Universal Property & Casualty Insurance Co. v. Johnson
114 So. 3d 1031, 2013 WL 1809639, 2013 Fla. App. LEXIS 6804 (2013)
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Rule of Law:
An insurance policy provision that voids the policy for making 'false statements,' when listed separately from provisions requiring 'intentional' misrepresentation or fraud, allows an insurer to rescind the policy for an innocent but material misrepresentation. Under Florida law, a misrepresentation is material if the insurer, in good faith, would not have issued the policy under the same terms had it known the true facts.
Facts:
- Jamón and Chaka Johnson applied for a homeowner's insurance policy with Universal Property and Casualty Insurance Company (Universal).
- On the application, in response to the question 'Have you been convicted of a felony in the last ten years,' the Johnsons answered 'no.'
- In fact, Mrs. Johnson had been convicted of five felonies in July 1998, which was eight and a half years prior to the application date.
- Universal issued the insurance policy to the Johnsons.
- On March 13, 2008, an accidental fire destroyed the Johnsons' home.
- The Johnsons filed a claim with Universal for the loss of their home.
- During its investigation of the claim, Universal discovered Mrs. Johnson's felony convictions.
- Universal denied the claim, asserting that the Johnsons had made a false statement on their insurance application.
Procedural Posture:
- The Johnsons filed a lawsuit against Universal in a Florida trial court for breach of contract.
- Universal filed a counterclaim seeking a declaratory judgment to rescind the policy.
- The trial court granted partial summary judgment for the Johnsons, ruling that Universal's policy required it to prove the Johnsons' misrepresentation was intentional.
- At trial, a jury found that the Johnsons did not intentionally make a misrepresentation, but also found that Universal would not have issued the policy had it known the true facts.
- Based on the finding of no intent, the trial court entered a final judgment in favor of the Johnsons, awarding them over $463,000.
- Universal, as the appellant, appealed the final judgment to the District Court of Appeal of Florida, First District.
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Issue:
Does an insurance policy provision that voids the policy if an insured has made 'false statements,' listed separately from provisions requiring intentional concealment or fraudulent conduct, allow an insurer to void the policy based on an innocent but material misrepresentation?
Opinions:
Majority - Van Nortwick, J.
Yes. An insurance policy provision voiding the policy for 'made false statements,' when distinguished from other provisions requiring intent, permits rescission for an innocent but material misrepresentation. The court reasoned that interpreting the 'false statements' clause to require intent would render it superfluous, as another clause in the same section already addressed 'intentionally concealed or misrepresented' facts. Under the canon of contract construction against surplusage, each provision must be given its own effect. The policy's structure indicates that 'false statements' are a separate ground for voiding the policy, without an intent element. This interpretation aligns with Florida Statute § 627.409, which permits an insurer to void a policy for any misrepresentation, intentional or not, if it is material to the acceptance of the risk. Because the jury found that Universal would not have issued the policy had it known the truth about the felony conviction, the misrepresentation was material, and Universal was entitled to void the policy regardless of the Johnsons' intent.
Analysis:
This decision solidifies the application of the contract interpretation principle against surplusage in the insurance context in Florida. It affirms that while parties can contract for a higher standard than provided by statute (e.g., requiring intent to deceive), courts will not infer such a standard where the plain language creates separate grounds for rescission based on intentional versus non-intentional misstatements. The ruling reinforces that materiality is the key inquiry for innocent misrepresentations under Florida law, putting a heavy burden on applicants to ensure accuracy. This case provides a clear precedent for insurers to deny claims based on material, yet unintentional, falsehoods in an application, so long as their policy language distinctly addresses 'false statements' separately from 'intentional misrepresentation' or 'fraud.'
