 85300.

Supreme Court of Florida.

March 7, 1996.

Rehearing Denied May 20, 1996.

Application for Review of the Decision of the District Court of Appeal; Certified Great Public Importance; Second District; Case No. 94-01241 (Pinellas County).

Dianna L. Myers of Perenich, Carroll, Perenich, Avril & Caulfield, P.A., Clearwater, for Petitioners.

H. Shelton Philips of Kaleel & Kaleel, P.A., St. Petersburg, for Respondent.

Roy D. Wasson, Miami; and Barbara Green, Coral Gables, for The Academy of Florida Trial Lawyers, Amicus Curiae.

George A. Vaka of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for Florida Farm Bureau Casualty Insurance Company, Amicus Curiae.

KOGAN, Justice.

We have for review State Farm Mutual Automobile Ins. Co. v. Hassen, 650 So.2d 128 (Fla. 2d DCA 1995), wherein the Second District Court of Appeal held section 627.727(6), Florida Statutes (Supp.1992), unconstitutional and certified the following question to be of great public importance:

IS SECTION 627.727(6), FLORIDA STATUTES (SUPP.1992), CONSTITUTIONAL? IF SO, IS IT A SUBSTANTIVE STATUTE, AS OPPOSED TO A REMEDIAL STATUTE, SUCH THAT ITS TERMS CANNOT BE APPLIED CONSTITUTIONALLY TO A PENDING CLAIM BROUGHT UNDER THE UNINSURED MOTORIST PROVISIONS OF AN AUTOMOBILE INSURANCE POLICY ISSUED PRIOR TO ITS EFFECTIVE DATE?

650 So.2d at 141-42. We have jurisdiction. Art. V, § 3(b)(1), (4), Fla. Const. For the reasons expressed below, we decline to answer the certified question. Rather, we hold that section 627.727(6), Florida Statutes (Supp.1992), should not be applied, as it was here, to a claim brought under the underinsured motorist provisions of an automobile insurance policy issued prior to that statute's effective date.

This case comes to us in the following context. On June 15, 1990, Diane Hassen was injured in an automobile accident that occurred as the result of the alleged negligence of an underinsured driver. At the time of the accident, State Farm Mutual Automobile Insurance Company (State Farm) insured Hassen and her husband under an automobile insurance policy with an effective date of March 26, 1990. The policy provided "stacked" uninsured motorist (UM) benefits of $200,000.

The automobile driven by the other driver was insured through UniSun Insurance Company with a policy providing liability limits of $100,000. UniSun offered to settle the Hassens' claim for the full amount of the policy limits. The Hassens accepted the offer subject to State Farm's approval. The Hassens sent State Farm a certified letter formally notifying it of UniSun's offer and requesting authorization to accept it. The letter further stated "[s]hould [State Farm] choose to preserve its subrogation right by refusing permission to settle, kindly forward a check in the amount of $100,000.00." State Farm questioned whether the value of the Hassens' third-party claim was worth UniSun's policy limits. State Farm also stated that it would not make a decision on authorization to settle until it heard from the owner of the other vehicle, who it had reason to believe might have sufficient assets to contribute to a settlement or to satisfy State Farm's subrogation claim. The record does not reflect whether the owner ever responded to State Farm's inquiry.

State Farm did, however, offer to settle the Hassens' uninsured motorist claim for $50,000 but without waiving its subrogation rights. Thus, State Farm ultimately denied permission to settle, refused to waive its subrogation rights, and declined to pay the sum previously offered by UniSun.

Over State Farm's objection, the Hassens accepted UniSun's $100,000 settlement offer and executed a full release in favor of the tortfeasors. The Hassens later demanded coverage from State Farm under the uninsured motorist provisions of their policy. When State Farm denied coverage citing the unauthorized settlement, the Hassens sought a declaration of their rights under the policy.

The trial court entered a partial final summary judgment in favor of the Hassens. The court determined that the Hassens were entitled to underinsured motorist coverage under the State Farm policy. The trial court ruled that section 627.727(6), Florida Statutes (Supp.1992), which became effective October 1, 1992, ¹ was a "remedial/procedural statute and applie[d], therefore, to claims for uninsured motorist benefits and policies of insurance issued before its effective date." The trial court found that the Hassens complied with the statute by giving State Farm "ample notice and opportunity to tender the sum offered by the tortfeasors in order to retain subrogation rights" and that State Farm "failed to timely waive subrogation or tender the amount of the written offer." Thus, under the 1992 statute, the Hassens were free to settle and release the tortfeasors without prejudice to their claim for underinsured motorist benefits from State Farm.

On appeal, the district court reversed. The district court held that, as applied in this case--to a pending claim brought under the uninsured motorist provisions of a policy executed prior to the statute's effective date--the 1992 statute unconstitutionally impaired the obligation of contract in violation of article I, section 10 of the Florida Constitution. 650 So.2d at 134. The court further held that the 1992 statute violates an uninsured motorist carrier's 1) right to due process of law as guaranteed by the Fourteenth Amendment to the United States Constitution and by article I, section 9 of the Florida Constitution; and 2) right of access to the courts as protected by article I, section 21 of the Florida Constitution. Id. at 139. The district court then certified the above question for our consideration.

Although we decline to answer the certified question as phrased by the district court, we approve the result reached below. Our resolution of this case is based on our determination that the 1992 amendment to section 627.727(6) substantially changes the law governing an underinsured motorist carrier's right to subrogation and therefore must be applied prospectively in light of the complete absence of a legislative statement to the contrary.

It is a well established rule of statutory construction that, in the absence of an express legislative statement to the contrary, an enactment that affects substantive rights or creates new obligations or liabilities is presumed to apply prospectively. Arrow Air, Inc. v. Walsh, 645 So.2d 422, 425 (Fla.1994). This Court will not divine an intent that a new law be applied to disturb existing contractual rights or duties when there is no express indication that such is the legislature's intent. Walker & LaBerge, Inc. v. Halligan, 344 So.2d 239, 243 (Fla.1977). Consistent with these rules of construction, it is generally accepted that the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract. See Lumbermens Mutual Casualty Co. v. Ceballos, 440 So.2d 612, 613 (Fla. 3d DCA 1983), and cases cited therein. We cannot agree with the trial court that the 1992 amendment at issue here is a "remedial/procedural" change in the law which falls outside these well established rules. A review of the 1992 and 1989 versions of the statute illustrates that substantive rights and obligations are affected by the amendment.

Under the 1992 version of subsection (6), which the trial court held to apply here, an underinsured motorist carrier has thirty days from receipt of written notice of a proposed settlement with an underinsured motorist's liability insurer to consider authorization of the settlement or retention of its subrogation rights. § 627.727(6)(a), Fla.Stat. (Supp.1992). If the UM carrier chooses to preserve its subrogation rights by refusing permission to settle, it has thirty days after receipt of the notice to pay its insured the amount of the settlement offer. Id. § 627.727(6)(b). After final resolution of the underinsured motorist claim, the UM carrier then may seek subrogation against the underinsured motorist and the liability insurer for the amounts paid to the UM carrier's insured. Id. If the carrier authorizes settlement or fails to respond to the settlement request within the thirty-day period, its insured is free to settle the claim and release from liability the underinsured motorist and the motorist's liability insurer without prejudice to any claim against the UM carrier. Id. § 627.727(6)(a).

We turn now to the version of the statute that was in effect at the time the Hassens' policy was issued. Under the 1989 version of section 627.727(6), State Farm had thirty days from receipt of notice of a settlement offer to approve the settlement, waive its subrogation rights, authorize a full release, and agree to arbitrate the underinsured motorist claim. If it did not act within the thirty-day period, the only consequence State Farm faced was a lawsuit against it and the underinsured motorist "to resolve their respective liabilities for any damages to be awarded" the Hassens. § 627.727(6), Fla.Stat. (1989). If State Farm chose to preserve its subrogation rights by refusing to approve a settlement offer, the 1989 statute placed no prepayment obligation on State Farm in order to preserve those rights. The parties incorporated language mirroring the relevant provisions of the 1989 statute into their contract of...