Essex Insurance Co. v. Integrated Drainage Solutions, Inc.
124 So. 3d 947
Fla. Dist. Ct. App.2013Background
- Essex issued a commercial general liability policy to IDS (named insured) in March 2008; Mastec North America was an additional insured. Exclusions in the policy’s combination general endorsement purportedly barred coverage for claims arising from negligent hiring/supervision and criminal/malicious acts.
- Underlying wrongful-death suit: Estate sued IDS, Mastec, and Verizon for claims including negligent hiring/retention, negligent selection/supervision of a contractor, and vicarious liability after an IDS employee murdered the decedent.
- Defendants (Verizon and Mastec) demanded defense/indemnity from Essex; Essex sought a declaratory judgment denying duty to defend/indemnify based on the policy exclusions.
- Defendants countered that Essex’s exclusions were unenforceable because Essex (a surplus-lines insurer) failed to file and obtain preapproval of the endorsement under Fla. Stat. § 627.410 and also failed to comply with claims-administration rules (§ 627.426).
- Florida amended § 626.913 in 2009 to clarify that chapter 627 does not apply to surplus-lines insurers and included retroactivity language in the enacting law back to 1988; the statute’s published text did not itself include the retroactivity clause.
- The trial court granted summary judgment for the insureds; the district court reversed, addressing retroactivity and constitutionality of applying the 2009 amendment and leaving the question whether the exclusions apply to the specific tort claims for the circuit court to decide on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2009 amendment to §626.913 applies retroactively to exempt surplus-lines insurers from chapter 627 filing/approval requirements | Essex: The enacting law expressly declared the amendment remedial and retroactive to Oct. 1, 1988, so surplus-lines insurers were never subject to chapter 627 filing/approval | Verizon/Mastec: The retroactivity language was not codified; applying the amendment retroactively is improper and would impair insureds’ rights to preapproval | Court: The legislative intent to apply retroactively is clear from the enacting law; retroactive application is proper here |
| Whether retroactive application or failure to file with OIR would unconstitutionally impair vested rights and thus void the policy exclusions | Essex: Retroactivity does not impair vested rights because OIR did not regulate surplus-lines forms when policy issued; even if failure to file occurred, courts should not void exclusions as that would alter bargained terms | Verizon/Mastec: Applying retroactively or allowing unfiled exclusions undermines insureds’ vested right to have policy forms approved and thus is unconstitutional | Court: Retroactive application does not violate constitutional principles; failure to comply with §627.410 does not automatically invalidate exclusions (voiding them would improperly alter the contract) |
| Whether the policy exclusions at issue apply to the specific wrongful-death claims (negligent hiring/retention, negligent selection/supervision, vicarious liability) | Essex: The exclusions cover alleged negligence in hiring/training/supervision and acts arising from criminal/malicious conduct, thus they bar coverage | Verizon/Mastec: The exclusions do not extend to the asserted common-law duties (negligent selection/retention/supervision and vicarious liability) for which they seek defense | Court: Not decided on appeal; remanded to the circuit court to determine applicability of exclusions to the underlying claims |
| Whether failure to comply with §627.410 or §627.426 requires voiding the exclusions | Essex: Noncompliance by a surplus-lines carrier (given retroactive exemption) does not void exclusions; Chalfonte and related precedent counsel against voiding contractual terms | Verizon/Mastec: Noncompliance renders the exclusions unenforceable | Court: Failure to comply does not automatically void exclusions; other courts and doctrine disfavor altering contract terms by voidance |
Key Cases Cited
- Essex Ins. Co. v. Zota, 985 So.2d 1036 (Fla. 2008) (addressed whether chapter 627 applies to surplus-lines insurers)
- CNL Hotels & Resorts, Inc. v. Twin City Fire Ins. Co., [citation="291 F. App'x 220"] (11th Cir. 2008) (applied Zota to conclude §627.410 applied to surplus-lines insurers)
- QBE Ins. Corp. v. Chalfonte Condominium, Apartment Ass'n, 94 So.3d 541 (Fla. 2012) (refused to void a noncompliant policy provision because voidance would alter the contract)
- State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So.2d 55 (Fla. 1995) (two-prong retroactivity test: legislative intent and constitutional limits)
- AIU Ins. Co. v. Block Marina Inv., Inc., 544 So.2d 998 (Fla. 1989) (constitutional concerns about retroactive alteration of insurance contracts)