Florida Supreme Court on Material Breach, Conditions Precedent and Subsequent, and Insurer Prejudice

The Florida Supreme Court had a busy day today. They decided in McCall v. U.S., No. SC11-1148 (Fla. Mar. 13, 2014), that the legislature’s cap on noneconomic damages in wrongful death cases violated the equal protection guarantee of the Florida Constitution, because there was no rational basis between the law and its stated purpose: to drive down malpractice insurance costs and dissuade Florida healthcare providers from leaving the State. That decision will probably be talked about for some time.

The court also decided State Farm Mutual Auto. Ins. Co. v. Curran, No SC12-157, (Fla. Mar. 13, 2014), which resolved a question certified by the Fifth DCA in State Farm Mutual Auto. Ins. Co. v. Curran, 83 So. 3d 793 (Fla. 5th DCA 2011) to be of great public importance.

The specific issue addressed by the court was whether, in an uninsured motorist case, the insured’s refusal to submit to a compulsory medical examination (CME) under the insurance policy prior to filing suit precludes the insured from recovering benefits. The plurality resolved the issue in the negative, holding that the insured’s failure to submit to a CME is an affirmative defense that must be plead and proven by the insurer, and that such proof must include proof that the breach was material, meaning that the insurer was prejudiced by the breach. The court drew distinction between conditions precedent, which are conditions that must be performed before the contract becomes effective, and conditions subsequent, which presuppose that there is a contractual duty but excuse or postpone it.

Interestingly, what separated the majority (or plurality) and the dissent was a difference in interpretation of the contractual terms, and they came to the exact opposite conclusions. The specific language of the policy at issue was the “no action” clause, which provided: 

[t]here is no right of action against [the insurer] until all terms of this policy have been met.

The plurality focused on the word ‘until,’ which it construed to reference timing, i.e. a condition subsequent. The dissent construed the sentence as a whole to mean that all duties referenced in the “no action” clause were conditions precedent.

Therefore, the moral of the story for insurers and insureds — and indeed for all people entering into contracts — is to be as specific regarding the parties’ duties and obligations as possible. When you state your terms clearly and unambiguously, there is much less room for judges to differ. Additionally, it appears that the inconsistencies in Florida law remain unresolved, the court not explicitly addressing the conflict certified by the Fifth DCA with Goldman v. State Farm Gen. Ins. Co., 660 So. 2d 300 (Fla. 4th DCA 1995) and De Ferrari v. GEICO, 613 So. 2d 101 (Fla. 3d DCA 1993).

How We Can Help 

If you, a friend or a family member find themselves in a situation such as this, please call the Law Office of Scott A. Ferris, P.A. at 305 670-3330 right away. Scott A. Ferris, Esq. is a licensed civil law attorney who has been practicing law since 1987. He is available whenever you need him to pursue your rights. Please learn about our firm at www.FerrisLawFirm.com.