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Judge Overrules Insurer’s Summary Judgment Motion; Finds Genuine Issue of Fact What Does the Concept of ‘misrepresentation’ Mean in The Context of A Residential Insurance Policy?

Pekar Law, P.A. June 22, 2015

When it comes to civil litigation, most defendants facing possible major exposure to liability will make a preliminary attempt to have the case dismissed early on, citing the procedural hurdle that requires a “genuine issue of material fact.” More simply, if all the major facts in a lawsuit are undisputed, a judge is required to dismiss the case on a motion known as “summary judgment.” These motions are decided in a light most favorable to the plaintiff, and require a showing that there is essentially nothing to fight over – even if the case makes it to a jury. By contrast, if the court can isolate even one material fact in dispute between the parties, the summary judgment motion must be overruled and the case must proceed to the discovery phase.

In a recent property insurance lawsuit known as Mora v. Tower Hill Prime Insurance Company,
Mora v. Tower Hill Prime Ins. Co., 2015 WL 292007, the defendants attempted to request a summary judgment after discovering that the plaintiffs may have known about a “cracking issue” prior to applying for coverage. While the court did not condone the plaintiffs’ failure to fully disclose known material defects with the property, it nonetheless gave the green light for the lawsuit to proceed to the fact-finding stage and overruled the company’s motion in its entirety.

Facts Leading up To Mora v. Tower Hill Prime Insurance Company

In 2005, the plaintiffs purchased a residential insurance policy from Tower Hill to cover their recently-purchased model home. Approximately five years later, the plaintiffs presented a sinkhole claim to Tower Hill to cover costs associated with various cracks appearing around the property. Following a routine investigation by the insurer, the claim was verified and approved. However, conflict arose when the plaintiffs disagreed with the extent of coverage offered by the company, and a breach of contract lawsuit was filed in 2011.

During this litigation, Tower Hill came across allegedly contradictory documents possibly indicating a material misrepresentation by the insureds – an act of misconduct expressly forbidden by the policy. First, the company unearthed the original application for coverage submitted in 2005, wherein the plaintiffs indicated that they had no knowledge or awareness of any defects or problems with the property. Then, the company discovered an inspection report – signed by one of the plaintiffs in 2005 – detailing the presence of cracks in the pool area and interior ceilings. In other words, Tower Hill asserts that the plaintiffs undoubtedly knew of the damage and failed to disclose this information on the original application.

From there, the company moved for summary judgment, citing the term in the insurance policy essentially nullifying the agreement in the event of a material misrepresentation. According to Tower Hill, there was no factual dispute remaining as the policy is no longer in force and the plaintiff’s claims must fail.

However, the court distinguished between fraudulent misrepresentation (requiring intentional conduct) and mere negligent misrepresentation – the latter of which is likely the sort of factual omission committed by the plaintiffs. In other words, the ambiguous wording on the policy application may not have prompted the average person to disclose every crack and flaw in the property, and the plaintiffs should not necessary be precluded from coverage. In sum, it is for the jury to decide.

If you are having difficulty with your insurance policy or are considering filing a breach of contract claim following a recent denial of coverage, we encourage you to contact the Tampa, Florida property insurance attorneys at Pekar Law today for assistance by calling us.