Opinion
CASE NO. 03-60039-CIV-DIMITROULEAS
April 22, 2003
FINAL ORDER OF DISMISSAL GRANTING SUMMARY JUDGMENT
THIS CAUSE is before the Court upon Plaintiff Continental Casualty Company's Motion for Judgment on the Pleadings or, in the alternative, for Summary Judgment [DE 4], Plaintiff's Memorandum of Law [DE 5], Defendants' Memorandum in Opposition [DE 10] and Plaintiff's Reply [DE 12]. The Court has carefully considered the motion, response, reply and declarations, and is otherwise fully advised in the premises. Plaintiff Continental Casualty Company ("Continental") has filed this action seeking a declaratory judgment regarding its rights and obligations under Continental's Accountants Professional Liability Policy No. APL-128534363, issued to Defendant Sewell Company, CPA's, P.A. for the policy period May 21, 2001, through May 21, 2002.
I. DISCUSSION
At the outset, the Court notes that the operative facts of this case are not in dispute by the parties. Continental has filed this Motion for Judgment on the Pleadings or for Summary Judgment, contending that it is entitled to judgment as a matter of law, declaring that the policy has been rescinded or is void ab initio because Sewell procured the policy on the basis of material misrepresentations or omissions of fact.
First, Continental's Complaint alleges that Thomas Sewell made numerous misrepresentations in Sewell Company's application for insurance that were material to the risk assumed by Continental. In particular, in the policy application, Sewell answered that Sewell Company did not provide investment advisory and financial planning services, and Sewell failed to complete a required supplemental form describing any financial planning and investment advisory services rendered. In fact, Thomas Sewell has admitted to providing investment advisory and financial planning services to Sewell Company clients, and he does not dispute that he made misrepresentations in the application of insurance on this issue.
Second, Continental argues that the parties bilaterally rescinded the policy by accord and satisfaction. Specifically, Continental advised Sewell by letter dated November 20, 2001, that it intended to rescind the policy based on Mr. Sewell's undisputed material misrepresentations and omissions in the policy application. Next, Continental advised Sewell by letter dated December 20, 2001, that the policy was rescinded, explained in detail the reasons for rescission, and tendered a refund of the premium that Sewell paid for the policy by enclosing a check in the amount of $3,529.76. On December 31, 2001, Sewell cashed the refund check.
The Court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). Rather, judgment on the pleadings is appropriate when there are no material facts in dispute, and judgment may be rendered considering the substance of the pleadings. Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir. 2002). Here, it is undisputed that there are no genuine issues of material fact and that the Court need only determine issues of law.
Under Florida law, an insurer may rescind an insurance policy on the basis of misrepresentation in the application for insurance if either: (a) the misrepresentation, omission, concealment, or statement is material either to the acceptance of the risk or to the hazard assumed by the insurer; or (b) if the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss. Florida Statutes Ann. § 627.409(1) (West 1996). "Where a misrepresentation occurs that meets the requirements of § 627.409 the insurer, as a matter of right, may unilaterally rescind." Fabric v. Provident Life Accident Ins. Co., 115 F.3d 908, 912 (11th Cir. 1997) (citing Pino v. Union Bankers Ins. Co., 627 So.2d 535 (Fla. 3rd DCA 1993)). Further, a material misrepresentation in an insurance application will nullify any policy issued and is an absolute defense to enforcement of the policy.Wimberg v. Chandler, 986 F. Supp. 1447, 1452 (M.D. Fla. 1997) (citing Motors Ins. Corp. v. Marino, 623 So.2d 814, 815 (Fla. 3rd DCA 1993)). Thus, under Florida law, such misrepresentations operate to void the policy ab initio.
Here, Defendants do not challenge that they made material misrepresentations in the application — this fact has been admitted — rather, Defendants argue that unilateral rescission did not occur because Continental failed to terminate the policy pursuant to the contractual cancellation terms. Defendants, however, miss the point. Because they procured the policy on the basis of Mr. Sewell's material misrepresentations regarding the firm's activities in providing investment advisory and financial planning services, the entire policy is void ab initio, and all contractual provisions contained in the policy are likewise unenforceable. See Fla. Stat. Ann. § 627.409(1); Fabric, 115 F.3d 908, 912-15;National Union Fire Ins. Co. of Pittsburgh, PA. v. Sahlen, 999 F.2d 1532, 1535 (11th Cir. 1993); Pino v. Union Bankers Ins. Co., 627 So.2d 535, 536-37 (Fla. 3rd DCA 1993).
In addition, Continental has provided a signed declaration from Continental underwriter Beverlee Burrows, declaring that (1) information regarding an applicant's investment advisory and financial planning services is material to Continental's assessment of risk in underwriting an accountants professional liability policy; and (2) had Continental been aware that Mr. Sewell was providing such services and of his particular activities involving Landmark Investment Trust, Continental would not have issued the policy or would have issued the policy under different terms. This uncontradicted declaration of Ms. Burrows sufficiently establishes that Mr. Sewell's misrepresentations, and omissions, were "material to the risk assumed by the insurer or the insurer would not have offered the same terms had it known the truth," and no further showing is required to void the policy under Florida law.Sahlen, 999 F.2d at 1536; see § 627.409(1).
Although not necessary to the determination of this judgment, the Court also concludes that as a matter of law Continental Casualty and Sewell Company bilaterally rescinded the policy by accord and satisfaction. See Fabric, 115 F.3d at 914.
III. CONCLUSION
For the reasons described above, the Court concludes that Continental Casualty Company's Accountants Professional Liability Policy No. APL-128534363, issued to Sewell Company, CPA's, P.A., for the policy period May 21, 2001, through May 21, 2002, is void ab initio, as a matter of law. Accordingly, it isORDERED AND ADJUDGED as follows:
1. Plaintiff Continental Casualty Company's Motion for Summary Judgment [DE 4] is hereby GRANTED.
2. Judgment is hereby entered in favor of Plaintiff Continental Casualty Company, declaring Plaintiffs Accountants Professional Liability Policy No. APL-128534363, issued to Sewell Company, CPA's, P.A., for the policy period May 21, 2001, through May 21, 2002, void and unenforceable.
3. All other pending motions in this case are denied as moot and the Clerk shall close this case.
DONE AND ORDERED