Defining Occurrence – When Policy Definitions Do Not Apply To All Coverages
September 24, 2020
Recently, Florida’s First District Court of Appeal held that for purposes of determining the timeliness of a proposal for settlement, the complaint is considered served on the insurer when process is served upon the statutory agent, Florida’s Chief Financial Officer, and not when process is forwarded by the Chief Financial Officer to the insurer. Markovits v. State Farm Mutual Automobile Ins. Co., 235 So. 3d 1018 (Fla. 1st DCA 2018) reh’g denied (Feb. 5, 2018).
In Markovits, the insured brought an action against the insurer to recover uninsured motorist benefits. The insured served a proposal for settlement upon the insurer, which was deemed rejected by the insurer when the insurer failed to timely accept. Id. After trial, the insured obtained a final judgment in her favor that exceeded twenty-five percent of the proposal for settlement. Accordingly, the insured moved for attorneys’ fees based upon the rejected proposal for settlement amount. Id. Under Florida Rule of Civil Procedure 1.442 and the technical requisites of a proposal for settlement, a proposal to a defendant shall be served no earlier than 90 days after service of process on that defendant. The insured asserted that the proposal was served 91 days after the service of process of the lawsuit was perfected upon the insurer, based upon the date of service upon Florida’s CFO. The insurer asserted the proposal was prematurely served 88 days after service of process of the lawsuit was perfected, based upon the date Florida’s CFO forwarded the complaint to the insurer.
The First District in Markovits held that service of process upon Florida’s Chief Financial Officer constituted actual service of process and, thus, the 90-day period of time started when process was served upon the insurer’s statutory agent, Florida’s CFO. The First District’s rationale in Markovits relied primarily upon two things: the binding authority of Centex-Rodgers Construction Co. v. Hensel Phelps Construction Co., 591 So. 2d 1117 (Fla. 1st DCA 1992)and the court’s reading of section 48.151, Florida Statutes. In Centex-Rodgers, the First District entertained the sole issue of whether service of process upon the Insurance Commissioner (which, at the time, was the appropriate office for serving a foreign corporation) constituted valid and binding service upon the insurer for jurisdictional purposes. The Markovits court specifically held that the language in Centex-Rodgers regarding sufficiency of service upon a statutory agent was not dicta and was binding upon the court. Markovits, 1020. In reading section 48.151, the Markovits court emphasized the following language in the statute: “[w]hen any law designates a public officer . . . as agent for service of process . . . service is valid service for all purposes on the person for whom the public office . . . is statutory agent for service of process.” Id. (emphasis in original).
While the Markovits decision only addressed the timeliness of a proposal for settlement, the question arises as to whether it lends itself to the timeliness of other important deadlines in the course of a lawsuit, such as removing the proceedings to federal court or answering the complaint.
With regard to removal, the majority of courts do not measure timeliness using the date of service upon Florida’s Chief Financial Officer as the initial line in the sand. The United States District Court for the Middle District of Florida has held that the time to remove a lawsuit to federal court (30 days) does not start to run until the defendant actually has received a copy of the complaint. See Meadows Springlake Condominium Association, Inc., v. Allstate Insurance Company, No. 8:06-cv-1282-T-17MAP, 2006 WL 2864313 (M.D. Fla. Oct. 6, 2016). The Court’s rationale in Meadows says statutory agents like Florida’s Chief Financial Officer “are not true agents but are merely a medium for transmitting the relevant papers.” Id. The Middle District cites to several similar holdings with identical rationale from various federal district courts including courts in Florida, New York, Michigan, and Louisiana. These cases also agree that the primary purpose of measuring timeliness for removal from the date a defendant is served is to ensure uniform time periods for a response to pleadings, because the Federal Rules of Civil Procedure are uniform, while the various state laws governing statutory agents can differ.
A minority of courts have found that the period for removal begins to run on the day the statutory agent transmits the complaint to the Defendant. However, none have adopted the view that service upon the statutory agent begins the removal period. See Morse, LLC v. United Wis. Life Ins. Co., 356 F. Supp. 2d 1296, 1298 (S.D. Fla. 2005), and Masters v. Nationwide Mut. Fire Ins. Co., 858 F. Supp. 1184, 1186 (M.D. Fla. 1994). Under the circumstances, it is unlikely that the First District’s holding in Markovits would be used as a basis for a finding that the language of section 48.151 dictates the timeliness of removal to federal court.
Markovits does not appear likely to disturb the determination of timeliness of responding to a complaint. That determination is governed by section 624.423, Florida statutes, which provides that a timely response to a complaint is made “within 20 days after the date upon which the Chief Financial Officer sends or makes available by other verifiable means a copy of the process served upon her or him.” Florida’s courts have applied this statute narrowly. The Second District, for example, has historically held that service of process upon the insurer is only valid and binding once it has been transmitted to the insurer by the CFO. See Home Life Ins. Co. v. Regueira, 243 So. 2d 460 (Fla. 2d DCA 1970). The argument could be made that the First District’s holding in Markovits strengthens the Court’s position that service upon a statutory agent is valid for “all purposes” inclusive of the purpose of determining the timeliness of a response to a complaint. But this argument does not appear likely to prevail, as all roads would lead back to the language of section 624.423 and the statute’s plain meaning. Moreover, the First District in Markovits specifically contrasts this case with Regueira, finding that proper notice and the opportunity to defend are not at issue in Markovits as they were at issue in Regueira. Markovits, at 1020. This language makes clear the First District’s intention to narrow the applicability of Markovits, or even to state its inapplicability in situations where determining the timeliness of a response to the complaint is at issue.
The majority of federal courts have held that the rationale for the 30 day period for removal dictates a uniform approach not served by the application of various state statutes. With respect to the timeliness of a responsive pleading to a complaint, Florida courts apply section 624.423, Florida statutes and not section 48.151. As a consequence, the decision in Markovits appears limited to the application of Florida Rule of Civil Procedure 1.442.