State Farm Florida Ins. Co. v. Loo

• Citation: 27 So.3d 747
• Decision Date: 10 February 2010
• Docket Number: No. 3D09-917.,3D09-917.
• Parties: STATE FARM FLORIDA INSURANCE CO., as subrogee of Jose R. Masvidal, Appellant, v. Aleli LOO, Appellee.
• Court: Court of Appeal of Florida (US)

27 So.3d 747 STATE FARM FLORIDA INSURANCE CO., as subrogee of Jose R. Masvidal, Appellant,
v.
Aleli LOO, Appellee. No. 3D09-917. District Court of Appeal of Florida, Third District. February 10, 2010.

[27 So.3d 748]

Richard A. Warren, Miami, for appellant.

Shook, Hardy & Bacon and Alexandra Bach Lagos and Daniel B. Rogers, Miami, for appellee.

Before RAMIREZ, C.J., and ROTHENBERG, J., and SCHWARTZ, Senior Judge.

ROTHENBERG, J.

State Farm Florida Insurance Co., as subrogee of Jose R. Masvidal, appeals from a final summary judgment entered in favor of Aleli Loo. We reverse.

I. Factual and Procedural Background

State Farm issued a rental dwelling insurance policy to Masvidal ("the Landlord"), insuring property he leased to Loo ("the Tenant"). During the term of the lease, a fire occurred at the leased premises, and State Farm paid the Landlord for the loss. State Farm subsequently filed a subrogation action against the Tenant to recover the amounts paid to Masvidal, alleging that the Tenant's negligence caused the fire.¹

The Tenant filed an amended answer denying that State Farm had a right of subrogation against her. Relying on Sutton v. Jondahl, 532 P.2d 478 (Okla.Civ. App.1975), the Tenant subsequently moved for summary judgment, arguing that a tenant is an implied co-insured under a landlord's insurance policy, and therefore, State Farm cannot seek subrogation against her because an insurer cannot seek subrogation against its own insured or co-insured. Agreeing with the Tenant, the trial court entered final summary judgment in favor of the Tenant. State Farm's appeal follows.

II. Standard of Review

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000). Thus, we review the trial court's entry of final summary judgment de novo. Id.; Sheikh v. Coregis Ins. Co., 943 So.2d 242, 243 (Fla. 3d DCA 2006).

III. Issue

The issue presented on appeal is whether a landlord's insurer may bring a subrogation action against the landlord's tenant to recover amounts the insurer paid under the insurance policy for damage to the leased premises that the insurer attributes to the tenant's negligence.

IV. Analysis

Generally, when an insurer pays the claim of its insured, the insurer stands in the shoes of its insured, and the insurer may bring a subrogation action against the tortfeasor to recover the amounts paid under the insurance policy. See Fireman's Fund Ins. Co. v. Rojas, 409 So.2d 1166, 1167 (Fla. 3d DCA 1982). The insurer, however, may not maintain a subrogation action against its own insured even if the insured's negligence caused the loss. See Bulone v. United Servs. Auto. Ass'n, 660 So.2d 399, 404 (Fla. 2d DCA 1995); Ray v. Earl, 277 So.2d 73, 76 (Fla. 2d DCA 1973); Smith v. Ryan, 142 So.2d 139, 141 (Fla. 2d DCA 1962).

Here, the Tenant urges this Court to adopt the holding in Sutton—a tenant is an implied co-insured under her landlord's insurance policy unless there is an express agreement between the landlord and tenant to the contrary—and therefore, to affirm

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the order under review because, as a co-insured, State Farm cannot bring a subrogation action against her. In response, State Farm contends that this Court addressed the issue under review in Tout v. Hartford Accident & Indemnity Co., 390 So.2d 155 (Fla. 3d DCA 1980) (affirming final judgment against tenant and in favor of landlord's insurance carrier, finding that the terms of the parties' lease did not express an intent that the landlord would exculpate the tenants for damage they negligently caused), and based on Tout, the order under review must be reversed.

In determining whether a landlord's insurer may bring a subrogation action against a negligent tenant, courts have typically adopted one of three views: (1) the approach set forth in Sutton; (2) an approach that is contrary to Sutton, which is known as the "anti-Sutton approach"; and (3) the approach outlined in Tout, which is known as the "case-by-case approach." The first view we will address is the view presented in Sutton. In Sutton, John Jondahl leased a home from Earl and Lavon Sutton. During the term of the lease, Mr. Jondahl's ten-year-old son started a fire while experimenting with his chemistry set. The Suttons' insurer, Central Mutual Insurance Company, paid the loss and thereafter filed a subrogation action against Mr. Jondahl and his son, seeking to recover the monies it paid to its insureds, the Suttons.² Following a jury trial, the trial court entered final judgment in favor of Central Mutual and solely against Mr. Jondahl. Mr. Jondahl appealed the final judgment, arguing that Central Mutual could not bring a subrogation action against him because, as the tenant of its policyholders, he is an implied co-insured under the policy. The Court of Appeals of Oklahoma agreed with Mr. Jondahl's argument, stating as follows:

Under the facts and circumstances in this record the subrogation should not be available to the insurance carrier because the law considers the tenant as a co-insured of the landlord absent an express agreement between them to the contrary, comparable to the permissiveuser feature of automobile insurance. This principle is derived from a recognition of a relational reality, namely, that both landlord and tenant have an insurable interest in the rented premises-the former owns the fee and the latter has a possessory interest. Here the landlords (Suttons) purchased the fire insurance from Central Mutual Insurance Company to protect such interests in the property against loss from fire. This is not uncommon. And as a matter of sound business practice the premium paid had to be considered in establishing the rent rate on the rental unit. Such premium was chargeable against the rent as an overhead or operating expense. And of course it follows then that the tenant actually paid the premium as part of the monthly rental.

The landlords of course could have held out for an agreement that the tenant would furnish fire insurance on the premises. But they did not. They elected to themselves purchase the coverage. To suggest the fire insurance does not extend to the insurable interest of an occupying tenant is to ignore the realities of urban apartment and single-family dwelling renting.

Id. at 482 (citations omitted). The view taken in Sutton is commonly referred to as the "Sutton doctrine" or the "anti-subrogation

27 So.3d 750

rule," and has been adopted in several jurisdictions.³

The second view, which is contrary to the principle in Sutton, allows for a presumption in favor of subrogation and permits an insurer to bring a subrogation against the tenant absent an express or implied agreement to the contrary.⁴ This view is commonly referred to as the "anti-Sutton approach."

Lastly, is the third view, which this Court applied in Tout and subsequent courts have referred to as the "case-by-case analysis,"⁵ where there is no presumption in favor or against subrogation. Instead, the "lease as a whole" is examined "in order to ascertain the intent of the parties `as to who should bear the risk of loss for damage to the leased premises caused by the tenant's negligence.'" Am. Family, 757 N.W.2d at 592 (quoting Tri-Par Invs., 680 N.W.2d at 197); see also Rausch, 882 A.2d at 806-07 ("The third principle is an application of basic contract law to the landlord-tenant relationship. Just as a lease may negate a tenant's common law tort liability, it may, independently of tort liability, contractually impose liability on the tenant for damage to the leased premises resulting from the tenant's negligent act or omission, either by a specific lease provision to that effect or by a covenant on the part of the tenant to return the property, save for ordinary

27 So.3d 751

wear and tear, in the same condition as the tenant received it."); Dattel Family Ltd. P'ship v. Wintz, 250 S.W.3d 883, 890 (Tenn.App.2007) (explaining that under the "...