TERRIE TOWERS, APPELLANT,
v.
CLARENDON NATIONAL INSURANCE COMPANY, APPELLEE
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Terrie Towers appealed an order compelling arbitration of her insurance dispute with Clarendon National Insurance Company. The court reversed, holding that Clarendon's rescission of the insurance policy and return of premiums voided the underlying contract and rendered the arbitration clause unenforceable.
The arbitration clause is unenforceable because Clarendon's rescission of the contract and return of the premium voided the underlying agreement, leaving nothing to arbitrate. An insurer's unilateral right to rescind a policy for misrepresentation in the application terminates the contract and all its provisions, including arbitration clauses.
[1] A court must determine whether a valid written agreement exists, whether an arbitrable issue exists, and whether the right to arbitration has been waived when ruling on a…
[2] An insurer may unilaterally rescind an insurance policy based on misrepresentation in the application without the consent of the insured.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“By returning Towers' premium, Clarendon voided the contract between the parties rendering all of the contractual provisions, including the arbitration clause, unenforceable.”
Establishes the core holding that rescission and premium return void the arbitration clause
Previewing 1 of 3 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceTowers purchased a health insurance policy from Clarendon in October 2002. When she made a claim, Clarendon denied it based on a preexisting condition…
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KELLY, Judge.
Terrie Towers appeals the nonfinal order granting Clarendon National Insurance Company’s motion to compel arbitration. Because we conclude that the trial court erred in finding that Towers’ claim is subject to arbitration, we reverse.
Towers purchased a health insurance policy from Clarendon in October 2002. She subsequently made a claim under the policy which was denied by Clarendon on the basis that the condition which formed the basis of her claim was preexisting. Clarendon thereafter sent Towers a letter, accompanied by her premium check, informing her that no benefits would be paid because of her preexisting condition which voided her coverage under the policy. In response to her verbal appeal, Clarendon sent Towers two more letters explaining the reason for rescission of her coverage and stating that her coverage was “null and void.”
Towers then filed suit'against Clarendon and Nicholas Insurance Group. Count I of the complaint is against Clarendon for breach of contract, and counts II through IV are against Nicholas for fraud in the inducement, negligent misrepresentation, and violations of the Florida Deceptive and Unfair Trade Practices Act. Approximately one month later, Clarendon filed a motion to dismiss or alternatively to stay litigation and compel arbitration. The trial court denied Clarendon’s motion to dismiss but granted its motion to compel arbitration. This appeal ensued.
When ruling on a motion to compel arbitration, courts must consider three elements: whether a valid written agreement exists, whether an arbitrable issue exists, and whether the right to arbitration has been waived. Stacy David, Inc. v. Consuegra, 845 So. 2d 803 (Fla. 2d DCA 2003) (citing Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla.1999)).
Towers does not dispute that the parties entered into a valid contract/agreement, nor does she challenge the arbitration provision which applies to “[a]ny disputes which You may have under the Group Policy or otherwise with Us or Our aurthorized Administrator. ... The right of arbitration may be invoked by either You or Us or both.” However, she contends that Clarendon voided the contract by rescinding her coverage and returning her premium, leaving nothing to arbitrate.
We agree.
Under Florida law, an insurer has the right to unilaterally rescind an insurance policy on the basis of misrepresentation in the application for insurance. Fabric v. Provident Life & Accident Ins. Co., 115 F. 3d 908 (11th Cir.1997) (citing Pino v. Union Bankers Ins. Co., 627 So. 2d 535 (Fla. 3d DCA 1993)). No consent by the opposing party is needed. Id. at 913. By returning Towers’ premium, Clarendon voided the contract between the parties rendering all of the contractual provisions, including the arbitration clause, unenforceable.
The trial court therefore had no basis to order arbitration of this dispute. See Henderson v. Coral Springs Nissan, Inc., 757 So. 2d 577 (Fla. 4th DCA 2000) (holding that an arbitration clause became unenforceable when an automobile dealership rescinded the contract containing the arbitration clause prior to the motion to compel arbitration).
Accordingly, we reverse and remand for further proceedings.
Reversed and remanded.
SALCINES and LaROSE, JJ., Concur.
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Gonzalez v. Eagle Ins. Co., 948 So. 2d 1 (Fla. 3d DCA 2006)…ntrary to the law of contract and unjust enrichment. Florida law indeed gives an insurer the unilateral right to rescind its insurance policy on the basis of misrepresentation in the application of insurance. See Towers v. Clarendon Nat’l Ins. Co., 927 So. 2d 913 (Fla. 2d DCA 2006); Fabric v. Provident Life & Acc. Ins. Co., 115 F. 3d 908 (11th [*3] Cir.1997). We stated in Martinez v. General Ins. Co., 483 So. 2d 892, 894 (Fla. 3d DCA 1986), a case in which the insurer omitted her son’s name from the renewal…
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Nunez v. Westfield Homes OF Fla., Inc., 925 So. 2d 1108 (Fla. 2d DCA 2006)…r a valid written agreement to arbitrate existed; (2) [*1111] whether an arbitrable issue exists; and (3) whether the right to arbitrate has been waived. Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla.1999); Towers v. Clarendon Nat’l Ins. Co., 927 So. 2d 913, 2006 WL 12939 (Fla. 2d DCA Jan.4, 2006). Here, we are called upon to decide only whether the parties agreed to arbitrate the building code violations as described in the class-action complaint. We, of course, must accord the parties’ contract lang…
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Ttsi Irrevocable Tr. v. Reliastar Life Ins. Co., 60 So. 3d 1148 (Fla. 5th DCA 2011)…es. Billian v. Mobil Corp., 710 So. 2d 984, 990 (Fla. 4th DCA 1998). Moreover, rescission is an elective remedy and the party may, but is not obligated to, exercise its right to rescind the transaction. See, e.g., Towers v. Clarendon Nat’l Ins. Co., 927 So. 2d 913, 914 (Fla. 2d DCA 2006). By contrast, the present case does not involve a voidable contract. Rather, neither party could elect to give effect to the policy at issue because it was void at the outset. Furthermore, as a general rule, contracts that a…
Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999)
- Stacy David, Inc. v. Consuegra, 845 So. 2d 303 (Fla. 2d DCA 2003)
- Robert K. Fabric, M.D. v. Provident Life & Accident Ins. Co., 115 F.3d 908 (11th Cir. 1997)
- Elio Pino v. Union Bankers Ins. Co., 627 So. 2d 535 (Fla. 3d DCA 1993)
- Lude Henderson v. Coral Springs Nissan, Inc., 757 So. 2d 577 (Fla. 4th DCA 2000)