Sosa v. Safeway Premium Fin. Co.

• Decision Date: 07 July 2011
• Docket Number: No. SC09–1849.,SC09–1849.
• Citation: 73 So.3d 91
• Parties: Lazaro E. SOSA, etc., Petitioner, v. SAFEWAY PREMIUM FINANCE COMPANY, etc., Respondent.
• Court: Florida Supreme Court

73 So.3d 91

Lazaro E. SOSA, etc., Petitioner,

v.SAFEWAY PREMIUM FINANCE COMPANY, etc., Respondent.

No. SC09–1849.

Supreme Court of Florida.

July 7, 2011.

Benjamin R. Alvarez, Paul B. Feltman and Eduardo Gomez of Alvarez, Carbonell, Feltman, Jimenez, and Gomez, PL, Coral Gables, FL, for Petitioner.

Maria Elena Abate of Colodny, Fass, Talenfeld, Karlinsky, and Abate, P.A., Fort Lauderdale, FL, for Respondent.

LEWIS, J.

Lazaro E. Sosa seeks review of the decision of the Third District Court of Appeal in Safeway Premium Finance Co. v. Sosa, 15 So.3d 8 (Fla. 3d DCA 2009), asserting that it expressly and directly conflicts with the decisions of the Fourth District Court of Appeal in Olen Properties Corp. v. Moss, 981 So.2d 515 (Fla. 4th DCA 2008), and Smith v. Glen Cove Apartments Condominiums Master Ass'n, Inc., 847 So.2d 1107 (Fla. 4th DCA 2003). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.

This appeal arises from a motion for class certification filed in the trial court by Sosa. That motion emanated from a cause of action initiated by Sosa in which Sosa claimed that Safeway Premium Insurance Company (“Safeway”) violated sections 627.840(3)(b) and 627.835, Florida Statutes (2003), by knowingly overcharging him an additional service charge of $20 twice in a twelve-month period in two premium finance agreements which he entered into with Safeway. The trial court granted the motion for class certification. The Third District Court of Appeal, however, reversed the order and held that the trial court erred because Sosa and the putative class members did not satisfy the requirements of commonality and predominance needed for class certification under Florida Rule of Civil Procedure 1.220. This discretionary review proceeding followed.

The decision of the Third District was incorrect because, in making its own factual findings as to whether Sosa and the putative class members satisfied rule 1.220, the Third District afforded no deference to the trial court's actual factual findings and conducted a de novo review. That constituted error because, as demonstrated by Glen Cove and Olen Properties, the proper appellate standard of review for a grant of class certification is abuse of discretion.

Furthermore, the Third District incorrectly addressed whether Sosa satisfied section 627.835's “knowingly” requirement. It also incorrectly held that Sosa and the putative class members failed to satisfy rule 1.220's commonality and predominance requirements. In so holding, the Third District created conflict with Glen Cove and Olen Properties. We conclude that Glen Cove provides a proper analysis of rule 1.220's commonality and predominance requirement, and Olen Properties provides a proper analysis of rule 1.220's commonality requirement. Therefore, we quash the Third District's decision in Sosa and approve the decisions in Glen Cove and Olen Properties.

FACTS

In December 2002, Sosa purchased an automobile insurance policy from United Automobile Insurance Company (“United Auto”). Concomitant to this agreement, Sosa entered into a six-month premium finance agreement with Safeway, an affiliate of United Auto. United Auto and Safeway also share some of the same stockholders.

A premium finance agreement is an agreement between an insured and a premium finance company in which the premium finance company agrees to pay the insurer the insured's total insurance premium. See § 627.827, Fla. Stat. (2010). ¹ In return, the insured repays, with service charges and a possible “additional service charge,” the premium finance company in monthly installments. See id. A “service charge,” which is usually in the form of interest on the amount financed, is added to the principal amount billed to the insured by the premium finance company “for financing the premiums under the agreement.” § 627.840(2), Fla. Stat. (2010). An “additional service charge” is a statutorily limited service charge that may be imposed in addition to a service charge. See id. § 627.840(3)(a). For example, under section 627.840(3)(b), a premium finance company may assess to an insured a service charge that does not exceed “a maximum of $12 per $100 per year.” In addition to this service charge, a premium finance company may make an “additional [service] charge not exceeding $20,” which “may be charged only once in a 12–month period for any one customer unless that customer's policy has been canceled due to nonpayment within the immediately preceding 12–month period.” Id.

Under the first six-month premium finance agreement between Sosa and Safeway, Safeway agreed to, and did, pay the entire automobile insurance premium to United Auto on behalf of Sosa. In return, Sosa agreed to, and did, pay to Safeway in equal monthly installments the amount advanced by Safeway to United Auto for his automobile insurance premiums plus a service charge—a.k.a., a finance charge—of 12% per annum interest and an additional service charge of $20. In May 2003, Sosa renewed his insurance policy with United Auto and entered into a second six-month premium finance agreement with Safeway. The terms of the second agreement mirrored the terms of the first agreement and included a second additional service charge of $20. Sosa also made all payments due to Safeway under the second agreement.

In November 2003, Sosa renewed his automobile insurance with United Auto and entered into a third six-month premium finance agreement with Safeway. Although that agreement also contained an additional service charge of $20, Safeway waived that charge by way of a $20 credit to Sosa's account.² Safeway granted Sosa that waiver because it found that it had charged Sosa an additional service charge of $20 during the six-month period preceding the third premium finance agreement.

Safeway discovered its November 2003 overcharge when it checked Sosa's account in accordance with a manual system designed to spot and correct such illegal charges. Safeway created this manual system only after Florida's Department of Insurance (now Florida's Department of Financial Services) found, pursuant to a February 2001 audit of Safeway, that Safeway had been routinely and impermissibly charging its customers an additional service charge of $20 twice in twelve-month periods. The Department required Safeway to initiate a systemic plan that would stop future overcharges. The Department did not demand that Safeway review its records to address past overcharges. As a result, Safeway, at the time of the Department's audit, did not conduct a retroactive audit for past overcharges, nor did it make proactive efforts to issue refunds or credits to customers for past overcharges. Rather, it simply initiated a manual system that attempted to check for future potential overcharges where it had impermissibly charged an insured a $20 additional service charge in the previous six months contrary to Florida law.

Under the manual system, an insurance agent facilitated the submission of an application for, and a copy of, a six-month premium finance agreement by the insured to Safeway. These agents were not direct employees of Safeway, but rather, worked with insurance agencies that had full access to Safeway's application forms and premium finance agreements through the technology of QuickQuote. QuickQuote provided the agents with software that provided direct access to Safeway's application forms and Safeway's premium finance agreements. The agent's incentive was to use the financing supplied by Safeway to complete a transaction for insurance with United Auto. When Sosa filed this action, Safeway had approximately 300 agents in the network submitting these applications and agreements.

The signed application and premium finance agreement reflected the full amount that Safeway charged the insured under a premium finance agreement, including the additional service charge of $20. Each premium finance agreement routinely contained an additional service charge of $20 even if the applicant had already paid the additional service charge in a prior six-month premium finance agreement. The agent then forwarded the application to Safeway.

Upon arrival of the applications and premium finance agreements in Safeway/United Auto's shared mailroom, a mailroom clerk would check the applications and premium finance agreements in an attempt to determine if the applicant had a previous premium finance agreement with Safeway spanning the previous six months. If the clerk found that the applicant had a previous premium finance agreement with Safeway, and that previous agreement spanned the prior six-month period, the clerk would set aside the application. A second Safeway clerk would then obtain the set-aside applications and check whether Safeway had canceled the applicant's previous premium finance agreement for nonpayment. If Safeway canceled the previous premium finance agreement for nonpayment, the application and new agreement were returned to the stack for processing with the additional service charge of $20, as that additional charge was permissible under section 627.840(3)(b) due to the insured's nonpayment. If Safeway had not canceled the previous premium finance agreement for nonpayment, Safeway would process the application and new premium finance agreement through its computer software, known as UNICORP, with a directive to waive the additional service charge of $20 by way of a credit to the balance owed to Safeway. Safeway assessed this credit by having a Safeway employee punch code “4” into the UNICORP system upon processing the application and new premium finance agreement. Thereafter, Safeway sent a letter to the applicant that indicated the applicant's new remaining balance after the $20 reduction.

Safeway admitted that the manual process and the large quantity of applications resulted in overcharges. Specifically, Safeway failed to assess credits due and, in fact, after Sosa filed this action in 2003, Safeway conducted its own...