                                    IN THE DISTRICT COURT OF APPEAL
                                    FIRST DISTRICT, STATE OF FLORIDA

GWENDOLYN ECHO,                     NOT FINAL UNTIL TIME EXPIRES TO
                                    FILE MOTION FOR REHEARING AND
      Appellant,                    DISPOSITION THEREOF IF FILED

v.                                  CASE NO. 1D14-1444

MGA INSURANCE COMPANY,
INC.,

     Appellee.
_____________________________/

Opinion filed February 16, 2015.

An appeal from the Circuit Court for Escambia County.
Linda L. Nobles, Judge.

J. Alistair McKenzie of McKenzie Law Firm, P.A., Pensacola, for Appellant.

Jeffrey E. Bigman and Amanda J. Jacobsen of Smith, Hood, Loucks, Stout,
Bigman & Brock, P.A., Daytona Beach, for Appellee.




THOMAS, J.

      Appellant appeals a final summary judgment in a favor of Appellee MGA

Insurance Co. (“MGA”), in which the court determined MGA was entitled to

rescind an insurance policy based on Appellant’s material misrepresentations.

Appellant raises four issues on appeal, asserting that the trial court erred by:
1) rejecting Appellant’s argument that MGA waived its misrepresentation defense

or confessed judgment when it made personal injury protection (PIP) payments to

Appellant’s medical care providers after Appellant filed suit; 2) finding Appellant

lacked standing to assert her waiver and confession of judgment arguments

because she assigned her rights to PIP benefits to her medical care providers;

3) interpreting section 90.409, Florida Statutes, to preclude evidence of the PIP

payments in support of those arguments; and 4) finding that there were no genuine

issues of material fact as to the misrepresentation issue. For the reasons discussed

below, we reverse as to the first three issues. We affirm as to the fourth issue

without further comment.

                                Factual Background

      Appellant purchased a 2008 Ford Focus in the name of one Mildred White.

Appellant was at no point a registered owner of that vehicle, and only Ms. White’s

name appears on the documents related to the vehicle. Regardless, Appellant

purchased the subject insurance policy covering the vehicle, and hers is the only

name appearing on any of the insurance documents. The insurance application

Appellant signed listed her as the only driver or resident in her household.

      Approximately one year later, Appellant was involved in a motor vehicle

accident while she was driving the Focus. Appellant underwent medical treatment

with several medical care providers and submitted a claim with MGA. MGA

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responded with a letter advising Appellant that, pursuant to its investigation, it had

learned that, contrary to her assertion in the insurance application, Appellant was

not the owner of the Focus.            MGA asserted that this constituted “a

misrepresentation, omission, concealment of fact and/or incorrect statement and

was material.” MGA also asserted that it either would not have issued the policy

or would not have issued it for the same premium had it known the truth; thus,

there was no coverage for the claim and the “policy is being voided ab initio.” The

letter was accompanied by a check refunding all premiums Appellant had paid,

which Appellant did not cash. The record also includes a letter from MGA to one

of Appellant’s medical providers indicating that it was “unable to make payment

on charges submitted because your patient’s claim has been denied for Material

Misrepresentation.”

      Appellant filed a breach of contract action against MGA seeking PIP

benefits, payment for vehicle repair costs, and legal representation in the event she

was sued for the accident, all pursuant to the subject policy. MGA’s answer to the

complaint generally denied the substantive allegations and included an affirmative

defense asserting that Appellant’s misrepresentation “regarding the identity of the

owner of the auto she was attempting to insure under said policy” entitled it “to

revoke and/or cancel the contract of insurance pursuant to F.S. 627.409,” which it

did pursuant to the notice provided in the aforementioned letter and its refund of

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Appellant’s premium payments. MGA also reiterated its position that the policy

was void “ab initio.”     Nearly one year after Appellant filed her complaint,

however, MGA paid over $10,000 to Appellant’s medical care providers.

      MGA later amended its affirmative defenses, asserting that Appellant lacked

“standing to pursue a claim for PIP benefits” because she “executed an assignment

of any and all benefits she may have under the policy . . . including but not limited

to the right to receive payment; the right to bring suit for an alleged breach of

contract” and any claim for fees, costs, and interest. Appellant subsequently filed

an amended complaint which omitted any claim for PIP benefits. Appellant also

filed a motion for partial summary judgment, asserting as grounds for entitlement

the fact that MGA paid PIP benefits pursuant to the policy and, thus, waived its

argument that the insurance contract was void ab initio. Appellant argued that the

“confession of judgment” doctrine also applied, because MGA made the PIP

payments after Appellant filed suit and before a judgment was entered.

      After a hearing on the parties’ respective motions, the court found that the

record established that Appellant completed the application for the subject

insurance policy and indicated in it that she was the vehicle’s registered owner,

“even though she knew at the time of the application” that this was not the case.

The court determined that the policy was issued based on this representation and

that the “record evidence indicates that the policy would not have been issued had

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[MGA] known that [Appellant] did not own the vehicle.” The court also found

that Appellant’s “misrepresentations were material to the risk being assumed by

[MGA] and were relied upon by [MGA] in deciding whether the policy of

insurance should have been issued,” thus, rescission was appropriate pursuant, to

section 627.409(1)(a), (b), Florida Statutes, and case law.

      Addressing Appellant’s waiver and confession of judgment arguments, the

court found that Appellant had “no standing to bring suit for [PIP] benefits under

the policy as she assigned those benefits to her treating physicians.” Finally, the

court found that section 90.409, Florida Statutes, “prohibits the introduction of

evidence of furnishing; offering; or promising to pay medical or hospital expense

to prove liability.   Therefore [MGA’s] payments of PIP benefits to medical

providers are inadmissible.” The court entered judgment in MGA’s favor, and this

appeal followed.

                                Standard of Review

      Because this appeal concerns a final summary judgment, our review is

de novo. See Volusia Co. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126,

130 (Fla. 2000) (holding: “Summary judgment is proper if there is no genuine

issue of material fact and if the moving party is entitled to a judgment as a matter

of law.   Thus, our standard of review is de novo.”) (citation omitted).




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            Waiver, Confession of Judgment, and Appellant’s Standing

      We agree with the trial court’s finding that Appellant made material

misrepresentations in the insurance application, warranting rescission pursuant to

section 627.409(1)(a), (b), Florida Statutes. We find that the trial court erred,

however, by failing to consider Appellant’s waiver and confession of judgment

arguments. The trial court found those arguments failed, because Appellant lacked

standing to raise them based on her assignment of PIP benefits. As of the time of

the hearing, however, Appellant was no longer seeking payment of PIP benefits;

she was seeking payment for vehicle repair costs and legal representation, in the

event she was sued for the accident. Furthermore, Appellant’s position was that

because of MGA’s payment of PIP benefits after she filed her complaint, MGA

could no longer contend that the contract was void, and regardless of assignment of

PIP benefits, she still had standing to contest whether MGA waived its right to

rescind the contract.

      MGA counters Appellant’s waiver and confession of judgment arguments by

asserting that once it rescinded the contract, because of Appellant’s

misrepresentations, the contract became “void ab initio.” Thus, MGA argues the

contract could not be “resurrected” even if it took actions inconsistent with the

rescission. We disagree.




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       Simply because MGA deemed the contract void because of Appellant’s

alleged misrepresentation does not mean the contract never existed. Pursuant to

section 627.409(1), Florida Statutes, an insured’s material misrepresentation “may

prevent recovery under the contract or policy” if certain conditions exist. Thus, the

statute does not provide that the contract instantly ceased to ever exist, because of

an insured’s misrepresentation (i.e., void ab initio); rather, it gives an insurer the

right to rescind an insurance contract if the statutory criteria are met (i.e., the

contract is voidable). Furthermore, case law establishes the principle that an insurer

can forfeit its right of rescission.

       It is “well settled in insurance law that, when an insurer has knowledge of

the existence of facts justifying a forfeiture of the policy, any unequivocal act

which recognizes the continued existence of the policy or which is wholly

inconsistent with a forfeiture, will constitute a waiver thereof.” Johnson v. Life

Ins. Co. of Ga., 52 So. 2d 813, 815 (Fla. 1951). Furthermore, in United Services

Automobile Association v. Clarke, the court acknowledged that an insurer can

waive its right to void a policy pursuant to section 627.409, but found that the

carrier in that case had not done so. 757 So. 2d 554, 556 (Fla. 4th DCA 2000).

Thus, MGA’s position that it could do nothing to “resurrect” or “cure” a contract

that was not in existence once void ab initio is not supported in law.




                                          7
      Because of its erroneous conclusion that Appellant lacked standing to raise

her waiver argument, the trial court did not address the factors necessary for

determining whether MGA waived its right to void the contract. Consequently, we

remand this matter for the court to resolve the waiver issue on the merits or,

alternatively, submit the matter to a jury. See, e.g., Hill v. Ray Carter Auto Sales,

745 So. 2d 1136, 1138 (Fla. 1st DCA 1999) (holding “[w]hether a waiver has

occurred in any given situation is generally a question of fact.”); Pajcic v. Am.

Gen. Life Ins. Co., 419 F. Supp. 2d 1380, 1382 (M.D. Fla. 2006) (holding:

“Generally, the existence or absence of waiver is a question of fact to be answered

by the jury. However, if based on the facts surrounding a claimed waiver, a

reasonable person could draw only one conclusion from those circumstances, then

the existence or absence of waiver is a question of law for the Court.”) (citation

omitted). We decline Appellant’s suggestion that we hold waiver occurred here as

a matter of law.

      The court applied the same lack of standing rationale to its finding that

Appellant’s confession of judgment argument “fails.” But “where an insurer pays

policy proceeds after suit has been filed but before judgment has been rendered,

the payment of the claim constitutes the functional equivalent of a confession of

judgment or verdict in favor of the insured, thereby entitling the insured to

attorney’s fees.” Ivey v. Allstate Ins. Co., 774 So. 2d 679, 684-85 (Fla. 2000).

                                         8
And this “doctrine applies where the insurer has denied benefits the insured was

entitled to, forcing the insured to file suit, resulting in the insurer's change of heart

and payment before judgment.” State Farm Florida Ins. Co. v. Lorenzo, 969

So. 2d 393, 397 (Fla. 5th DCA 2007).           Finally, “the question of whether an

insurer's post-suit payment of additional policy proceeds constitutes a confession

of judgment will be determined based on whether ‘the filing of the suit acted as a

necessary catalyst to resolve the dispute and force the insurer to satisfy its

obligations under the insurance contract.’” Clifton v. United Cas. Ins. Co. of Am.,

31 So. 3d 826, 829 (Fla. 2d DCA 2010) (emphasis supplied) (quoting Lewis v.

Universal Prop. & Cas. Ins. Co., 13 So. 3d 1079, 1081 (Fla. 4th DCA 2009)).

      Here, although Appellant may have lacked standing to sue for payment of

PIP benefits under the policy by her assignment of those benefits, MGA took the

position that it had no obligations at all under the policy, based on section

627.409(1), Florida Statutes. After Appellant filed suit, however, MGA made PIP

payments pursuant to the policy. There remains, therefore, the matter of whether

MGA made these payments as a result of Appellant’s lawsuit and, thus, whether

this constituted a confession of judgment -- i.e., a confession that, contrary to

MGA’s assertion, the insurance contract was in fact valid -- or whether there

existed some other reason for MGA’s decision to make the payments. This is a

question for the trial court to resolve.

                                           9
                          Section 90.409, Florida Statutes

      Section 90.409, Florida Statutes, in its entirety, provides:

      Evidence of furnishing, or offering or promising to pay, medical or
      hospital expenses or other damages occasioned by an injury or
      accident is inadmissible to prove liability for the injury or accident.

The trial court agreed with MGA’s argument that this statute renders evidence of

paying for medical expenses inadmissible to “prove liability.” But both MGA and

the learned trial court fail to note the clause “for the injury or accident” following

the word “liability.” Thus, the plain language of the statute prohibits evidence of,

inter alia, paying medical expenses to prove an insured’s liability for causing an

injury or accident, not for an insurer’s obligation to make payments for or on

behalf of its insured as a result of injury or accident, based on a contract of

insurance.

      The reason for this evidentiary rule was explained by the Florida Supreme

Court in Carls Markets, Inc. v. Meyer, 69 So. 2d 789, 793 (Fla. 1953), in which the

court held that “evidence of insurance carried by a defendant is not properly to be

considered by the jury because that body might be influenced thereby to fix

liability where none exists, or to arrive at an excessive amount through sympathy

for the injured party and the thought that the burden would not have to be met by

the defendant.” See also Babcock v. Flowers, 198 So. 326, 329 (Fla. 1941) (in

which the plaintiff in an automobile negligence action sought to testify that the

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defendant had offered to pay her medical bills and was covered by insurance, and

the court held such testimony was inadmissible because “an agreement to pay

expenses of the injured constitutes no admission of any actionable negligence on

the part of the person making such agreement.”). Here, however, Appellant sought

to admit MGA’s PIP payout ledger, not as evidence of liability for an injury or

accident, but as evidence that MGA waived its affirmative defense of

misrepresentation and resultant rescission. To put it another way, Appellant sought

to use the evidence to prove that a contract existed despite MGA’s claim to the

contrary.

      MGA relies on USAA Casualty Insurance Compapny v. Shelton, 932 So. 2d

605 (Fla. 2d DCA 2006), to support its position that the payout ledger was

inadmissible. In that case, the insureds in an uninsured motorist action obtained a

judgment against USAA for policy limits. The insurer argued that “the trial was

tainted by the court's decision to allow the [insureds] to introduce evidence

concerning USAA's standards for payment of personal injury protection (PIP)

benefits.” Id. at 606. The Second District first explained that the case “did not

involve questions of coverage or negligence.        The sole issue was whether

Mrs. Shelton's medical bills were reasonable, necessary, and related to the

accident” and “whether evidence of a carrier's payment of PIP benefits is

admissible as part of the plaintiff's evidence that medical damages sought in a UM

                                        11
suit are reasonable, necessary, or connected with the accident.” Id. at 606-07

(emphasis added). The court held that, although “a carrier's payment of PIP

benefits is not an admission that its insured's claims for UM benefits are

reasonable, necessary, and connected to the accident . . . [b]ecause of the unique

policy considerations underlying PIP coverage . . . evidence of an insurer's

payment of PIP benefits is not relevant, and therefore is not admissible, to prove

the propriety of claimed medical damages in a UM action.” Id. at 607 (emphasis

added).

      The court explained:

             An insurer is in a far different posture under UM coverage. The
      purpose of the insurance is to provide a source of recovery when the
      insured has been injured by a tortfeasor with insufficient or no
      insurance. § 627.727(1), Fla. Stat. (2002). Therefore, in a UM claim
      the insured must prove that she is legally entitled to recover from the
      owner or operator of the uninsured or underinsured vehicle. Id. Just as
      she would in a suit against the tortfeasor, the insured bears the entire
      burden to prove that her claimed damages were reasonable, necessary,
      and related to the accident. And, unlike the case in a PIP claim, an
      insurer's assessment of a UM claim is unrestrained by concerns about
      statutory deadlines, penalties, or attorney's fees, or by the burden to
      develop “reasonable proof” that it is not responsible for the claim.

Id. at 608.

      The Shelton decision does not support MGA’s arguments on the question of

the admissibility of the PIP payout ledger, because the issue in that case was not

whether an insurer had waived its right to void a policy. Rather, the issue in

Shelton was the admissibility of evidence of PIP benefits with respect to the
                                        12
reasonableness of the damages being sought by the insureds, and whether those

damages were related to the accident in question. The case before us involves a

contract or coverage dispute, which was, as the Shelton court expressly pointed

out, not at issue in that case, whereas Shelton involved a question of the

admissibility of evidence as to damages sounding in tort. 1

      Thus, in the context of section 90.409, “liability” clearly refers to an

insured’s (or, in a UM claim, uninsured motorist’s) responsibility for causing

injury or accident, not for an insurer’s obligations to its insured pursuant to an

insurance contract.2 Conflating an insured’s liability for causing injury or accident

with an insurer’s contract obligation disregards the policy behind the rule codified

in section 90.409, as explained by the supreme court in Meyer. Thus, the trial court

erred by ruling the PIP ledger was inadmissible under these circumstances.

                                    Conclusion



1
  Although Shelton does not support MGA’s interpretation of section 90.409, the
“unique policy considerations” discussed in the case may bear some relevance on
the issue of why MGA made the PIP payments it did despite rescinding the
contract.
2
  The Shelton court cited with approval Judge Torpy’s concurrence, in which he
opined that “payment of medical expenses by USAA, pursuant to the PIP
coverage” was not admissible “for the purpose of proving USAA's liability for the
injury under the uninsured motorist component of its policy.” Id. at 1180
(emphasis added). In a UM claim, the insurer is effectively put in the shoes of the
uninsured tortfeasor for damage purposes; thus the reference to the “insurer’s”
liability for injury should be read in that context.
                                            13
      We affirm the trial court’s granting of partial summary judgment in favor of

MGA on the issue of material representation. We reverse, however, the trial

court’s conclusions that Appellant lacked standing to establish that MGA forfeited

its right to rescind the contract at issue, based on that misrepresentation. The trial

court also erred in ruling that evidence of MGA’s PIP payments was inadmissible

for that purpose. We therefore REMAND for the trial court to address the merits

of Appellant’s waiver and confession of judgment arguments.

      AFFIRMED in part, REVERSED in part, and REMANDED with

instructions.

ROWE and OSTERHAUS, JJ., CONCUR.




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