Court Opinion

ID: 2785106
Source: CourtListenerOpinion
Date Created: 2015-03-10 18:04:05.48305+00
Date Added: 2024-06-11T11:03:11.058446
License: Public Domain

IN THE DISTRICT COURT OF APPEAL
                                     FIRST DISTRICT, STATE OF FLORIDA

PATRICIA ASSEFF and                  NOT FINAL UNTIL TIME EXPIRES TO
ABRAHAM ASSEFF,                      FILE MOTION FOR REHEARING AND
                                     DISPOSITION THEREOF IF FILED
      Appellants,
                                     CASE NO. 1D14-1822
v.

CITIZENS PROPERTY
INSURANCE, a government
entity of the State of Florida,

      Appellee.

_____________________________/

Opinion filed March 10, 2015.

An appeal from the Circuit Court for Leon County.
Kevin J. Carroll, Judge.

Gary M. Farmer, Jr., Steven R. Jaffe, Mark S. Fistos of Farmer, Jaffe, Weissing,
Edwards, Fistos & Lehrman, P.L., Ft. Lauderdale; Todd J. Stabinski of Stabinski &
Funt, P.A., Miami; Elliot B. Kula, W. Aaron Daniel, Daija M. Page of Kula &
Associates, P.A., North Miami, for Appellants.

Karen D. Walker, Stephen H. Grimes, Matthew H. Mears of Holland & Knight
LLP, Tallahassee, for Appellee.

LEWIS, C.J.

      Appellants, Patricia and Abraham Asseff, seek review of the trial court’s

order dismissing their Amended Complaint. Appellants contend that the trial court
erred in relying upon Serchay v. State Farm Florida Insurance Co., 25 So. 3d 652

(Fla. 4th DCA 2010), in concluding that they failed to exhaust the administrative

remedies provided for in section 627.371, Florida Statutes. For the reasons that

follow, we reject Appellants’ argument and affirm.

      Florida insurers are required to provide savings to consumers who “install or

implement windstorm damage mitigation techniques, alterations, or solutions to

their properties to prevent windstorm losses.” § 627.0629(1), Fla. Stat. (2012).

Rate filings for residential property insurance must “include actuarially reasonable

discounts, credits, or other rate differentials, or appropriate reductions in

deductibles, for properties on which fixtures or construction techniques

demonstrated to reduce the amount of loss in a windstorm have been installed or

implemented.” Id.

      In May 2013, Appellants filed their First Amended Class Action Complaint

against Appellee, Citizens Property Insurance Corp., their homeowners insurer, on

behalf of themselves and similarly situated entities and/or persons. Appellants

alleged that they and the class they sought to represent had submitted uniform

mitigation verification inspection forms to Appellee after a professional inspector

inspected each insured’s property. Appellee allegedly accepted the forms without

conducting any separate inspections of the properties and routinely provided

insureds premium credits based on the loss mitigation features and inspection

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results.   According to Appellants, the mitigation forms set forth that “[t]his

verification form is valid up to five (5) years provided no material changes have

been made to the structure.” Prior to the expiration of five years and beginning as

early as 2010, Appellee allegedly began re-inspecting its insureds’ properties

without cause. Appellants alleged that the re-inspection campaign has “led to

widespread removal of loss mitigation benefits afforded under the policy in the

form of credits to [Appellee’s] insureds, including [Appellants} and the class.”

They further alleged that the campaign “has caused and will continue to cause

[Appellants] and Class Members to lose the benefit of their premium discounts and

credits [and] [i]t also appears to contravene the fundamental purpose of § 627.711,

Fla. Stat., which is to incentivize insureds to fortify their structures against

windstorm damage and to lessen their costs of insurance.” Appellants were “not

challenging [Appellee’s] rates, or [its] individual inspections of each Class

Member.” Nor were Appellants “challenging the discount calculation or discount

or credit rating category.”      Appellants alleged a good-faith belief that the

mitigation form was a part of their insurance policy with Appellee and that the

policy clearly obligated Appellee to honor their loss mitigation discounts and

inspection results for five years absent a material change in their dwelling.

       The sole count in the Amended Complaint was for declaratory relief.

Appellants sought a declaration that the mitigation form and its terms were

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incorporated into Appellee’s insurance policies, that Appellee must honor the

mitigation form and inspection results on an insured’s property for five years

unless there has been a material change to the property, and that the trial court was

the proper forum for issuing declaratory relief. If the trial court entered those

declarations, Appellants requested that the court further declare that “the proper

forum for Plaintiffs and Class Members to pursue a breach of contract action or

other action for benefits based on those declarations is in this Court [the trial court]

notwithstanding that damages in such an action would be in the form of overpaid

premiums.”

      Appellants attached several exhibits pertaining to Appellee to their Amended

Complaint, including a blank homeowners application, a blank supplemental

application, a blank Contract Information Form, and a sample Homeowners HO-3

Special Form Policy. Each of those forms was stamped “Approved” by the Office

of Insurance Regulation (“OIR”).               Appellants also attached Appellee’s

Homeowners Policy Program Manual Ratings Rules and a blank Uniform

Mitigation Verification Inspection Form. As alleged by Appellants, the mitigation

form contained the statement “[t]his verification form is valid up to five (5) years

provided no material changes have been made to the structure.”              Appellee’s

manual provided in part that “[t]he OIR-B1-1802 [mitigation form] is valid for five

years provided no material changes have been made to the structure.”

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      Appellee moved to dismiss the Amended Complaint, arguing that Appellants

had not alleged that they had exhausted administrative remedies available in

section 627.371, Florida Statutes.   Appellee relied upon the Fourth District’s

decision in Serchay v. State Farm Florida Insurance Co., 25 So. 3d 652 (Fla. 4th

DCA 2010), in support of dismissal. Following a hearing on the motion, the trial

court entered the Order Granting Defendant’s Motion to Dismiss, wherein it

determined that dismissal was appropriate based upon Serchay. The court found

that the injury Appellants complained of was the reduction of wind mitigation

credits and the corresponding increase in premiums they and others were required

to pay to Appellee for homeowners coverage. Quoting the Amended Complaint,

the trial court further found that Appellants sought damages in the form of

overpaid premiums. The court subsequently entered a Final Order of Dismissal of

Plaintiffs’ First Amended Complaint. This appeal followed.

      As we have explained, “[C]onsiderable deference is accorded a trial court’s

order of dismissal of a complaint seeking a declaratory judgment.” Fla. Pub.

Emps. Council 79, AFSCME v. Dep’t of Children & Families, 745 So. 2d 487, 490

(Fla. 1st DCA 1999). As such, the standard of review is abuse of discretion. Id.

(citing Abruzzo v. Haller, 603 So. 2d 1338, 1339 (Fla. 1st DCA 1992), which held,

“Typically the standard of review of the dismissal of a complaint with prejudice is

de novo. . . .   However, when dismissing a count in a complaint seeking a

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declaratory judgment, the trial court’s ruling is accorded great deference.”); see

also Kelley v. Kelley, 147 So. 3d 597, 601 (Fla. 4th DCA 2014) (“Since a trial

court’s decision to dismiss a complaint seeking declaratory relief is afforded great

deference, . . . our review is for an abuse of discretion.”); Palumbo v. Moore, 777
So. 2d 1177, 1178 (Fla. 5th DCA 2001) (same); Webb v. Town Council of Town

of Hilliard, 766 So. 2d 1241, 1243 (Fla. 1st DCA 2000) (same).

      Section 627.711(1), Florida Statutes (2012), requires insurers, using a form

prescribed by OIR, to:

      clearly notify the applicant or policyholder of any personal lines
      residential property insurance policy . . . of the availability and the
      range of each premium discount, credit, other rate differential, or
      reduction in deductibles, and combinations of discounts, credits, rate
      differentials, or reductions in deductibles, for properties on which
      fixtures or construction techniques demonstrated to reduce the amount
      of loss in a windstorm can be or have been installed or implemented.

Section 627.371(1), Florida Statutes (2012), the statute at issue, provides in part:

      Any person aggrieved by any rate charged, rating plan, rating system,
      or underwriting rule followed or adopted by an insurer, and any
      person aggrieved by any rating plan, rating system, or underwriting
      rule followed or adopted by a rating organization, may herself or
      himself or by her or his authorized representative make written
      request of the insurer or rating organization to review the manner in
      which the rate, plan, system, or rule has been applied with respect to
      insurance afforded her or him.

(Emphasis added). If a request is not granted within thirty days after it is made, the

aggrieved party may treat it as rejected and may file a written complaint with OIR.

Id.
                                          6
      In Elite II v. American Casualty Co. of Reading, Pennsylvania, No. 8:05-

CV-1623-T-17MAP, 2006 WL 1319540, at *1 (M.D. Fla. 2006), the district court

explained that the complaint in the case sought a declaratory judgment on the right

to premium credits under the Florida Contracting Classification Premium

Adjustment Program (“FCCPAP”), monetary damages, punitive damages for bad

faith, and attorney’s fees. The defendant requested the dismissal of the cause for

failure to state a claim because the plaintiff did not exhaust its administrative

remedies under section 627.371, Florida Statutes. Id. The defendant argued that

any claim that an insurance rate was improperly applied must be administratively

reviewed in accordance with the regulatory scheme and that Florida law precluded

the plaintiff from circumventing the required review process by bringing suit. Id.

The plaintiff argued that the case was “not about the calculation of rates and the

administrative remedies to challenge those calculations” and that the defendant

knowingly refused to refund the premium overpaid by the plaintiff. Id. The

district court denied the motion to dismiss, setting forth in part:

      Although this case is about the total premium due for the policies
      issued to Plaintiff, Plaintiff is not challenging alleged improper
      classification, or the rates on which the premium is based. Plaintiff is
      seeking a declaration that the policy provisions require Defendant to
      apply the FCCPAP credit in calculating the correct premium for the
      policy periods. The Court recognizes the regulatory scheme and the
      discretion of the Florida Department of Insurance, but finds that the
      resolution of this case will turn on construction of the insurance
      policies.

                                           7
Id. at *2.

       Turning to Serchay, the case relied upon by the trial court in dismissing the

Amended Complaint, the Fourth District explained:

       The plaintiff [appellant] sued his homeowner’s insurer, State Farm
       [appellee], in circuit court, alleging in various causes of action that
       State Farm violated sections 627.0629 and 627.711. The plaintiff
       alleged that his home has a windstorm-mitigating hip roof for which
       the State of Florida requires insurers to provide a premium discount to
       their insureds. The plaintiff further alleged that State Farm did not
       notify him of his right to receive the discount, or provide him with the
       discount. Instead, according to the plaintiff, State Farm required its
       insureds to complete an inspector-certified windstorm survey to be
       entitled to the discount. The plaintiff sought to recover the discount,
       and to enjoin State Farm from allegedly continuing to violate the
       aforementioned statutes. The plaintiff also sought class action relief
       on behalf of all other similarly situated State Farm policyholders.
25 So. 3d at 653. The appellee successfully moved to dismiss the complaint,

arguing that the appellant failed to exhaust his administrative remedies under

section 627.371. Id.

       The appellant argued on appeal that section 627.371 did not apply because

the case was not about ratemaking and because his complaint did not challenge the

appellee’s rates. Id. at 654. The appellant contended that the action “concerns

State Farm’s failure to provide the statutorily-mandated premium discount.” Id. In

rejecting the appellant’s argument and affirming the trial court’s dismissal, the

Fourth District held that a premium discount is “inextricably linked to the rate

charged and, therefore, section 627.371 applies to the plaintiff’s action.” Id. The

                                          8
Fourth District reasoned as follows:

            [T]o the extent an insured claims to have been wrongly
      deprived of a premium discount, the insured essentially is claiming to
      have been aggrieved by the rate charged.

             Such a claim finds its remedy in section 627.371. Any person
      aggrieved by any rate charged may request review of the manner in
      which the rate “has been applied,” i.e., the premium. See §§ 627.371;
      627.041(1). Upon sufficient complaint, the OIR is required to notify
      the insurer as to the manner in which to correct the noncompliance,
      including any “premium adjustment.” See § 627.371(2). Thus, under
      section 627.371’s plain language, a request for a “premium
      adjustment” necessarily must arise from a challenge to the “rate
      charged.”

             The statutes upon which the plaintiff bases his action further
      demonstrate on their face that the rate charged and any premium
      discounts are inextricably linked. Section 627.0629(1)(a) provides that
      a rate filing for residential property insurance must include
      “reasonable discounts ... or other rate differentials” for properties on
      which windstorm mitigation techniques have been installed.
      (emphasis added) Section 627.0629(2)(c) provides that “[t]he
      premium notice shall specify the amount by which the rate has been
      adjusted.” (emphasis added) Section 627.711(1) provides that the
      insurer shall notify the policyholder of the availability and the range
      of each “premium discount ... [or] other rate differential” for
      properties on which windstorm mitigation techniques have been
      installed. (emphasis added)

            Our application of section 627.371 to the plaintiff's action here
      is consistent with the results of cases from three other district courts.
      See FCCI Ins. Co. v. NCM of Collier County, Inc., 15 So. 3d 5 (Fla. 2d
      DCA 2009) (insured challenging good faith calculation of insurance
      premiums must avail itself of the administrative process under section
      627.371); Progressive Express Ins. Co. v. Reaume, 937 So. 2d 1120
      (Fla. 2d DCA 2006) (insured alleging that her insurer charged
      excessive rate by violating statute prohibiting insurers from seeking
      excessive premium finance charges was required to first seek relief
      with OIR under section 627.371); State Farm Mut. Auto. v. Gibbons,
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      860 So. 2d 1050 (Fla. 5th DCA 2003) (insured alleging that her insurer
      charged excessive rate by violating statute prohibiting insurers from
      considering monies paid on bad faith and punitive damage claims
      when determining rates was making “challenge to the rate-making
      process” for which exclusive remedy was administrative review under
      section 627.371); Int’l Patrol & Detective Agency, Inc. v. Aetna Cas.
      & Sur. Co., 396 So. 2d 774 (Fla. 1st DCA 1981) (insured alleging that
      its insurers charged excessive rates by violating statute requiring
      insurers to consider investment income when determining rates had
      adequate administrative remedy under section 627.371 and was barred
      from bringing circuit court action).

            We find inapplicable the cases upon which the plaintiff relies,
      but we choose to address one of those cases, Elite II v. Am. Cas. Co.
      of Reading, Pa., No. 8:05-CV-1623-T-17MAP, 2006 WL 1319540
      (M.D.Fla. May 11, 2006). . . .

             The plaintiff relies on Elite II because that case dealt with the
      application of a credit in calculating a premium, not the basis for
      calculating the premium. Respectfully, we disagree with Elite II based
      on our statutory analysis and case comparison above. Notably, the
      federal district court’s decision did not examine any of the Florida
      state cases which we have examined, and appears inconsistent with
      those cases.
Id. at 654-55.

      We agree with the Fourth District’s holding in Serchay and conclude that the

trial court properly applied Serchay in dismissing Appellants’ Amended

Complaint. While Serchay did not involve a declaratory judgment action, the

Fourth District disagreed with Elite II, which did involve such an action. The trial

court in this case correctly found that the injury Appellants complain of is the

reduction or elimination of wind mitigation credits and the corresponding increase

in premiums. As alleged by Appellants, Appellee’s re-inspections caused the loss
                                        10
of “the benefit of their premium discounts and credits.” Appellants further alleged

that Appellee’s re-inspection campaign “has led to widespread removal of loss

mitigation benefits.” As the Fourth District in Serchay explained, an insured who

claims to have been wrongly deprived of a premium discount is essentially

claiming to have been aggrieved by the rate charged by the insurer.

      Our agreement with the Fourth District’s holding in Serchay is supported by

Continental Casualty Co. v. First Financial Employee Leasing, Inc., 716 F. Supp.
2d 1176, 1178 (M.D. Fla. 2010), the only case that has addressed both Serchay and

Elite II. In Continental Casualty Co., the plaintiffs brought an action to recover

amounts owing under two policies of workers’ compensation and employers

liability insurance issued to the defendant. The defendant counterclaimed and

raised a breach of contract claim in Count II, asserting that in determining the

amount of premium owed by it, the plaintiff was required by Florida law and the

insurance policies to apply a premium credit provided by the FCCPAP. Id. The

plaintiffs argued that because Count II challenged a premium rate calculation and

sought a premium rate adjustment, the defendant was required to exhaust its

administrative remedies under section 627.371. Id. at 1178-79. The district court

agreed with the plaintiff that the defendant failed to exhaust administrative

remedies. Id. at 1179. The court noted that the defendant argued that its claims,

like those in Elite II, were based not on rates or rate calculations but on a breach of

                                          11
an obligation under the policies to apply the FCCPAP and because its claims and

defenses were based solely on construction of the insurance policies, the result

would turn on construction of the policies. Id. at 1187. After noting that the

Fourth District in Serchay disagreed with the Elite II opinion, the district court set

forth:

                The Court concludes that [the defendant] was required to
         exhaust its administrative remedies under Section 627.371 before
         filing suit. First, [the defendant’s] contention that this case is not
         about premium rates is incorrect. The evident purpose of the
         FCCPAP credit is to effectively reduce construction classification
         rates that disfavor certain employers paying above-average wages. . . .

               Second, Serchay expressly held that Section 627.371 applies to
         a premium discount. To that extent, its disagreement with Elite II was
         necessary to the decision and not dicta. To the extent that [the
         defendant] contends that the FCCPAP credit is mandated by statute,
         Serchay’s holding applies because there is no relevant difference
         between a statutorily mandated premium discount and a statutorily
         mandated premium credit.

                Third, even to the extent Serchay’s holding does not cover the
         facts of this case (e.g., because [the defendant’s] claim is based in part
         on contract), its extraordinarily broad rationale does. Serchay
         reasoned that because a premium adjustment necessarily changes the
         rate charged, a claim to a premium discount is essentially a challenge
         to the “rate charged” within the meaning of Section 627.371.

                Fourth, FCCI Ins. Co. v. NCM of Collier County, Inc. appears
         to support requiring exhaustion here. FCCI involved a premium
         calculation challenge based on (a) allegedly inaccurate payroll
         amounts and loss reserves and (b) an allegation that the insurer had
         “agreed to reduce the premium amount” after being informed that
         losses were overstated. 15 So. 3d at 6 (emphasis added). Although it
         distinguished Elite II, the Second District Court of Appeal in FCCI
         required exhaustion of a claim for a premium reduction based in part
                                            12
      on an alleged agreement between the parties. FCCI thus suggests that
      a premium challenge is not necessarily exempted from the
      requirement of administrative review merely because it is based in
      part on contract.

            Finally, [the defendant’s] contention that its claim for a
      premium refund is based solely on a construction of the Policies and
      the “endorsements” is disingenuous. [The defendant] has contended
      throughout this lawsuit and continues to contend that application of
      the FCCPAP credit is mandated not only by the Policies but also by
      Florida law, i.e., Florida statutory law and the NCCI Manual as
      “codified” by Florida law or regulation.

             In sum, Florida appellate courts have not followed the narrower
      interpretation of Florida Welding suggested by Elite II and relied on
      by Defendant. Absent a persuasive indication that the Florida
      Supreme Court would disagree with Serchay or decide the issue
      differently, the Court concludes that [the defendant] was required to
      exhaust its administrative remedies under Section 627.371 before
      seeking relief in court. . . .
Id. at 1188-89.

      Appellants’ attempt to distinguish Continental Casualty Co. on the basis that

it involved a challenge to specific rates under a contract while their challenge is

based on Appellee’s re-inspection rights is unavailing. By virtue of the fact that

Appellants filed suit against Appellee and alleged a loss of premium discounts and

credits, Appellants have been “aggrieved by any rate charged” pursuant to section

627.371(1).   The statute also speaks to “[a]ny person aggrieved by any . . .

underwriting rule followed or adopted by an insurer.” While the mitigation form at

issue states that it is “valid up to five (5) years provided no material changes have

been made to the structure,” Appellee’s Homeowners Policy Program Manual

                                         13
Rating Rules, which were attached as an exhibit to the Amended Complaint,

provide that the mitigation form “is valid for five years provided no material

changes have made to the structure.” To the extent that Appellants wish to argue

that Appellee failed to abide by its policy manual and rating rules by re-inspecting

its insureds’ properties too soon, section 627.371(1) is the appropriate avenue for

relief. We note also that Appellants’ other exhibits, including insurance policies,

were stamped “Approved” by OIR.           Given such, Appellants have failed to

persuade us that they cannot proceed in the manner provided for in section 627.371

in seeking a resolution of the issue as to whether, pursuant to their policy with

Appellee, they are entitled to overpaid premiums as a result of Appellee’s

inspections.

      While Appellants also take issue with the trial court’s determination that the

Amended Complaint sought damages in the form of overpaid premiums,

Appellants did, in fact, seek a declaration that the trial court was the proper forum

to pursue a breach of contract action, “notwithstanding that damages in such an

action would be in the form of overpaid premiums.” Moreover, while Appellants

attempt to distinguish Serchay on the basis that they did not invoke the Florida

Insurance Code or claim a violation of such in their Amended Complaint, they

alleged therein that Appellee’s re-inspection campaign “also appears to contravene

the fundamental purpose of § 627.711, Fla. Stat., which is to incentivize insureds

                                         14
to fortify their structures against windstorm damage and to lessen their costs of

insurance.” Appellants acknowledge on appeal that their declaratory relief action

was an attempt to circumvent the requirement to pursue administrative relief

pursuant to section 627.371. Specifically, they represent that the Amended

Complaint was “carefully tailored” to “limit[] the requested remedy to avoid

invoking the Florida Insurance Code and administrative review, putting this case

beyond the purview of Serchay . . . .” However, for the reasons stated herein,

Appellants’ attempt at circumvention must fail. Because the trial court did not err

in dismissing the Amended Complaint, we affirm the order on appeal.

      AFFIRMED.

BENTON and THOMAS, JJ., CONCUR.

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