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Analysis of New Case Law re: Material Misrepresentations and the Voiding of Coverage

Posted by Michael A. Cassel | Apr 01, 2021 | 0 Comments

Analysis and Interpretation by  Michael A. Cassel

On April 24, 2019, and, again, on March 16, 2020, we published articles regarding the decisions in Alvarez v. State Farm [1] and Beseler v. Avatar, [2] respectively.  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

More recently, on March 26, 2021, the Fourth District Court of Appeal released their opinion in the matter of Jennifer Mezadieu v. Safepoint Insurance Company (hereinafter " Mezadieu"). [3]  In Mezadieu, the appellate court analyzed whether a material misrepresentation even without an element of intent was sufficient to void coverage under the concealment or fraud provision of the governing policy.  While the Mezadieu court found that coverage could be voided without intent, it is the particular facts of the case that lend themselves to such a finding.  Overall, the position outlined in our prior articles remains unchanged: 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

In  Mezadieu , the insured filed a claim for damages caused by a water leak in the second-floor bathroom.  In support of the claim, the insured submitted a sworn proof of loss in the amount of $43,181.01 supported by an estimate which included, in pertinent part, $11,107.72 for damages to the kitchen and kitchen cabinets.  The carrier inspected the property along with the insured's loss consultant who directed the carrier's adjuster to portions of the property alleged to have sustained damages as a result of the leak, including the kitchen directly below the bathroom.  Ultimately, the carrier denied the claim based on exclusionary provisions found within the policy.  The insured then filed a lawsuit alleging breach of contract.

During litigation, the insured, again, attested to the damages set forth in the proof of loss and accompanying estimate through sworn interrogatories; however, in deposition, even after attesting to the accuracy of the estimate in support of her claim, the insured disclosed that the kitchen cabinets were actually damaged by a prior leak submitted to a different insurance carrier and that the leak at issue in the lawsuit did not cause any new damages to the kitchen cabinets.  Based on this testimony, when compared to the sworn proof of loss/supporting estimate and sworn interrogatory answers, the carrier moved for leave to add an affirmative defense based on the concealment and fraud provision of the policy and filed a motion for summary judgment.

During the hearing on the carrier's motion for summary judgment, the insured's attorney conceded as follows:

  • (1) the Homeowner “has never said that she does not agree with [the] sworn proof of loss;” (2) the Homeowner adopted the estimate; and (3) the estimate should not have included $11,000 for damages to the kitchen and that it would therefore be appropriate for the trial court to grant partial summary judgment, or alternatively, strike $11,000 from the total damages claimed by the Homeowner.[4] 

As a result, based on the stipulations of counsel and sworn to statements of the insured, the trial court concluded that the evidence established that the estimate contained materially false statements and the statements were attributable to the insured because she adopted same in the proof of loss, interrogatory answers, and deposition testimony.  The court voided coverage under the policy and the claim was disposed of accordingly.

4th DCA Opinion

On appeal, the insured argued that the misrepresentations were not intentional because the insured did not prepare the estimate; however, the appellate court disagreed stating that, because the misrepresentations were material, the element of intent did not matter.  In rendering such a finding, the court noted:

Simply put, an insured cannot blindly rely on and adopt an estimate prepared by his or her loss consultant without consequence.  This is not to say that an insured will always be bound by the representations made in an estimate prepared by his or her loss consultant. However, when an insured relies on or adopts an estimate containing material false statements to support his or her claim, the insured is bound by the estimate and cannot avoid application of the concealment or fraud provision simply because he or she did not prepare the estimate. [5]

Analysis, Impact, and Effect

While I do not necessarily disagree with the outcome of the case, I think the court lost sight of something entirely: the admissions and sworn statements of the insured, and her attorneys, that portions of the estimate should not have been included satisfy the element of intent.  If, during a single deposition, the insured was able to adopt the estimate as being truthful and then subsequently testify as to aspects which should not have been included, the insured's assertions regarding the veracity of the estimate were intentionally false.  Similarly, if the insured knew of the truth when signing the proof of loss and interrogatories, her misrepresentations were similarly intentional as Florida law does not allow anyone “to remain willfully ignorant of a thing readily ascertainable” when swearing to something under oath. [6]   To that end, insureds have an affirmative duty to read and understand a proof of loss that is to be submitted in support of a claim, and claiming ignorance when it turns out there were misrepresentations is not a viable course of action to rehabilitate an otherwise false statement. [7]   

Because the  Mezadieu  opinion does, in fact, make a finding of intent despite all indications to the contrary, I want to bring up a very important question: what exactly is materiality when discussing misrepresentations.  On that issue, the  Mezadieu  court cited to  Universal v. Johnson [8]  for the proposition that intent was not required when a misrepresentation is material.  In  Johnson , the court analyzed whether a material misrepresentation set forth on an application required intent to void a policy which, as can easily be ascertained, the court held that it did not.  There, the court was guided by Section 627.409, Florida Statutes, which states that a misrepresentation on an insurance application is material when the “insurer in good faith would not have issued the policy or contract, would not have issued it at the same 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.” [9]   Of course, these questions do not relate in any way to a post-claim misrepresentation.  They do, however, evidence an element of reliance necessary to prove materiality. 

Under Florida law, “if there is a willful false statement of a material fact, there is no requirement that an insurer show prejudicial reliance in order to enforce the [concealment or fraud] provision.” [10]   This makes sense as an insured should not be able to benefit from intentionally lying.  Conversely, however, if there is an accidental, inadvertent, or mistaken false statement of material fact, logic mandates that prejudicial reliance must be shown in order to void coverage.  Therein lies the question of materiality - whether there was prejudicial reliance on the alleged false statement or misrepresentation.  If there was no such reliance by, or prejudice to, the carrier, how could the misrepresentation ever be deemed material?  This brings me back to my prior point that the  Mezadieu  court ignored the fact that the insured's statements were admittedly, and arguably intentionally, false. 

Generally speaking, “[t]he question of whether an insured has made a material misrepresentation is a question for the jury to determine.” [11]   Whether discrepancies are sufficient to constitute material misrepresentations versus harmless misstatements in an insurance claim are similarly questions for the jury. [12]   Of course, the reason why this was not the case in  Mezadieu  is simple – the insured admitted to the misrepresentations based on knowledge which was available long before the misrepresentations were ever put forth.  This then begs the question of whether the misrepresentations were material.  On one hand, the insurer did not rely on the representations as the claim was denied subject to an unrelated exclusionary provision so there was not really any prejudice; on the other, the insured adopted an estimate which included areas which were not damaged and should not have been addressed as part of the claim in any way.  There is no clear answer which perfectly illustrates why materiality is a question of fact for the jury to weigh based on the evidence submitted.  Of some guidance, however, is the concurring opinion in  Mezadieu  which states:

  • In cases of loss estimates such as here, however, the insurer can, and does, make its own determination regarding the amount of the loss and the requirements for repairs. The insurer does not pay a loss solely on the basis of the insured's loss estimate. Therefore, the insured's loss estimate does not affect the insurer's risk nor cause an overpayment for a loss.[13]

To this point, the only reason the concurring judge joined with the majority was due to the insured's attorney's concessions during the summary judgment hearing.  It seems as though the concurring opinion leans towards a lack of materiality with regards to an insured's presentation of their claim when the carrier's decision is not affected by same.

So allow me to bring this back to my prior analysis 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 there is a good faith basis for the line items in an estimate, and the insured has not knowingly adopted an estimate which is clearly improper, the answer is no.  If you were to get 100 adjusters to inspect a loss, you would get 100 different estimates.  That is because an estimate is an opinion and everyone is entitled to their own.  With that said, if the carrier wants to assert that a “misrepresentation” in an estimate is of sufficient materiality to completely void coverage as a matter of law, that is, absent extenuating circumstances such as those found in  Mezadieu , an issue of fact for a jury to decide.  In such cases, the burden of proof will be on the insurer to prove either intent or materiality by a preponderance of the evidence.  In my opinion, having represented clients on both sides of the “v,” unless there is clear evidence of fraud, attempting a fraud defense is a perilous journey.

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] Jose Alvarez and Hilda Alvarez v. State Farm Florida Insurance Company, No. 3D17-2261, 2019 WL 1646421 (3d DCA 2019)

[2] Beseler v. Avatar Prop. & Cas. Ins. Co., 4D18-3148, 2020 WL 1038760 (Fla. 4th DCA Mar. 4, 2020)

[3] Mezadieu v. Safepoint Ins. Co., 4D20-2, 2021 WL 1153052 (Fla. 4th DCA 2021).

[4] Id. at 2.

[5] Id. at 3

[6] Citizens Prop. Ins. Corp. v. European Woodcraft & Mica Design, Inc., 49 So. 3d 774 (Fla. 4th DCA 2010).

[7] Id. at 14488.  See also Nationwide Mut. Fire Ins. v. Kramer, 725 So. 2d 1141, 1143 (Fla. 2d DCA 1998).

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

[9] Fla. Stat. § 627.409(1)(b) (2020)

[10] Lopes v. Allstate Indem. Co., 873 So. 2d 344, 347 (Fla. 3d DCA 2004). 

[11] Id.

[12] Svetlanovich v. State Farm Florida Ins. Co., 291 So. 3d 1261, 1267 (Fla. 2d DCA 2020)

[13] Mezadieu at 4.

About the Author

Michael A. Cassel

Michael A. Cassel, LL.M., is the managing partner and co-founder of Cassel & Cassel, P.A., where he represents policyholders throughout the state of Florida in first party property insurance claims.  Michael is licensed by the Florida Bar as well as in the Southern, Middle, and Northern Federal Districts of Florida, the U.S. Court of Appeals for the 11th Circuit, and has argued before the Judicial Panel for Multidistrict Litigation.  He has earned an AV Preeminent rating from Martindale Hubbell.  He has also been named a Florida Super Lawyer for the last two years by Florida Super Lawyers Magazine and a Rising Star for the prior six consecutive years, was named as one of South Florida Business Journal's 40 Under 40 for 2020, and one of the Cystic Fibrosis Foundation 40 Under 40 Outstanding Young Professionals of South Florida for 2022.  Michael regularly publishes blogs on newly released case law pertaining to first party property insurance claims and has become a regular on the lecture circuit presenting on topics such as building code compliance, ordinance and law coverage, bad faith litigation, technology in claims adjustment, and providing updates on case law and legislative changes.  He obtained his Masters of Insurance Law from the University of Connecticut in 2023.


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