ANCHOR PROPERTY & CASUALTY INSURANCE COMPANY v. ALEX TRIF and GEORGE TRIF ( 2021 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ANCHOR PROPERTY AND CASUALTY INSURANCE COMPANY,
Appellant,
v.
ALEX TRIF and GEORGE TRIF,
Appellees.
No. 4D20-814
[June 2, 2021]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; G. Joseph Curley, Jr., Judge; L.T. Case No. 50-2018-CA-
00820-XXXX-MB.
Patrick M. Chidnese and Jessica S. Kramer of Holland & Knight LLP,
Tampa, and Hope C. Zelinger and Krista L. Elsasser of Bressler, Amery &
Ross, P.C., Miami, for appellant.
Percy Martinez of Percy Martinez, P.A., Coral Gables, for appellees.
GROSS, J.
Anchor Property and Casualty Company appeals a final judgment in
favor of its insureds, George Trif and his son, Alex Trif. We affirm. Viewing
the trial evidence in the light most favorable to appellees, we conclude that
a reasonable view of the evidence supports the jury’s verdict awarding
some damages in a breach of contract lawsuit.
The Loss and the Policy
On September 10, 2017, the Trifs’ home, which was insured by Anchor,
was damaged by Hurricane Irma. The policy contains the following
provision regarding “Concealment or Fraud”:
2. Concealment or Fraud.
a. Under SECTION I - PROPERTY COVERAGES, with respect
to all “insureds” covered under this policy, we provide no
coverage for loss under SECTION I - PROPERTY COVERAGES
if, whether before or after a loss, one or more “insureds” have:
(1) Intentionally concealed or misrepresented any material
fact or circumstance;
(2) Engaged in fraudulent conduct; or
(3) Made material false statements;
relating to this insurance.
Inspection and Denial of Payment Letter
Anchor sent a field adjuster to inspect the home on September 30,
2017.
On December 2, 2017, Anchor wrote the insureds stating that it had
completed its investigation of the claim. The letter stated that no payment
would be made because Anchor’s estimate of the insureds’ loss was
$2,462.40, less than the policy’s deductible. The letter further indicated
that Anchor would not cover the interior water damage because there was
no peril-created opening, and the adjuster’s inspection “found no physical
evidence of any wind damaged shingles.” Attached to the letter was an
estimate noting that “[n]o covered storm damage noted to any slopes of
roof during inspection.”
However, the letter said that the insureds “may submit a supplemental
claim to us for consideration by providing any additional information
about the damage and the associated repair costs.”
The Original Exactimators Estimate
On December 6, 2017, Nicholas Merced, the owner of a company called
Exactimators, created an estimate of all the damages to the home. The
estimate set forth a “net claim” of $103,809.68, which included an entry
of $52,800 for “Roofing (Bid Item)” and an entry of $5,890.26 for replacing
the screened pool enclosure.
The Sworn Proof of Loss
On December 11, 2017, Alex Trif signed a Sworn Proof of Loss stating
that the “whole loss and damage” was $103,809.68. The information in
the Sworn Proof of Loss was typed, with only the signature lines and the
notary information filled in by hand. The insureds submitted the Sworn
Proof of Loss, along with Merced’s estimate, to Anchor. Merced’s estimate
2
was not referenced on the Sworn Proof of Loss, but Alex conceded that the
figure on the Sworn Proof of Loss was based on the estimate.
Anchor presented no evidence at trial that it took any action in response
to the estimate or the Sworn Proof of Loss.
The Pleadings
On January 20, 2018, the insureds sued Anchor for breach of contract,
alleging that Anchor breached the policy by refusing to pay the full amount
of the claim. The insureds further alleged that, through their public
adjuster, they forwarded Anchor an estimate of the damages. Merced’s
estimate was attached to the complaint as the estimate that the insureds
provided to Anchor.
Anchor filed an answer and affirmative defenses. Anchor’s defenses
included allegations that there was no peril-created opening and that
certain damages were caused by wear and tear.
Anchor later amended its answer to assert as an affirmative defense
that Anchor was relieved of its indemnity obligation under the
“Concealment or Fraud” provision due to the insureds’ “intentional
misrepresentation and/or fraudulent conduct and/or material false
statements.” Specifically, Anchor alleged that the insureds made willful
misrepresentations and material false statements regarding the pre-loss
condition of the property, as the insureds had “denied that any pre-loss
roof leaks had occurred,” when in fact a 2012 insurance claim
investigation revealed roof leaks. Anchor further alleged that the insureds
made willful misrepresentations and material false statements regarding
the “extent and/or amount of damage” at issue, namely, the extent of
damage to the flooring.
Anchor did not specifically allege that the insureds made an intentional
misrepresentation or a material false statement regarding the cost to
replace the roof.
Prior to trial, the trial court entered an agreed order granting Anchor’s
motion for partial summary judgment eliminating the insureds’ claim for
damages to the pool screen enclosure because it was not covered under
the policy.
3
The Jury Trial—Facts Regarding the “Concealment or Fraud” Issue
The case proceeded to trial, where the following evidence and argument
was presented on whether coverage was barred under the “Concealment
or Fraud” clause.
Anchor’s Opening Statement
In opening statement, Anchor’s counsel stated that “there is no
coverage if you make a false statement,” and that the insureds made
“blatant misrepresentations.” However, counsel did not specifically assert
that the Sworn Proof of Loss was a material false statement because it was
based on an inflated estimate to repair the roof.
George Trif’s Testimony
George Trif testified that water began pouring from the ceiling on the
night Hurricane Irma struck. He described the damage to the home from
the hurricane. George also addressed the 2012 insurance claim for water
damage.
The morning after Hurricane Irma passed, a handyman referred George
to Jean Guirand, who performed temporary patch work on the roof for
$700 or $800. Guirand later provided him with two estimates: one to “fix”
the roof for about $6,000 and one to replace the roof for “20 something
thousand.” The second estimate, which is dated November 10, 2017,
appears to be in the amount of $25,450. However, this estimate did not
include the cost to replace all the wood.
George described various repairs that he made out-of-pocket because
Anchor failed to pay for them. These repairs included repairs to rid the
home of mold and mildew.
On cross-examination, Anchor’s counsel asked George about the
Exactimators’ estimate. He responded that he remembered “a gentleman
being in the house, measuring everything.” George admitted that he
“look[ed]” at the estimate, and that he did so because it was part of his
claim against Anchor.
George said that the $52,800 estimate for replacing the roof was
submitted to Anchor on his behalf, but he claimed that the estimate was
made by a professional:
4
Q. Even if it was 30, why did you ask Anchor to give you
$52,800?
A. Because that is not me. That’s the estimate. That is a
contractor. That’s a specialist. That’s a contractor. Don’t ask
me that.
***
Q. So you’re admitting – you will just admit that you asked
Anchor to pay you $52,800 through this Exactimators’
estimate, correct?
A. No. That is not an estimate by me. It is an estimate by a
professional.
George also claimed that he had been given different estimates of the
cost to replace the roof: “Even to – to your adjuster, I gave a few of them,
because I get different estimates.” George received a proposal from
Guirand for $26,000 and said that Guirand would charge “a minimum” of
$32,000 today because his proposal did not include replacing all the wood.
George acknowledged that $32,000 was “a lot less” than $52,000.
On redirect, George reiterated that he had nothing to do with producing
or creating the Exactimators’ estimates. George did not know how to work
the Xactimate software used to create these estimates. When asked if the
man from Exactimators asked him if he was in agreement with every single
line item on the estimate, George replied: “No, he never asked me if I’m in
agreement with it or not, never.”
Guirand’s Testimony
Guirand testified that he quoted George a price of $26,000 to replace
the roof after the storm, but that the price would be $32,000 at the time
of trial.
Merced’s Testimony
Merced testified that the insureds’ public adjuster paid him $250 to go
to the insureds’ home to prepare an estimate of the damage from
Hurricane Irma. Merced used a software program called Xactimate, which
automatically creates line item entries specific to particular zip codes.
5
At the time he inspected the insureds’ home, Merced was working 16-
hour days, seeing five-to-ten homes per day. Merced did not personally
know the insureds and had not been back to their house since the day of
the inspection.
Merced prepared two estimates: (1) the original estimate in December
2017; and (2) an estimate in 2019 before his deposition. The first estimate
was superseded by the second.
In the first estimate, Merced admitted that he changed a price on the
line item for roofing “from what Xactimate gave [him] to his own pricing or
a bid item from a contractor.” The price of the roof in the first estimate
was “around $52,000.”
In the second estimate, the roof estimate was lowered from $52,800 to
$28,000. Merced explained that the bid item was “too high” for the roof.
Merced elaborated as to how this change occurred:
Well, . . . I talked to the Church Hill public adjuster. We came
to an agreement that the roof was too high. So we decided to
go back and assess and kind of like brainstorm over the roof
and adjust accordingly.
However, even with the reduction for the roof, the second damages
estimate went up by about $20,000 to $123,855.48, as the original
estimate failed to include the damage to the kitchen.
Merced provided the original estimate to the public adjuster. Merced
did not give this estimate to the insureds. Merced explained that he does
not “do that with clients.”
Merced also testified that he was doing “over 150 estimates” at the time
he prepared the insureds’ first estimate. He admitted that he makes
mistakes and oversights on estimates.
On cross-examination, Merced admitted to various oversights in his
original estimate, explaining that he was trying to get to other
appointments that day. He did not take any photographs of the roof or
keep any notes from his visit to the insureds’ home.
When questioned about the $52,800 roofing estimate, Merced initially
denied that he got this item from George. He acknowledged that the
estimate was “extensively high.” Merced was impeached by his prior
deposition testimony where he said that he had gotten the $52,800 “from
6
George Trif, if I’m not mistaken.” He conceded that he knew the estimate
would be given to Anchor Insurance with a Sworn Proof of Loss and that
the estimate was inaccurate and inflated.
Alex Trif’s Testimony
Alex Trif testified that he allowed his father to handle the claim to
Anchor. He said that 2012 damages were repaired before the 2017
hurricane hit. He said that he submitted a Sworn Proof of Loss in the
amount of $103,809.68 and explained that he had been “professionally
advised” to do so.
Motion for Directed Verdict
Following the close of the insureds’ case, Anchor rested without
presenting any evidence. Anchor then moved for a directed verdict,
arguing that coverage was voided under the policy because the insureds
provided a Sworn Proof of Loss that was based on an inflated estimate to
repair the roof. The Trifs’ counsel raised no objection as to Anchor’s failure
to plead the defense that coverage was voided due to an inflated roof
estimate. Instead, he argued that fraudulent conduct and materiality were
questions for the jury. The trial court reserved ruling on the motion.
Closing Arguments
In closing argument, the Trifs’ counsel argued that there was no
evidence “the $52,000 roof [estimate] was an intentional
misrepresentation.”
Anchor’s counsel emphasized that the Trifs made a materially false
statement when they submitted a Sworn Proof of Loss claiming $52,800
for the roof. According to Anchor’s counsel, George knew this figure was
inaccurate, because he “had a proposal to do the roof for half that
amount.”
The Jury’s Verdict
The jury returned a verdict finding that: (1) Anchor failed to satisfy its
obligations under the policy; (2) the insureds did not intentionally conceal
or misrepresent any material fact, engage in fraudulent conduct, or make
a material false statement; (3) the insureds did not fail to comply with
policy conditions so as to prejudice Anchor’s investigation of the claim;
and (4) the insureds sustained damages of $26,425.
7
Post-Trial Motions and Final Judgment
As to the issue of the roof estimate, Anchor filed post-trial motions
seeking a judgment notwithstanding the verdict or, in the alternative, a
new trial. Anchor argued that it was entitled to a directed verdict because
the insureds made a material false statement to Anchor by submitting a
Sworn Proof of Loss based on an inflated estimate for replacement of the
roof. In a detailed order, the trial court denied the motion for JNOV,
reasoning that there was conflicting evidence on the issues of intent and
materiality. The court entered a final judgment consistent with the jury’s
verdict.
The Trial Court Properly Denied Anchor’s Motion for Directed
Verdict Because a Reasonable View of the Evidence is That They
Did Not Violate the “Concealment or Fraud” Provision of the Policy
Anchor argues that it is entitled to a directed verdict because the
insureds’ Sworn Proof of Loss contains a material misrepresentation—the
claim of $52,800 to repair the roof. The insureds respond that Anchor
waived this defense by failing to plead it with specificity and that the trial
evidence, in the light most favorable to them, supports the jury’s verdict.
“An order on a motion for directed verdict or for judgment
notwithstanding the verdict is reviewed de novo.” Kopel v. Kopel, 229 So.
3d 812, 819 (Fla. 2017). The evidence and all inferences of fact must be
viewed “in the light most favorable to the nonmoving party.” Id. Thus, “an
appellate court must affirm the denial of a motion for directed verdict if
any reasonable view of the evidence could sustain a verdict in favor of the
non-moving party.” Meruelo v. Mark Andrew of Palm Beaches, Ltd., 12 So.
3d 247, 250 (Fla. 4th DCA 2009).
The Parties Tried by Consent the Issue of Whether the Insureds
Violated the “Concealment or Fraud” Provision by Submitting a
Sworn Proof of Loss Based on the First Roofing Estimate
Anchor failed to plead with specificity that the insureds violated the
“Concealment or Fraud” provision of the policy by submitting a Sworn
Proof of Loss based on a material misrepresentation concerning the cost
to replace the roof. See Cocoves v. Campbell, 819 So. 2d 910, 912 (Fla. 4th
DCA 2002) (stating that “[w]hen a party asserts fraud as a defense, the
pertinent facts and circumstances constituting fraud must be pled with
8
specificity, and all the essential elements of fraudulent conduct must be
stated”).
Nonetheless, the issue was tried by consent.
“An issue is tried by consent when there is no objection to the
introduction of evidence on that issue.” LRX, Inc. v. Horizon Assocs. Joint
Venture ex rel. Horizon–ANF, Inc., 842 So. 2d 881, 887 (Fla. 4th DCA 2003).
For example, an issue is tried by consent where a party “never objected to
the evidence or argument” regarding the issue “on grounds that the issue
was not framed in the pleadings.” Citigroup Mortg. Loan Tr. Inc. v.
Scialabba, 238 So. 3d 317, 324 (Fla. 4th DCA 2018).
Still, “[a] failure to object cannot be construed as implicit consent to try
an unpled theory when the evidence introduced is relevant to other issues
properly being tried.” Raimi v. Furlong, 702 So. 2d 1273, 1285 (Fla. 3d
DCA 1997). Two interrelated criteria for determining whether an issue was
tried by consent are “(a) whether the opposing party had a fair opportunity
to defend against the issue and (b) whether the opposing party could have
offered additional evidence on that issue if it had been pleaded.” Fed.
Home Loan Mortg. Corp. v. Beekman, 174 So. 3d 472, 475 (Fla. 4th DCA
2015).
Here, the issue of whether the Sworn Proof of Loss violated the
“Concealment or Fraud” provision consumed a significant portion of the
trial. During the trial, the parties presented extensive evidence and
argument on this issue without any objection from the insureds that the
issue exceeded the scope of the pleadings. The insureds suggest that no
objection was necessary because the testimony was relevant to the issue
of damages. But Anchor’s cross-examinations of the Trifs and Merced
went well beyond any relevance to damages.
Instead, Anchor asked numerous questions that were designed to elicit
testimony as to whether the $52,800 roofing estimate was knowingly
inflated. This theory of defense took center stage well before Anchor moved
for a directed verdict on the issue. The insureds had a fair opportunity to
combat Anchor’s claims of fraud. They did not call an expert witness on
their witness list who had testified that $52,800 was not too high an
estimate to replace the roof. They argued the merits of the fraud issue to
the jury. They did not object that the issue was unpled until after the jury
had considered the issue and reached a verdict. Because the issue was
tried by consent, we now turn to the merits.
9
The “Concealment or Fraud” Provision in the Policy Requires Proof
that the Insureds Acted Knowingly or Intentionally In Order to Void
the Policy
Applying well-established principles of construction, we conclude that
the “Concealment or Fraud” provision is ambiguous, so it must be
construed in the light most favorable to the insureds. With this in mind,
we hold that, for post-loss conduct, the policy requires proof of knowing or
intentional fraudulent conduct by the insureds to trigger the application
of the “Concealment or Fraud” provision to void the policy.
The law abhors forfeiture of insurance coverage. Am. Integrity Ins. Co.
v. Estrada, 276 So. 3d 905, 914 (Fla. 3d DCA 2019). “Policy provisions
that tend to limit or avoid liability are interpreted liberally in favor of the
insured and strictly against the drafter who prepared the policy.” Flores
v. Allstate Ins. Co., 819 So. 2d 740, 744 (Fla. 2002). Moreover, “forfeiture
of rights under an insurance policy is not favored by the law, especially
where, as here, a forfeiture is sought after the happening of the event giving
rise to the insurer’s liability.” Johnson v. Life Ins. Co. of Ga., 52 So. 2d
813, 815 (Fla. 1951); see also Boca Raton Cmty. Hosp., Inc v. Brucker, 695
So. 2d 911, 912 (Fla. 4th DCA 1997).
Still, a policy provision that voids coverage for fraud or concealment
relating to the insurance is fully enforceable in Florida. See Svetlanovich
v. State Farm Fla. Ins. Co., 291 So. 3d 1261, 1265 (Fla. 2d DCA 2020)
(explaining that a policy provision voiding coverage “if the [insureds] made
any material misrepresentations or concealed any material facts either
before or after a loss” was “fully enforceable”); Alvarez v. State Farm Fla.
Ins. Co., 305 So. 3d 5, 8 (Fla. 3d DCA 2019) (“As a matter of law, the finding
of material misrepresentation voids coverage for the claim.”); Lopes v.
Allstate Indem. Co., 873 So. 2d 344, 346 (Fla. 3d DCA 2004) (“[T]he subject
policy contained a provision whereby Allstate stated it would not provide
coverage for any loss which occurred in connection with any material
misrepresentation, fraud or concealment of material facts. This policy
provision is fully enforceable in Florida.”) (footnote omitted); Wong Ken v.
State Farm Fire & Cas. Co., 685 So. 2d 1002, 1003 (Fla. 3d DCA 1997)
(“There is no question that the clause which voids coverage if the insured
makes an intentional misrepresentation ‘after a loss’—that is, as here, in
making a claim—is valid and enforceable.”).
It is “well settled that, for there to be a total forfeiture of coverage under
a homeowner’s insurance policy for failure to comply with post-loss
obligations (i.e., conditions precedent to suit), the insured’s breach must
be material.” Estrada, 276 So. 3d at 914. (italics in original). “A
10
misrepresentation is material if a reasonable insurance company, in
determining its course of action, would attach importance to the fact
misrepresented.” In re Sandell, No. 8:00BL6417KRM, 2005 WL 1429746,
at *2 (Bankr. M.D. Fla. June 9, 2005). In other words, a statement is
material if it is “reasonably relevant to the insurance company’s
investigation of a claim.” Dadurian v. Underwriters At Lloyd’s, London, 787
F.2d 756, 760 (1st Cir. 1986).
“[W]hen the insurer is acting to enforce a contract provision that voids
coverage based on willful postloss misrepresentations concerning material
facts, the insurer need not demonstrate either reliance or prejudice.”
Svetlanovich, 291 So. 3d at 1265. Stated another way, a willful
misrepresentation can be material under the policy without inducing
actual reliance. Still, the concepts of materiality and reliance are
intertwined because the materiality of a misrepresentation turns on its
likelihood of inducing reliance in a reasonable person. See Restatement
(First) of Restitution § 8 (1937) (“(2) A misrepresentation is material if it
would be likely to affect the conduct of a reasonable man with reference to
the transaction in question.”).
The materiality of a misrepresentation is a question for the jury.
Haiman v. Fed. Ins. Co., 798 So. 2d 811, 811 (Fla. 4th DCA 2001)
(“[M]ateriality is a question of fact to be determined by the trier of fact.”);
Lopes, 873 So. 2d at 347 (“The question of whether an insured has made
a material misrepresentation is a question for the jury to determine.”).
An insured can make a material misrepresentation “by exaggerating the
extent of the loss.” 1 Alvarez, 305 So. 3d at 7–8. A policy may be voided
for post loss “material misrepresentations of substantive amounts.”
Collins v. USAA Prop. & Cas. Ins. Co., 580 N.W.2d 55, 57 (Minn. Ct. App.
1998). For example, in Wong Ken, an insured’s violation of a “concealment
or fraud” clause was established as a matter of law where the
uncontradicted evidence showed that the insured reported $85,000 in
false living expenses when, in fact, he lived in the damaged home during
the repair process. 685 So. 2d at 1003.
We reject Anchor’s reliance upon Pryor v. Oak Ridge Development Corp.,
119 So. 326 (Fla. 1928), for the proposition that “any impact to value
renders a fraudulent misrepresentation material.” In Pryor, the supreme
court stated: “If any pecuniary loss is shown to have resulted, the court
1 The scope of this statement in Alvarez is curtailed by the court’s recognition
that the jury in that case was instructed that “[o]verestimating the value, a
mistake, or inadvertence is not sufficient to void the policy.” 305 So. 3d at 7 n.1.
11
will not inquire into the extent of the injury; it is sufficient if the party
misled has been very slightly prejudiced, if the amount is at all
appreciable.” 119 So. at 1093. However, this quote from Pryor discusses
the requirement that fraud must have “resulting pecuniary damage” to be
actionable. Id. Pryor did not involve an insurance claim and does not
stand for the proposition that any misstatement in value in a Sworn Proof
of Loss is automatically material.
An insured’s correction of an earlier misstatement is something the jury
may consider in making a materiality determination. See Haiman, 798 So.
2d at 812 (recognizing that the insured’s correction of an inflated damage
estimate may be considered by the finder of fact on the existence of a
material misrepresentation that voids coverage). 2
Most “concealment or fraud” clauses contain, or have been construed
to contain, a requirement that a post-loss concealment or
misrepresentation be intentional.
To void coverage under such a clause after a loss, the insurer must
show “a wi[l]lful, purposeful misrepresentation of facts having substantial
materiality under circumstances to which the law would attribute the
intention to defraud, . . . that is, cheat, deceive and cause the insurer to
do other than that which would have been done had the truth been told.”
Freundlich v. Ace Ins. Co. of Midwest, No. 17-24435-CIV, 2018 WL
6261514, at *2 (S.D. Fla. Sept. 6, 2018) (citation omitted). Mere mistakes
or errors in calculations will not suffice to void coverage “when these flow
from the mistaken good faith judgment or opinion of the assured or his
agents.” J & H Auto Trim Co. v. Bellefonte Ins. Co., 677 F.2d 1365, 1372
(11th Cir. 1982) (quoting Chaachou v. Am. Central Ins. Co., 241 F.2d 889,
893 (5th Cir. 1957)); see also H.D. Warren, Annotation, Overvaluation in
Proof of Loss of Property Insured as Fraud Avoiding Fire Insurance Policy,
16 A.L.R.3d 774 (1967) (“It is well settled that where an insured person, in
making proof of loss . . . , overestimates through mistake or inadvertence,
the value of the property destroyed, the overvaluation does not amount to
fraud sufficient to avoid the policy.”).
2 Anchor points out that in Schneer v. Allstate Indemnity Co., 767 So. 2d 485, 486
(Fla. 3d DCA 2000), a jury found that the insureds intentionally misrepresented
a material fact by submitting an inflated personal contents claim of $67,000, even
though they later amended it to $18,000. Notably, though, the misrepresentation
issue was still submitted to a jury for determination. The issues on appeal in
Schneer involved the admissibility of expert testimony and divisibility of an
insurance policy. The case does not hold that a correction to an earlier
misstatement is irrelevant to the materiality issue.
12
Because reasonable persons “may differ as to the values which they
place on particular objects, the rule voiding a policy of insurance will not
apply in its severity unless the proof of the false swearing was such that
no other conclusion can be drawn than that a purposeful
misrepresentation was intended.” Berkshire Mut. Ins. Co. v. Moffett, 378
F.2d 1007, 1012 (5th Cir. 1967) (applying Florida law). Thus, “an
overestimate of the value of goods lost in a fire, an error in judgment with
respect to fixing a value, a mistake, or an inadvertence, will not render an
insurance contract void.” Id. In short, “[c]ontractors or adjusters may
significantly differ in their estimates, and [the court] cannot presume that
one estimate, merely because it is excessively higher, is rife with fraud.”
El-Ad Residences at Miramar Condo. Ass’n, v. Mt. Hawley Ins. Co., No. 09-
60723-CIV, 2010 WL 8961438, at *7 (S.D. Fla. Sept. 28, 2010). “Mere
overvaluation is not, in the absence of fraud, such a misrepresentation as
will avoid the policy.” Steven Plitt et al., 6A Couch on Insurance § 93:8 (3d.
ed. 2020 update).
U.S. Fire Insurance Co. v. Dickerson
A century ago, the Florida Supreme Court read into a policy the
requirement that a post-loss misrepresentation be intentional to void the
policy.
In U.S. Fire Insurance Co. v. Dickerson, 90 So. 613 (Fla. 1921), an
insured filed suit to recover benefits under an insurance policy. The
insurance company raised the affirmative defense that the insured had
violated the “concealment or fraud” provision of the policy, which provided:
This entire policy shall be void if the insured has concealed or
misrepresented, in writing or otherwise, any material fact or
circumstance concerning this insurance, or the subject
thereof, or if the interest of the insured in the property be not
truly stated herein, or in case of any fraud or false swearing
by the insured touching any matter relating to this insurance,
or the subject thereof, whether before or after loss.
Id. at 614. That provision did not contain a specification that the insured’s
concealment or misrepresentation had to be intentional to void the policy.
On the affirmative defense, the trial judge in Dickerson instructed the
jury that “the [insurance company] would be required to show, not only
that the plaintiff swore falsely, but that her oath was knowingly and
13
willfully false and made for the purpose and with the intent of deceiving
and defrauding the [insurance company].” Id. at 618.
The Florida Supreme Court held that the trial court had properly
charged the jury, explaining that “the element of fraud must be present in
any false swearing by the complainant in the proof of loss”:
This instruction was correct and contained no statement
that was in variance with the law in such cases or the
issues tendered by the plea. . . . The charge complained of was
not erroneous, in that it announced the doctrine that the
element of fraud must be present in any false swearing
by the complainant in the proof of loss. The courts, almost
without exception, hold to the doctrine that, in order to vitiate
a claim for loss of property under a fire insurance policy by
false swearing as to the goods destroyed or damaged, the
element of fraud must be present, and in this respect the
charge as given by the court is in line with the authorities in
this country.
Id. (emphasis added).
Universal Property & Casualty Insurance Co. v. Johnson
Taking an approach that departs from Dickerson, the First District has
interpreted a “concealment or fraud” clause substantively identical to the
one here at issue, although in the context of a misrepresentation on an
insurance application, and held that a false statement need not be
intentional to void the policy. Universal Prop. & Cas. Ins. Co. v. Johnson,
114 So. 3d 1031, 1033–36 (Fla. 1st DCA 2013). The court reasoned that
“given the language of subsection [2.a.(1)], subsection [2.a.(3)] would be
superfluous if a ‘false statement’ under [2.a.(3)] included only intentionally
false statements.” Id. at 1036.
Unlike this case, Johnson involved the application of a statute, section
627.409(1), Florida Statutes, which deals with misrepresentations in
insurance applications and allows an insurer to deny recovery for
nonintentional misstatements on an application that materially affect the
risk. Id. at 1033–36. Johnson presumably could have applied the statute
to trump the language of the policy,3 because the statute is consistent with
3 In Green v. Life & Health of America, 704 So. 2d 1386, 1392 (Fla. 1998), the
Florida Supreme Court held that “an insured’s truthful answers on an insurance
application according to the best of the insured’s ‘knowledge and belief,’ do not
14
an established principle of contract law that even an innocent
misrepresentation is a sufficient ground for rescission of a contract that
was induced by the misrepresentation. Id. at 1035. It is well-established
in Florida that a misrepresentation in an insurance application need not
be intentional or knowing to later void the policy. See Cont’l Assurance
Co. v. Carroll, 485 So. 2d 406, 409 (Fla. 1986) (“The plain meaning of the
statute indicates that, where either an insurer would have altered the
policy’s terms had it known the true facts or the misstatement materially
affects risk, a nonintentional misstatement in an application will prevent
recovery under an insurance policy.”). This makes sense because the
insured’s state of mind in filling out an insurance application has nothing
to do with the company’s decision to assume the risk of the policy. The
insurance company bases the decision to extend coverage based on the
existence of material facts; the obligation is on the insured to ensure that
those facts are correct.
Although it was unnecessary to do so because the case was controlled
by statute, Johnson went on to construe the meaning of the term “false
statement” in section 2.a.(3) of the policy, but it failed to address the
ordinary meaning of the term “false statement.”
Black’s Law Dictionary defines a “false statement” as “[a]n untrue
statement knowingly made with the intent to mislead.” Statement, Black’s
Law Dictionary (11th ed. 2019). Similarly, Merriam Webster’s Online
Dictionary provides the following “legal definition” of the word “false”—“2
a: not true or correct especially: intentionally or knowingly untrue or
incorrect.” False, Merriam-Webster’s Online Dictionary,
https://www.merriamwebster.com/dictionary/false (last visited Apr. 5,
2021) (legal definition). Indeed, in jurisprudence, “the word ‘false’ implies
something more than mere untruth: it imports knowledge and a specific
intent to deceive.” State v. Tedesco, 397 A.2d 1352, 1358 (Conn. 1978).
Thus, the more common meaning of the term “false statement” in the legal
context is one that includes an element of intent. At a minimum, the term
is ambiguous because it can mean either an “untrue statement” or an
constitute misstatements within the meaning of section 627.409, Florida
Statutes (1993), and therefore cannot provide the grounds for the insurer’s
rescission of the insurance policy.” Although Green contains dicta about parties’
freedom to contract around insurance statutes, section 627.409 was never
implicated in that case, because it was undisputed that the insured did not know
of his medical condition and thus he had “not been shown to have intentionally
or innocently misrepresented any facts within his knowledge and belief.” Id. at
1390. By contrast, in Johnson, there was no indication that the insurance
application contained the “knowledge and belief” limitation.
15
“intentionally untrue statement.” And an ambiguous contract should be
construed against the drafter.
While it is true that contracts generally should not be interpreted in a
way that renders a portion superfluous, in this case it is unavoidable. No
matter how one interprets part 2.a.(3) (“Made material false statements”),
some portion of the “Concealment or Fraud” provision will be rendered
superfluous. For example, the Johnson court’s interpretation of part
2.a.(3) would render superfluous the requirement in part 2.a.(1) that a
misrepresentation must be intentional to void the policy.
Johnson is best understood as the First District’s refusal to construe
the policy in a way that would operate as a waiver of an insurer’s statutory
right to rescind for innocent misrepresentations in an insurance
application that materially affect risk. We decline to extend Johnson to the
post-loss context where a different dynamic between the insured and
insurer is at play. To apply Johnson here would be inconsistent with the
Florida Supreme Court’s holding in Dickerson that “the element of fraud
must be present in any false swearing . . . in the proof of loss.” 90 So. at
618.
To summarize, in the post-loss context, the term “false statement” in
the “Concealment or Fraud” exclusion should be interpreted as including
an element of intent because: (1) interpreting “false statement” as
including an element of intent is more consistent with the ordinary
meaning of the term; (2) any ambiguity in the term “false statement”
should be construed against the drafter; (3) forfeiture is especially
disfavored in the law after a loss has already occurred; (4) such an
interpretation would not operate as a waiver of the insurer’s statutory right
to rescind for innocent misrepresentations in insurance applications that
materially affect risk; and (5) such an interpretation is mandated by the
Florida Supreme Court’s holding in Dickerson.
Thus, contrary to Anchor’s argument, we interpret the policy as
requiring a showing that the insureds acted with fraudulent intent in
submitting the original roofing estimate.
Mezadieu v. Safepoint Insurance Co.
We distinguish this case from the recent decision in Mezadieu v.
Safepoint Insurance Co., ___ So. 3d ___, 2021 WL 1153052 (Fla. 4th DCA
Mar. 26, 2021). There, the insured intentionally adopted an estimate that
her attorney later conceded “should not have included $11,000 for
damages to the kitchen.” Id. at *2. The estimate “undisputedly included
16
at least $11,000 in repairs” for damage to the kitchen unrelated to the
leak, even though the insured “clearly knew” that the kitchen had not been
damaged by the leak. Id. at *2–*3. In short, the summary judgment
evidence in Mezadieu established that the insured knew certain
statements to the insurer were false. It was therefore unnecessary to reach
the issue of whether the policy required a showing of the insured’s intent
under the same “Concealment or Fraud” exclusion that is involved in this
case. This renders the Mezadieu court’s discussion of Johnson to be dicta.
Thus, Mezadieu does not change our conclusion that applying Johnson in
the post-loss context is inconsistent with Dickerson and ignores the
different considerations that come into play once a loss has already
occurred.
Conclusion
Regardless of whether a “material false statement” under the policy is
limited to intentionally untrue statements, the trial court properly denied
a directed verdict on the “Concealment or Fraud” issue. Although Anchor
argues that the record leads to an “unavoidable” conclusion that the
insureds acted with fraudulent intent, this argument is based upon
Anchor’s one-sided interpretation of conflicting evidence.
A reasonable jury could have concluded that the insureds did not make
any material false statements in connection with the Sworn Proof of Loss
because, viewing the evidence in the light most favorable to the insureds,
(1) there was no admission that the $52,800 roof replacement estimate
was false as opposed to a mistake or merely a high estimate; (2) the
insureds unequivocally denied having any input in its creation; (3) even on
the cold pages of the record, Merced was an easily suggestible witness and
the jury was free to reject his equivocal testimony about the creation of the
roofing estimate; (4) Merced admitted that he was working long hours at
the time and that he sometimes made mistakes; (5) Merced acknowledged
that the cost of replacing a roof is higher in the immediate aftermath of a
hurricane; (6) the Sworn Proof of Loss did not seek more than the actual
costs because Merced’s mistakes led to a total request for $20,000 less
than the total damages; (7) the Sworn Proof of Loss was submitted after
Anchor had already completed its investigation and denied coverage; and
(8) the public adjuster corrected the roofing estimate before Anchor made
any argument that it was inflated.
While a statement as to value is ordinarily material, a reasonable jury
could have concluded that the high roofing estimate was not reasonably
relevant to Anchor’s investigation under the specific facts of this case. A
reasonable view of the evidence is that once Anchor had already inspected
17
the roof and denied coverage for it, the company was in an adversarial
position with the insureds and it would not have placed much importance
on the insureds’ initial estimate of the roofing cost, particularly where the
estimate was later corrected, and Anchor could have obtained its own
estimate at any time. In short, a reasonable jury could have concluded
that the high initial roofing estimate was not material because it was not
likely to affect the conduct or investigation of a reasonable insurer in
Anchor’s position—i.e., an insurer that had already inspected the roof,
completed its investigation, and denied coverage.
We agree with the trial judge’s thoughtful and well-reasoned order in
denying the motion notwithstanding the verdict. As the trial judge wrote,
there was conflicting evidence regarding the insureds’ state of mind in
presenting the Sworn Proof of Loss:
In summary, [Anchor] has not demonstrated that there is no
evidence upon which the jury could have relied when it found
that [Anchor] failed to prove that either George or Alex
intentionally concealed or misrepresented any material fact,
engaged in fraudulent conduct, or made a material false
statement. In accord with the above and on the basis that
there was evidence from which the jury could reasonably infer
and conclude that Plaintiffs did not intend to commit fraud or
concealment, that their initial “estimate” was just that—an
estimate which may have been high but possibly even
accurate due to its close temporal proximity to a hurricane
and the ultimate reduction in consultation with the adjuster,
as well as credibility determinations based on the conflicted
testimony as to who made the estimate and how, the Court
denies the Defendant’s Motion for Directed Verdict.
We have considered the other argument raised and conclude that the
trial judge did not abuse his discretion in denying the motion for a new
trial.
Affirmed.
WARNER, J., concurs.
ARTAU, J., concurs in part and dissents in part with opinion.
ARTAU, J., concurring in part and dissenting in part.
While I concur in result with the majority because this case presented
conflicting evidence upon which the jury could have relied when it found
18
the insurer failed to prove that the insured had made materially false
statements, I dissent as to the majority’s interpretation of the insurance
policy which conflicts with our recent opinion in Mezadieu v. Safepoint
Insurance Co., ___ So. 3d ___, 2021 WL 1153052 (Fla. 4th DCA Mar. 26,
2021).
Mezadieu interpreted the same insurance policy language at issue in
this case. Id. at *2. The operative policy language precludes insurance
coverage where an insured: “(1) Intentionally concealed or misrepresented
any material fact or circumstance; (2) Engaged in fraudulent conduct; or
(3) Made material false statements[.]” Id. (emphasis added).
Contrary to the majority opinion, Mezadieu held that intent is not
required when proving that an insured made materially false statements
under subsection (3) of the operative policy language. See id. at *3 (“[A]
showing of intent is not required under the policy’s concealment or fraud
provision.”) (citing Universal Prop. & Cas. Ins. Co. v. Johnson, 114 So. 3d
1031, 1036 (Fla. 1st DCA 2013), and Privilege Underwriters Reciprocal
Exch. v. Clark, 174 So. 3d 1028, 1031 (Fla. 5th DCA 2015)).
A textual analysis of the operative policy language is consistent with
our holding in Mezadieu. The disjunctive use of “or” before subsection (3),
without repeating the term—“intentionally”—as utilized in subsection (1),
unambiguously renders intent to be unnecessary when an insurance
company invokes subsection (3)—“material false statements”—in defense
of a claim.
In addition, because subsection (1) already covers intentional
misrepresentations, the majority’s interpretation of the policy language
would render subsection (3) to be superfluous or meaningless because it
would do nothing more than repeat subsection (1) if we were to read an
intent requirement into it. See Johnson, 114 So. 3d at 1036 (“[A] contract
will not be interpreted in such a way as to render a provision meaningless
when there is a reasonable interpretation that does not do so.” (citing
Moore v. State Farm Mut. Auto. Ins. Co., 916 So. 2d 871, 877 (Fla. 2d DCA
2005))); see also Mezadieu, 2021 WL 1153052 at *3 (‘“[G]iven the language
of subsection [(1)], subsection [(3)] would be superfluous if a ‘false
statement’ under [(3)] included only intentionally false statements.’”
(quoting Johnson, 114 So. 3d at 1036)).
While the majority attempts to distinguish Mezadieu and treat it as
dicta on the basis that it relied upon Johnson which addressed materially
false statements in the procurement of insurance on an issue that is
regulated by a statute, the policy provision being interpreted covers
19
materially false statements by an insured “whether before or after a loss[.]”
In other words, the operative provision we are interpreting applies equally,
from a contractual perspective, to both materially false statements in the
procurement of insurance and a materially false statements in the filing of
an insurance claim. Moreover, Mezadieu is indistinguishable as it applied
the same operative policy provision to materially false statements in the
filing of an insurance case—no different than here.
Nonetheless, the majority characterizes Mezadieu’s holding that intent
is not required as dicta because Mezadieu also concluded, in the
alternative, that “it cannot be said that the [insured] did not intend to rely
on the false statements[,]” as she “made no attempt to revise the estimate”
prepared by her loss consultant. Id. at *3.
Although what constitutes dicta may be debatable under certain
circumstances, our courts have long held that alternative holdings are not
dicta. See, e.g., Woods v. Interstate Realty Co., 337 U.S. 535, 537 (1949)
(“But where a decision rests on two or more grounds, none can be relegated
to the category of obiter dictum.”); Richmond Screw Anchor Co. v. United
States, 275 U.S. 331, 340 (1928) (“It does not make a reason given for a
conclusion in a case obiter dictum, because it is only one of two reasons
for the same conclusion.”); see also Paterson v. Brafman, 530 So. 2d 499,
501 n.4 (Fla. 3d DCA 1988) (“The fact that this was an alternative holding
of the court does not detract from its binding authority.” (citing Clemons
v. Flagler Hosp., Inc., 385 So. 2d 1134, 1136 n.3 (Fla. 5th DCA 1980))).
Even assuming arguendo that the majority’s view that an alternative
holding under these circumstances is dicta, that would mean the
majority’s interpretation of the insurance policy here is also dicta.
Because the jury determined that any false statements made by the
insured were not material, the majority did not need to reach the issue of
whether intent is required under the operative provision of the policy. See
Haiman v. Fed. Ins. Co., 798 So. 2d 811, 811 (Fla. 4th DCA 2001)
(“[M]ateriality is a question of fact to be determined by the trier of fact.”).
Thus, while I respectfully dissent from the majority’s dicta that the
insurance policy provision is ambiguous and subject to a different
interpretation than articulated in this court’s prior panel opinion in
Mezadieu, I concur in result because the jury determined that any false
statements made by the insured were not material.
* * *
Not final until disposition of timely filed motion for rehearing.
20