11th Judicial Circuit Court, Miami-Dade County
Case No. 2022-007657-SP-21
Opinion Filed: November 22, 2024
Judge: Gordon Murray
Insurance – Auto Policy Rescission – Material Misrepresentation – Marital Status – Summary Judgment Denied
Background of the Case
This case concerns an automobile insurance dispute over the rescission of a policy issued by Direct General Insurance Company to Carlos Frometa Mayner and Claudia Mendez. The insurer rescinded the policy due to alleged material misrepresentations about the insureds’ marital status, prompting a lawsuit from Therapy Center of Tampa, LLC (“Plaintiff”).
The insurer moved for summary judgment, arguing that the policy was properly voided ab initio due to inaccuracies in the policy application. The Plaintiff contested the rescission, asserting that no material misrepresentation occurred, that the insurer unfairly discriminated based on marital status, and that factual disputes remained. The trial court denied the motion for summary judgment, ruling that factual issues must be resolved at trial.
Factual and Procedural History
1. The Insurance Policy and Application
- Claudia Mendez was a named insured on an automobile insurance policy issued by Direct General.
- The policy was effective from February 13, 2020, to August 13, 2020.
- The policy application was completed by Carlos Frometa Mayner, who was also a named insured.
- On the application, Carlos Frometa Mayner listed his marital status as “married” and Claudia Mendez as a “Household Resident and Driver,” also marking her as “married.”
2. The Accident and Rescission of the Policy
- Claudia Mendez was involved in an auto accident on February 13, 2020, the same day the policy took effect.
- On March 25, 2020, Direct General rescinded the policy, citing “Material Misrepresentation – Failure to disclose accurate marital status at policy inception.”
- The insurer’s investigation revealed that Carlos Frometa Mayner was legally married to another individual who did not reside in the same household.
- Direct General then reclassified both insureds as “single”, leading to a higher premium calculation but did not offer an option to pay the difference before voiding the policy.
Legal Issues and Arguments
1. Defendant’s Argument for Rescission
Direct General Insurance Company argued that:
- The insured provided false information about marital status, constituting a material misrepresentation.
- Marital status affects underwriting decisions, including premium calculations.
- Because the misrepresentation was material, the insurer was entitled to rescind the policy ab initio without any obligation to allow the insured to pay the adjusted premium.
2. Plaintiff’s Counterarguments
Therapy Center of Tampa, LLC challenged the rescission, contending:
- No misrepresentation occurred – Carlos Frometa Mayner truthfully disclosed that he was married; the insurer failed to clarify the nature of its inquiry.
- The insurer unfairly discriminated based on marital status, potentially violating Florida Statute § 626.9541(o)(9), which prohibits unfair premium discrimination based on marital status.
- The insurer failed to provide an opportunity to correct the premium adjustment before rescinding the policy.
- The insurer refunded the policy premium without including interest, further questioning the validity of the rescission.
- Materiality of the alleged misrepresentation is a question for the jury, making summary judgment inappropriate.
Court’s Analysis and Ruling
1. Factual Disputes Regarding Marital Status
The court found that there was a genuine factual dispute regarding the insured’s marital status:
- The insurer did not present definitive evidence that the insured intended to misrepresent his marital status.
- No depositions of the insureds were taken, leaving the exact nature of their relationship unclear.
- Judicial notice of a divorce proceeding in Hillsborough County did not conclusively prove the insured’s marital status as it related to the policy application.
2. The Materiality of the Alleged Misrepresentation Must Be Determined at Trial
The court noted that materiality is a question for the factfinder, citing:
“Forfeiture of rights under an insurance policy is not favored by law, especially where, as here, a forfeiture is sought after the happening of the event giving rise to liability.”
Thus, whether the alleged misrepresentation was material enough to justify rescission was an issue requiring jury determination.
3. Summary Judgment Standard
Under Florida Rule of Civil Procedure 1.510(a), summary judgment is appropriate only when:
“There is no genuine dispute as to any material fact, and the movant is entitled to judgment as a matter of law.”
Since Direct General failed to establish the absence of disputed material facts, the court denied the motion for summary judgment.
Final Judgment
The court denied Direct General’s motion for summary judgment, finding that:
- Factual disputes remain regarding the insured’s marital status.
- The insurer failed to prove that no genuine issues of material fact existed.
- The materiality of the alleged misrepresentation is a question for the jury.
Key Takeaways: Insurance Rescission and Marital Status Disputes
- Insurers cannot rescind policies without clear evidence of material misrepresentation.
- Materiality of an alleged misrepresentation is often a factual question that must be determined at trial.
- Marital status-based premium adjustments may raise issues of unfair discrimination under Florida law.
- Insurance companies must provide insureds with an opportunity to adjust premiums before voiding policies.
This case highlights the importance of accurate policy applications, but also the legal protections afforded to insureds when insurers attempt rescission after a claim arises.
Todays Insight:
“Justice delayed is justice denied.”
— William E. Gladstone
Ensuring fairness in insurance rescission cases requires careful scrutiny of the facts, protecting policyholders from arbitrary cancellations.