Receipt Of Funds By Insurer's Bank Binds Policy Even When Not Yet Credited To Insurer

In Nationwide Mutual Fire Insurance Company v. Smith (1D08-4761), the First District applied the “tipsy coachman” rule to affirm a summary judgment against Nationwide.  Nationwide provided a grace period for the payment of overdue premiums, in this case until 12:01 a.m. on Sunday, September 25, 2005.  The trial court concluded that since the deadline fell on a Sunday it was automatically extended until Monday "by operation of Florida Rule of Civil Procedure 1.090(a)."  The First District stated:

The only applicable statute in this case is section 627.728(3)(a), Florida Statutes (2005), which requires an insurer to give its insured 10 days’ notice before cancelling a policy for nonpayment of premium. Because the statute does not require the insurer to allow the insured to make an overdue premium payment before the cancellation date in order to avoid cancellation of the policy for nonpayment of premium, the time computation provisions of rule 1.090(a) are not applicable in this case.

By extending the payment deadline to the next business day, the trial court stacked “grace” upon “grace,” which cannot be done by implication under contract law.

However, the trial court's decision was still affirmed.  While the opinion does not provide the facts, it appears prior to the deadline the insured had transferred funds from its bank account to the bank of the insurer. Apparently, the insurer's bank had not credited the funds to the insurer by the deadline.  The court stated:

even if the payment deadline was not extended, the trial court properly entered summary judgment for the insured because appellant’s bank received the insured’s electronic payment file before the cancellation date and the delay in the deposit of the payment into appellant’s bank account was due to processing delays by appellant’s bank.

It would be interesting to know how the transfer was made and when it was made.  If it was an online payment, there are usually terms and conditions when you make the payment and, usually, those terms and conditions would prevent a result based upon a delay in crediting the funds.

Retroactive Application Of Statute By OIR Reversed

In Coventry First, LLC v. Florida, Office of Insurance Regulation, 30 So. 3d 552 (Fla. 1st DCA 2010),  the First District held that the trial court erred as a matter of law when it retroactively applied a statute.  The court stated:

“The general rule is that a substantive statute will not operate restrospectively absent clear legislative intent to the contrary, but that a procedural or remedial statute is to operate retrospectively.”  Tracking the constitutional reasoning  used by the United States Supreme Court in Ruckelshaus v. Monsanto Company, 467 U.S. 986, 1001-14 (1984), and Landgraf v. USI Film Products., 511 U.S. 244, 280-86 (1994), the Florida Supreme Court has described the proper  two-pronged analysis  for determining whether an enactment such as the 2007 amendment should have retroactive application.  “The first inquiry is one of statutory construction:  whether there is clear evidence of legislative intent to apply the statute retrospectively.”...“The general rule is that in the absence of clear legislative intent to the contrary, a law affecting substantive rights, liabilities and duties is presumed to apply prospectively.”...“If the legislation clearly expresses an intent that [an act] apply retroactively, then the second inquiry is whether retroactive application is constitutionally permissible.” 

***

Coventry correctly notes the trial court erred in failing to address and adjudicate this required second prong of the  legal analysis....We do not find the legislative consideration, mandated by law, anywhere in the 2007 amendment. Instead, we conclude that retroactive application of the 2007 amendment improperly deprived Coventry of vested property rights in the continuing confidentiality and exemption of its trade secrets and other work papers already submitted to the OIR pursuant to  the agency’s regulatory duties....We hold that the amendments here at issue are not retroactive as to Coventry’s work papers.

The oral argument in the case can be viewed below.

"What's in a Name? Insured Loses Coverage By Failing to Inform Insurer of Name Change"

David S. White has a post about a recent decision from the Northern District of Texas.  The first paragraph of the post, at the Law and Insurance Blog [HERE], is below:

What's in a Name? Insured Loses Coverage By Failing to Inform Insurer of Name Change

VRV Development, L.P. v. Mid-Continent Cas. Co., No. 09-cv-1382 (N.D. Tex. Feb. 3, 2010) see Decision

The insured in this case lost coverage because it changed its name in 2005 from VRV Development, Inc. to VRV Development, L.P. and failed to change the named-insured designation on its liability policy. Risk managers, take heed! On the named-insured designation, expect no tolerance with the identification of the business. A corporation is not a limited partnership. A miss is as good as a mile.

Click HERE to read the rest of his post.

Injunction Reversed For Failing To Meet Any Of The Required Elements

In Biscayne Park, LLC v. Wal-Mart Stores East, LP (3D08-3219), the Third District reversed the entry of a temporary injunction.  In a concurring opinion, with a little humor, Judge Schwartz stated:

A preliminary injunction must be based on four indispensable elements. See Wilson v. Sandstrom, 317 So. 2d 732, 736 (Fla. 1975). In my opinion, the one in this case is supported by none of them. Apart from that, it’s fine.

The court's opinion stated:

The well-established requirements for the issuance of a temporary injunction are: (1) the likelihood of irreparable harm and the unavailability of an adequate remedy at law; (2) a substantial likelihood of success on the merits; (3) that the threatened injury to the petitioner outweighs any possible harm to the respondent; and, (4) the entry of the injunction will not disserve the public interest......A review of the proceedings below demonstrates that Wal-Mart’s alleged injury was its possible monetary liability resulting from possible future contamination to groundwater through the wells. “[T]his court has previously held that the granting of injunctive relief is improper when a plaintiff’s right to recover is based upon a future event,”.....Because the alleged injury is speculative, we conclude that it is insufficient to meet the irreparable injury standard.....Additionally, in the event that such an alleged event were to occur, Wal-Mart would have an adequate remedy at law, i.e., a claim for money damages.

While Judge Schwartz does not below the injunction satisfied any of the required elements, Judge Gersten disagreed.  In a dissent, he stated:

The trial court did not abuse its discretion in granting the temporary injunction because the requirements for issuing one were satisfied. Trial courts have wide discretion in granting or denying a temporary injunction, and appellate courts will not interfere with the exercise of such discretion unless the party challenging the grant or denial clearly shows an abuse of discretion....Therefore, the trial court properly and responsibly granted the temporary injunction on legal, apparent environmental concerns. The trial court was well within its discretion in protecting Wal-Mart from liability for the environmental damage. Moreover, the trial court acted responsibly to protect against further damage to our over-indulged, over-taxed, and under-protected environment. In fact, I feel that a reversal in these circumstances is a slap in the face to a hardworking trial judge who was only doing his job . . . well....Accordingly, because Wal-Mart satisfied the requirements for the temporary injunction and the issue is now moot, I respectfully dissent. On an end note, I regret the expenditure of paper resources used in the writing of both the majority and dissent, but reiterate that I would affirm the order granting Wal-Mart’s verified motion for temporary injunction.

(emphasis added).

Request To Ignore Florida Supreme Court Rejected As Insulting & Frivolous

Apparently, it was not clear that when the Florida Supreme Court decides an issue--the lower courts are bound.  In Lower Keys Medical Center v. Windisch (3D09-3082), the Third District cleared up the confusion.  The court stated:

The petitioner’s position in this case is directly contrary to Florida Hospital Waterman, Inc. v. Buster, 984 So. 2d 478 (Fla. 2008), and each of the other District Courts of Appeal. See West Fla. Reg’l Med. Ctr., Inc. v. See, 18 So. 3d 676) (Fla. 1st DCA 2009); Lakeland Reg’l Med. Ctr. v. Neely, 8 So. 3d 1268 (Fla. 2d DCA 2009); Columbia Hosp. Corp. of S. Broward v. Fain, 16 So. 3d 236 (Fla. 4th DCA 2009); Fla. Eye Clinic, P.A. v. Gmach, 14 So. 3d 1044 (Fla. 5th DCA 2009).

Even if we were inclined, which we are not, we do not have the authority to rule otherwise. Hoffman v. Jones, 280 So. 2d 431 (Fla. 1973). The petitioner’s suggestion that we might do so is insulting and frivolous.

(emphasis added).

Failure To Timely File Answer Brief Leads To Exclusion From Oral Argument

In Perez v. Deutsche Bank Trust Co. (3D09-504), the Third District highlighted one possible penalty for failing to timely file an appellate brief.  The Appellee was excluded from oral argument and lost the appeal.

Order Setting Aside Foreclosure Sale Based Upon "Victimhood" Reversed

In Phoenix Holding, LLC v. Martinez, et al (3D09-3365), reversed "an order denying its motion for a writ of possession and granting the mortgagors’motion to vacate the sale and the judgment upon which it was based."  The court noted that "The mortgagors had provided no true defense to the foreclosure but had merely pled their victimhood in various ways."  As explained below, victimhood is not a legal basis to set aside a mortgage sale. 

“It is established that a judicial sale may be set aside on the grounds of gross inadequacy of consideration, surprise, accident, mistake, or irregularity in the conduct of the sale.”  U-M Pub., Inc. v. Home News Pub. Co., 279 So. 2d 379, 381 (Fla. 3d DCA 1973) (citing Moran-Alleen Co. v. Brown, 123 So. 561 (Fla. 1929)). “However, even though a judicial sale will not be set aside due to ‘slight defects,’ or for ‘merely technical, formal, and unimportant irregularities,’ we must view the proceedings in their totality.” Id. 

***

For the first time on appeal, the mortgagors argue that because Rule 1.080(h)(2), Florida Rules of Civil Procedure, gives a mortgagor against whom a default judgment has been entered the right to be served with a copy of the judgment, and because the final judgment in this case was served to them at the wrong address, it was correctly reversed. However, Rule 1.080(h)(3) notes that subdivision (h) “is directory and a failure to comply with it does not affect the order or judgment or its finality or any proceedings arising in the action.”

The court then stated:

With no valid reason, the trial judge set aside the judgment and sale solely because he did not “think it [was] fair.” Unfortunately, neither the ground of fairness nor “the ‘ground’ of benevolence and compassion . . . constitute[s] a lawful, cognizable basis for granting relief to one side to the detriment of the other, and thus cannot support the order below: no judicial action of any kind can rest on such a foundation.” Republic Fed. Bank, N.A. v. Doyle, 19 So. 3d 1053, 1054 (Fla. 3d DCA 2009).  Although the trial judge might believe otherwise, “[w]e cannot agree that courts of equity have any right or power under the law of Florida to issue such order it considers to be in the best interest of ‘social justice’ at the particular moment without regard to established law.” Flagler v. Flagler, 94 So. 2d 592, 594 (Fla. 1957).

Tenth Circuit Affirms 310 Year Sentence For Forty Million Dollar Ponzi Scheme

In Lewis v. U.S. and Schmidt v. U.S. (08-1170 & 08-1171), the Tenth Circuit affirmed the conviction (with a small exception) of two ponzi schemer's in Colorado.  The ponzi scheme lasted four years and resulted in a loss of forty million to the investors.  For the forty million dollar scheme, one was sentenced to 310 years in prison (reduced from 330 years) and the other 360 months in prison.  The court stated:

Norman Schmidt and Charles Lewis conducted a Ponzi scheme through a number of ostensible investment companies (the “scheme companies”). Prospective investors were told that they would be participating in an exclusive program that purchased high-yield notes whose principal was guaranteed by reputable insurers. But their money was never used to purchase such notes. Rather, funds from new clients were used to pay the operators of the scheme and to pay off earlier investors. The scheme, which lasted from April 1999 until late 2004, resulted in estimated losses to investors of more than $40 million....Schmidt was convicted on one count of conspiracy, five counts of mail fraud, six counts of wire fraud, twelve counts of securities fraud, and thirteen counts of money laundering (and acquitted on five counts). He was sentenced to 330 years’ imprisonment. Lewis was convicted on one count of conspiracy, two counts of mail fraud, one count of wire fraud, five counts of securities fraud, and one count of money laundering (and acquitted on 12 counts), and was sentenced to 360 months’ imprisonment.

The opinion can be viewed HERE.

Second District Explains When Payment By An Insurer Results In A Confession Of Judgment

In Clifton v. United Casualty Insurance Co. (2D09-971),  the Second District reversed the entry of summary judgment and, more importantly, explained when a confession of judgment is appropriate based upon payment from an insurer after a lawsuit is filed.  After an extensive analysis of the relevant case law, the court stated:

What can be gleaned from these cases is that an insurer that is aware of a dispute with its insured cannot simply ignore that dispute, wait until the insured files suit to demand appraisal, pay any subsequent appraisal award, and then maintain that the payment does not constitute a confession of judgment as a matter of law. On the other hand, if an insurer is not on notice that the claim or payment is disputed, the insured generally will be unable to show that he or she was "forced" to file suit, and a subsequent post-suit payment by the insurer may not constitute a confession of judgment. While this does not mean that the insured is required to invoke the appraisal clause prior to suit, it does mean that the insured must, at a minimum, clearly notify his or her insurer in a timely fashion of his or her dissatisfaction with the amounts paid.

***

Contrary to Clifton's argument here, the Goff opinion does not stand for the proposition that any post-suit payment automatically operates as a confession of judgment. Instead, when considered in its factual context, the Goff opinion held that State Farm's payment operated as a confession of judgment because State Farm was aware that the Goffs disputed the settlement of the claim but it took no steps to resolve that dispute. The Goffs' suit forced State Farm's hand, and thus the suit was "necessary" to obtain policy benefits. The Goff decision is also entirely consistent with the holdings of Myrick, Lewis, Wilson, and Meadows MRI that an insurer that knows of a dispute with its insured, takes no steps to resolve that dispute, and then makes a postsuit payment of additional policy proceeds confesses to judgment by that post-suit payment.

Finally, we reject United Casualty's argument that its payment should not operate as a confession of  judgment because it never denied Clifton's claim. When an insurer is aware that an insured disputes the settlement of a claim and the insurer fails to respond in any fashion to the insured's demands for further action, that failure has the legal effect of denying coverage. See Sanchez v. Am. Ambassador Cas. Co., 559 So. 2d 344, 346 (Fla. 2d DCA 1990) (holding that when an insurer was aware of its insured's demand for either payment or arbitration and it chose not to respond to the demand until after suit was filed, the insurer's actions amounted to a denial of coverage). While an insurer is clearly not required to pay any sum demanded by an insured to avoid a judgment for breach and award of attorney's fees, an insurer may not simply sit back and ignore its insured's demands for additional payments and then claim that its failure to respond does not operate as a denial of coverage.