Citizens Property Insurance Corp. v. European Woodcraft & Mica Design, Inc.
Docket: No. 4D08-4932
Court: District Court of Appeal of Florida; September 29, 2010; Florida; State Appellate Court
Litigation resulted from a coverage dispute between European Woodcraft (Plaintiff) and Citizens Property Insurance Company (Defendant). Citizens only accepts windstorm insurance applications through licensed Florida agents, appointing Global Insurance Services, Inc. as its agent. European Woodcraft regularly utilized Global for insurance and requested windstorm coverage for new property. Global secured a quote from Citizens and sent a partial application to European Woodcraft, stating that a premium check of $568.00 and a signed application were required to bind coverage. The application contained incorrect information, completed by Global, and included a certification clause which Mr. Volpe, the Plaintiff’s principal, signed, acknowledging the terms on an unreviewed second page.
Citizens received the application and premium check but informed Global that the check was void due to insufficient funds. After Mr. Volpe provided a new check, Citizens identified a mistake in the property designation, which increased the premium. Citizens issued a Notice of Deficiency, stating a policy would not be issued until full payment was received. While Global received this notice, it failed to communicate with European Woodcraft, whose notice was returned undeliverable. Citizens later closed its file due to non-payment and returned the premium, stating no coverage existed. After Hurricane Wilma damaged the property, European Woodcraft reported the loss but was informed of the lack of coverage, leading to the lawsuit.
The trial court concluded that Global had apparent authority to bind insurance coverage for Citizens and that European Woodcraft was never notified of any limitations on Global’s authority.
Global, as a general lines agent, is licensed to represent insurance companies in selling various types of insurance, including windstorm property insurance. The central issue is whether Global had the apparent authority to bind Citizens Insurance for coverage of European Woodcraft. The trial court noted that Citizens provided application forms and an underwriting manual to Global, which may establish civil liability for Citizens if Global acted on behalf of Citizens. However, an insurer is not bound by an agent's actions if the insured is aware or should have inquired about the agent's limitations.
The trial court found no evidence that European Woodcraft was notified of any limitations on Global’s authority. However, the application included a clause stating that coverage becomes effective only upon Citizens' approval and specified that no agent can bind coverage. This clause indicates actual notice of Global’s limitations, but European Woodcraft claimed not to have received the second page of the application.
The printed line above the signature on the first page indicated that the signer understood and agreed to the terms on the second page. Mr. Volpe, European Woodcraft’s principal, acknowledged he understood page 2 was part of the application but did not review it. To determine if Volpe was on inquiry notice of the agency limitations, it must be assessed whether a reasonable person would have inquired about the agency disclaimer, suggesting that reading the second page would have revealed this information.
A person cannot claim ignorance to avoid legal notice when information is readily available and they have been placed on inquiry notice. An insured party cannot escape liability for provisions in an insurance application they did not read. In this case, the plaintiff was on inquiry notice concerning limitations imposed by Citizens. Citizens argued the trial court erred by not ruling that European Woodcraft was aware of the contents of page 2 of the insurance application due to the incorporation by reference doctrine. The trial court found that since Mr. Volpe was not provided with page 2, Citizens could not use this doctrine to enforce its terms. The court outlined two rules for incorporating documents by reference: the incorporating document must explicitly state it is subject to the incorporated document, and the collateral document must be sufficiently described for the intention of the parties to be clear. The Citizens application failed on both counts, as page 1 did not reference or describe page 2 adequately. Thus, the trial court's decision not to apply the incorporation by reference doctrine was correct. The ruling was reversed and remanded, with concurrence from Judges Polen and May.
