Proof of Loss
Sworn Proof of Loss Is a Condition Precedent, and Presumption of Prejudice Applies: Florida’s 3rd DCA Reverses Summary Judgment for Insurer
Deborah Vennos
February 11, 2013
As we have indicated in prior blog posts on the Soronson and Slominski cases, late notice issues have been cropping up consistently in the Florida appellate courts in the context of Hurricane Wilma claims being reported years after the storm. Cooperation clauses requiring prompt notice and sworn proof of loss are implicated, and the issue, at least in Florida, becomes whether the failure to abide by the plain language of the policy results in forfeiture of coverage, or whether prejudice is presumed, but rebuttable by the insured. In Bankers Ins. Co. v. Macias, 475 So. 2d 1216, the Florida supreme court determined that in the context of late notice, the insurer is presumed to be prejudiced by late notice, but that the insured may rebut the presumption by providing evidence that the insurer was not prejudiced.
The latest Florida decision on this topic was issued by Florida’s 3rd DCA in 1500 Coral Towers Condominium Association, Inc. v. Citizens Property Ins. Co., 2013 Fla. App. LEXIS 1753 (Feb. 6, 2013). In June 2010, almost five years after Hurricane Wilma made landfall in October 2005, the insured (“Coral Towers”) notified Citizens of roof damage due to Hurricane Wilma. Coral Towers knew about the damages at the time of Wilma, but opted not to advise Citizens because it did not know whether the damages would exceed the policy deductible. Coral Towers conducted repairs to the roof before advising Citizens of the loss. Once notified of the loss, Citizens requested that Coral Towers provide a sworn proof of loss within 60 days, which Coral Towers did not provide until six months later, which was three months after Coral Towers filed suit.
Citizens moved for summary judgment based on its affirmative defenses citing the “Your duties after loss” provision, which required that Coral Towers “Give prompt notice to [Citizens], and “Send to [Citizens], within sixty (60) days after our request, your signed, sworn proof of loss . . . .” Citizens also demonstrated prejudice by alleging that the passage of time and repairs performed in the meantime diminished its ability to investigate and evaluate the claim, as well as monitor and coordinate mitigation of damages.
Appellate briefing reveals that Coral Towers offered an engineer’s affidavit in support of its opposition to Citizens’ motion for summary judgment, which provided that there was “no prejudice whatsoever to the insurance company by learning of the damage in 2010 because the type of damage sustained . . . is the same type of damage I have seen time after time coming from Hurricane Wilma, and not simply damage that is from a rain event that might have occurred since then.” Coral Towers’ public adjuster provided a similar affidavit.
The trial court granted Citizens’ motion for summary judgment, finding that notice was late as a matter of law, and with regard to prejudice, stated the following:
“there is a legal presumption that prejudice really has been established by the defendant in this case, the Court finds that really Citizens is relieved of any further liability based on the fact that there is – there had been conditions post Wilma that needed to be complied with, that those were not complied with. Therefore, the motion for summary judgment at this time is going to be granted.”
Coral Towers appealed, and the 3rd DCA affirmed the trial court’s finding that notice was late as a matter of law, stating
“. . . an insured must give notice of the loss that implicates a potential claim without waiting for the full extent of the damages to become apparent.”
However, the 3rd DCA reversed the trial court’s decision as to whether Citizens was prejudiced by the late notification, stating that while “Citizens alleges that the extended passage of time creates a very strong inference that Citizens’ investigation and defenses have been diminished as a result of the late notice . . . [w]hether or not the delay in investigating the damages was prejudicial to the insurance company is an issue of fact for the jury.” A concurring opinion noted that “the burden is on Coral Towers to show that Citizens was not prejudiced by the lack of timely notice.” Interestingly, the issue of whether the presumption of prejudice rule set forth in Macias was equally applicable to a case where both notice and sworn proof of loss were provided late was not discussed.
The 3rd DCA joins the 5th (see our blog post on Allstate Floridian v. Farmer) and 4th DCA’ (see our blog post on Soronson v. State Farm Fla. Ins. Co.) in extending the rebuttable presumption of prejudice to late sworn proofs of loss despite the clear and unambiguous language requiring such proofs of loss within 60 days of request by the insurer. It remains to be seen whether the Florida Supreme Court would agree with this extension of the presumption of prejudice rule.