Opinion
Case No. 05-21465-CIV-LENARD-KLEIN.
June 5, 2006
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON SPECIFIC ISSUES AND GRANTING DEFENDANT'S MOTION FOR FINAL SUMMARY JUDGMENT
THIS CAUSE comes before the Court upon cross-motions for summary judgment. The Court has reviewed Plaintiff Mariela Aguilar's Motion for Summary Judgment on Specific Issues; Concise Statement of Facts, and Supporting Memorandum of Law (D.E. No. 29); Plaintiff's Notice of Filing Exhibits and Index of All Exhibits Filed in Support of Plaintiff's Motion for Summary Judgment (D.E. No. 30); Defendant's Response to Plaintiff's Motion for Summary Judgment (D.E. No. 37); Plaintiff's Notice of Filing Supplemental Exhibits and Supplemental Index of Exhibits Filed in Support of Plaintiff's Motion for Summary Judgment (D.E. No. 39); Plaintiff's Reply to Defendant's Memorandum of Law Filed by the Defendant in Opposition to Plaintiff's Motion for Summary Judgment (D.E. No. 40); and Defendant's Motion for Final Summary Judgment (D.E. No. 46); Defendant's Notice of Filing the Deposition of Marc Pearl (D.E. No. 44); Plaintiff's Response to Defendant's Motion for Final Summary Judgment (D.E. No. 47); Plaintiff's Notice of Filing Second Supplemental Exhibits and Supplemental Index of Exhibits Filed in Opposition to Defendant's Motion for Summary Judgment (D.E. No. 48); Plaintiff's Notice of Filing Affidavit of Kathy Bronger in Opposition to Defendant's Motion for Summary Judgment and in Support of Plaintiff's Motion for Summary Judgment (D.E. No. 50); and Defendant's Reply to Plaintiff's Response to Defendant's Motion for Final Summary Judgment (D.E. No. 52). Also before the Court is Defendant's Motion to Strike Affidavit of Kathy Bronger (D.E. No. 53); Plaintiff's Response to Defendant's Motion to Strike Affidavit of Kathy Bronger (D.E. No. 54); and Defendant's Amended Reply to Plaintiff's Response to Motion to Strike Affidavit of Kathy Bronger (D.E. No. 56). Based on a review of all the foregoing, and for the reasons discussed below, the Court DENIES Plaintiff's motion for summary judgment and GRANTS Defendant's motion for final summary judgment.
The parties in this case consented to have the undersigned Magistrate Judge take all necessary and proper action as required by law, and render a final Order, as appropriate, on all pretrial motions in this action. (D.E. Nos. 9, 10, 11).
BACKGROUND
On February 16, 2002, Plaintiff Maria Aguilar ("Aguilar") was treated at Premiere Center for Cosmetic Surgery of Coconut Grove, Inc. ("Premiere"), following which she expressed dissatisfaction to Premiere and her physician, Dr. Peter Somers, over the results of her surgery. On May 15, 2002, her then-attorney wrote to Premiere as follows:
Please be advised that this office has been retained to represent your patient, Mariela Aguilar.
Pursuant to Florida Statute § 766.204, I hereby request that you provide me with a full and complete copy of all of your medical records regarding services rendered to Maria Aguilar. I enclose herewith an appropriate medical authorization signed by Maria Aguilar.
Please be advised that Florida Statute § 766.204 requires you to provide me with copies of these records within ten (10) business days of your receipt of this request.See Plaintiff's Notice of Filing Exhibits and Index of All Exhibits Filed in Support of Plaintiff's Motion for Summary Judgment ("Plf. Ex. in Support of Mot. Summ. J.") (D.E. No. 30), Ex. 4. On the same date, the attorney also wrote Dr. Somers a different letter as follows:
Please be advised that I represent Mariela Aguilar.
I am writing to you pursuant to Florida Statute § 627.4137 to ascertain whether you were covered by medical malpractice insurance on February 16, 2002 when you performed surgery on Mariela Aguilar. Please immediately provide me with the name and address of your medical malpractice insurance carrier and your policy number. In the event that you were not covered by medical malpractice insurance at the time of this surgery, please advise me of that fact in writing.
In the event that you do have medical malpractice insurance coverage, please turn this letter over to your medical malpractice insurance carrier as my request that they contact me regarding the claims of Mariela Aguilar.Id., Ex. 5.
Premiere carried a "claims made and reported" insurance policy issued by Defendant Royal Surplus Lines Insurance Company ("Royal") which provided for medical professional liability coverage with effective dates of May 24, 2001, to May 24, 2002.Id., Ex. 3 ("the policy"). The policy required a claim to be made for any claim first made against the insured during the policy period, and reported to the insured during the policy period but in no event more than 60 days after the expiration of the policy period.
On May 22, 2002, just prior to expiration of the policy, Mark H. Pearl, President of Premiere, sent a letter to Insource, its agent, stating as follows:
On behalf of Premiere Centers for Cosmetic Surgery, Inc., please make Royal Surplus Lines Insurance Co. aware of the following potential incidents that may result in a claim against Premiere Center.Id., Ex. 7 (emphasis supplied). This statement was followed by a list of 27 patients, with a status line as to each. For Maria Aguilar, the status line read: "Request for Medical Records from attorney, mastopexy and liposuction on 5/2/02." Id. The May 15, 2002, letters from the attorney to Premiere and Dr. Somers were not sent to Insource or Royal. The May 22, 2002, letter from Pearl was faxed to Royal.
Thereafter, Market Finders Insurance Corp., a wholesale insurance broker, as agent of Premiere, allegedly advised Premiere that if it wanted coverage for the incidents listed in Pearl's May 22nd letter, it would have to exercise its right to purchase "tail" coverage under the Royal policy. "Tail" coverage is another name for the extended reporting endorsement which provided coverage (in this case, for an additional year) for any claims which arose during the policy period from May 24, 2001, to May 24, 2002. The policy required it to be purchased within 30 days of expiration of the policy. Royal quoted a charge to Kathy Bronger of Market Finders for the "tail" coverage, but Premiere declined to purchase the coverage. Pearl has no recollection of ever being provided with the option to purchase such "tail" coverage.
Nine months after expiration of the policy, on March 14, 2003, Premiere received a "Notice of Intent to Initiate Litigation" from an attorney representing Aguilar. Pearl forwarded the letter to Insource, Premiere's agent, which forwarded the letter to Royal. Pearl's letter stated in pertinent part:
Please find enclosed an Intent to Litigate letter against Premiere Center for Cosmetic Surgery of Coconut Grove, Inc. on behalf of patient, Maria Aguilar. Notice of a potential claim was originally provided in my correspondence to you dated May 22, 2002.
Please notify Royal about this claim. . . .See Defendant's Motion for Final Summary Judgment ("Df. Mot. Summ. J.") (D.E. No. 46), Ex. D (emphasis supplied).
On March 18, 2003, Royal received Pearl's March 14, 2003, letter from Market Finders, the wholesale broker, which in turn received it from Insource. Royal denied coverage since the claim was made outside the policy period.
Aguilar filed suit against Premiere and Dr. Somers in August 2003. The suit papers were ultimately received by Royal, which reiterated its denial of coverage, since the claim was made and reported outside the policy period. Premiere then consented to a judgment against it for $925,000 and assigned to Aguilar any rights against Royal which it may have. This suit followed, with Aguilar now claiming coverage under the policy as the assignee of Premiere. Both sides have moved for summary judgment.
Royal's Insurance Policy
Royal's policy contains the following pertinent provisions:
Part III. Definitions
* * *
C. Claim means a written or verbal demand received by the Insured for money or services, including service of suit or institution of arbitration proceeding against the Insured.
* * *
Part IV. General Conditions
A. Notice of Claim
The Insured must notify the Company as soon as practicable of an incident, occurrence or offense which may reasonably be expected to result in a Claim. The Insured must immediately send copies to the company any demands, notices, summonses or legal papers received in connection with any Claim, and authorize to [sic] the Company to obtain records and other information.
The policy also contains the following provisions in Part 1, the Insuring Agreements:
A. Covered Services
The Company as stated in the Declarations, will pay on behalf of the Insured all sums that the Insured becomes legally obligated to pay as Damages and associated Claim Expenses, because of a negligent act, error or omission, even if such Claim is groundless, false or fraudulent, in rendering or failing to render professional services as described in the Declarations provided that:
1. The Claim is first made against the Insured and reported to the Company during the Policy Period but not later than 60 days after the end of the Policy Period;
* * *
F. Extended Reporting Period
If the policy is not renewed for any reason, or is canceled for any reason other than for non-payment of premium (whether canceled by the Company or by the Insured), the Insured has the right to purchase an extension of the coverage granted by this policy for a period of twelve (12) months after the Policy terminates, but only with respect to negligent acts, errors or omission committed before the effective date of Policy termination, and otherwise covered by this Policy. . . .
The premium for this Extended Reporting Period . . . must be elected and paid within thirty (30) days after the effective date of policy termination. Such additional premium will be deemed fully earned immediately upon the inception of this Extended Reporting Period.
LEGAL STANDARD
A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The movant bears the initial responsibility of informing the Court of the basis for its motion and of identifying those materials which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2553 (1986). Once this initial demonstration under Rule 56(c) is made, the burden of production, not persuasion, shifts to the nonmoving party.The nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. (quoting Fed.R.Civ.P. 56(e)). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510 (1986) (emphasis added). The Court is not to resolve factual issues, but may only determine whether factual issues exist. A material fact is one which "might affect the outcome of the suit under the governing law. . . ." Id. Therefore, the appropriate inquiry is whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 2511. The Court must view the evidence and factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party.Maniccia v. Brown, 171 F.3d 1364, 1367 (11th Cir. 1999). If the nonmoving party fails to "make a sufficient showing on an essential element of her case with respect to which she has the burden of proof," then the Court must enter summary judgment for the moving party. Celotex, 106 S. Ct. at 2552.
ANALYSIS
The policy at issue is a "claims made and reported" policy as opposed to an "occurrence" policy. All parties are in agreement on this proposition. This means that, in order to trigger coverage, a claim must be made against the insured and reported to the insured within the policy period, or any extension provided for in the policy. The policy provided for a 60-day extension after expiration of the policy. Both sides agree that the insured had until July 24, 2002, to report any claim. There is no real dispute as to the timeliness of notification, and thus the 60 day extension for reporting a claim is not relevant. The question is legal sufficiency of the notice given by Premiere.The only real question here is whether Pearl's letter of May 22, 2002, reporting 27 incidents, including Aguilar's, was sufficient notice that a claim had in fact been made by Aguilar. If it sufficiently reported a claim, then coverage was triggered. If it did not sufficiently report a claim, then there is no coverage.
The starting point is Premiere's May 22 letter, which stated:
[P]lease make Royal Surplus Lines Insurance Co. aware of the following potential incidents that may result in a claim against Premiere Center.
* * *
Maria Aguilar Coconut Grove Request for Medical Records from attorney, mastopexy and liposuction on 5/2/02.
The letter does not characterize any of the 27 listed incidents as claims, instead referring to them as "potential incidents." Pearl's characterization is reiterated in his letter forwarding the March 14, 2003, Notice of Intent to Litigate when he states that "[n]otice of a potential claim was originally provided in my correspondence to you dated May 22, 2002." The May 22, 2002, letter fails to meet the definition of Claim in the policy, which requires a written or verbal demand received by the Insured for money or services, including service of suit or institution of arbitration proceeding against the Insured."
Pearl confirmed his understanding of the difference between a "potential claim" and a "claim" during his deposition, in which he stated:
Q. So you had a distinction, in your mind, when authoring those letters, between a potential claim and a claim, correct?
A. Correct.
* * *
Q. So wouldn't you agree that the claim was not made against the insured, being Premiere, within the policy period?
* * *
A. That would be my understanding.See Defendant's Notice of Filing the Deposition of Marc Pearl ("Pearl Depo.") (D.E. No. 44) at 40, 62. There is no doubt, then, that the May 22 letter from Pearl which ultimately was received by Royal gave notice of a potential claim as opposed to an actual claim by Aguilar. Plaintiff contends that the May 22 notification is sufficient under the Notice of Claim policy provision, and pursuant to case law. Defendant, of course, disputes this notion. To understand the Notice of Claim provision, reference toCouch on Insurance is germane:
Some liability insurance policies, called "claims made" policies, cover only "claims" that are "made" against the insured during the policy period, regardless of when the circumstances giving rise to the claim occurred, while others (called "occurrence" policies) cover claims based on activity occurring during the policy period, regardless of when the claim is actually asserted, and still others narrow their coverage to claims that both are made during the policy period and which are based on circumstances occurring during that period. Policies which impose a requirement that the claim be made during the policy period thus tend to have two separate "notice of claim" provisions —
1. The ordinary and usual notice of loss requirement that is the focus of this and the following chapters, which in the case of liability insurance tends to be phrased in terms of the insured notifying the insurer of a claim or potential claim "promptly" or the like; and
2. A requirement that the claim be made during the policy period in order for the loss to be treated as falling within the period of time covered by the policy.
These provisions serve very different purposes. The first is directed at ensuring promptness of notice, maximizing the insurer's opportunity to investigate, set reserves, and control or participate in negotiations with the third party asserting the claim against the insured. The second is directed to the temporal boundaries of the policy's basic coverage terms, and is used to mark the point at which liability for the claim passes to an ensuing policy, frequently issued by a different insurer, which may have very different limits and terms of coverage. Notice under the second provision is not simply part of insured's duty to cooperate, but defines the limits of the insurer's obligation, and if there is no timely notice, there is no coverage. In essence, the first notice requirement looks to the length of time between the point when the insured knew or should have known of the likelihood of a claim and the point at which the insured notified the insurer of those facts, while the second requirement compares only the point at which the claim is made and the point at which the policy period ends.
Lee R. Russ, Thomas F. Segalla, Couch on Insurance § 186:13 (3d ed. 2005).
The two notice provisions in the policy here serve different purposes. The Notice of Claim provision requires the insured to notify the company of incidents which could lead to a claim, but does not supplant the requirement of the other notice provision, which requires actual claims made against the insured to be reported to the insurer within the policy period. Giving notice under the Notice of Claim provision may suffice, if an actual claim is being reported. If the notice under that provision reports something other than a claim, for example, a patient's complaint that she was dissatisfied with results, then such notice is not notice of an actual claim, and does not operate to trigger coverage. The question here is whether the advice of a potential claim based on an attorney's request for medical records constitutes a claim sufficient to trigger coverage.
One of the primary purposes of the Notice of Claim provision is to furnish an underwriter with information about a company's possible exposure so that it can calculate premiums for "tail" coverage with greater certainty. It also permits the insurer to undertake investigation of any claims.
Aguilar claims that Florida law draws no distinction between notice of a potential claim and an actual claim. Royal says no Florida court has decided this precise issue, but that the policy provisions, logic, and cases from other jurisdictions compel the opposite result. Analysis of the relevant cases is helpful here.
Royal's Position
Royal relies primarily on cases from other jurisdictions, in the belief that there are no Florida cases directly on point. But the Eleventh Circuit has spoken on an important aspect of the issues presented here. The relevant facts in Nat'l Fire Ins. v. Bartolazo, 27 F.3d 518 (11th Cir. 1994), are substantially similar to the facts at bar: a medical malpractice insurance policy that defined "claim" in relevant part as a demand for money or services; a request for medical records from the attorney of a former patient; notification by the insured to the insurer of that letter; and an assertion that the letter constituted a "claim" under the policy.
As noted below, though, Royal never actually received the letter from the attorney to Premiere.
In Bartolazo, a physician received a letter from his former patient's attorney in April 1990, requesting the patient's records in connection with "her claim for medical malpractice and other relief against him." The patient eventually served a Notice of Intent to Initiate Litigation for Medical Malpractice in January 1991. The physician in turn notified his insurance company of the claim, seeking coverage under his 1991 policy. The insurer had issued policies to the physician for both the 1990 and 1991 calendar years; the policies required the physician to inform the insurer of a claim in the year in which the claim was made, with some grace period for reporting claims after the policy was terminated. The insurer moved for summary judgment, contending that the 1990 letter constituted a claim and that the physician was not entitled to coverage because he failed to notify the insurer of the letter within the year in which it was received. The district court denied summary judgment for the insurer.
On appeal, the Eleventh Circuit rejected the insurer's contention that the letter constituted a claim:
The 1991 policy defines a "claim" as "the receipt by you of a demand for money or services, naming you and alleging a medical incident." [The insurer's] contention that the 1990 letter from Marsico's attorney constitutes a "claim" is meritless. The 1990 letter made no demand for money or services, nor did it allege a medical incident. The letter merely requested Marsico's medical records and alluded to a claim for malpractice. The district court's decision on this point is due to be affirmed. [The insurer's] motion for summary judgment was properly denied.27 F.3d at 519.
Under Bartolazo, it is clear that the May 15 letter from Aguilar's attorney to Premiere did not constitute a "claim" under Royal's policy. Thus, that letter was insufficient notice of an actual claim. Furthermore, Royal never even received that letter. What it received was far less than the letter itself; it merely received notification on May 22 that an attorney had requested medical records for Aguilar. No demand for money or services was mentioned in either the attorney's letter or Premiere's May 22 notification transmitted to Royal. This May 22 notification falls woefully short of anything that could be considered a "claim," making no mention of any demand for money or services.
Royal cites cases from other jurisdictions which support this conclusion. It points to FDIC v. Booth, 82 F.3d 670 (5th Cir. 1996), in which directors of a bank which later failed received letters from the FDIC warning them that failure to take corrective action could result in civil money penalties and threatening "more severe enforcement action." The directors contended that the FDIC threats were "claims" within the meaning of the policy, which triggered coverage for the lawsuits filed after the expiration of the policy period. The Fifth Circuit rejected this contention, stating at 676-77:
The language of the letter indicates that even the FDIC considered the correspondence only a warning of "potential liability," making it more akin to a potential claim than a true claim. Equating the mere threat of a claim with an actual claim negates the "necessarily" element in the very definition of "claim." Such an interpretation would contradict the intentions of the insurance contract.
In making this ruling, we join the Sixth and Ninth Circuits in their interpretations of similar D O policies. In MGIC Indemnity Corp. v. Home State Savings Assn., cited approvingly by this court in Barham and Mijalis, the Sixth Circuit determined that a letter targeting directors as the subject of a grand jury indictment did not qualify as a "claim." It reasoned that "a claim that a wrongful act has occurred is not the same thing as a claim for payment on account of a wrongful act," and that the "mere potential for such a claim is not enough to meet the condition imposed by the policy."
Similarly, the Ninth Circuit has determined that threats of potential liability do not rise to the level of a demand for a particularized loss. In Winkler v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., the court determined that a letter announcing that legal action would be instituted in the future to recoup losses, coupled with a meeting to discuss problems, did not constitute a "claim." Although that decision was based on the particular policy language, the court emphasized in a footnote that they would reach the same conclusion even without the specific policy provisions. It reasoned, "to constitute a claim, a demand for something due or believed to be due must be made."
In MGIC Indem. Corp. v. Home State Say. Ass'n, 797 F.2d 285 (6th Cir. 1986), an Assistant U.S. Attorney advised Home State that it and five of its officers were targets of a grand jury investigation. Home State ultimately plead nolo contendere to criminal charges and agreed to make restitution of loan commitment fees. It sought coverage from its insurer, claiming that the prosecutor's letter was a "claim" made within the policy period. The policy required a claim for payment on account of a wrongful act by officers or directors. Home State argued that since its officers were indemnified against any claim, that the "claim" encompassed their liability, and that the claim was made during the policy period. In rejecting this contention, the court stated at 288:
Home State suggests that there was a potential for demands against the officials for the payment of money, but a mere potential for such claims is not enough to meet the condition imposed by the policy. The agreement was that MGIC would pay if, during the policy period, "claims are made against the Directors and Officers." (Emphasis supplied.) That condition is not satisfied, in our view, where claims might have been made during the policy period, but were not.
These cases support the conclusion that Pearl's May 22 letter advising of numerous incidents that might give rise to one or more claims — potential claims — was not notice of an actual claim by Aguilar sufficient to trigger coverage under the policy at issue.
Aguilar's Position
Aguilar cites to the usual bromides that ambiguities should be construed against the insurer, the policy should be read as a whole, and courts will not interpret policies in a fashion to defeat coverage when coverage in fact exists. But the issue here is not one of ambiguities; there are none. The question boils down to whether notification by the insured of 27 potential claims, including Aguilar's, pursaunt to the Notice of Claim policy provision sufficiently described actual claims so as to trigger coverage under this "claims made and reported" policy for all 27 potential claims on the list, including Aguilar's.
Aguilar cites a number of cases to support her position that Florida makes no distinction between reporting a potential claim and an actual claim, but her analysis of each case is flawed. Her primary reliance is on U.S. Fire Ins. Co. v. Fleekop, 682 So.2d 620 (Fla. 3d DCA 1996), and Gulf Ins. Co. v. Dolan, Fertig and Curtis, 433 So.2d 512 (Fla. 1983). Neither case supports her position.
In Fleekop, the insured was an accounting firm which promoted tax shelters to many people, including Fleekop. The IRS later disallowed the deductions, resulting in tax penalties to the firm's clients. The firm carried a "claims made" insurance policy, which contained the following provision:
Conditions
1. Policy Period and Claims-Made Provisions
This policy applies to acts, errors or omissions in the Insured's performance of professional accounting services provided that the claim is first made during the policy period and written notice of said claim is received by the Company during the policy period.
If during the policy period, the Company shall receive written notice of an act, error or omission which could reasonably be expected to give rise to a claim against the Insured under this policy, any claim which subsequently arises out of such act, error or omission shall be considered a claim first made against the Insured during the policy year in which the written notice was received.682 So.2d at 623 (second emphasis supplied).
The policy also contained an option to purchase an extended reporting period, also sometimes referred to as `tail" coverage. The court aptly explained the connexity of "tail" coverage with a "claims made" policy, at 623:
"Tail" or discovery period coverage essentially supplements a claims-made policy to give the insured added protection. See Arad v. Caduceus Self Ins. Fund, Inc., 585 So.2d 1000, 1001 (Fla. 4th DCA 1991) ("[Tail coverage] protects [insureds] into the future for claims regarding incidents that occurred during the policy period but which were not presented until after the policy expired."); American Casualty Co. v. Rahn, 854 F. Supp. 492, 501 (W.D. Mich. 1994) ("In effect, [tail coverage] provide[s] an extended period during which the insured may `discover' the existence of a claim based on the prior conduct."). The logic of such policies is that an act of malpractice might not be discovered until after the original policy period had terminated, at which time the insured would be completely vulnerable to suit. Tail coverage picks up where the claims-made policy leaves off, with respect to acts committed during the original policy period. Tail coverage does not provide indemnity for new negligent acts or omissions committed during the tail period. Tail coverage is what the P.A. purchased for the period of October 1, 1984 through October 1, 1990. The endorsement for the tail or discovery policy specifically stated that "all other terms and conditions of this policy remained unchanged."
The insured in Fleekop purchased "tail" coverage, and as claims began coming in during the "tail" period the insurance company defended the firm. When the "tail" coverage approached expiration, the firm notified the company of 700 persons or entities who might have reason to sue the firm, including Fleekop. The Fleekops sued after expiration of the "tail" coverage, and U.S. Fire denied coverage on the basis that the 700 list letter only provided notice of "potential" rather than actual claims; the company maintained that the letter was insufficient to meet the reporting requirements of the "tail" policy. The parties disagreed as to whether the "tail" coverage mirrored the initial coverage in providing that notice of "potential" claims triggered coverage. After reviewing cases from other jurisdictions in which similar policy provisions were construed, the court concluded that for "tail" coverage, notice of "potential" claims was all that was required. Id. at 627.
At first blush, this holding seems to support Aguilar's position, especially considering the following quote at 625:
It is undisputed on this appeal that coverage would have been triggered during the original policy period . . . by the P.A.'s mere notice of an occurrence. In other words, the P.A.'s notification to its carrier of a mere potential claim would have sufficed. . . .
However, closer scrutiny of the policy in Fleekop discloses a crucial distinguishing feature. The notice provision in Fleekop specifically provided that if notice of an act, error or omission
which could reasonably be expected to give rise to a claim against the Insured under this policy, any claim which subsequently arises out of such act, error or omission shall be considered a claim first made against the Insured during the policy year in which the written notice was received.Id. at 623 (emphasis supplied). In other words, under the above policy, notice of a potential claim which later turned into an actual claim was sufficient to trigger coverage, and the claim would be treated as having been made within the policy period. In the case at bar, no such language exists that would allow notice of a potential claim to operate as sufficient notice of an actual claim made after expiration of the policy. The Notice of Claim provision in the policy here is far narrower than those in Fleekop and the cases relied on by theFleekop court.
Significantly, the Fleekop court noted that the policies in cases it cited from other jurisdictions to justify its position all had similar notice provisions: notice of an incident or occurrence during the policy period which may give rise to a claim which subsequently results in a claim made after the policy period will be covered. In point of fact, all of the cases cited by the court did have a notice provision similar to that inFleekop.
Such clauses are known as "relation back" or awareness clauses. As noted, the Notice of Claim provision here is markedly different, and is not an awareness clause. The Notice of Claim provision here is far more limited, and does not provide for a claim subsequently made after earlier notification to be a covered claim. Thus, Fleekop simply does not apply here because of the important differences in the notice of claim provisions in the Fleekop policy vis-a-vis the much narrower notice of claim provision in the policy at issue here.
Next, Aguilar relies on Gulf Ins. Co. supra, but that case is totally inapposite. In Gulf, a law firm received a letter from a client on the last day of its Gulf claims-made policy period suggesting that the law firm was grossly negligent in its professional performance, and requesting that the firm place its malpractice carrier on notice. The law firm obtained subsequent coverage from LPLIC, and advised its new carrier of this claim three weeks later, and its old carrier, Gulf, of the claim over two months later. Gulf denied coverage on the basis of lack of notice during the policy period. The only issue was whether an insured should be given extra time to report a claim after expiration of a claims-made policy when a claim arises late in the contract term. The court stated at 515-16:
Coverage depends on the claim being made and reported to the insurer during the policy period. Claims-made or discovery policies are essentially reporting policies. If the claim is reported to the insurer during the policy period, then the carrier is legally obligated to pay; if the claim is not reported during the policy period, no liability attaches. If a court were to allow an extension of reporting time after the end of the policy period, such is tantamount to an extension of coverage to the insured gratis, something for which the insurer has not bargained. This extension of coverage, by the court, so very different from a mere condition of the policy, in effect rewrites the contract between the two parties. This we cannot and will not do.
(emphasis in original).
There was no issue in Gulf as to timely reporting of a potential claim versus reporting an actual claim. The only issue was whether the insured could report an actual claim (which it did) after expiration of the policy. The case simply has no application here.
The only other case of significance cited by Aguilar is Fla. Physicians Ins. Co. v. Stern, 563 So.2d 156 (Fla. 4th DCA 1990), which Aguilar quotes as saying, "as a matter of law, notice of a potential claim was sufficient to trigger coverage pursuant to a claims made policy." See Plf. Mot. Summ. J. (D.E. No. 29) at 12. That quote appears nowhere in that case. Although the case does speak of a potential claim, the policy provision is not set forth in the case, and it is thus not possible to say whether the notice of claim clause was an awareness provision, as in Fleekop, or was akin to the one in the case at bar. Thus,Stern has no precedential or persuasive value in deciding the issue now before the Court.
One case cited by both sides does by implication have some limited persuasive authority. In Paradigm Ins. Co. v. P C Ins. Systems, Inc., 747 So.2d 1040 (Fla. 3d DCA 2000), the insured received a letter from a patient's lawyer which read in part:
Please be advised that the undersigned law firm represents Mr. Perez in connection with a personal injury claim which he filed and litigated against Riviera Rental Apts. 2 and 3, Inc., d/b/a La Riviera Apts. This litigation resulted in a judgment in excess of $2 million dollars (sic). A copy of the Final Judgment is enclosed for your review.
The President of Riviera Rental Apts. 2 and 3, Inc., Hector Vinas, testified that he purchased insurance from Pablo Cantin [should be Conde] at your agency to cover the loss in question. Unfortunately, the policy which Mr. Cantin procured failed to provide liability insurance for my client[']s loss.
You are kindly requested to turn this letter over to your errors and omissions insurance carrier for handling. You are kindly requested to have your error[s] and omissions carrier contact the undersigned at [its] earliest convenience relative to this matter.747 So.2d at 1041 n. 1. Not clear is what or when the insured advised the insurer after receiving that letter. But what is clear is that the insurer argued that the letter did not amount to a "claim" for purposes of the claims made policy. The policy defined "claim" to mean a "demand for money or services made by a third party, made in writing against the Insured and actually received by the Insured. . . ."
That definition of "claim" is virtually identical to the definition of "claim" in the policy at issue here. The Paradigm court held the letter to be sufficient to constitute a "claim," since it demanded money within the meaning of Paradigm's policy. Contrast that with the initial letter sent by Aguilar's then-attorney to Premiere which merely requested all medical records, and Pearl's May 22 letter which simply listed Aguilar as a potential claim annotated with the request for medical records; it is clear that no claim was being made for money or services as required by the policy definition. Neither the attorney's letter nor Pearl's letter can be construed as a "claim" within the meaning of the policy.
Further buttressing this contrast is the letter sent by Aguilar's then-attorney to Dr. Somers on the same day (May 15, 2002) he sent his letter to Premiere. The Somers letter, which asks for medical malpractice insurance information, requests Dr. Somers, who had a different carrier than Premiere, to turn the letter over to his medical malpractice insurance carrier. Although there may be a question as to whether even this letter would have been sufficient to be a "claim," it certainly does not compare to the Premiere letter which merely requests medical records and never advises Premiere to put its carrier on notice. Clearly, the letter to Premiere, as opposed to the letter to Somers, was nothing more than a preparatory act to the possibility of making a claim, depending on what the medical records showed.
Aguilar's Version of "Tail" Coverage
Aguilar argues that Royal is trying to confuse "tail" coverage with the 60 day extension for reporting claims at the expiration of the policy period, and that Royal denies that there was a 60 day period for reporting claims in an effort to get Aguilar to purchase "tail" coverage. This is simply incorrect. Royal does not take such a position, and does not dispute the timeliness of Pearl's May 22 notification as being within the policy period or the 60 day extension. What it does dispute, and has been the sole and exclusive focus of this opinion, is the adequacy of that notice as a "claim" under the terms of the policy. The "tail" coverage is the right of the insured to purchase an extended reporting period to allow for coverage for claims reported after the expiration of the "claims made" policy period. Premiere chose not to purchase such coverage. Although Pearl claims that he never was advised of such an option, and was misled into believing that he had no 60 day extended reporting period, the policy as the contract between the parties controls, and it clearly provided for such an option. See Key v. Allstate Ins. Co., 90 F.3d 1546, 1549 (11th Cir, 1996) ("Under Florida law, if the terms of an insurance contract are clear and unambiguous, a court must interpret the contract in accordance with its plain meaning, and, unless an ambiguity exists, a court should not resort to outside evidence or the complex rules of construction to construe the contract."). The 60 day period is indeed a "red herring," since Premiere provided a timely, albeit insufficient notice to the insurer. Whether Pearl was misled as to whether he had an extra 60 day reporting period is thus irrelevant. It had 30 days to purchase tail coverage, which it failed to do.
Likewise, the Bronger Affidavit (D.E. No. 48), in which she states that Royal advised her there was no "grace period" for reporting claims, is also a "red herring." It really doesn't matter whether there was a 60 day "grace period" for reporting claims, since Pearl already submitted his notice, and there is nothing to indicate that having an additional 60 days would have made any difference. Pearl testified that he thought his May 22 letter was sufficient. Whether the company's motive, as Aguilar argues, was to get Premiere to purchase a "tail" is irrelevant to the legal issues raised as to the sufficiency of the May 22 notification. Moreover, had Premiere exercised its right to purchase the "tail," it would not be in the predicament it finds itself in. Royal can thus hardly be faulted for any efforts it may have made (although none appear evident) to persuade Premiere to purchase a "tail."
The importance of such "tail" coverage, and its interplay with the expiration of the policy, has already been adverted to above, as explained in Fleekop, and need not be repeated here. Ultimately, however, whether or not Premiere purchased such tail coverage is irrelevant to the question of the sufficiency of the May 22 notification to Royal.
Waiver
Aguilar contends that Royal's failure to timely respond to its insured's notice of claim constitutes a waiver of Royal's right to deny coverage. Aguilar states that Royal had actual knowledge of her claim in May 2002, by virtue of its fax receipt of Pearl's May 22 letter prior to May 28, 2002, yet Royal did not timely advise Premiere that the May 22 notification was insufficient to invoke coverage.
However, citing Aguilar's own evidence, Royal notes that it acknowledged receipt of the May 22 letter and in turn advised Market Finders to advise Premiere that no coverage would exist for the 27 incidents cited in the letter unless Premiere exercised its right to purchase tail coverage.
In support of her waiver argument, Aguilar cites Florida Statute § 627.426 and points out that Royal failed to comply with the requirements of this statute. Section 627.426 provides in pertinent part:
(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:
(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and
(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial, the insurer:
1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured;
2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which the coverage defense is asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the subject litigation; or
3. Retains independent counsel which is mutually agreeable to the parties. Reasonable fees for the counsel may be agreed upon between the parties or, if no agreement is reached, shall be set by the court.
(emphasis supplied). Aguilar argues that if Royal intended to properly assert a coverage defense, it should have notified Premiere within 30 days of receipt of the May 22 letter.
Aguilar's reliance on § 627.426 is misplaced. The statute does not apply here. "An insurer does not assert a `coverage defense' where there is no coverage in the first place. Country Manors Ass'n v. Master Antenna Systems, Inc., 534 So.2d 1187, 1195 (Fla. 4th DCA 1988) (cited with approval in AIU Ins. Co. v. Block Marina Investment, Inc., 544 So.2d 998, 1000 (Fla. 1989)). In Block Marina, the Florida Supreme Court construed
the term "coverage defense," as used in section 627.426(2), [to mean] a defense to coverage that otherwise exists. We do not construe the term to include a disclaimer of liability based on a complete lack of coverage for the loss sustained. Under this construction, for example, if the insurer fails to comply with the requirements of the statute, it may not declare a forfeiture of coverage which otherwise exists based on a breach of a condition of the policy. However, its failure to comply with the requirements of the statute will not bar an insurer from disclaiming liability where a policy or endorsement has expired or where the coverage sought is expressly excluded or otherwise unavailable under the policy or under existing law.Id. (emphasis supplied).
In this case, Royal denied coverage because the policy lapsed without Premiere providing the requisite notice of a claim under the policy, i.e., no coverage existed for Aguilar's claim, and therefore, under Block Marina, § 627.426 is inapplicable. Royal's failure to comply with the statutory requirements of this provision did not constitute a waiver of its right to deny coverage to Premiere for Aguilar's claim. See also Nova Cas. Co. v. Anderson, No. 804CV2085T27TGW, 2005 WL 3336496 at *6-*7 (M.D. Fla. Dec. 8, 2005) (employees fell outside the definition of "insured" in company's insurance policy; insurer contended there was no coverage under the plain language of the policy, and was not estopped from asserting lack of coverage after failing to comply with § 627.426). The statute cannot be used to create coverage when there is no coverage in the first place. Block Marina, 544 So.2d at 999-1000.
Aguilar seeks support from language in Fleekop. Without belaboring the point, that case is factually and legally distinguishable for the reasons stated earlier. The case did not address § 627.426, and was determined on the basis of its unique facts involving the undertaking of defense of many claims during the tail period and sudden denial when a number of new claims were made.
Finally, Aguilar suggests that Royal's policy has competing definitions of "claim," therefore, the policy is ambiguous and should be construed so as to require the broadest possible coverage. For the reasons discussed above, the Court rejects that notion. The term "claim" is clearly and precisely defined, and the fact that the policy contains two notice provisions regarding claims does not render the policy ambiguous.
CONCLUSION
Based on the foregoing, it is hereby ORDERED AND ADJUDGED that1) Plaintiff Mariela Aguilar's Motion for Summary Judgment on Specific Issues; Concise Statement of Facts, and Supporting Memorandum of Law (D.E. No. 29) is DENIED.
2) Defendant Royal Surplus Lines Insurance Company's Motion for Final Summary Judgment (D.E. No. 46) is GRANTED.
3) Plaintiff's Request for Oral Argument (D.E. No. 31) is DENIED.
4) Defendant's Motion to Strike Affidavit of Kathy Bronger (D.E. No. 53) is DENIED.
DONE AND ORDERED.