What was once a trilogy has become a tetralogy.  On April 24, 2019, March 16, 2020, and April 1, 2021, we published articles regarding the decisions in Alvarez v. State Farm, [1] Beseler v. Avatar, [2] and Mezadieu v. Safepoint, [3] respectively, on the topic of material misrepresentations voiding coverage under insurance policies.  The Alvarez opinion was being used for the proposition that an allegedly overinflated estimate is de facto fraud/material misrepresentation.  We argued that this was not the case due to established case law culminating in the holding in Beseler.  This position was somewhat vindicated after the release of the Mezadieu opinion where the court found intent was not required when the misrepresentation was material in light of extenuating circumstances wherein the insured testified that she knew $11,000 of the total estimated amount should not have been in there.  It was and is our argument that the Mezadieu court ignored analysis of this fact in reaching their holding.

Most recently, on June 2, 2021, [4] the Fourth District Court of Appeal released their opinion in the matter of Anchor Property and Casualty Insurance Company v. Alex Trif and George Trif (hereinafter " Trif"). [5]  In Trif, the appellate court performed an in depth analysis regarding the requirement for intent when an insurance carrier seeks to utilize the concealment or fraud provision to void coverage.  In doing so, the Trif court distinguished Mezadieu in a manner similar to that of our prior analysis.  Once again, we stand firm and confident in our argument that simply because an estimate is unilaterally deemed to be too high by an insurance company either in scope or price does not mean the insured has committed fraud or put forth a material misrepresentation sufficient to void coverage.

  Background and Facts

Like many Floridians, the insureds sustained damages to their property as a result of Hurricane Irma.  After an adjustment by the carrier which included a determination that the exterior damages fell below the policy deductible and the interior damages were excluded because there was no peril-created opening, the insureds hired a public adjuster to assist them.  The public adjuster submitted an estimate setting forth a net claim of $103,809.68 which included line items of $52,800 for “Roofing (Bid Item)” and $5,890.26 for the pool enclosure.  On December 11, 2017, the insureds executed a Sworn Proof of Loss incorporating said estimate under penalties of perjury. 

Subsequently, the insureds filed suit against their carrier alleging that the insurer breached the contract by failing to pay the full amount of the claim.  Eventually, the carrier asserted as an affirmative defense that it was relived of its obligation to issue payment based on the insureds' “intentional misrepresentation and/or fraudulent conduct and/or material false statements.”  The specific policy provision (hereinafter the "fraud or concealment provision") is as follows:

2.   Concealment or Fraud.

a.   Under SECTION I - PROPERTY COVERAGES, with respect to all “insureds” covered under this policy, we provide no coverage for loss under SECTION I - PROPERTY COVERAGES if, whether before or after a loss, one or more “insureds” have:

(1)  Intentionally concealed or misrepresented any material fact or circumstance;

(2)  Engaged in fraudulent conduct; or

(3)  Made material false statements;

relating to this insurance. [6]

This was based on the allegation that the insureds misrepresented the condition of the property before the loss, noting that the insureds denied prior roof leaks when a roof leak actually occurred in 2012 as well as false statements regarding the total amount of damages as outlined in the estimate presented.

During trial, Mr. Trif testified that he received a proposal from his roof in the amount of $26,000 which then increased to $32,000 at the time of trial and acknowledged that this amount was significantly lower than the than the $52,000 incorporated into the estimate and proof of loss but that he was never asked if he was in agreement with every line item on the estimate.  The estimator testified that, at the time of his inspection of the insured property, he was working 16-hour days and seeing five to ten homes per day which admittedly led to mistakes and oversights.  It must be noted that, prior to the deposition of the estimator, a new estimate was drafted which reduced the price of the roof to $28,000 but increased the total amount of the estimate by approximately $20,000.  That being said, the estimator admitted during his trial testimony that the estimate supporting the proof of loss was inaccurate and inflated. 

After the insureds concluded their case in chief, the carrier rested without presenting evidence and moved for directed verdict on their fraud defense.  They argued that coverage was voided under the policy based on the insureds' execution of the proof of loss based on an estimate that was admittedly inflated.  The insureds argued that the question of materiality and fraudulent conduct were questions from the jury to answer.  The court reserved ruling on the motion and submitted the case to the jury.

Ultimately, the jury rendered a finding that the carrier failed to satisfy its obligations under the policy, that the insureds did not engage in any conduct which could nullify the claim based on the fraud defense, and that the insureds sustained $26,425 in damages.  The carrier renewed its motion for directed verdict and sought judgment notwithstanding the verdict which the court denied due to conflicting testimony regarding intent and materiality of the alleged misrepresentations.  An appeal followed.

4th DCA Opinion

On a procedural level, the 4th DCA upheld the trial court's denial of the post-trial motion noting motions for directed verdict require that the “evidence and all inferences of fact must be viewed ‘in the light most favorable to the nonmoving party.'” [7]   Because, as indicated above, the trial court noted that there was conflicting testimony, it was not procedurally possible for the court to take the decision out of the jury's hands and render a judgment notwithstanding the verdict. 

On the issue of the fraud defense, the clearest indication of the 4th DCA's decision is the title of its section discussing same: “The ‘Concealment or Fraud” Provision in the policy Requires Proof that the Insureds Acted Knowingly or intentionally In Order to Void the Policy.” [8]   This was based on the court's analysis of the term “false statement” leading the court to the determination that the policy provision relied upon is ambiguous.  The court noted that Black's Law Dictionary defines a “false statement” as “[a]n untrue statement knowingly made with the intent to mislead” [9]  and Merriam Webster's Online Dictionary defines the word “false” in the legal context at “not true or correct especially: intentionally or knowingly untrue or incorrect.” [10]   The court reasoned that, “the more common meaning of the term ‘false statement' in the legal context is one that includes an element of intent.  At a minimum, the term is ambiguous because it can mean either an ‘untrue statement' or an ‘intentionally untrue statement.'” [11]   Because of this ambiguity, the provision must be viewed in the light most favorable to the non-drafting party. [12]

The appellate court also analyzed the materiality factor stating that “[a] misrepresentation is material if a reasonable insurance company, in determining its course of action, would attach importance to the fact misrepresented.” [13]   Said another way, “a statement is material if it is ‘reasonably relevant to the insurance company's investigation of a claim.'” [14]   Regardless, the 4th DCA noted that the question of materiality of a misrepresentation is a question for the jury and “[a]n insured's correction of an earlier misstatement is something the jury may consider in making a materiality determination.” [15]

Analysis, Impact, and Effect

The  Trif  opinion is one of the most thorough analyses on the issue of intent and fraud.  As we have discussed these issues at length, we will do our best not to repeat ourselves.  With that said, there are some issues raised with regards to the prior opinions that warrant some further discussion.

We previously argued that the 4th DCA in  Mezadieu  ignored the fact that the record there was rife with evidence of intent to proffer false statements of material facts in reaching its determination that the fraud defense applied.  Additionally, we argued that the  Mazadieu  court's reliance on  Universal v. Johnson [16]  was not necessarily appropriate because the maxims of  Johnson  deal only with misrepresentations on an application for insurance and, as such, should not relate to a post-loss circumstance.  The  Trif  court vindicated our arguments on both issues. 

First, the  Trif  court distinguished  Mezadieu  noting that, there, the insured intentionally adopted an estimate for which it was later conceded that it should not have included $11,000 in damages related to the kitchen.  We argued that, while the  Mezadieu  court did not consider intent as part of its analysis, there was a clear showing of same.  The  Trif  court agreed noting that because “the summary judgment evidence in  Mezadieu  established that the insured knew certain statements to the insurer were false[,] [i]t was therefore unnecessary to reach the issue of whether the policy required a showing of the insured's intent.” [17]   Furthermore, the 4th DCA described  Johnson  as “the First District's refusal to construe the policy in a way that would operate as a waiver of an insurer's statutory right to rescind for innocent misrepresentations in an insurance application that materially affect risk.”  To this point, the  Trif  court distinguished misrepresentations in applications for insurance from those within the post-loss context when a policy has been in effect.  To that point, the  Trif  court defined the term “false statement” to be “interpreted as including an element of intent.” [18]   This was determined to fall in line with the century-old holding in  U.S. Fire Insurance Co. v. Dickerson[19]  wherein the Supreme Court of Florida held that a jury instruction that a fraud defense require the elements that a statement is “knowingly and willingly false and made for the purpose and with the intent of deceiving and defrauding” the insurance carrier was proper. [20] 

There is no doubt that an insured can present a material misrepresentation by overinflating or exaggerating the extent of a loss; however, it is not quite as simple as insurers would try to have the courts believe based on their reliance of  Alvarez  and  Mazadieu .  The  Trif  court uses the example of an insured claiming $85,000 in incurred additional living expenses when the insured never actually moved out of his property. [21]   Such a situation is obviously vastly different from the assertion that the presentation of an estimate in an amount higher than that which may ultimately be required is tantamount to fraud.  The  Trif  court reconciles this disparity remarking that because “reasonable persons ‘may differ as to the values which they place on particular objects, the rule voiding a policy of insurance will not apply in its severity unless the proof of the false swearing was such that no other conclusion can be drawn than that a purposeful misrepresentation was intended.'” [22]   Therefore, “an overestimate of the value of goods lost in a fire, an error in judgment with respect to fixing a value, a mistake, or an inadvertence, will not render an insurance contract void.” [23]   This is best exemplified through Couch on Insurance stating that “[m]ere overvaluation is not, in the absence of fraud, such a misrepresentation as will avoid the policy.” [24]   This is because “[c]ontractors or adjusters may significantly differ in their estimates, and [the court] cannot presume that one estimate, merely because it is excessively higher, is rife with fraud.” [25]

As with analyses regarding failures to comply with post-loss conditions, precedent is abundantly clear that the law in Florida “abhors” forfeiture of insurance coverage based on the fraud or concealment provision. [26]   This is to avoid insurance carriers from avoiding their duties of indemnification based on technicalities.  So, hopefully for the last time, I will bring this back to our prior analyses regarding estimates and whether a unilateral determination by the insurance company that the scope of an estimate is excessive can be used to void coverage.  As long as the insured has not knowingly or intentionally adopted an estimate which is clearly improper, or if any improper inclusions in the estimate are explainable as mistake or inadvertence, the answer has been and continues to be “no.”  As fully addressed by the  Trif  court, this is because an estimate is an opinion and everyone is entitled to their own.  Frankly, it seems to be a slippery slope to argue that a high estimate is automatically considered fraud as, taking the inverse to its logical conclusion, an under inclusive estimate could be considered de facto bad faith.  This is certainly not precedent that insurance carriers would like to set.

Should you have any questions about how this analysis may relate to your own claim,  please do not hesitate to contact us for a free consultation.

[1] Alvarez v. State Farm Fla. Ins. Co., 305 So. 3d 5, 8 (Fla. 3d DCA 2019).

[2] Beseler v. Avatar Prop. & Cas. Ins. Co., 291 So. 3d 137 (Fla. 4th DCA 2020).

[3] Mezadieu v. SafePoint Ins. Co., 315 So. 3d 26 (Fla. 4th DCA 2021).

[4] While the original opinion was released in June 2021, subsequent activity occurred in the appeal, including the carrier seeking discretionary jurisdiction from the Supreme Court of Florida, prevented the 4th DCA from issuing its mandate until August 31, 2021.

[5] Anchor Prop. & Cas. Ins. Co. v. Trif, 2021 WL 2217265 (Fla. 4th DCA 2021)

[6] Id. at 1.

[7] Id. at 5 quoting Kopel v. Kopel, 229 So. 3d 812, 819 (Fla. 2017).​

[8] Trif at 5.

[9] Id. at 9 citing Black's Law Dictionary (11th ed. 2019).

[10] Trif citing Merriam-Webster's Online Dictionary.

[11] Id.

[12] Taurus Holdings, Inc. v. United States Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005). 

[13] Id. at 6 citing In re Sandell, No. 8:00BL6417KRM, 2005 WL 1429746, at *2 (Bankr. M.D. Fla. June 9, 2005)

[14] Trif citing Dadurian v. Underwriters At Lloyd's, London, 787 F.2d 756, 760 (1st Cir. 1986).

[15] Trif at 7 citing Haiman v. Fed. Ins. Co., 798 So. 2d 811, 811 (Fla. 4th DCA 2001) (“[M]ateriality is a question of fact to be determined by the trier of fact.”); Lopes v. Allstate Indem. Co., 873 So. 2d 344, 346 (Fla. 3d DCA 2004) (“The question of whether an insured has made a material misrepresentation is a question for the jury to determine.”).

[16] Universal Prop. & Cas. Ins. Co. v. Johnson, 114 So. 3d 1031 (Fla. 1st DCA 2013).

[17] Trif at 10.

[18] Id. at 9.

[19] U.S. Fire Ins. Co. v. Dickerson, 82 Fla. 442, 90 So. 613 (1921).

[20] Id. at 618.

[21] Trif citing Wong Ken v. State Farm Fire & Cas. Co., 685 So. 2d 1002 (Fla. 3d DCA 1997).

[22] Trif at 8 quoting Berkshire Mut. Ins. Co. v. Moffett, 378 F.2d 1007, 1012 (5th Cir. 1967) (applying Florida law).

[23] Id.

[24] Steven Plitt et al., 6A Couch on Insurance § 93:8 (3d. ed. 2020 update).

[25] Trif at 8 quoting El-Ad Residences at Miramar Condo. Ass'n v. Mt. Hawley Ins. Co., No. 09-60723-CIV, 2010 WL 8961438, at *7 (S.D. Fla. Sept. 28, 2010).

[26] Am. Integrity Ins. Co. v. Estrada, 276 So. 3d 905, 914 (Fla. 3d DCA 2019).