IN THE SUPREME COURT OF FLORIDA. Case No. Lower Tribunal No. 3D

IN THE SUPREME COURT OF FLORIDA Case No. Lower Tribunal No. 3D 05-1400 AMEDEX INSURANCE COMPANY, CINCINNATI EQUITABLE INSURANCE COMPANY, and FERNANDO NAVA d/b/a NAVA & COMPANY, Petitioners, vs. KAREM ELENA ROMO, individually and as Personal Representative of the Estate of Magali Romo, Respondent. PETITIONERS BRIEF ON JURISDICTION On Discretionary Review from a Decision of the Third District Court of Appeal Christopher N. Johnson Florida Bar No. 0069329 Hunton & Williams LLP Attorney for Amedex Insurance Company, Cincinnati Equitable Insurance Company, and Fernando Nava 2500 Mellon Financial Center 1111 Brickell Avenue Miami, Florida 33131 Ph: 305.810.2500 Fax: 305.810.2460 cjohnson@hunton.com

TABLE OF CONTENTS TABLE OF AUTHORITIES...ii I. Introduction...1 II. III. Statement of the Case and Facts...2 Summary of Argument...4 IV. Argument...4 A. Standard for Jurisdiction...4 B. There Is Express and Direct Conflict....5 V. Conclusion... 10 CERTIFICATE OF SERVICE... 11 CERTIFICATE OF COMPLIANCE... 11 i

TABLE OF AUTHORITIES Cases Almerico v. RLI Ins. Co., 716 So. 2d 774, 781 (Fla. 1998)... 1, 4, 6, 7, 8, 9 Amstar Ins. Co. v. Cadet, 862 So. 2d 736 (Fla. 5th DCA 2003)...7 Brown v. Inter-Ocean Insurance Co., 438 F. Supp. 951 (N.D. Ga. 1977)... 6, 7 Fladell v. Palm Beach County Canvassing Bd., 772 So. 2d 1240, 1242 (Fla. 2000)...9 Ford Motor Co. v. Kikis, 401 So. 2d 1341 (Fla. 1981)...5 Franz Tractor Co. v. J.I. Case Co., 566 So. 2d 524, 526 (Fla. 2d DCA 1990)...9 Harry Pepper & Assocs., Inc. v. Lasseter, 247 So. 2d 736, 736-37 (Fla. 3d DCA 1971)...9 Jenkins v. State, 385 So. 2d (Fla. 1980)...4 Joseph v. Zurich Life Ins. Co., 159 Fed. Appx. 114, 118 (11th Cir. 2005)...8 Laganella v. Boca Grove Golf & Tennis Club, 690 So. 2d 705, 706 (Fla. 4th DCA 1997)...9 Murphy v. John Hancock Mutual Life Ins. Co., 213 So. 2d 275 (Fla. 3d DCA 1968)... 5, 6, 8 Steele v. Jackson Nat. Life Ins. Co., 691 So. 2d 525, 527 (Fla. 5th DCA 1997). 6, 7 Other Authorities 11th Cir. Local Rule 36-2...8 Fla. Const. Art. V, 3(b)(3)...4 Fla. R. App. P. 9.210(a)(2)... 11 ii

I. Introduction The decision in this case upsets an important and well settled tenet of Florida law: principals are not bound by an agent s statements if the plaintiff has prior notice that the agent lacks the authority to make statements binding the principal. The Third District Court of Appeal expressly recognized in its decision below that the petitioners warned the policyholders at issue, Magali Romo and her husband, in writing that no agent could bind the company by way of promises, representations, or information unless placed in writing and made part of the insurance contract. Nevertheless the Third District overturned dismissal of the Respondent s complaint on the theory that an agent of an insurer can bind the insurer notwithstanding a written disclaimer of the agent s authority. This decision expressly and directly conflicts with a prior ruling of this Court that the principal is not bound if the insured knew or was put on notice of inquiry as to limitations on the agent's actual authority. Almerico v. RLI Ins. Co., 716 So. 2d 774, 781 (Fla. 1998). Courts in other districts relying on Almerico have ruled against claims similar to those here, as a matter of law, based on the written notice. The decision at issue directly and expressly conflicts with those decisions as well. Unless this Court accepts jurisdiction, there will be considerable confusion in this state regarding the effectiveness of written disclaimers of an agent s authority. 1

II. Statement of the Case and Facts 1 In 1991, the insureds (the Romos ) purchased an insurance policy. 2 The application gave clear notice that no agent could bind the insurer with any representations, or even information, unless it was set forth in the written contract: I understand that no agent is authorized to change or modify in any way these contracts or waive one or some of the requirements [sic] this company, or are they able to bind the company by way of promises, representations or information unless placed in writing and form part of an insurance contract or in favor of this application. (App. at 3). 3 The application becomes part of the policy issued. (App. at 3 n.1). The Romos later discussed with an agent, Humberto Martinez, switching to a less expensive policy. Id. The Second Amended Complaint (the complaint ) alleged that Martinez told the Romos that the new policy would provide the same coverage as the old. It also alleged that Mr. Martinez was the petitioners agent. (App. at 16-17). The complaint attached the application. (App. at 3 n.1). The petitioners, who are the allegedly bound principals, moved to dismiss on the theory that they cannot as a matter of law be bound by Martinez s alleged representations in light of the insureds express acknowledgment that no agent had 1 This statement is drawn solely from the decision below (in the Appendix), which recited the allegations of the complaint. The allegations are not admitted. 2 This was originally a Cincinnati Equitable Insurance Company policy, which policy was later acquired by Amedex Insurance Company. 3 The Decision refers to this provision as a merger clause, but the language is express notice of the limits on any agent s authority. 2

authority to make statements and bind the insurers. Martinez did not join this motion. The trial judge dismissed Amedex, Cincinnati Equitable and Nava. The decision noted that the complaint alleged that, after talking to Mr. Martinez in 1996, the Romos wrote to Amedex stating:... I wish to change from a Plan B to the New Plan Named Worldwide Select Plan with the understanding that I will not lose seniority, I am enclosing a check for $1,763.00 to cover the annual charges. (App. at 4). The letter did not ask for coverage or benefits to remain the same, but did specify that seniority remain the same. Id. The written policy requested was then sent to the Romos, providing different coverage but the same seniority. Id. The complaint claims the Romos never read the new policy. Id. Eventually, Mrs. Romo sought coverage for a liver transplant, which was denied because the new, less expensive policy did not cover transplants. (App. at 5). The Third District noted that the complaint alleged that the 1996 policy was a renewal policy, as opposed to a new policy and opined that it is arguable that the disclaimer contained in the 1991 application is part of the 1996 policy. (App. at 8 n.3). The Third District also offered that if instead the 1996 policy was a new policy, it would be arguable that the disclaimer in the 1991 application would have no bearing on the 1996 policy. Id. The Court -- ignoring the express allegations of the complaint that the 1996 policy was a renewal -- then wrote that the status of the 1996 policy as a renewal or new policy was an 3

issue of fact that could not be addressed. 4 Id. The Third District then reversed all aspects of the dismissal, reinstating all claims against Amedex, Cincinnati Equitable, and Nava. III. Summary of Argument The Third District Court of Appeal s decision (the decision ) expressly and directly conflicts with clear authority from this Court in Almerico v. RLI Ins. Co., 716 So. 2d 774, 781 (Fla. 1998), and from other District Courts of Appeal that, as a matter of law, an agent may not bind a principal to a third party by making representations to the third party if the third party knew or was put on notice of inquiry as to limitations on the agent's actual authority. IV. Argument A. Standard for Jurisdiction This Court has jurisdiction to review a decision of a district court of appeal that expressly and directly conflicts with a decision of another district court or of the supreme court on the same question of law. Fla. Const. Art. V, 3(b)(3). To be express the decision must express the legal basis for the ruling in writing. Jenkins v. State, 385 So. 2d (Fla. 1980). It need not identify the cases with which it conflicts in order to have a direct conflict; it is only necessary for the decision to 4 Even if the 1996 policy was a renewal, the complaint alleges that at the time of the alleged discussion with Mr. Martinez in December 2005, the Romos were still insured by their old policy, with the old application putting them on notice that no agent could bind the company. (App. at 3-4). 4

articulate the conflicting legal principal. Ford Motor Co. v. Kikis, 401 So. 2d 1341 (Fla. 1981). B. There Is Express and Direct Conflict. The decision provides that, as long as one alleges a statement was made by an agent, there is an issue of fact as to whether the agent was authorized to bind the principal, notwithstanding any written notice to the contrary. This ruling expressly and directly conflicts with rulings of this Court and other district courts. In this case, the application put the insureds on notice that: no agent is authorized to change or modify in any way these contracts or waive one or some of the requirements..., or are they able to bind the company by way of promises, representations or information unless placed in writing and form part of an insurance contract.... The complaint alleged that the agent represented the coverage would be the same if the insureds changed to a new, less expensive policy. It also alleged the insureds never read the new policy, which excluded the claim upon which suit was brought. The Third District Court of Appeal itself examined a similar scenario in Murphy v. John Hancock Mutual Life Ins. Co., 213 So. 2d 275 (Fla. 3d DCA 1968), holding that an agent cannot bind an insurance company where the application discloses such a limit on the scope of the agency. A long line of cases from outside the Third District then followed Murphy. The holding in the Murphy was next followed by a federal case in Brown v. 5

Inter-Ocean Insurance Co., 438 F. Supp. 951 (N.D. Ga. 1977). Applying Florida law, the Brown court cited Murphy and held that: Although determination of an agent's apparent authority may in some cases be a question of fact, Hughes v. Pierce, supra, an agent cannot bind an insurer by contracting to issue a policy when the written application expressly states that the agent cannot so contract. Murphy v. John Hancock Mutual Life Insurance Co., 213 So.2d 275 (Fla. App. 1968). The application... provides that no agent shall have the right to make, alter, modify, or discharge any contract or policy issued on the basis of this Application... Jennings Brown was thereby put on notice to inquire as to the actual authority... and [the insurer] is not bound by their representations. Brown, 438 F. Supp. at 954. The language of the application in this case is indistinguishable from the language used in Brown. The Brown Court held it was unnecessary to make determinations as to agency, because the principal could not be bound by the statements of the alleged agent. It is an issue of law, not fact. This Court quoted and adopted the above language in Brown. Almerico v. RLI Ins. Co., 716 So. 2d 774, 781 (Fla. 1998). [W]e conclude that the interpretations of the statute reached in Gaskins and Brown are correct. Id. at 781. While this Court in Almerico ultimately distinguished Brown because the application in Almerico did not put the insureds on notice, other districts have now followed the rule of law enunciated in Almerico and Brown. The court in Steele v. Jackson Nat. Life Ins. Co., 691 So. 2d 525, 527 (Fla. 5th DCA 1997), had before it a contract that provided: 6

The Agent shall have no authority, on behalf of the Company to make, alter or discharge any contract or any of the terms, rates or conditions of the Company's policies or contracts;... ; The Court in Steele held that, in light of the application, even if Middleton was JNL's agent for some purposes, and even if he had apparent authority for some purposes, the Steeles were on notice to inquire as to the scope of Middleton's authority and could not rely on his alleged statement.... Id. The Court in Steele entered judgment as a matter of law for the insurer. In Amstar Ins. Co. v. Cadet, 862 So. 2d 736 (Fla. 5th DCA 2003), the application provided that: The Agent has no authority to bind the company without first obtaining confirmation from the company through a telephonic binder and receiving a corresponding binder number. The agent has no right to make, alter, modify or discharge any contract or policy issued on the basis of this application. Amstar Ins., 862 So. 2d at 741. The court held that this language precluded the insured from claiming that the principal was bound by the agent s representations. The last sentence is identical to language included in an application for insurance that the court in Almerico found to be sufficient to put an insured on notice of limitations placed on the broker's actual authority to bind the insurance company. Hence, even if the McClain Agency was a statutory agent for Amstar, Cadet was effectively put on notice of the limitations placed on its authority to act on behalf of Amstar. Id. (omitting citations to Almerico, Brown, and Steele). 7

Recently, the United States Court of Appeals for the Eleventh Circuit, summed up the law of Florida on this point: Florida insurance law also recognizes that an agent cannot waive a provision of an insurance contract or bind the insurer when the insurance application makes clear that the agent has no authority to do so. See Almerico v. RLI Ins. Co., 716 So.2d 774, 781 (Fla.1998) (holding that "an agent cannot bind an insurer by contracting to issue a policy when the written application expressly states that the agent cannot so contract"); Murphy v. John Hancock Mut. Life Ins. Co., 213 So.2d 275, 276 (Fla.Dist.Ct.App.1968) (holding that an agent could not bind the insurer by contracting to issue an insurance policy when the application expressly stated that the agent could not so contract). Joseph v. Zurich Life Ins. Co., 159 Fed. Appx. 114, 118 (11th Cir. 2005). 5 The Third District never mentioned or considered any of the foregoing authority, even though it expressly recognized that the application in this case state[s] that the agent does not have the authority to bind the insurer. (App. at 15). Contrary to controlling authorities, the Third District held Amedex, Cincinnati Equitable, and Nava all bound by Martinez s representations even though they were never made part of the written insurance contract. It reached this conclusion solely because the complaint contained generalized, conclusory allegations of agency. [T]he Complaint in the instant case contains numerous 5 This case is unpublished, but the decision is available on Westlaw, and may be cited as persuasive authority. 11th Cir. Local Rule 36-2. 8

Ex. A, Slip Op. at p.16. allegations connecting Amedex and Cincinnati Equitable with the misrepresentations made by Martinez, who the Complaint alleges is an agent of Nava, Amedex, and Cincinnati Equitable... Based upon the allegations in the Complaint, which if proven, would establish an agency relationship between Martinez and Nava, between Nava and Amedex and Cincinnati Equitable, and between Martinez and Amedex and Cincinnati Equitable directly, coupled with the allegations of the misrepresentations of Martinez (their agent) which were false and which upon the Romos relied to their detriment, we conclude that the Complaint contains sufficient allegations to state a cause of action.... The decision conflicts, not only with Almerico and its progeny, but also with authority, from this Court and the other Districts, holding that, where a pleading conflicts with a document attached to that pleading, the document controls. See, e.g., Fladell v. Palm Beach County Canvassing Bd., 772 So. 2d 1240, 1242 (Fla. 2000); Laganella v. Boca Grove Golf & Tennis Club, 690 So. 2d 705, 706 (Fla. 4th DCA 1997); Franz Tractor Co. v. J.I. Case Co., 566 So. 2d 524, 526 (Fla. 2d DCA 1990). 6 All of the Respondent s ten causes of action arise from the same alleged misstatement by the purported agent. The issue of agency is thus essential to every cause of action. The decision s analysis of this issue, inexplicably, appears 6 Ironically, this line of authority also originated with a respected Third District Court of Appeal decision, Harry Pepper & Assocs., Inc. v. Lasseter, 247 So. 2d 736, 736-37 (Fla. 3d DCA 1971). 9

in the middle of the opinion in the fraud section. The decision then confuses the agency line of authority with merger clauses, and actually cites two cases for the proposition that a merger clause does not necessarily invalidate a cause of action for fraudulent inducement. Id. at p.17. The decision goes on to state that whether reliance was reasonable is a question of fact. These are three entirely separate doctrines. The reliance and merger theories are inapplicable to the agency analysis. The only question is whether the principals were bound by an agent s representation notwithstanding clear notice to the insureds that he lacked the authority to so bind. The agent here is still a party. Whether the application absolves him of liability on the basis of reasonable reliance was not the issue before the Third District Court of Appeal or this Court. V. Conclusion This Court should accept jurisdiction for the reasons stated above. Respectfully submitted, HUNTON & WILLIAMS LLP Counsel for Amedex Insurance Company, Cincinnati Equitable Insurance Company, and Fernando Nava By: Christopher N. Johnson Fla. Bar No. 069329 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 305.810.2500 Fax: 2460 cjohnson@hunton.com 10

CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed this 7 th day of August, 2006 to Charles M. Auslander, Esq., Greenberg Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33131; and to Michael J. Higer, Esq., Mintz, Truppman, Clein & Higer, P.A., 1700 Sans Souci Boulevard, North Miami, Florida 33131. By: Christopher N. Johnson CERTIFICATE OF COMPLIANCE We hereby certify that this answer brief is printed in 14 point Times New Roman type, and is in compliance with Fla. R. App. P. 9.210(a)(2). By: Christopher N. Johnson 58002.000013 MIAMI 363546v4 11