True, False, or Simply Wrong? Florida Courts Disagree About Whether ‘False Statements’ Must Be Intentional

A Florida appellate court recently interpreted a “Concealment or Fraud” provision that voids coverage where an insured makes “material false statements” as requiring intentional deception, extending the split amongst the Florida appellate courts. In Vargas v. SafePointe Ins. Co., No. 3D19-1656, 2022 WL 108428 (Fla. 3d DCA Jan. 12, 2022), a homeowner reported a water loss to her property insurer following a plumbing leak. The insurer immediately requested repair invoices from prior claims and photographs of the pre-loss condition of the property. The homeowner, however, never provided this information. Instead, she submitted a sworn proof of loss with an itemized estimate.

The insurer subsequently denied coverage and the homeowner, in turn, filed suit. In discovery, the insurer served interrogatories asking about prior claims, and the homeowner disclosed only a roof claim approximately a decade earlier. At her deposition, she testified that she had not made any prior insurance claims involving plumbing leaks. But that testimony appeared to be incorrect. The insurer took the deposition of the homeowner’s previous property insurer, who testified that the homeowner made a similar plumbing claim only a few years earlier, and that the earlier claim included damage in many of the same areas presently being claimed.

As a result of this testimony, the insurer moved for summary judgment, in part arguing coverage is void under the Concealment or Fraud provision in the policy:

3. Concealment or Fraud.

With respect to all persons insured under this policy, we provide no coverage for loss if, whether before or after a loss, one or more persons insured under this policy have:

a.   Intentionally concealed or misrepresented any material fact or circumstance;

b.   Engaged in fraudulent conduct; or

c.   Made material false statements relating to this insurance.

At the hearing on the motion, the homeowner testified that she did not recall the prior claim when answering the interrogatories and testifying at deposition.

On appeal the court was asked whether the term “false statement” in the post-loss context means: (1) incorrect statement, or (2) intentionally incorrect statement. The court first analyzed competing definitions of the term false, which is sometimes defined as “contrary to fact or truth,” and other times as “deliberately untrue.” Relying heavily on dicta in Anchor Prop. & Cas. Ins. Co. v. Trif, 322 So. 3d 664 (Fla. 4th DCA 2021), the court concluded that in the legal context, the term “false” “carries the connotation of an intentionally deceptive statement.” The court recognized, however, that this interpretation may render parts of the Concealment of Fraud provision superfluous. If subpart (c) has an intent requirement, then it would do nothing more than repeat subsection (a). On the other hand, if subpart (c) does not have an intent component, then subsections (a) and (b) may be unnecessary because mere proof of incorrectness would forfeit coverage.

Although courts ordinarily attempt to avoid interpretations that render parts of a text superfluous, the court “decline[d] to apply the rule in a manner that defeats the common meaning of ‘false statement.’” Instead, the court “interpret[ed] the reference to ‘false statements’ in the ‘Concealment of Fraud’ provision under review as requiring an element of fraudulent intent.”

In so holding, the court may have found the subparts irreconcilable because it focused only on the language of intent, and not on the differences between “concealment or misrepresentations of material fact or circumstance” and “statements relating to this insurance.” A misrepresentation, however, does not have to be spoken. A misrepresentation can also be true but misleading. For instance, if a homeowner stated that she has not reported any other claims because her insurance agent reported them for her, that statement may be true, but it is misleading.

In contrast to Vargas, in Universal Prop. & Cas. Ins. Co. v. Johnson, 114 So. 3d 1031 (Fla. 1st DCA 2013), the court refused to read in an intent requirement and interpret the term “false statement” in a manner that makes the rest of the Concealment or Fraud provision superfluous because “there is a reasonable interpretation that does not do so.” Surprisingly, Florida’s Fourth District Court of Appeal followed Johnson in Mezadieu v. SafePoint Ins. Co., 315 So. 3d 26 (Fla. 4th DCA 2021) only months before dismissing both in Trif. In Mezadieu, a homeowner referenced an estimate written by her public adjuster in explaining the damages she sought, even though the estimate contained repairs undisputedly unrelated to the loss. The Fourth DCA explained that “a showing of intent is not required under the policy’s concealment or fraud provision…. Simply put, an insured cannot blindly rely on and adopt an estimate prepared by his or her loss consultant without consequence.”

The precedential value of Johnson, Mezadieu, and Trif has been called into question. Nonetheless, there appears to be conflict amongst the Florida appellate courts as to whether there is an element of intent to mislead included in policy conditions that void coverage where an insured makes material false statements in the post-loss context.

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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