In Vargas v. Safepoint Ins. Co., 333 So. 3d 752 (Fla. 3d DCA 2022), the Third District considered the issue of the interpretation of an insurance policy’s “concealment or fraud” provision providing for forfeiture of coverage when an insured makes “false statements relating to this insurance.”

In Vargas, the insured’s statement at issue arose post-loss: she denied making prior similar claims when, in fact, she had made and been reimbursed for a similar claim from another insurance company. The insured maintained that her misstatement was innocent, because she had forgotten the prior claim. The question, according to the Third District, was whether the term “false statement” in this post-loss context means (1) “incorrect statement” or (2) “intentionally incorrect statement.” The court concluded the term “false statement” in this post-loss context includes an element of intent to mislead, regarding which there was a genuine issue of fact that had to be decided by a jury.

Describing the facts, the Third District wrote:

Vargas and Safepoint entered into a property insurance contract. Pertinent to this appeal, the contract included the following provision:

3. Concealment or Fraud.

With respect to all persons insured under this policy, we provide no coverage for loss if, whether before or after a loss, one or more persons insured under this policy have:

a. Intentionally concealed or misrepresented any material fact or circumstance;

b. Engaged in fraudulent conduct; or

c. Made material false statements relating to this insurance.

Vargas reported a loss to Safepoint resulting from water damage due to a plumbing leak. Safepoint’s corporate representative testified that Safepoint immediately requested repair invoices from any prior claims and photographs of the pre-loss condition of the property. Vargas never provided this information. Instead, Vargas submitted a sworn proof of loss with an itemized estimate of her damages prepared by a claim consultant.

After conducting its own investigation, Safepoint denied coverage and Vargas initiated this suit. Safepoint served Vargas with its first set of interrogatories asking Vargas to disclose any previous claim made on the property. Vargas responded by recalling a roof claim made ten years prior. Vargas did not disclose any prior claims involving water damage. In her deposition, Vargas stated that she had not made any prior insurance claims involving a plumbing leak on the property.

After receiving these answers, Safepoint added an affirmative defense based on the “Concealment or Fraud” provision of the insurance policy. To support this affirmative defense, Safepoint deposed Christina Crossway, the corporate representative of Citizens Property Insurance Company. Crossway testified that Vargas made a prior claim on the property in 2013 for “a broken water pipe under the kitchen sink” resulting in “water damage to the kitchen cabinets.” The damaged areas listed under this prior claim included many of the same areas in the claim Vargas had submitted to Safepoint.

Safepoint moved for summary judgment based on the “Concealment or Fraud” affirmative defense. The motion asserted that Vargas had violated the concealment or fraud provision in the contract by failing to disclose the previous water leak in her deposition and interrogatory answers and by including damages from the previous claim in her sworn proof of loss. While there were other grounds asserted in the motion, the summary judgment hearing centered entirely on Safepoint’s “Concealment or Fraud” defense. Vargas argued that while Safepoint had submitted evidence of a prior claim, it had submitted no evidence to counter Vargas’s statement under oath that she did not recall the prior claim when giving her interrogatory answers and deposition testimony. The trial court granted Safepoint’s motion for summary judgment. The insured appealed.

Turning to its discussion of the law, the Third District observed:

Insurance contracts are construed according to their plain meaning and, if a policy provision is clear and unambiguous, it should be enforced according to its terms.” Universal Prop. & Cas. Ins. Co. v. Johnson, 114 So. 3d 1031, 1035 (Fla. 1st 755*755DCA 2013) (citing Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528 (Fla. 2005)).

Subsection (c) of the “Concealment or Fraud” provision at issue stated that Safepoint would not provide coverage for loss where an insured “[m]ade material false statements relating to this insurance.” Because the policy did not define “false statements,” the court reasoned, the court had to look to the ordinary, dictionary meaning of the term. Doing that brought the court to the first problem in this dispute: the term “false,” wrote the court, has two distinct meanings. It has been defined as either “[c]ontrary to fact or truth” or as “deliberately untrue.” American Heritage Dictionary (2d ed. 1985); see also Merriam-Webster’s Ninth New Collegiate Dictionary 447 (9th ed. 1987) (defining “false” as “intentionally untrue,” “tending to mislead,” “adjusted or made so as to deceive,” or “not true”).

This problem, however, was not as serious as it first appeared, according to the court. While “false” includes both meanings, the more common usage of the word, certainly in the legal context, carries the connotation of an intentionally deceptive statement. The Court noted:

“Only when the context strongly suggests mere error is the connotation of being deceived absent … false has an overlay of perfidy that is absent from wrong: false advice is both incorrect and two-faced, while wrong advice is simply incorrect.” Bryan A. Garner, Garner’s Dictionary of Legal Usage 352 (3d ed. 2011).

The court noted that in Anchor Property & Casualty Insurance Company v. Trif, 322 So. 3d 663 (Fla. 4th DCA 2021), the Fourth District had recently interpreted the use of “false statements” in a similar concealment or fraud provision of an insurance policy. Judge Robert M. Gross, writing for the majority, found that “in jurisprudence, `the word “false” implies something more than mere untruth: it imports knowledge and a specific intent to deceive.’” Id. at 675 (quoting State v. Tedesco, 175 Conn. 279, 397 A.2d 1352, 1358 (1978)). The Third District agreed with the Fourth District and held that the term “false statement” includes an element of intent. Id.

The court explained its rationale:

This interpretation not only comports with the plain, dictionary meaning, it is also compelled by the rule of construction that “[p]olicy provisions that tend to limit or avoid liability are interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy….’” Am. Integrity Ins. Co. v. Estrada, 276 So. 3d 905, 914 (Fla. 3d DCA 2019) (quoting Bethel v. Sec. Nat’l Ins. Co., 949 So. 2d 219, 223 (Fla. 3d DCA 2006)).

This result is bolstered by the fact that “words are given meaning by their context.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 56 (2012). Here, the term “false statement” arises in the context of forfeiture of coverage. As the Supreme Court stated decades ago, “a forfeiture of rights under an insurance policy is not favored by the law, especially where, as here, a forfeiture is sought after the happening of the event giving rise to the insurer’s liability.” Johnson v. Life Ins. Co. of Ga., 52 So. 2d 813, 815 (Fla. 1951). In the forfeiture context, as Judge Gross pointed out in Trif, the Supreme Court has long interpreted similar language (such as “false swearing”) in a concealment or fraud provision to require not simply incorrectness or untruth but also “the element of fraud.” 322 So. 3d at 674 (citing U.S. Fire Ins. Co. v. Dickerson, 82 Fla. 442, 90 So. 613, 618 (1921)). Other cases have taken a similar approach. See id. at 671-73 (collecting cases).

It is important to remember that there is a difference in the law depending on whether the misrepresentation was made in the application for insurance or post-loss. The Third District noted that, as stated by the First District, “[t]his case law relating to insurance policies is consistent with the general principle in contract law that, to obtain rescission of a contract, based upon misrepresentation, it is not necessary that `the party making the misrepresentation should have known that it was false. Innocent misrepresentation is sufficient….’” Johnson, 114 So. 3d at 1035 (quoting 27 Williston on Contracts § 69:49 (4th ed.)). The court stated that it was not abandoning this long-standing precedent regarding contract rescission based upon incorrect information provided in an insurance application. It simply did not apply, concluded the court, where the incorrect statement was made post-loss.