State Farm Mut. Auto. Ins. Co. v. Hassen
| Decision Date | 01 February 1995 |
| Docket Number | No. 94-01241,94-01241 |
| Court | Florida District Court of Appeals |
| Parties | 20 Fla. L. Weekly D318 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Appellant, v. Diane S. HASSEN and Thomas S. Hassen, Appellees. |
H. Shelton Philips, Kaleel & Kaleel, P.A., St. Petersburg, for appellant.
Diana L. Myers, Perenich, Carroll, Perenich, Avril & Caulfield, P.A., Clearwater, for appellees.
State Farm Mutual Automobile Insurance Company (State Farm) appeals a partial final summary judgment entered in a declaratory judgment action brought by Diane and Thomas Hassen (the Hassens) in which the trial court determined that the Hassens were entitled to uninsured motorist coverage under an automobile insurance policy issued by State Farm. We have jurisdiction. Insurance Co. of North America v. Querns, 562 So.2d 365 (Fla. 2d DCA 1990); Fla.R.App.P. 9.110(k). Because we agree with State Farm's contention that the trial court constitutionally erred by applying the provisions of section 627.727(6), Florida Statutes (Supp.1992), to the Hassens' claim, we reverse and remand for further proceedings. We also certify a two-part question of great public importance regarding whether the statute is constitutional and, if so, whether it can be applied constitutionally to a pending claim brought under an insurance policy executed prior to the statute's effective date.
On June 15, 1990, Mrs. Hassen sustained injuries in an automobile accident as a result of the alleged negligence of another driver, Chad Carlton. At the time of the accident, State Farm insured both her and her husband under an automobile insurance policy with an effective renewal date of March 26, 1990. The policy provided "stacked" uninsured motorist benefits of $200,000.
The owner of the automobile driven by Mr. Carlton, William Buttmi, was insured through UniSun Insurance Company (UniSun) with a policy providing liability limits of $100,000. UniSun offered to settle the third party claim for the full amount of its policy limits. The Hassens accepted the offer subject to the approval of State Farm. They then sent State Farm a certified letter formally notifying it of UniSun's offer and requesting authorization to accept the offer. The letter further stated that "[s]hould [State Farm] choose to preserve its subrogation rights by refusing permission to settle, kindly forward a check in the amount of $100,000.00."
Correspondence followed in which State Farm, although making settlement overtures, questioned whether the value of the Hassens' third party claim was worth UniSun's policy limits. State Farm also stated that it had reason to believe that Mr. Buttmi may have sufficient assets to contribute to a settlement or to satisfy its subrogation claim because of his ownership in two construction companies and his recent inheritance from a deceased family member. 1 State Farm further advised that it had been in contact with Mr. Buttmi to determine if he would contribute to the settlement and that it would not make a decision on authorization to settle the third party claim until he responded. The record does not reflect whether Mr. Buttmi 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, its ultimate response was to deny permission to settle, to refuse to waive its subrogation rights, and to decline to pay the sum previously offered by the third party liability carrier, UniSun.
The Hassens, over State Farm's objection, then proceeded to finalize UniSun's settlement offer by accepting the full amount of the policy limits and by executing a full release in favor of the tortfeasors. Their motivation for doing so was based on an immediate financial need for the settlement money. The Hassens later demanded coverage from State Farm under the uninsured motorist provisions of their policy. State Farm denied coverage because of the unauthorized settlement, resulting in the Hassens' seeking a declaration of their rights under their policy and Florida law as to the existence of uninsured motorist coverage.
In determining coverage by way of summary judgment, the trial court ruled that section 627.727(6), Florida Statutes (Supp.1992), which had an effective date of October 1, 1992, 2 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 then found that (1) 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 (2) that State Farm "failed to timely waive subrogation or tender the amount of the written offer." It thus concluded that under the statute the Hassens "were free to settle and release the tortfeasors without prejudice to their claim for underinsured motorist benefits from Defendant, STATE FARM."
On the effective date of the policy at issue, section 627.727(6), Florida Statutes (1989), governed the respective rights and obligations of the parties in the event the Hassens presented State Farm with a proposed settlement agreement from an uninsured motorist's liability insurance carrier. Under this version of the statute, State Farm had thirty days from receipt of the agreement to approve the settlement, waive its subrogation rights, authorize a full release, and agree to arbitrate the uninsured motorist claim. If it did not abide by these conditions, the only consequence it faced was a lawsuit brought by the Hassens against it and the uninsured motorist "to resolve their respective liabilities for any damages to be awarded" the Hassens. Additionally, the statute provided that "[a]ny award in such action against the liability insurer's insured [would be] binding and conclusive as to the [Hassens] and [State Farm's] liability for damages up to its coverage limits." The statute also required that "in such action, the liability insurer's coverage must first be exhausted before any award [could] be entered against [State Farm], and any such award against [State Farm] [would] be excess and subject to the provisions of subsection (1)." 3 The statute, however, placed no advance payment obligation on State Farm's right to preserve its subrogation rights against the uninsured motorist if it refused to approve the settlement offer.
Significantly, the parties recognized the 1989 statute's requirements and limitations by incorporating its terms in the uninsured motorist provisions of their policy. They specifically agreed that if State Farm, within thirty days of receiving a tortfeasor's settlement agreement from the Hassens, did not approve the settlement, waive its right of recovery against the tortfeasor, authorize a full release, and agree to arbitrate the uninsured motorist claim, then the Hassens could file a lawsuit against State Farm and the tortfeasor. The purpose of the lawsuit would be to decide The policy also provided that the tortfeasor's liability limits for bodily injury
Furthermore, as clearly contemplated by the parties under their contract, State Farm's obligation to pay uninsured motorist benefits was to be reduced by "the total of the bodily injury limits of liability of all other vehicle liability policies ... that apply to any person or organization legally liable for such bodily injury." They agreed, therefore, that State Farm's uninsured motorist coverage would be "excess over, but shall not duplicate any amount paid to or for the [Hassens] by or for any person or organization who is or may be held legally liable for the bodily injury to the [Hassens]."
Because the parties obviously incorporated the provisions of the 1989 statute into the insurance contract, we presume that they entered into the contract with reference to this specific statute so that its provisions became an integral part of the contract. Grant v. State Farm Fire & Casualty Co., 638 So.2d 936 (Fla.1994).
Under one clause of the uninsured motorist provisions of the policy, the Hassens and State Farm also clearly and unambiguously agreed that:
The insured shall not enter into any settlement with any person or organization legally liable for the insured's bodily injury without our written consent if the settlement agreement precludes our right of recovery against such person or organization.
They then agreed, consistent with this clause, that there would be no uninsured motorist coverage "for any insured who, without [State Farm's] written consent, settles with any person or organization who may be liable for the bodily injury." The obvious intent of these provisions were twofold.
First, they were designed to preserve State Farm's well-established right under Florida law, consistent with public policy, to be subrogated to any right of action which the Hassens may have had against third persons who caused them bodily injury. Schwab v. Town of Davie, 492 So.2d 708 (Fla. 4th DCA 1986). This right is based on the premise that an insurance contract is a business undertaking not founded on principles of philanthropy or charity. State v. De Witt C. Jones Co., 108 Fla. 613, 147 So. 230 (1933). Thus, "[a]fter an insurance company has paid a loss on behalf of the insured, it is entitled to subrogation either by express contract rights, or by equitable subrogation by operation of law." Hough v. Huffman, 555 So.2d 942, 945 (Fla. 5th DCA), approved, 564 So.2d 1081, 1082 (Fla...
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