State Farm Mut. Auto Ins. Co. v. Hinestrosa, 91-3155

• Decision Date: 24 February 1993
• Docket Number: No. 91-3155,91-3155
• Citation: 614 So.2d 633
• Parties: 18 Fla. L. Week. D566 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Jandy HINESTROSA and George Hinestrosa, Appellees.
• Court: Florida District Court of Appeals

Page 633

614 So.2d 633

18 Fla. L. Week. D566

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Jandy HINESTROSA and George Hinestrosa, Appellees.

No. 91-3155.

District Court of Appeal of Florida,

Fourth District.

Feb. 24, 1993.

Richard A. Sherman and Rosemary B. Wilder, of Richard A. Sherman, P.A., Fort Lauderdale, for appellant.

Robert Feldman of Law Office of Philip M. Berman, Pompano Beach, for appellees.

FARMER, Judge.

While travelling in Missouri, the Hinestrosas were involved in an automobile accident. The attorney for Mrs. Hinestrosa contacted their insurer, State Farm, and inquired whether there were any coverage defenses for the accident. State Farm responded that there were "no known policy defenses at this time." Jandy sued her husband, alleging that he had negligently operated the vehicle and thereby caused her to suffer injuries. State Farm was not a named defendant in the personal injury action but provided George with a defense under a reservation of rights.

After the case proceeded through discovery, the parties stipulated to negligence, and the cause was set for trial on the issue of damages. Before trial, however, State Farm filed a declaratory judgment action against the Hinestrosas. It alleged that the policy contained an exclusion from coverage for any bodily injury to any insured or any member of an insured's family residing in the insured's household. The Hinestrosas alleged estoppel and waiver as defenses, arguing that State Farm had failed to comply with sections 627.426 and 627.7264, Florida Statutes (1989), because their insurer had never previously asserted the family exclusion as a policy defense. The Hinestrosas moved for summary judgment on that basis, and the trial court granted their motion, entering a judgment that stated in its operative provisions:

2. That the Petition seeking Declaratory Relief is hereby dismissed with Prejudice.

3. That Plaintiff shall take nothing by this action and that Defendant [sic] go hence without day.

It is from this judgment that State Farm has brought this appeal.

Before addressing the merits of the coverage issue, we pause to note the form of the final judgment entered. The action which led to the judgment was an ordinary declaratory judgment action to determine whether there was coverage under a liability insurance policy for a specific claim already in litigation. Even if State Farm was wrong in its contention that there was no coverage under the subject policy for the claim, it was still entitled to a declaration by judgment on the coverage issue. In other words, the form of the judgment is incorrect in dismissing State Farms's pleading seeking a declaratory judgment on the coverage question, simply because the judge had concluded--contrary to State Farm's position--that coverage did exist.

When a party seeks a declaratory judgment as to coverage under an insurance policy, it is functionally seeking the court's construction as to the rights and liabilities of the parties under a contract. The mere fact that one of the contracting parties is in error as to its own interpretation of the contract language does nothing to vitiate the party's right to the court's construction of the contract. The proper form would have been to enter a judgment declaring that coverage either existed or did not exist. It only compounded the error to add the irrelevant words that "plaintiff take nothing and defendant go hence without day"--words usually found in cases seeking only a money judgment rather than a declaratory judgment.

Turning to the merits, the gist of the insured's case for coverage is that State Farm failed to comply with the "Claims Administration Statute," section 627.426(2), Florida Statutes (1989), which provides in pertinent part:

(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and

(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before the trial, the insurer:

1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured;

2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which the coverage defense is asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the subject litigation; or

3. Retains independent counsel which is mutually agreeable to the parties. * * *

The problem with the position of the Hinestrosas is that their case is entirely undercut by the supreme court's decision in AIU Insurance Company v. Block Marina Investment Inc., 544 So.2d 998 (Fla.1989). The issue in that case, as here, was whether a liability insurer "is prohibited from denying coverage in connection with a loss, coverage for which is excluded under a comprehensive liability policy, due to its noncompliance with the notice requirements of section 627.426(2), Florida Statutes (1985)." The court held:

We do not believe that the legislature intended, by the enactment of section 627.426(2), to give an insured coverage which is expressly excluded from the policy or to...