Arguello v. People's Trust Ins. Co.

315 So.3d 35

Enrique ARGUELLO and Yahoska Arguello, Appellants,

v.PEOPLE'S TRUST INSURANCE COMPANY, Appellee.

No. 4D20-69

District Court of Appeal of Florida, Fourth District.

[March 31, 2021]

Steven E. Gurian of Marin, Eljaiek, Lopez, & Martinez, P.L., Coconut Grove, for appellants.

David C. Borucke of Cole, Scott & Kissane, P.A., Tampa, for appellee.

Warner, J.

Appellants Enrique and Yahoska Arguello ("insureds") appeal a final summary judgment in favor of their insurance company for material breach of the insurance contract, which voided any coverage obligations the insurance company owed them in connection with a property loss. The trial court concluded that insureds had forfeited their policy coverage for failure to provide a sworn proof of loss. Because insureds complied to some extent with the policy requirements, and the policy language required the insurance company to prove it was prejudiced by insureds’ failure to provide a sworn proof of loss, material issues of fact remain. We therefore reverse.

Insureds’ home was insured with appellee/People's Trust Insurance Company ("insurer"). They suffered a plumbing loss at their home in May 2018 due to a leak in their dishwasher, but they did not submit a claim for damages to insurer until November 19, 2018. On November 25, 2018, insurer sent insureds an email with a letter attached that stated insurer was reserving its rights because insureds "did not give prompt notice to us or your agent regarding your loss."

The letter referred to Section I Conditions of the policy which set forth the duties of the homeowner after a loss. In Section I Condition C—"Duties After Loss"—the policy states that "[i]n case of a loss to covered property, we have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us." Included in the duties listed in this section, paragraph 9 states: "[s]end to us, within sixty (60) days after our request, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief ...." In its letter, insurer stated that it "must conduct further investigation into this matter and provide the insured with a timely response."

A day later, two emails were sent to insurer notifying it that "All Claims Solutions," a public adjuster, would be representing insureds. Insurer sent All Claims Solutions a "Request for Information Letter along with the Sworn Statement in Proof of Loss." The following day, insurer sent insureds’ policy to All Claims Solutions. Insurer inspected the property on November 29, 2018. On December 12, 2018, insurer followed up on the inspection with a letter accepting coverage and invoking the option to repair under the contract. The letter broadly set forth what would be covered and repaired and advised insureds of the policy provisions if they disputed the assessment of items insurer was obligated to repair. The letter also notified them that if they disagreed with the estimate and scope of repairs, insureds would have to provide insurer, within sixty days, a sworn proof of loss including what insureds believe to be the proper scope of repairs.

Two weeks later, the insurance adjuster sent insureds a follow-up letter to their November 25th letter again notifying insureds of the requirement of a sworn proof of loss. The adjuster informed them that their response was vital to expedite completion of their investigation and notified them that their failure to provide the statement was a material breach of the policy. To cure the breach, insurer required the receipt of a proof of loss on or before January 25, 2019.

Another email attached a forty-five-day follow-up letter and was sent on January 10, 2019, notifying insureds that they had until Thursday January 24, 2019 to supply the proof of loss in order to avoid materially breaching the insurance contract. When nothing was received, insurer sent another email with a letter attached that was titled "Notice of Material Breach With Option to Cure." It required the sworn proof of loss to be submitted within ten days, with the warning that insurer may rescind coverage for the loss if they failed to comply.

On February 14, 2019, insurer sent insureds another email; this time insurer attached a "Material Breach Notice." This letter stated that insureds "remain in material breach," and insurer "has no choice but to seek legal intervention."

Making good on its threat, on February 19, 2019, insurer filed a complaint for declaratory judgment and for material breach of the policy and election to repair contract. Insurer alleged that insureds had an obligation to comply with the policy provisions, including the election to repair to be performed by insurer's selected contractor and to substantially comply with insurer's request for a sworn proof of loss and supporting documentation. In the declaratory judgment action, insurer sought a declaration of rights and obligations under the contract, specifically that the court declare that the failure to provide a sworn proof of loss and supporting documentation barred insureds from any recovery on the claim. In the breach of contract claim, insurer alleged that pecuniary damages were unavailable and sought equitable relief entitling it to a "voidance of further coverage obligations arising from the subject loss."

After insurer filed suit, on March 11, 2019, insureds executed and submitted the sworn proof of loss. Insureds stated in the form that the loss was from "water damage," and that on May 1, 2018, the "dishwasher leaked caused damage to kitchen cabinets only." As to the "whole loss and damage" and as to the amount claimed, insureds wrote "pre-loss condition." Also on March 14, 2019, insureds submitted a signed work authorization "to put the Insured back to their pre-loss condition in accordance with the invocation of the repair option[.]"

Insureds moved to compel an appraisal pursuant to the policy, disputing the amount of the repairs. Before that motion was heard, insurer filed a motion for final summary judgment, arguing that because insureds had failed to comply with the policy loss provisions within sixty days, they had breached the policy and insurer was entitled to a judgment forfeiting coverage. An affidavit of insurer's business records custodian attached all the correspondence between insureds and the company.

The trial court granted summary judgment, concluding that there was a total failure to comply with the sworn proof of loss. The final judgment itself simply stated that "Final Judgment is entered in favor of Plaintiff." From this, insureds appeal.

Preliminarily, we note that insureds never filed an answer and never contested whether the complaint as filed stated a cause of action. In People's Trust Insurance Co. v. Valentin , 305 So. 3d 324 (Fla. 3d DCA 2020), this same insurer filed suit for declaratory relief and breach of contract under nearly identical circumstances as the present case. The trial court dismissed those causes for failure to state a cause of action. Id. at 326. The Third District held that the breach of contract claim filed by this insurer against another policy holder failed to state a cause of action, because it failed to allege any damages, similar to the complaint in this case. Id. at 327. The court reversed the dismissal of the declaratory relief count because the insurer "seeks a declaration of its coverage obligations and whether it is entitled to void the subject policy," which the court concluded was a proper subject for declaratory relief. Id. ; see also People's Trust Ins. Co. v. Alonzo-Pombo , 307 So.3d 840 (Fla. 3d DCA 2020). While the parties do not raise the failure to state a cause of action as an issue on appeal, we point this out so that our opinion may not be taken as a tacit acceptance of the claims brought in this case as valid causes of action.

Furthermore, the judgment in this case makes no declaration of the rights or obligations of the parties, as is generally required in a declaratory judgment. See Sears, Roebuck & Co. v. Forbes/Cohen Fla. Props., L.P. , 223 So. 3d 292, 298 (Fla. 4th DCA 2017). However, this issue was also not raised on appeal. We have the transcript of proceedings in which the trial court ruled that the evidence showed no compliance with the sworn proof of loss. It granted summary judgment, by which we interpret this to mean no coverage for the loss. With that understanding, we proceed with our analysis.

Analysis

"The standard of review of a trial court's ruling on a motion for summary judgment based upon the interpretation of an insurance policy is de novo." Rodrigo v. State Farm Fla. Ins. Co. , 144 So. 3d 690, 692 (Fla. 4th DCA 2014) (citing Chandler v. Geico Indem. Co. , 78 So. 3d 1293, 1296 (Fla. 2011) ). "Summary judgment is proper if there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law." Volusia County v. Aberdeen at Ormond Beach, L.P. , 760 So. 2d 126, 130 (Fla. 2000).

Insureds contend that the court erred in granting summary judgment on insurer's claims, because: (1) the policy language did not require the submission of a proof of loss in the circumstance where insurer elected to repair the property; and (2) material issues of fact remain as to insureds’ compliance with the conditions and whether insurer was prejudiced by any lack of compliance. We conclude that the policy conditions require a sworn proof of loss statement. However, we also conclude that material issues of fact remain as to compliance and prejudice.

I. Policy Construction

Insurance contracts are construed in accordance with the plain language of the policy. Auto-Owners Ins. Co. v. Anderson , 756 So. 2d 29, 34 (Fla. 2000). However, ambiguous provisions are liberally construed in favor of the insured and strictly against the insurer. Id. Nevertheless, " ‘the rule of liberal construction in favor of the insured applies only when a genuine inconsistency, uncertainty, or ambiguity...