If the only named insured in a policy of property insurance assigns all right, title, interest in the property, along with any and all insurance claims to someone else, would that named insured be obligated to comply with the insurance policy duties after loss despite the assignment? Given a recent ruling from the Third District Court of Appeals in Florida,1 it would seem so.
In 2004, Haim and Alexandra Ifergane, jointly purchased a residential property in Miami Beach, Florida. The Property, which the Iferganes intended to renovate before moving in, was insured by Citizens Property Insurance Corporation. Alexandra was the only named insured on the policy. The policy had the following parts of the duties after loss:
(3) Submit to examinations under oath while not in the presence of any other named insureds and sign the same;
. . . .
Under the terms of the policy, the terms “you” and “your” referred to both the “named insured” and “the spouse if a resident of the same household.”
On October 25, 2005, the property was damaged by Hurricane Wilma. The Iferganes notified Citizens of the loss within a week, and Citizens began its investigation of the claim. On November 17, 2005, Alexandra filed for divorce from Haim. As part of a marital settlement agreement, Alexandra executed a quit claim deed on April 4, 2006, assigning to Haim “all the right, title, interest, claim and demand which [she] has in and to the . . . [Property]”. Citizens made an initial payment on the Hurricane Wilma claim for $44,955.08. Mr. Ifergane claimed damages of over one million dollars for the Wilma loss. Citizens sought to take examinations under oath of Haim and Alexandra. Citizens also requested a sworn proof of loss. Haim complied by providing a sworn proof of loss and sitting twice for an EUO. However, Alexandra refused to comply with Citizens’ requests that she attend an EUO, asserting she was not obligated to do so because she had assigned to Haim all of her rights and interest in the property.
On March 31, 2008, Citizens notified Alexandra it could not complete its investigation or determine coverage for the claim because she had not appeared at the requested EUOs. The letter indicated that since it was unclear whether she and Haim were residing in the house together on the date of loss, and because Citizens had not consented to her assignment of the claim, it could not determine whether Haim was an insured under the policy.
On April 8, 2008, Haim made a demand under the policy for appraisal. In response, Citizens in May of 2008 filed an action for declaratory judgment against the Iferganes, seeking a determination regarding its coverage obligations. As to Alexandra, Citizens’ complaint demanded a declaratory judgment:
- To determine the validity of the Assignment;
- To declare that the Assignment did not relieve Alexandra of her policy obligations;
- To declare Alexandra was obligated to appear for an EUO and comply with other policy conditions;
- “To determine the effect of [Alexandra’s] . . . breach of the policy” by failing to appear for an EUO and comply with other policy conditions;
- To declare that the Iferganes failed to mitigate their damages and make temporary repairs to the Property; and
- To declare that the Iferganes representation that the Property was “tenant occupied” was a material misrepresentation voiding the policy.
Alexandra moved to dismiss the complaint, claiming that because she had assigned to Haim “all her rights and interest (including any insurance claims) via Quit Claim Deed” to the Property, she was not a party in interest. The motion was denied. Alexandra then moved for summary judgment, requesting the trial court determine the assignment was valid. Citizens also moved for summary judgment, requesting the trial court determine that Alexandra’s failure or refusal to comply with her policy duties constituted a breach of contract precluding recovery under the policy as a matter of law.
Haim filed a cross-motion for partial summary judgment against Citizens on the coverage issue. Haim argued that the undisputed facts established he was a resident spouse co-insured under the policy, that he had complied with the policy’s post-loss requirements, and Alexandra’s alleged failure to comply could not be imputed to him, an innocent co-insured, and therefore no breach of contract had occurred as a matter of law.
Citizens’ prior motion for summary judgment relating to Alexandra’s policy duties was denied, and Haim’s motion for partial summary judgment as to coverage was granted. Haim then moved to compel appraisal, which was granted. After an appraisal award of $476,594.61 was returned, the trial court entered an order of final judgment, confirming the appraisal award (with some stipulated changes), and awarding prejudgment interest, costs and attorney’s fees. Citizens filed the appeal.
On appeal, the court had to determine whether the trial court was correct in entering summary judgment for Mr. Ifergane as to coverage and ultimately final judgment in his favor against Citizens. In his motion for partial summary judgment, Haim Ifergane argued he was entitled to summary judgment, as to coverage, for two reasons: (1) he was a resident insured under the policy; and (2) he was an innocent co-insured, so any failure on Alexandra’s part to comply with the policy’s post-loss obligations was irrelevant.
The appellate court noted there were contradictory statements in the case that created genuine issues of material fact as to whether Haim and Alexandra lived together on the date of the hurricane, and the trial court erred in granting summary judgment. At Haim’s first EUO on January 14, 2008, he testified he was living alone at the Venetian Drive property three months before Hurricane Wilma. He recanted this testimony in a subsequent affidavit, where he asserted he was not good with dates, was mistaken during his EUO, and that he lived with his wife at another property on the date of the hurricane.
As to the policy post-loss obligations, the appellate court noted that “[a]lthough Alexandra assigned her right to benefits under the policy, she did not assign to Haim her obligations under the policy.” The appellate court held Citizens was entitled to an EUO from Alexandra, its named insured, regardless of the Assignment. Alexandra’s refusal to submit to a requested EUO precludes recovery under the policy, because the EUO stands as a condition precedent to coverage.
The appellate court reversed the trial court’s ruling in favor of Haim Ifergane and reversed the final judgment in his favor and remanded the case. Making a long story short; it is imperative for policyholder advocates to be aware of this case where there is a division of assets after a divorce and potentially continuing obligations under the policy of insurance. This poses a problem where there is a divorce, a division of assets in what could be a bitter dispute between the parties, and naturally strong feelings against having any further involvement in the matter. It is unclear from the opinion whether Haim may still potentially recover insurance proceeds if he proves he was an innocent co-insured or resident spouse under the policy. This is because the holding states that Alexandra’s refusal to submit to the EUO “precludes recovery under the policy.” This legal battle will likely continue on the issues in the trial court. I am sure there will be further discussion on this case.