Opinion ID: 1663571
Heading Depth: 2
Heading Rank: 2

Heading: The Significance of Sections 626.922 and 627.421

Text: Having reaffirmed Manaure V and its explanation of the scope of section 627.021, Florida Statutes, we now address the first certified question, which we rephrase as follows: Whether section 626.922 or section 627.421, Florida Statutes (2003), or both, require delivery of evidence of insurance directly to the insured, so that delivery to the insured's representativeacting as an independent insurance broker in the transactionis insufficient. [9] Ultimately, we answer this question in the negative and conclude that neither statute has altered the common-law presumption that an insurance representative, serving as an independent insurance broker, acts on behalf of the insured for purposes of procuring insurance coverage.
Beginning with this Court's decision in Jefferson Standard Life Insurance Co. v. Lyons, 122 Fla. 346, 165 So. 351 (1936), lower courts have seized upon the apparent rule of law that delivery of an insurance policy to an insurance agent constitutes delivery to the insured for all purposes. See, e.g., Reliance Ins. Co. v. D'Amico, 528 So.2d 533, 534 (Fla. 2d DCA 1988) (The fact that [the insured] may never have received a copy of the subject insurance policy because his insurance agent kept it on file for him is irrelevant because delivery of an insurance policy to an agent constitutes delivery to the insured. (citing Prudential Ins. Co. of Am. v. Latham, 207 So.2d 733 (Fla. 3d DCA 1968), which, in turn, relied upon Jefferson Standard Life Ins. Co. v. Lyons, 122 Fla. 346, 165 So. 351 (1936))). However, the actual holding of Lyons was much more narrow because it addressed delivery in the context of contract formation. In particular, Lyons centered on a life-insurance coverage dispute, in which the insurer claimed that no contract had ever been formed between it and the insured. See 165 So. at 352. This case, in contrast to Lyons, does not focus on a contract-formation dispute; rather, it focuses on a situation in which an insurance contract concededly exists, but the insured disputes the fact that it received notice of certain insurance-policy exclusions. In Lyons, A.D. Lyons, the insured, purchased a life insurance policy in the sum of $1,000, payable to Martha Traylor Lyons, his wife. See 165 So. at 352. Lyons completed the application on January 6, 1933, and the insurer's Jacksonville office mailed the policy to its soliciting agent on January 13. See id. The soliciting agent received the policy on January 15 or 16, but held the policy until January 26. See id. Upon attempting delivery, the agent learned that Lyons had died earlier that same day. See id. Lyon's wife, however, tendered the first premium and continued to request delivery of the policy. The agent and insurer refused this request, and Mrs. Lyons filed a complaint seeking to require the insurer to deliver the policy. See id. The policy application stated that the company should incur no liability under it unless and until (a) it has been received and approved, (b) the policy issued and actually delivered, and (c) the premium has been actually paid to and accepted by the Company, or its authorized agent, all during the lifetime of the insured and while he is in good health. 165 So. at 352 (emphasis supplied). The insurer conceded that it received and approved Lyons' application, that it refused to deliver the policy, and that it refused to accept Mrs. Lyons' tender of the first premium payment. See id. This Court held: On the question of delivery, we do not think the company is in position to complain. When the policy was sent to the soliciting agent of the company, he became the agent of both the insurer and the insured for the purpose of delivery, and, having held it for ten or eleven days before moving to do so, we hold that delivery was in effect performed. The company should not by its conduct defeat delivery and claim an advantage by doing so. 165 So. at 353 (emphasis supplied). Thus, this Court decided Lyons solely with regard to the question of contract formation, and did not address delivery for purposes of notice of policy exclusions. When a policy-delivery dispute focuses on notice of policy exclusionsand not contract formation Lyons, and cases based upon Lyons, should not control. Rather, as explained below, a well-established insurance law presumption, used in conjunction with this Court's decision in Almerico v. RLI Insurance Co., 716 So.2d 774 (Fla.1998), should resolve these types of policy-delivery notice issues.
The applicable presumption is commonly formulated as follows: [A]n insurance broker acts as an agent of the insured, not the insurer, where the broker is employed by the insured to procure insurance. The presumption can be overcome by the existence of special circumstances [i.e., indicia of agency] indicating that the broker's arrangement with the insurer was not a standard relationship. 3 Russ & Segalla, supra § 45:5 (emphasis supplied) (footnotes omitted). It is important to note that insurance broker and insurance agent are not synonymous terms: A representative of the insured is known as an  insurance broker.  A broker represents the insured by acting as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, places it with a company selected by the insured, or if the insured has no preference, with a company selected by the broker. In contrast, an  insurance agent  represents an insurer under an exclusive employment agreement by the insurance company. . . . The distinction between an agent and a broker is important because acts of an agent are imputable to the insurer, and acts of a broker are imputable to the insured. 3 Russ & Segalla, supra § 45:1 (emphasis supplied) (footnotes and internal division omitted); see also Almerico, 716 So.2d at 776-78. Based on its recognition of the sometimes amorphous nature of an insurance broker, this Court held in Almerico that under the provisions of section 626.342(2), Florida Statutes (1989), as well as Florida's common law, civil liability may be imposed upon insurers who cloak unaffiliated insurance agents with sufficient indicia of agency to induce a reasonable person to conclude that there is an actual agency relationship.  716 So.2d at 782 n. 13, 783 (emphasis supplied). [10] In this vein, [c]ourts have found the existence of [indicia of agency] when the insurer characterizes the broker as a representative of the insurer, or when insurers contemplate broker solicitation of their products using the insurer's application and sales brochures. [ See, e.g., Almerico, 716 So.2d at 777 (Evidence of indicia of agency may be demonstrated if the insurer furnishes an insurance agent or agency with any blank forms, applications, stationery, or other supplies to be used in soliciting, negotiating, or effecting contracts of insurance. (internal quotation marks omitted)).] Conversion of a broker to an agent has also been found when an insurer uses a broker as an agent for a single purpose. Finally, an agent licensed to sell insurance products for a variety of insurers as an independent insurance agent, may still be considered the agent of an insurer if the insurer has a written agency appointment agreement expressly authorizing the agent to transact business on behalf of the insurer as its agent. 3 Russ & Segalla, supra § 45:5 (emphasis supplied) (footnotes omitted). Here, the Appellees have not proffered any allegations that R.A. Brandon & Company acted as anything other than an independent insurance broker regarding the parties or transaction involved in this litigation, nor have they proffered any evidence, or even a contention, that Brandon had any contract or agreement with Essex to market and sell Essex's insurance policies. Further, the Appellees had the burden of proof on this issue. See 3 Russ & Segalla, supra § 45:10 (An insured seeking to estop an insurer from denying coverage based on a broker's actions has the burden of proving that the broker was the agent of the insurer.). In fact, Isidoro Farji, Lighthouse's presidentwho has contacted Brandon since 1998 to obtain Lighthouse's insurance coverageindicated during his September 9, 2004, deposition that Brandon acted as Lighthouse's broker for purposes of obtaining insurance coverage concerning the 30th Court property: Q. Did you authorize Brandon and Company to fill out an application and apply for insurance for Lighthouse Intracoastal, Inc.? A. Yes. Q. And did they do that to the best of your knowledge? A. Yes. Q. And you obtained insurance from several different insurance companies for Lighthouse Intracoastal, Inc., based on that application? . . . A. Correct. Dep. of Isidoro Farji at 161-62. Additionally, in reference to Maria Figuerasthe primary Brandon customer representative with whom Isidoro Farji interactedMr. Farji stated that [s]he was getting all the policies for me. Dep. of Isidoro Farji at 188. Finally, Todd Brandonthe Executive Vice President of R.A. Brandon & Companystated during his February 1, 2005, deposition that Brandon acted as a producing or general-lines agent that approached surplus-lines agents on behalf of its clients to obtain surplus-lines coverage where general-lines coverage was unavailable, and that Brandon did not have any type of exclusive relationship with any one surplus-lines insurer. See Dep. of Todd Brandon at 11-18. Therefore, in this case, all of the evidence offered by the parties preceding the entry of the summary judgment in favor of the Appellees indicates that Brandon, an independent insurance broker, acted as Lighthouse's insurance representative-broker for purposes of procuring insurance coverage for the 30th Court property. Relatedly, all applicable evidence indicates that it was MacDuff Underwriters, Inc., not Brandon, that acted as Essex's surplus-lines agent in Florida. See, e.g., Dep. of Jack Miller, Executive Vice President with Essex Ins. at 13; see also §§ 626.913(2), 626.914(1) Fla. Stat. (2003) (defining surplus lines agent, and providing that surplus-lines policies are only placed in Florida  through . . . qualified, licensed, and supervised surplus lines agents resident in this state, for insurance coverages and to the extent thereof not procurable from authorized insurers (emphasis supplied)). In sum, under this Court's Almerico decision and under the common-law broker-agency presumption, Brandon, as an independent insurance broker in this transaction, is presumed to have acted on Lighthouse's behalf for purposes of obtaining insurance coverage. Moreover, the Appellees had the burden of rebutting this presumption by presenting some indicia of agency indicating that Brandon acted not on Lighthouse's behalf, but as an agent for and on behalf of Essex. However, the Appellees have failed to present any evidence, or even a contention, that Brandon acted as an agent for and on behalf of Essex when it received a copy of the Essex CGL policy. Therefore, under Almerico, Brandon's receipt of the Essex CGL policy constituted delivery to its principal, Lighthouse Intracoastal. See 716 So.2d at 776-82; see also 3 Russ & Segalla, supra §§ 45:5, 45:10.
It is a well-settled rule of Florida statutory construction that [s]tatutes in derogation of the common law are to be construed strictly. . . . They will not be interpreted to displace the common law further than is clearly necessary. Rather, the courts will infer that such a statute was not intended to make any alteration other than was specified and plainly pronounced. A statute, therefore, designed to change the common law rule must speak in clear, unequivocal terms, for the presumption is that no change in the common law is intended unless the statute is explicit in this regard. Carlile v. Game & Fresh Water Fish Comm'n, 354 So.2d 362, 364 (Fla.1977) (emphasis supplied). Accordingly, for either section 626.922 or section 627.421 to alter the common-law broker-agency presumption, those statutes were required to announce that intention in explicit, unequivocal terms. However, neither statute does so. In relevant part, section 626.922(1) states that [u]pon placing a surplus lines coverage, the surplus lines agent shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, a certificate, cover note, or other confirmation of insurance. Such document shall be executed or countersigned by the surplus lines agent and shall show the description and location of the subject of the insurance; coverage, conditions, and term of the insurance; the premium and rate charged and taxes collected from the insured; and the name and address of the insured and insurer. If the direct risk is assumed by more than one insurer, the document shall state the name and address and proportion of the entire direct risk assumed by each insurer. A surplus lines agent may not delegate the duty to issue any such document to producing general lines agents without prior written authority from the surplus lines insurer. A general lines agent may issue any such document only if the agent has prior written authority from the surplus lines agent. The surplus lines agent must maintain copies of the authorization from the surplus lines insurer and the delegation to the producing general lines agent. The producing agent must maintain copies of the written delegation from the surplus lines agent and copies of any evidence of coverage or certificate of insurance which the producing agent issues or delivers. Any evidence of coverage issued by a producing agent pursuant to this section must include the name and address of the authorizing surplus lines agent. § 626.922(1), Fla. Stat. (2003) (emphasis supplied). Based on the plain text of section 626.922, [11] we presume that in drafting this statute, the Legislature did not use the terms deliver and issue synonymously. See, e.g., Capers v. State, 678 So.2d 330, 332 (Fla.1996) (It is, of course, a general principle of statutory construction that the mention of one thing implies the exclusion of another; expressio unius est exclusio alterius. (quoting Thayer v. State, 335 So.2d 815, 817 (Fla.1976))). When examining the text of section 626.922, it is apparent that the Legislature only intended to prevent surplus-lines agents from delegating  the duty to issue  surplus-lines policies. The nondelegation rule does not concern policy delivery: A surplus lines agent may not delegate the duty to issue any such document to producing general lines agents without prior written authority from the surplus lines insurer.  § 626.922(1), Fla. Stat. (2003) (emphasis supplied). Additionally, the first portion of the statute does not state the method by which a surplus-lines agent or a surplus-lines insurer may accomplish delivery of the policy: Upon placing a surplus lines coverage, the surplus lines agent shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, a certificate, cover note, or other confirmation of insurance. Id. (emphasis supplied). Delivery of the policy to the principal-insured's independent representative-broker would, therefore, remain a viable option under section 626.922(1). Consequently, where the Legislature has used the terms issue and deliver in a statute, but appears to have intentionally omitted the term deliver from an amended portion of the statute, which imposes a nondelegation rule, this Court will presume that the omission was intentional. See Carlile, 354 So.2d at 364-65 (The omission of a word in the amendment of a statute will be assumed to have been intentional. And, where it is apparent that substantial portions of a statute have been omitted by process of amendment, the courts have no express or implied authority to supply omissions that are material and substantive, and not merely clerical and inconsequential.). Finally, the penultimate portion of the statute, which deals with the records a producing agent must maintain, is just thata rule limited to record-keeping:  The producing agent must maintain copies of the written delegation from the surplus lines agent and copies of any evidence of coverage or certificate of insurance which the producing agent issues or delivers.  § 626.922(1), Fla. Stat. (2003) (emphasis supplied). That sentence does not alter the fact that in imposing the policy-issuance non-delegation rule, the Legislature intentionally omitted the word deliver. Section 626.922 thus does not unequivocally alter the common-law broker-agency presumption because the portion of the statute that Appellees rely upon for that proposition does not even mention the word delivery. Moreover, even if this Court were to refer to legislative materials to aid in the construction of section 626.922, those materials support our interpretation. The Senate Staff Analysis and Economic Impact Statement states that the Legislature's 1998 amendment of section 626.922(1) specifie[d] conditions under which a surplus lines agent may delegate to a producing agent the requirement to provide documentation of coverage to an insured. Fla. S. Comm. on Banking & Ins., CS for SB 1372 (1998) Staff Analysis 1 (Mar. 12, 1998) (on file with the Florida State Archives) (emphasis supplied). The Staff Analysis later denotes that the term provide relates to the  duty to issue any such document, and indicates that issue is synonymous with  bind[ing] coverage.  Id. at 13 (emphasis supplied). In turn, bind coverage means legally obligating the insurer to provide coverage under an insurance policy. See Black's Law Dictionary 178 (8th ed.2004) ( bind, vb. 1. To impose one or more legal duties on (a person or institution) . 2. Hist. To indenture; to legally obligate to serve.). Thus, even after resorting to extrinsic legislative materials, it remains clear that section 626.922(1)'s policy-issuance nondelegation rule has nothing to do with policy delivery, and, therefore, the common-law broker-agency presumption emerges unscathed. Section 627.421, Florida Statutes (2003), also does not alter the common-law broker-agency presumption. That statute states in relevant part that [s]ubject to the insurer's requirement as to payment of premium, every policy shall be mailed or delivered to the insured or to the person entitled thereto not later than 60 days after the effectuation of coverage. § 627.421(1), Fla. Stat. (2003) (emphasis supplied). Section 627.421 does not state that the phrase to the insured or to the person entitled thereto, excludes authorized insurance representative-brokers of the principal-insured. Therefore, where (1) a surplus-lines insurer or its direct surplus-lines agent delivers copies of an insurance policy to the representative of the insured, who is acting as an independent insurance broker in the transaction; (2) the insured disputes that it received a copy of the policy; and (3) the insured fails to present any evidence that its independent insurance representative-broker was actually acting as an agent of the insurer, the insured may not point to section 627.421 as mandating that the insurer was required to deliver a copy of the policy directly to the insured. In these types of situations, a surplus-lines insurer or its direct surplus-lines agent complies with section 627.421's command to deliver a copy of the policy to the insured or to the person entitled thereto, by delivering a copy of the policy to the insured's undisputed, independent representative-broker (e.g., R.A. Brandon & Company in this case). See § 627.421(1), Fla. Stat. (2003). As stated above, the same result occurs under section 626.922: when a surplus-lines insurer or its direct surplus-lines agent delivers a copy of a surplus-lines policy to the insured's independent representative-broker, that delivery constitutes delivery to the insured. [12] In Almerico, we expressed the means through which an insured may overcome this general rulethe insured must present convincing indicia of agency demonstrating that the insurance broker was actually an agent of the insurer. See 716 So.2d at 782-83; see also 3 Russ & Segalla, supra §§ 45:5, 45:10. However, the Appellees have not done so in this case. Accordingly, we answer the first certified question in the negative: neither section 626.922 nor section 627.421, Florida Statutes (2003), requires delivery of evidence of insurance directly to the insured, so that delivery to the insured's independent representative-broker is insufficient. In situations such as this, delivery of a surplus-lines policy to the insured's undisputed, independent representative-broker constitutes delivery to the insured; nothing in sections 626.922 and 627.421 alters this result.