Florida Case Law
TOBIN v. MICHIGAN MUTUAL INS., SC05-214 (Fla. 12-21-2006)
MARK ANDREW TOBIN, et al., Appellants, v. MICHIGAN MUTUAL
INSURANCE COMPANY, Appellee. Case No. SC05-214. Supreme
Court of Florida. December 21, 2006.
Certified Question of Law from the United States Court of
Appeals for the Eleventh Circuit — Case No.
03-12737.
Christopher J. Lynch of Hunter, Williams and Lynch, P.A.,
Coral Gables, Florida, for Appellant.
Wendy F. Lumish of Carlton Fields, P.A., Miami, Florida and
Stephen J. Harburg of O’Melveny and Myers, Washington,
D.C., for Appellee.
PER CURIAM.
We have for review the following question of Florida law
certified by the United States Court of Appeals for the
Eleventh Circuit that is determinative of a cause pending
in that court and for which there appears to be no
controlling precedent from this Court:
DOES THE DEFENDANT MICHIGAN MUTUAL HAVE ANY LIABILITY TO
THE PLAINTIFFS UNDER THE POLICY IN QUESTION, AND, IF SO,
WHAT IS THE EXTENT OF THAT LIABILITY?
Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1275 (11th Cir.
2005). We have jurisdiction. See art. V, § 3(b)(6),
Fla. Const. We rephrase the certified question to more
accurately address the procedural setting we are facing, as
follows:
WHETHER THE PLAINTIFFS ARE ENTITLED TO
UNINSURED/UNDERINSURED MOTORIST COVERAGE UNDER THE POLICY
AS REFORMED.
FACTS AND PROCEDURAL HISTORY
The facts of the underlying action are not in dispute.
Appellants Tobin, Hunter, and the Mackays[fn1] were either
injured or killed in accidents with uninsured drivers while
operating or occupying vehicles leased from Ford Motor
Company. See Tobin, 398 F.3d at 1269.[fn2] The lease
agreements entered into with regard to these vehicles each
contained language to the effect that the lessees would be
responsible for obtaining insurance for these vehicles.
Appellants Hunter and the Mackays’ “Red Carpet” lease
agreements stated that the “lessor is not providing vehicle
insurance or liability insurance” and that the lessee “must
insure the vehicle during this lease.” Id. Appellant Tobin’s
lease agreement stated that “[t]he Lessee must insure the
vehicle for the term of the lease.” Id.
Notwithstanding the above-quoted language in the respective
lease agreements, appellants seek to recover under an
insurance policy issued to Ford by defendant Michigan
Mutual Insurance Company (“Michigan Mutual”). See id.
Appellants present the claim for insurance coverage and
benefits under a theory that the insurance policy at issue
did not comply with section 627.727 of the Florida Statutes
relating to uninsured and underinsured motorist coverage
(“UM/UIM”). That statute requires that UM/UIM coverage be
offered and either accepted or properly rejected by a
“named insured” when an insurance policy which provides
liability coverage is issued or delivered in this State and
provides:
No motor vehicle liability insurance policy which
provides bodily injury liability coverage shall be
delivered or issued for delivery in this state with
respect to any specifically insured or identified motor
vehicle registered or principally garaged in this state
unless uninsured motor vehicle coverage is provided
therein. . . . However, the coverage required under this
section is not applicable when, or to the extent that, an
insured named in the policy makes a written rejection of
the coverage on behalf of all insureds under the policy.
§ 627.727(1), Fla. Stat. (2004). If an insurer fails
to comply with the statutory requirements, UM/UIM coverage
is provided by the contract as though the required coverage
had been offered and accepted by the “named insured” as a
matter of law. See Am. Fire & Indem. Co. v. Spaulding, 442
So. 2d 206, 208 (Fla. 1983) (“[T]he statute clearly
provides that uninsured motorist coverage is by operation of
law equal to general liability coverage unless the named
insured selects otherwise. . . .”).
The details surrounding the issuance of the Michigan Mutual
policy at issue here (the “policy”) as described in the
Eleventh Circuit’s opinion reveal:
Ford entered into a separate insurance agreement with
Michigan Mutual . . ., which contains three sections. The
commercial general liability section provides coverage for
Ford’s premises and operations activities. The business
auto section provides coverage for a group of vehicles
used by Ford for business purposes. The personal auto
section is designed to provide coverage to a group of
vehicles assigned to Ford management personnel under the
lease evaluation program. The lease agreement signed by
the Ford personnel in the lease evaluation program,
unlike the retail lease agreements signed by the
plaintiffs here, specifically states that “the Company
[Ford] provides insurance on the vehicle during the term
of the lease.” Ford employees who participate in the lease
evaluation program also receive a certificate of no-fault
insurance and an identification card that indicates their
coverage under the Michigan Mutual policy.
This consolidated appeal involves only the personal auto
section of the Michigan Mutual policy and specifically
what is entitled the personal auto policy supplement
(“auto supplement”) to the policy.
Tobin, 398 F.3d at 1269 (alteration in original).
The arguments in the instant matter center on four specific
provisions found in the personal auto supplement to the
policy, as follows: (1) The Declarations page of the
personal auto supplement provides the following
definitions:
Item 1. Named Insured
FORD MOTOR COMPANY, ITS U.S. SUBSIDIARIES AND ANY PERSON
TO WHOM AN AUTOMOBILE HAS BEEN ASSIGNED, LEASED OR LOANED
. . . .
Item 2. Description of Auto
1. See Endorsement Number PP FO RD 04
(2) Endorsement PP FO RD 04, which modifies the personal
auto supplement, states:
A. By addition of this endorsement to your policy, the
following replaces paragraph J. of DEFINITIONS [defining
“covered auto”]:
J. “Your Covered Auto” is changed as follows:
1. Any auto which has been designated with the following
tag letters:
L — Leased vehicles
E — Executive Vehicles
S — Sales Vehicles
in the records of Ford Motor Company’s vehicle
administration system.
(3) The uninsured motorist coverage provision states:
“Insured” as used in this Part means:
1. You or any “family member.”
2. Any other person “occupying” “your covered auto.”
(4) Endorsement PP FO RD 01, added exclusions which
include:
2. This policy, however, shall provide contingent loss
and excess auto liability coverages for autos included in
the following programs:
a. Red Carpet Lease
. . . .
but only as respects the liability of Named Insured. No
coverage is provided to lessees, agents, or permissive
users.
In the federal district court, the appellants and Michigan
Mutual both sought summary final judgment with regard to
the issue of whether the appellants were provided coverage
and entitled to UM/UIM benefits under the policy at issue.
The district court determined that the claimants were
entitled to a summary judgment on the issue of coverage
under the terms of the insurance contract based upon the
decision of the Third District Court of Appeal in Perez v.
Michigan Mutual Insurance Co., 723 So. 2d 849 (Fla. 3d DCA
1998), which was predicated upon the determination that
persons in the position of these claimants are “named
insureds” under this contract. However, notwithstanding the
determination of the issue of coverage and the definition of
“named insured” under the contract as written, the district
court conducted further proceedings and a bench trial to
consider and determine whether the insurance policy should
otherwise be reformed because it did not accurately reflect
the intent of the contracting parties. At the conclusion of
this subsequent proceeding, the district court found that
Ford and Michigan Mutual had not intended to provide
coverage to retail lessees under the policy. Therefore, the
district court reformed the definition of “named insured”
under the insurance contract to exclude any coverage for
retail lessees. As a result of this reformation, the
district court entered final judgment for Michigan Mutual,
reasoning that “[o]nce the contract has been reformed, no
motor vehicle liability policy was issued with respect to
retail lessees” and, therefore, the district court
concluded that section 627.727 of the Florida Statutes and
the requirements contained therein for “named insureds” had
no application with respect to these claimants. Appellants
sought review of this judgment in the United States Court
of Appeals for the Eleventh Circuit and this certified
question followed.
ANALYSIS
Reformation
The federal district court ultimately denied the appellants
relief here because it reformed the “named insured”
provision of the insurance policy to reflect the intent of
the contracting parties to exclude any coverage for retail
lessees, such as these appellants. Upon review, we agree
with the district court’s decision to reform the policy and
hold that reformation was appropriate.
We have held that “[a] court of equity has the power to
reform a written instrument where, due to a mutual mistake,
the instrument as drawn does not accurately express the
true intention or agreement of the parties to the
instrument.” Providence Square Ass’n., Inc. v. Biancardi,
507 So. 2d 1366, 1369 (Fla. 1987) (citing Blumberg v. Am.
Fire & Cas. Co., 51 So. 2d 182, 184 (Fla. 1951)).
Furthermore, the First District has implied that this broad
concept of reformation would apply to the specific issue of
reformation of a “named insured” clause in an insurance
contract to accurately reflect the mutual intent of the
contracting parties as to who was to be designated a “named
insured.” See Canal Ins. Co. v. Hartford Ins. Co., 415 So.
2d 1295, 1297-98 (Fla. 1st DCA 1982) (implying that,
although the facts did not indicate a mutual mistake, had
there been a drafting mistake resulting in the “named
insured” being defined other than as the parties mutually
intended, reformation of the “named insured” clause would
be appropriate). One commentator who has addressed this
specific subject has noted that “[o]ne of the main grounds
for reformation in the cases dealing with automobile
liability policies is that there was a mutual mistake which
caused someone other than the person intended to be insured
to become the named insured.” D. E. Ytreberg, Annotation,
Reformation of Automobile Liability Insurance Policy by
Adding to or Substituting for the Named Insured the Person
Intended to Be Insured, 1 A.L.R.3d 885, § 4[a]
(1965).
Following a bench trial on the issue of reformation, the
district court made a finding of fact that Ford and
Michigan Mutual “never . . . inten[ded] to provide coverage
to retail lessees, and that the personal auto policy
section was only meant to provide coverage to certain
vehicles leased or loaned to Ford’s current and former
employees.” On appeal, “[t]he findings of a trial court are
presumptively correct and must stand unless clearly
erroneous.” Chiles v. State Employees Attorneys Guild, 734
So. 2d 1030, 1034 (Fla. 1999). Based on the district
court’s finding of fact with respect to the parties’
intention, if the definition of “named insured” on the
declarations page of the policy includes retail lessees,
then the imprecise wording of that definition would not
reflect the parties’ intended agreement. This would be a
mutual mistake entitling the parties to reformation. See
Biancardi, 507 So. 2d at 1372 (“A mistake is mutual when the
parties agree to one thing and then, due to either a
scrivener’s error or inadvertence, express something
different in the written instrument.”) (citing Blumberg, 51
So. 2d at 184). Therefore, reformation was appropriate and,
consequently, the appellants are not “named insureds” under
the policy. We need not address what, if any, statutory
provisions with regard to “named insureds” would be
implicated because the insurance contract was properly
reformed.
The “Other Insurance” Clause
Appellants next assert that, even if the definition of
“named insured” is reformed to exclude retail lessees, the
UM/UIM coverage issue is not resolved adversely and they
are still entitled to coverage under the “other insurance”
clause in endorsement PP FO RD 01 which states that
“contingent loss and excess auto liability” coverage is
provided for Red Carpet Lease vehicles. Through this
clause, appellants claim that they are at least entitled to
UM/UIM coverage as Class II insureds because they were
lawful occupants of covered vehicles at the time of their
accidents. Class II insureds “are protected only if they
receive bodily injury due to the negligence of an uninsured
motorist while they occupy the insured automobile of the
named insured with his permission or consent.” Mullis v.
State Farm Mut. Auto. Ins. Co., 252 So. 2d 229, 233 (Fla.
1971).
The language the appellants attempt to invoke to create
their insured status as occupants of a covered vehicle is
an “other insurance” provision, found in an endorsement,
which replaces only the “other insurance” clause found in
the underlying policy form Liability Coverage section of
the personal auto supplement. The original “other
insurance” clause in the underlying contract form that this
endorsement replaces is the last paragraph of two policy
pages “Part A — Liability Coverage.” Nothing in the
endorsement indicates that the replacement of the “other
insurance” clause has any impact on any remaining policy
provisions. In fact, the endorsement specifically states in
capital font that “ALL OTHER TERMS AND CONDITIONS REMAIN
UNCHANGED.”
An “other insurance” clause describes what occurs if other
insurance coverage is available for the particular loss. It
describes the application and relationship that arises if
multiple insurance contracts apply to the same loss. See 8A
John Alan Appleman & Jean Appleman, Insurance Law and
Practice § 4909, at 70 (2005 Supp.). The “other
insurance” clause at issue in the present action provides
excess coverage once the policy limits of other insurance
covering the same risk are exhausted and is only intended
to provide excess liability coverage to the “named
insured,” Ford, in the event that a retail lessee’s primary
insurance is inadequate or the primary insurer denies
coverage. The only effect of the endorsement is to afford
liability coverage to Ford in the event it is exposed to
damages due to an accident involving a vehicle leased
through one of three programs listed in the endorsement.
Appellants have no legitimate claim for liability coverage
under this clause and certainly no claim for UM/UIM
coverage, because the description specifically states that
“[n]o coverage is provided to lessees, agents, or
permissive users.”
Contrary to the appellants’ contention, the “other
insurance” clause does not alter the description of
“covered auto” found elsewhere in the policy or
endorsement. The endorsement which contains the “other
insurance” clause states that “[a]ll other terms and
conditions remain unchanged,” directing that a plain
reading of the policy provisions demonstrates that the
description of “covered auto” in endorsement PP FO RD 04
remains unchanged by the addition of this “other insurance”
clause to the liability coverage section of the personal
auto supplement. Similarly, the “other insurance” clause
does not alter the definition of an “insured” under the
uninsured motorist coverage section of the personal auto
supplement. The appellants do not become “insureds” under
the uninsured motorist coverage because that definition
remains unchanged. Therefore, the language in the “other
insurance” clause does not support the appellants’ position
that they are insureds entitled to UM/UIM coverage.
CONCLUSION
In summary, we conclude that the district court properly
reformed the policy to reflect the mutual intent of the
contracting parties that appellants are not “named
insureds” under the policy. Additionally, the claim that
appellants are within the category of being Class II
insureds as occupants of “covered autos” under the reformed
policy also fails. Post-reformation, the appellants are
neither “named insureds” nor occupants of “covered autos.”
Accordingly, the appellants have no relationship with the
policy which would allow them to assert any rights under
section 627.727 of the Florida Statutes. Following the
reformation, none of the clauses the appellants seek to use
to claim their insured status apply to them. Accordingly,
we answer the certified question in the negative and return
this case to the United States Court of Appeals for the
Eleventh Circuit for further proceedings.
It is so ordered.
WELLS, ANSTEAD, PARIENTE, QUINCE, CANTERO, and BELL, JJ.,
concur.
LEWIS, C.J., concurs with an opinion.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
[fn1] Tobin, Hunter, and the Mackays will be collectively
referred to as “appellants.”
[fn2] The Eleventh Circuit’s opinion indicates that although
certain vehicles were leased from a Ford subsidiary, such
as Ford Motor Credit or Jaguar Credit Corporation, for
purposes of this appeal, and to simplify matters, it
referred to all vehicles as being leased from Ford. Tobin
v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1269 n. 1 (11th Cir.
2005). This opinion adopts that approach and also refers to
Ford as the lessor of all vehicles in question.
LEWIS, C.J., concurring.
I concur in the majority’s determination that the federal
district court properly reformed the insurance contract at
issue in the instant matter, and that appellants are not
entitled to uninsured motorist coverage under the policy
post-reformation because they are neither “named insureds”
nor class II insureds as occupants of “covered autos.” I
write separately because we should answer the question
certified and not begin our analysis in the “middle” of the
process. The question certified is:
DOES THE DEFENDANT MICHIGAN MUTUAL HAVE ANY LIABILITY TO
THE PLAINTIFFS UNDER THE POLICY IN QUESTION, AND, IF SO,
WHAT IS THE EXTENT OF THAT LIABILITY?
Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267 (11th Cir.
2005). The analysis begins with a determination of whether
the appellants were “named insureds” under the policy prior
to reformation because that is essential to any resolution
in the instant matter, because if the appellants were not
“named insureds,” the district court’s reformation of the
policy was unnecessary and inappropriate.
Appellants’ “Named Insured” Status
“Named insureds” are those persons defined or described by
the language of the insurance contract. See Kohly v. Royal
Indem. Co., 190 So. 2d 819, 821 (Fla. 3d DCA 1966) (“In
interpreting insurance policies, the courts have uniformly
held that the term `named insured’ has a restricted meaning
and does not apply to any persons other than those named in
the policy.”). The contract at issue in the instant matter
defines “named insured” as
FORD MOTOR COMPANY, ITS U.S. SUBSIDIARIES AND ANY PERSON
TO WHOM AN AUTOMOBILE HAS BEEN ASSIGNED, LEASED OR LOANED.
In the context of UM/UIM coverage, an analysis of who is a
“named insured” is always the first step in any analysis
with regard to the statutory requirements and protections,
because “named insureds” are the only persons authorized
under the UM/UIM statute to reject UM/UIM coverage or to
accept UM/UIM coverage at lower limits. See, e.g., Kimbrell
v. Great Am. Ins. Co., 420 So. 2d 1086, 1087 (Fla. 1982)
(“[S]ection 627.727(1) . . . requires insurers to provide
uninsured motorist coverage to policy holders in an amount
equal to their bodily injury liability coverage, unless the
uninsured motorist coverage is rejected by the named
insured.” (emphasis supplied)). This is particularly true
when any issue touching upon UM/UIM coverage by operation
of the statute arises because, as indicated above, if the
statutorily mandated offer and rejection or acceptance does
not take place, UM/UIM coverage is provided by operation of
the UM/UIM statute. See id.
In concluding that summary judgment in favor of the
appellants on the issue of coverage was proper, the
district court in the instant matter specifically
determined, based on the analysis of the Third District in
Perez v. Michigan Mutual Insurance Co., 723 So. 2d 849 (Fla.
3d DCA 1998), that the appellants were “named insureds”
under the plain language of the insurance policy prior to
reformation, i.e., “person[s] to whom an automobile has
been . . . leased or loaned.” In Perez, the Third District
determined that the plaintiff, a retail lessee, was a
“named insured” under the same insurance contract at issue
in the present case. See Perez, 723 So. 2d at 850-51. The
Third District reasoned that under Item 1 listed on the
declarations page, describing the “Named Insured” as “Ford
Motor Company, its U.S. subsidiaries, and any person to
whom an automobile has been assigned, leased or loaned,”
the plaintiff, as an individual to whom an automobile had
been leased, came within the definition of a “named
insured” under the plain language of the policy. See id. at
850. The Third District concluded that the insurance
policy’s language was unambiguous and, therefore, did “not
require construction, and must be given effect as written.”
Id. at 851. Adopting this reasoning, the district court
below determined that appellants were likewise “named
insureds” under the policy. As such, they would be entitled
to UM/UIM coverage under the policy by operation of section
627.727 of the Florida Statutes because neither the
appellants nor any other “named insured” under the policy
were offered and either accepted or properly rejected the
coverage. See § 627.727, Fla. Stat. (2004).
Michigan Mutual looks to the policy definition of “covered
auto” to amend the separate policy provision of “named
insured,” arguing that a different definition of vehicles
in a separate “covered autos” provision in Endorsement [PP]
FO RD 04 changes “named insureds” under the policy at
issue. We have held that “insurance contracts must be
construed in accordance with the plain language of the
policy.” Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845
So. 2d 161, 165 (Fla. 2003). The definition of “named
insured” on the declarations page of the policy at issue
here clearly states and includes “any person to whom an
automobile has been . . . leased.” An interpretation of the
plain meaning of that definition would, absent any
modification of the definition of “named insured” elsewhere
in the policy or by endorsement, include appellants retail
lessees as “named insureds.” See Kohly, 190 So. 2d at 821
(“named insured” status is only given to those named in the
policy).
Michigan Mutual attempts to change the definition of “named
insured” on the declarations page of the policy, by
reference to the description of a “covered auto” with the
tag designations listed in Endorsement PP FO RD 04 under
the definition of “covered auto,” not “named insured,” and
conclude that the retail lessees are not “named insureds”
under the policy at issue. If we adopted this reasoning, we
would stretch the concept of interpretation entirely beyond
that permitted by Florida law by mixing distinct insurance
provisions, one policy provision and concept —
“named insured” — being defined by reference to a
definition of an entirely different independent policy
provision, definition, and concept — “covered auto.”
Who is a “named insured” under a policy is not altered by
the description of a “covered auto” found in a separate,
different provision, definition, and concept contained in an
endorsement to that policy. Therefore, the tag designations
listed in endorsement PP FO RD 04, which are used to
describe the term “covered auto” and not “named insured,”
cannot be used to totally alter the separate definition of
“named insured” found on the declarations page in a
different policy provision. There is no endorsement which
modifies the definition of “named insured” in this
contract. The plain and unambiguous language in the
distinct contract provision on the declarations page which
defines who qualifies as a “named insured” must control and
dictate who is in that category without resorting to a
distinct and different policy provision and definition to
change the unambiguous policy language. Reference to a
“covered auto” may modify or impact the vehicle or where
coverage may apply, but it does not alter the definition of
“named insured” as a policy term.
Even if the definition of the distinct and separate
contract description of “covered auto” in Endorsement PP FO
RD 04 could be construed as creating ambiguity as to the
separate definition and provision of the term “named
insured,” principles of insurance contract construction
would still require that the plaintiff retail lessees be
considered “named insureds.” We have held that “where policy
language is subject to differing interpretations, the term
should be construed liberally in favor of the insured and
strictly against the insurer.” State Farm Fire & Cas. Co.
v. CTC Dev. Corp., 720 So. 2d 1072, 1076 (Fla. 1998)
(citing Container Corp. of Am. v. Md. Cas. Co., 707 So. 2d
733, 736 (Fla. 1998)). Under this reasoning, an
interpretation of “person to whom an automobile has been .
. . leased,” which clearly includes a retail lessee, should
be favored over one that includes only Ford employee
lessees, because the former interpretation would adhere to
the rule of construing policy language subject to differing
interpretations “liberally in favor of the insured and
strictly against the insurer.” CTC Dev. Corp., 720 So. 2d
at 1076.
Based on the foregoing, I would conclude that the
appellants were within the definition of “named insured”
and were entitled to the statutory protection related
thereto under the policy at issue in its pre-reformation
state. Therefore, the district court’s reformation of the
policy was the proper process to analyze this case if
appellants as retail lessees were to be excluded from the
definition of “named insured” under the policy. Since the
majority correctly determines that reformation was
appropriate in the instant matter and supported by
competent substantial evidence, I concur.