Tobin v. Michigan Mut. Ins. Co.

• Decision Date: 21 December 2006
• Docket Number: No. SC05-214.,SC05-214.
• Citation: 948 So.2d 692
• Parties: Mark Andrew TOBIN, et al., Appellants, v. MICHIGAN MUTUAL INSURANCE COMPANY, Appellee.
• Court: Florida Supreme Court

948 So.2d 692

Mark Andrew TOBIN, et al., Appellants, v. MICHIGAN MUTUAL INSURANCE COMPANY, Appellee.

No. SC05-214.

Supreme Court of Florida.

December 21, 2006.

Christopher J. Lynch of Hunter, Williams and Lynch, P.A., Coral Gables, FL, for Appellant.

Wendy F. Lumish of Carlton Fields, P.A., Miami, FL, and Stephen J. Harburg of O'Melveny and Myers, Washington, D.C., for Appellee.

PER CURIAM.

We have for review the following question of Florida law certified by the United States Court of Appeals for the Eleventh Circuit that is determinative of a cause pending in that court and for which there appears to be no controlling precedent from this Court:

DOES THE DEFENDANT MICHIGAN MUTUAL HAVE ANY LIABILITY TO THE PLAINTIFFS UNDER THE POLICY IN QUESTION, AND, IF SO, WHAT IS THE EXTENT OF THAT LIABILITY?

Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1275 (11th Cir.2005). We have jurisdiction. See art. V, § 3(b)(6), Fla. Const. We rephrase the certified question to more accurately address the procedural setting we are facing, as follows:

WHETHER THE PLAINTIFFS ARE ENTITLED TO UNINSURED/UNDERINSURED MOTORIST COVERAGE UNDER THE POLICY AS REFORMED.

FACTS AND PROCEDURAL HISTORY

The facts of the underlying action are not in dispute. Appellants Tobin, Hunter, and the Mackays¹ were either injured or killed in accidents with uninsured drivers while operating or occupying vehicles leased from Ford Motor Company. See Tobin, 398 F.3d at 1269.² The lease agreements entered into with regard to these vehicles each contained language to the effect that the lessees would be responsible for obtaining insurance for these vehicles. Appellants Hunter and the Mackays' "Red Carpet" lease agreements stated that the "lessor is not providing vehicle insurance or liability insurance" and that the lessee "must insure the vehicle during this lease." Id. Appellant Tobin's lease agreement stated that "[t]he Lessee must insure the vehicle for the term of the lease." Id.

Notwithstanding the above-quoted language in the respective lease agreements, appellants seek to recover under an insurance policy issued to Ford by defendant Michigan Mutual Insurance Company ("Michigan Mutual"). See id. Appellants present the claim for insurance coverage and benefits under a theory that the insurance policy at issue did not comply with section 627.727 of the Florida Statutes relating to uninsured and underinsured motorist coverage ("UM/UIM"). That statute requires that UM/UIM coverage be offered and either accepted or properly rejected by a "named insured" when an insurance policy which provides liability coverage is issued or delivered in this State and provides:

No motor vehicle liability insurance policy which provides bodily injury liability coverage shall be delivered or issued for delivery in this state with respect to any specifically insured or identified motor vehicle registered or principally garaged in this state unless uninsured motor vehicle coverage is provided therein. . . . However, the coverage required under this section is not applicable when, or to the extent that, an insured named in the policy makes a written rejection of the coverage on behalf of all insureds under the policy.

§ 627.727(1), Fla. Stat. (2004). If an insurer fails to comply with the statutory requirements, UM/UIM coverage is provided by the contract as though the required coverage had been offered and accepted by the "named insured" as a matter of law. See Am. Fire & Indem. Co. v. Spaulding, 442 So.2d 206, 208 (Fla.1983) ("[T]he statute clearly provides that uninsured motorist coverage is by operation of law equal to general liability coverage unless the named insured selects otherwise. . . .").

The details surrounding the issuance of the Michigan Mutual policy at issue here (the "policy") as described in the Eleventh Circuit's opinion reveal:

Ford entered into a separate insurance agreement with Michigan Mutual . . ., which contains three sections. The commercial general liability section provides coverage for Ford's premises and operations activities. The business auto section provides coverage for a group of vehicles used by Ford for business purposes. The personal auto section is designed to provide coverage to a group of vehicles assigned to Ford management personnel under the lease evaluation program. The lease agreement signed by the Ford personnel in the lease evaluation program, unlike the retail lease agreements signed by the plaintiffs here, specifically states that "the Company [Ford] provides insurance on the vehicle during the term of the lease." Ford employees who participate in the lease evaluation program also receive a certificate of no-fault insurance and an identification card that indicates their coverage under the Michigan Mutual policy.

This consolidated appeal involves only the personal auto section of the Michigan Mutual policy and specifically what is entitled the personal auto policy supplement ("auto supplement") to the policy.

Tobin, 398 F.3d at 1269 (alteration in original).

The arguments in the instant matter center on four specific provisions found in the personal auto supplement to the policy, as follows: (1) The Declarations page of the personal auto supplement provides the following definitions:

Item 1. Named Insured

FORD MOTOR COMPANY, ITS U.S. SUBSIDIARIES AND ANY PERSON TO WHOM AN AUTOMOBILE HAS BEEN ASSIGNED, LEASED OR LOANED

. . . .

Item 2. Description of Auto

1. See Endorsement Number PP FO RD 04

(2) Endorsement PP FO RD 04, which modifies the personal auto supplement, states:

A. By addition of this endorsement to your policy, the following replaces paragraph J. of DEFINITIONS [defining "covered auto"]:

J. "Your Covered Auto" is changed as follows:

1. Any auto which has been designated with the following tag letters:

L — Leased vehicles

E — Executive Vehicles

S — Sales Vehicles

in the records of Ford Motor Company's vehicle administration system.

(3) The uninsured motorist coverage provision states:

"Insured" as used in this Part means:

1. You or any "family member."

2. Any other person "occupying" "your covered auto."

(4) Endorsement PP FO RD 01, added exclusions which include:

2. This policy, however, shall provide contingent loss and excess auto liability coverages for autos included in the following programs:

a. Red Carpet Lease

. . . .

but only as respects the liability of Named Insured. No coverage is provided to lessees, agents, or permissive users.

In the federal district court, the appellants and Michigan Mutual both sought summary final judgment with regard to the issue of whether the appellants were provided coverage and entitled to UM/ UIM benefits under the policy at issue. The district court determined that the claimants were entitled to a summary judgment on the issue of coverage under the terms of the insurance contract based upon the decision of the Third District Court of Appeal in Perez v. Michigan Mutual Insurance Co., 723 So.2d 849 (Fla. 3d DCA 1998), which was predicated upon the determination that persons in the position of these claimants are "named insureds" under this contract. However, notwithstanding the determination of the issue of coverage and the definition of "named insured" under the contract as written, the district court conducted further proceedings and a bench trial to consider and determine whether the insurance policy should otherwise be reformed because it did not accurately reflect the intent of the contracting parties. At the conclusion of this subsequent proceeding, the district court found that Ford and Michigan Mutual had not intended to provide coverage to retail lessees under the policy. Therefore, the district court reformed the definition of "named insured" under the insurance contract to exclude any coverage for retail lessees. As a result of this reformation, the district court entered final judgment for Michigan Mutual, reasoning that "[o]nce the contract has been reformed, no motor vehicle liability policy was issued with respect to retail lessees" and, therefore, the district court concluded that section 627.727 of the Florida Statutes and the requirements contained therein for "named insureds" had no application with respect to these claimants. Appellants sought review of this judgment in the United States Court of Appeals for the Eleventh Circuit and this certified question followed.

ANALYSIS

Reformation

The federal district court ultimately denied the appellants relief here because it reformed the "named insured" provision of the insurance policy to reflect the intent of the contracting parties to exclude any coverage for retail lessees such as these appellants. Upon review, we agree with the district court's decision to reform the policy and hold that reformation was appropriate.

We have held that "[a] court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument." Providence Square Ass'n., Inc. v. Biancardi, 507 So.2d 1366, 1369 (Fla.1987) (citing Blumberg v. Am. Fire & Cas. Co., 51 So.2d 182, 184 (Fla.1951)). Furthermore, the First District has implied that this broad concept of reformation would apply to the specific issue of reformation of a "named insured" clause in an insurance contract to accurately reflect the mutual intent of the contracting parties as to who was to be designated a "named insured." See Canal Ins. Co. v. Hartford Ins. Co., 415 So.2d 1295, 1297-98 (Fla. 1st DCA 1982) (implying that, although the facts did not indicate a mutual mistake, had there been a drafting mistake resulting in the "named insured" being defined other than as the parties mutually intended, reformation of the "named insured" clause would be appropriate). One commentator who has addressed this specific subject has noted that "[o]ne of the main grounds for reformation in the cases dealing with...