Florida’s Third District Court of Appeals Affirms Summary Judgment in Favor of Insurer, and Finds Claims Administration Statute Inapplicable When the Insuring Agreement Is Never Triggered

By Jonathan S. Wickham

In the recent decision of Fojon v. Ascendant Commercial Insurance Company, Florida’s Third District Court of Appeal affirmed summary judgment in favor of Ascendant Commercial Insurance Company, and in affirming, held that Florida’s Claims Administration Statute (Florida Statutes Section 627.426) was inapplicable to a claim where the insuring agreement was never triggered.

In Fojon, Ascendant issued a Commercial Automobile For Hire Liability Policy to USA Taxi and USA Taxi Runner, Inc. The policy required all drivers and vehicles to be scheduled. In March 2018, Kelbert Ferdinand was involved in a motor vehicle accident with Fojon in Miami-Dade County. At the time of the accident, Ferdinand was operating a vehicle for hire as a taxi for USA Taxi and USA Taxi Runner, Inc. Ferdinand was not listed as a scheduled driver and the vehicle he was operating was not listed as a scheduled vehicle on the Ascendant policy. Ascendant denied coverage for the loss, sent reservation of rights letters and noted this in its insurance disclosure response.

Fojon sued Ferdinand, USA Taxi and USA Taxi Runner, Inc., for bodily injuries. Ascendant did not provide a defense and Fojon ultimately resolved its claims against USA Taxi and USA Taxi Runner, Inc. Fojon, as assignee of USA Taxi and USA Taxi Runner, Inc., then filed a declaratory judgment action against Ascendant. Fojon sought a declaration that the Ascendant policy provided coverage for her bodily injuries and that Ascendant had violated Florida’s Claims Administration statute. Ascendant filed a counterclaim for declaratory judgment and asserted that it did not have a duty to defend or indemnify for the loss. The trial court granted summary judgment in favor of Ascendant and Fojon appealed.

On appeal, Fojon argued that Ascendant had waived its right to deny coverage because it had failed to comply with Florida’s Claims Administration Statute. In affirming the summary judgment entered in favor of Ascendant, the appellate court held that the Claims Administration Statute is only applicable to coverage defenses, and under Florida law, there is a distinction between coverage defenses and policy defenses. In distinguishing between the two, the Court stated that a policy defense is an assertion that the terms of the contract do not provide coverage. The Court went on to state that a policy defense exists where the insurance policy is not triggered, such as when a person does not qualify as an insured, or a vehicle does not qualify as a covered vehicle. The Court also cited policy exclusions and losses occurring outside of the policy period as other examples of policy defenses. The Court went on to state that coverage defenses involve the forfeiture of coverage that otherwise exists. The Court cited an insured’s failure to comply with policy conditions or duties as examples of coverage defenses and stated that coverage defenses are based on some action or inaction of an insured after a loss. The Court further held that in order to rely on a coverage defense, an insurer must comply with the Claims Administration Statute, or it waives its right to rely on that coverage defense. However, it can still rely on a policy defense-a defense of no coverage.

In applying its holding to the facts of Fojon, the Third DCA held that Ascendant had only asserted a policy defense (that neither the driver nor vehicle involved in the accident were covered under the schedules of the policy), and as a result, coverage did not apply under the plain terms of the contract. The Court further held that because coverage was never triggered under the policy, the Claims Administration Statute did not apply, and did not bar Ascendant from denying coverage.