Archive for May, 2013

Duty To Defend Limited to Theories Pled In Complaint

Wednesday, May 29th, 2013

In most states, including Michigan, the duty to defend is not limited to the four corners of the complaint and the insurer must look behind the allegations asserted against the insured to determine whether there is a potential for coverage. See, e.g., American Bumper and Mfg. Co. v. Hartford Fire Ins. Co., 452 Mich. 440, 550 N.W.2d 475, 481 (Mich. 1996).  As a result of the application of this principle, it may be difficult to obtain summary judgment on the duty to defend.  A recent decision from the Eastern District of Michigan takes a more restrictive view, which may prove helpful to insurers.  Certified Restoration Drycleaning Network, LLC v. Federal Ins., 2013 WL 1629291 (April 16, 2013, E.D. Mich.).

The Certified Restoration case involved a franchisor/franchisee dispute and a general liability policy issued to the franchisor which excluded claims “based upon, or arising from, or in any consequence of” any breach of contract.  The underlying complaint included causes of action for breach of  the franchise agreement and breach of the duty of good faith and fair dealing, but also included two paragraphs alleging that the franchisor made misrepresentations.  After the insurer initially denied coverage, the franchisor and franchisee executed a settlement agreement specifically averring pre-contract misrepresentations.  The pre-contract misrepresentations were also discussed in a deposition.

Reasoning that the duty to defend depends only on the allegations of the complaint, and that the complaint alleged only breach of contract, the District Court ruled that the settlement agreement and deposition testimony were “immaterial” to the duty to defend.  Id. at *6.   The District Court also analyzed the alleged facts and concluded that there was “no doubt” that the basis of the alleged injuries arose from the alleged breach of the franchise agreement, and not the alleged misrepresentations.  Id.

There is No Coverage for Fighting in Alaska, Seriously

Monday, May 20th, 2013

Late last month, the Supreme Court of Alaska affirmed the lower court’s decision in favor of an insurance company that denied coverage to insured, Kent Bearden, for liability in a civil suit filed by the victim of his assault. His insurer argued that, as Mr. Bearden had previously pleaded no contest to the related criminal disorderly conduct charge, the elements of which established he was not acting in self-defense, no coverage was available under the policy.

In Bearden v. State Farm Fire & Cas. Co., No. S-14345, 2013 WL 1777442 (Sup. Ct. Alaska April 26, 2013), the issue presented was whether the insured was collaterally estopped from relitigating the essential elements of a disorderly conduct charge so as to bring a later-filed civil suit within the scope of his homeowner’s insurance policy. The assault occurred when Mr. Bearden punched a man, with whom he had a history of nonviolent confrontations, after the man told him that, “he would like to kick [Mr. Bearden’s] ass.” Mr. Bearden was charged with assault and use of reckless force. He ultimately pleaded no contest to Disorderly Conduct, which makes it unlawful to knowingly challenge another to a fight or to engage in fighting other than in self-defense.

After paying the court ordered fine and serving 5 days in jail, he was sued civilly by the victim of the assault. Mr. Bearden sought a defense and indemnification from his homeowners policy which provided coverage, in relevant part, for damages caused by an “occurrence,” defined as an accident that is not expected or intended and is not the result of willful and malicious acts. Not surprisingly, his insurer denied coverage on the basis that there was no “occurrence” alleged, and because Mr. Bearden’s no contest plea established as a matter of law that his conduct was expected, intended and he acted willfully and maliciously.

Although Mr. Bearden claimed in response to the civil suit that he was acting in self-defense, the court found that he was collaterally estopped from arguing self-defense, having already pleaded no contest to disorderly conduct. Mr. Bearden argued that the three-part test previously articulated by the Alaska Supreme Court for determining when a no-contest plea can be used to collaterally estop a civil defendant from relitigating an issue was not met. The required showing is that the offense to which the defendant pleaded no contest was “serious,” he was afforded a full and fair hearing, and the issue was previously decided.

In this regard, Mr. Bearden argued at length that the offense to which he pleaded no contest was not “serious,” because his jail time was minimal and only a fraction of what he could have been received. The court was not persuaded, finding that although he only served five days, offenses punishable by imprisonment are deemed serious. Mr. Bearden also argued that he was not given a fair hearing, because he was not explicitly advised that in pleading no contest he would lose insurance coverage. This argument was summarily rejected. Finally, Mr. Bearden argued that the issue of whether he acted in self-defense was not previously decided because he admitted nothing by entering a no-contest plea. However, the court agreed with the insurer’s reasoning that the issues of self-defense and the state of Mr. Bearden’s mind were decided as part of the no contest plea, as the definition of disorderly conduct offense, to which he pleaded no contest, includes a knowing element, as well as the element that the fight was not in self-defense.


First Circuit Permits Insurer to Retain Policy Premiums Despite Rescission

Wednesday, May 15th, 2013

Courts often require insurers to return premiums (or at least offer to return them) when rescinding an insurance policy.  Some states may even require it under statute.  The reason is that rescission is an equitable remedy intended to place the parties in the same position they were before the policy was issued, and the insurer obviously does not receive any premiums until the policy is issued.  On Monday, the U.S. Court of Appeals for the First Circuit rejected this general rule and determined that an insurer was entitled to retain premiums as special damages when it seeks to rescind an insurance policy based on rampant fraud.

In PHL Variable Insurance Co. v. P. Bowie 2008 Irrevocable Trust, No. 12-2243, 2013 WL 1943820 (1st Cir. May 13, 2013), an insurance broker (“Rainone”) and an attorney acting on behalf of a trust (“Baldi”) submitted an application on behalf of Peter Bowie seeking a $5 million life insurance policy naming the trust as the beneficiary.  The application stated that Bowie had an annual salary of $250,000, and a personal net worth of approximately $7.5 million.  Rainone and Baldi represented that the policy premiums would not be paid by any third-party, the policy was not being purchased as part of any program to transfer the policy to a third-party within the first five years, and neither Bowie nor the trust had any agreement for any other party to take legal or equitable title to the policy.  Bowie confirmed this information to a third-party inspector working for PHL, and PHL issued the policy. 

The representations made by Rainone, Baldi, and Bowie were false.  Bowie turned out to be a retired city worker, used car salesman, and blackjack dealer who did not have a personal net worth anywhere near the $7.5 million he, Rainone, and Baldi claimed.  Bowie also could not personally afford the policy’s premium.  The premium was actually being paid by a company (“Imperial”) “whose business model consists of lending money to pay for life insurance policy premiums and, when borrowers default on those loans, taking possession of the policies as collateral”; indeed, Imperial’s loan terms made its loans virtually impossible to pay back.  A subsequent amendment to the trust documents provided that the policy would be assigned to Imperial if its loan was defaulted on and, if PHL rescinded the policy, any premiums refunded to the trust would be delivered to Imperial.

PHL eventually discovered the scheme and filed an action against the trust in the U.S. District Court for the District of Rhode Island seeking to rescind the policy.  PHL also sought to obtain the premiums paid in order to offset the damages it suffered in connection with issuing the policy.  These included costs to underwrite and issue the policy, payment of commissions and fees in connection with issuing and servicing the policy, costs incurred to investigate the scheme, and costs to initiate its rescission action.  Alternatively, PHL advised that it was ready, willing, and able to refund the premiums if the court required it to do so, and tendered the premium into the court’s registry.

Resolving cross-motions for summary judgment filed by PHL and the trust, the court determined that the sole issue was whether PHL was required by law to return the premiums, or if the court’s equity powers enabled it to permit PHL to retain the premiums as special damages.  The court determined that it could permit PHL to retain the premiums, and the trust appealed.  The First Circuit affirmed. 

Initially, the court rejected the trust’s argument that Rhode Island case law required an insurer to return premiums when seeking to rescind an insurance policy.  The court instead determined that the case law “do[es] not stand for such a broad and inflexible proposition,” and focused on equity principles that Rhode Island law permits courts to consider in attempting to make whole a party defrauded into entering a contract.  Those principles include: (1) rescission seeks to create a situation the same as if no contract ever existed; (2) parties should gain no advantage from their own fraud; and (3) a court in equity can grant all relief necessary to make the aggrieved party whole so long as it is permitted by the pleadings.  Because it concluded that PHL was deceived into issuing the policy as the result of a conspiracy, the First Circuit determined that:

these equitable principles provide ample support for the district court’s decision to make PHL whole by allowing it to retain the premium.  PHL paid a commission to Rainone of $172,365 that it would not have paid but for the misrepresentations that led it to issue the Policy.  Mere rescission of the contract would not have compensated PHL for this expense.  While PHL apparently did not provide a precise accounting of the other costs in incurred with respect to the Policy, it was reasonable for the district court to conclude that the costs alleged in PHL’s complaint — including underwriting, administration, and servicing of the Policy, as well as investigation into the misrepresentations in the application — justified awarding PHL the remaining $19,635 from the premium, particularly in light of the Trust’s fraud.

Although insurers generally are permitted to rescind policies only when there is no other adequate remedy at law, PHL Variable acknowledges that even permitting an insurer to rescind may not make it whole.  Rescission by itself does not compensate the insurer for all of the costs necessary to issue a policy, and even qualifying those costs as “overhead” does not acknowledge the insurer’s lost opportunity costs.  Accordingly, unless a statute or case law absolutely requires an insurer to return premiums in order to rescind its policy, insurers should consider their right to retain premiums as special damages.

Court Adheres to Specific Definition of “Designated Premises”; Holds Policy Cancellation Does Not Preclude Rescission

Monday, May 13th, 2013

In Seneca Ins. Co. v. Cimran Co., — N.Y.S.2d –, 2013 WL 1405231 (App. Div. 1st Dep’t 2013), the New York appeals court granted the insurer’s motion for summary judgment, declaring that it had no duty to defend and indemnify the defendants in an underlying personal injury action because the commercial general liability (CGL) insurance policy it issued did not cover the portion of their property on which the accident occurred.  Additionally, the court held that the insurer’s cancellation of the underlying policy did not estop the insurer from later rescinding the policy.  The court’s ruling provides two key lessons for insurers: (1) specificity in defining the term “Designated Premises” in a CGL policy can avoid liability for unintended coverage, and (2) an insurer should cancel a policy when the available information warrants cancellation without fear that doing so will waive subsequent rescission as a remedy.

The insureds obtained a CGL policy to insure a one-story building, the “Designated Premises,” after submitting a renewal application indicating that no demolition or construction was contemplated at the premises.  While construction to add three additional stories on to the building was under way, a worker fell from the fourth story and sustained injuries.

After receiving notice of the claim, Seneca reserved its rights to disclaim coverage and/or rescind the policy, stating that further investigation of the claim was needed, including whether defendants had misrepresented that they had no intention of conducting demolition or construction at the premises on their insurance application.  Meanwhile, by notice of cancellation, Seneca cancelled defendants’ policy because “[t]he building is currently under construction.”

Seneca filed a declaratory judgment action, seeking a declaration that (1) it had no duty to defend in the underlying action because the accident occurred outside the “Designated Premises” and (2) the policy was void ab initio based on defendants’ material misrepresentations in their application that no demolition or construction at the premises was contemplated.  The insureds sought summary judgment that they were entitled to coverage because (1) the alleged accident occurred at the designated premises and (2) Seneca’s cancellation of the policy effectuated a waiver of the rescission claim or constituted grounds to estop it from seeking rescission of the policy.

The court ruled the “Designated Premises” covered by the policy was limited to the one-story building existing when the policy was issued.  On rescission, the court ruled Seneca was not estopped from rescinding the subject policy because, at the time of the cancellation, Seneca lacked a basis for claiming a right of rescission.  However, the court stopped short of granting rescission because Seneca had not established whether defendants were “contemplat[ing]” the construction work when they submitted their renewal application.

Missouri Court Rejects Attempt to Plead Conversion into Coverage through Negligence Counts

Friday, May 10th, 2013

In Allen v. Cont’l W. Ins. Co., 2013 WL 1803476 (Mo. Ct. App. April 30, 2013), the Missouri Court of Appeals found that a Commercial General Liability (“CGL”) insurer had no duty to defend its insureds, a title loan company and its agents, against allegations of conversion and negligence on account of their purported wrongful repossession of a vehicle.

Missouri law requires an insurer to defend its insured where the facts alleged against it evidence a claim that is potentially covered.  An insurer can disclaim that duty by proving there is no possibility of cover under its policy.  The Allen court ultimately determined that Continental Western Insurance Company (“Continental Western”) did not owe a defense to its insureds.

In analyzing whether Continental Western’s CGL policy provided cover for the conversion claims, the court was required to consider whether the tort of conversion constituted an “occurrence” giving rise to “property damage.”  The policy defined “occurrence” to mean an “accident,” which the Missouri courts have interpreted to mean: “an event that takes place without one’s foresight or expectation; an undesigned, sudden and unexpected event.”

The court found the intentional nature of the tort of conversion was at odds with the definition of “accident.”  Where an intentional and affirmative act was calculated to deprive the vehicle’s owner of use and possession, it could not be construed as an accident.  There was no “occurrence,” and no duty to defend the conversion allegations arose. Similarly, the court found that the negligence claims also were premised upon intentional conduct and, accordingly, the insurer was under no duty to defend them.

The court found that the insurer was also entitled to rely on the exclusion barring coverage for “property damage” that was expected or intended from the standpoint of the insured.  Because the intentional acts of the insureds resulted in injuries that were the natural and probable consequence of their act, both the injuries and the act were found to be intentional.  In so finding, the court distinguished between injuries that are caused by negligence and injuries that are caused by deliberate acts initiated by negligence.  The acts in question, being more akin to the latter category, were barred by the exclusion.

In New York, One Priest’s Multiple Acts of Sexual Abuse on a Minor Constitutes Multiple Occurrences

Wednesday, May 8th, 2013

Yesterday, New York State’s highest court, for the “first time,” ruled on the meaning of “occurrence” in the context of multiple incidents of sexual abuse of a minor by a priest that spanned several years and policy periods.  In Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Company, 2013 NY Slip Op 03264 (May 7, 2013), the New York Court of Appeals found that, in the context of sexual abuse of a minor by a priest, multiple acts of sexual abuse constitute multiple occurrences.

The underlying action alleged that a Diocese priest repeatedly molested a minor at different locations over a period of six years.  The Diocese settled the underlying action, and then sought settlement reimbursement from one of its general liability insurers, National Union.  National Union disclaimed coverage, prompting the Diocese to file a declaratory judgment action.

In the declaratory judgment action, National Union filed a summary judgment motion arguing that each incident of sexual abuse constituted a separate occurrence that was subject to a separate self-insured retention (SIR), and the settlement should be paid pro rata across each of the implicated policies.  The trial court denied the motion, and on appeal the Appellate Division reversed.  This appeal ensued.

As a “threshold matter,” the Court of Appeals determined that National Union did not waive the issues involving SIR exhaustion and allocation under NY Insurance Law § 3420(d) because they are not defenses used to disclaim coverage.  Because there was no statutory duty to disclose a liability limitation, National Union was not barred from arguing the application of the SIR and allocation.

The Court of Appeals then turned to the central issue in the case, stating that this was the “first time” it was addressing the meaning of “occurrence” in this context.   The court’s analysis began by reviewing the policy, noting that “occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  It found no policy language evincing an intent to aggregate separate incidents into a single occurrence.  Consequently, the court applied the “unfortunate event” test.  In doing so, the court concluded that the multiple incidents of sexual abuse were not part of a singular causal connection, and lacked the requisite temporal and spatial closeness to join them into a single occurrence.  The court also indicated that the “continuous or repeated exposure” language in the definition of occurrence was more likely designed to deal with environmental losses, rather than “priests and choirboys.”  The court held that the Diocese must exhaust a separate SIR for each occurrence.

The instant case provides guidance on when multiple incidents will be considered multiple occurrences under New York law.  Interestingly, in his dissent, Judge Graffeo posits that the multiple incidents constitute a single occurrence because they stem from the repeated or continuous exposure of the child to the same negligently hired and supervised priest.  Judge Graffeo further writes that the analysis adopted by the plurality “suggests that each act of sexual abuse involving the same victim constitutes a separate occurrence.”  Despite Judge Graffeo’s reading of the plurality opinion, it would seem possible that multiple incidents could be aggregated into a single occurrence under a different set of facts and with different policy language.  Time will tell.

New Jersey Passes Law Requiring Summary of Homeowners Policy

Tuesday, May 7th, 2013

On May 6, 2013, the New Jersey state legislature approved Assembly Bill A-3642, which now becomes Public Law 2013, c.53, requiring homeowners insurance policies delivered or renewed in New Jersey to contain a one-page summary of the policy which identifies any notable coverages or exclusions.

Under the prior law, when a homeowners insurance policy was issued or renewed, insurers were required to provide a consumer information brochure to the insured which included certain information about the National Flood Insurance Program as well as the insurer’s hurricane deductible program. The amended law, which was introduced in the wake of Super Storm Sandy, now expressly requires the brochure to be written in a manner that is simple, clear, understandable and easily readable. It also expands the contents of the brochure to include the one-page summary. The law, which goes into effect in 90 days, leaves it to the New Jersey Commissioner of Banking and Insurance to determine which coverages and exclusions are to be considered “notable”.

The law explicitly provides that the summary is not to be considered a replacement for the terms of the policy or as having the effect of altering coverage terms. Additionally, it provides that the summary will not confer new or additional rights beyond those expressly provided by the policy.  Indeed, it requires that the summary expressly state that it is only provided to the homeowner as a guide to understanding the terms of the policy. It is anticipated that this should thwart any attempts by policy holders to assert that the summary is evidence that coverage is broader or different from that provided for by the terms, conditions and exclusions of the policy.

New York Appellate Division Affirms Zoning Ordinance Banning Fracking

Monday, May 6th, 2013

The Sedgwick Insurance Law Blog has been following decisions related to hydraulic fracturing for potential impacts on insurance coverage issues.  Although not involving coverage, the New York Supreme Court, Appellate Division, recently upheld two zoning ordinances passed by Dryden and Middlefield, New York in 2011, prohibiting the exploration and production of natural gas and petroleum. These decisions are victories for local governments seeking to ban hydraulic fracturing (“fracking”) before the current statewide moratorium against fracking is lifted.

In Matter of Norse Energy Corp. USA, v. Town of Dryden, et al., – AD3d –, 2013 NY Slip Op 03145 (3rd Dep’t May 3, 2013) and Cooperstown Holstein Corp., v. Town of Middlefield, – AD3d –, 013 N.Y. Slip Op. 03148 (3rd Dep’t May 2, 2013)(decided based upon the analysis in Norse Energy), the Appellate Division, Third Department, affirmed two February 2012 Supreme Court decisions granting summary judgment in favor of two towns that passed zoning ordinances banning natural gas and petroleum production operations.  The ordinances in question were passed in 2011, and subsequently challenged by natural gas exploration companies alleging that the ordinances were preempted by New York’s Oil, Gas and Solution Mining Law (OGSML) which, among other things, regulates the production and storage of oil and natural gas. The trial courts disagreed with the production companies’ preemption arguments, and granted cross-motions for summary judgment in favor of the towns because the zoning ordinances in question only limit the use of land and do not attempt to regulate the manner in which oil and gas is extracted, as regulated in New York under the OGSML.

On appeal, the Third Department affirmed for the same fundamental reasons. First, the OGSML does not expressly preempt the local zoning regulations because the OGSML’s preemption clause is limited to the gas, oil and solution mining industries generally, but not the use of land which is under the police power of local municipalities. This is supported by the OGSML’s legislative history and the Court’s interpretation of the “plain meaning” of the preemption clause. Secondly, implied or conflict preemption does not apply here, because the OGSML’s provisions regulating the location of drilling and extraction processes to maximize efficiency and avoid wasting natural resources does not include land use and zoning restrictions. Thus, the local zoning ordinances were reasonable uses of the towns’ police powers.

We expect a further appeal of this issue, and will be monitoring these matters for further developments.

Please click here for other recent posts on fracking.

Costs and Attorney Fees Awarded In the Same Action in Idaho

Monday, May 6th, 2013

In Employers Mutual Casualty Co. v. Donnelly, No. — P.3d —-, 2013 WL 1693661 (Idaho Apr. 19, 2013), a majority of the Idaho Supreme Court affirmed a declaratory judgment action decision that an insurer was required to pay costs and attorneys’ fees taxed against the insured in the underlying action, while affirming that the awarded damages were excluded from coverage.  Additionally, the majority affirmed that the plaintiffs in the underlying action were not entitled to attorneys’ fees in the declaratory judgment action under the relevant statutes.

David and Kathy Donnelly hired Rimar Construction, Inc. (RCI) to repair and remodel their home.  The Donnellys filed suit against RCI alleging various causes of action, including breach of contract and breach of warranties, and damages.  RCI had a commercial general liability policy issued by Employers Mutual Casualty Company (EMC).

EMC filed a declaratory judgment action in the state district court to establish that it did not have a duty to pay any damages claimed or awarded to the Donnellys in the underlying action.  The declaratory judgment action was stayed pending the verdict in the underlying action; the Donnellys were ultimately awarded $128,611.55 in damages and $296,933.89 in costs and attorney fees against RCI.  Thereafter, the district court entered summary judgment in the declaratory judgment action, concluding that although the policy did not afford coverage for the Donnellys’ damages because they were contractual, the policy afforded coverage for the costs and attorneys’ fees.  The district court denied the Donnellys’ attorneys’ fees in the declaratory judgment action.  Both EMC and the Donnellys appealed.

The majority of the Idaho Supreme Court affirmed the district court’s decision with respect to the attorneys’ fees and court costs taxed against RCI.  The court reasoned that EMC’s duty to pay stemmed from its duty to defend as articulated in the supplementary payments section of the policy.  Because the Donnellys alleged damages that implicated the applicable provisions of the policy, EMC was obligated to pay all costs and attorneys’ fees awarded against RCI in the underlying action.

The majority also affirmed the district court’s decision regarding the damages.  It concluded that the damages awarded for breach of implied warranty of workmanship were contractual, and the policy expressly excluded contractual damages.  Thus, EMC did not have a duty under the policy to indemnify RCI for the damages awarded to the Donnellys.

The majority went on to find that the district court did not err in denying attorneys’ fees to the Donnellys under Idaho Code §§ 12-120(3) and 41-1839.

The concurring opinion only addressed the dissent’s arguments.  The dissent primarily found that the policy did not afford coverage for costs and attorneys’ fees in cases in which no covered damages were awarded against the insured, and referred to the reasonable expectations of the insured for payment.  However, the concurring opinion disagreed with the dissent’s interpretation based on the clear and unambiguous wording of the policy, and further noted that the insured’s reasonable expectations could not have altered the wording.

Florida Court Reconfirms that Insurance Policies May be Voided Based on an Insured’s Innocent Misrepresentations

Thursday, May 2nd, 2013

Earlier this week, the Florida District Court of Appeal once again concluded that, where an insurance policy does not impose a stricter standard for voiding insurance policies based on misrepresentations than section 627.409 of the Florida Statutes (“Section 627.409”), Section 627.409 permits an insurer to do so based on even innocent misrepresentations if the insurer demonstrates that it would not have issued the policy had it known the truth.

In Universal Property & Casualty Insurance Co. v. Johnson, No. 1D12-0891, 2013 WL 1809639 (Fla. Dist. Ct. App. 1st Dist. Apr. 30, 2013), a fire destroyed the Johnsons’ home.  Universal insured the home, and its policy contained a condition (the “Voidance Condition”) providing that the entire policy would be void if, before or after a “loss,” the insured:  (1) “intentionally concealed or misrepresented any material fact or circumstance”; (2) engaged in fraudulent conduct; or (3) “made false statements.” Universal investigated the claim and denied coverage based on a misrepresentation in the Johnsons’ policy application.  Specifically, the Johnsons answered “no” when asked if either of them had been convicted of a felony in the last 10 years, but Mrs. Johnson had actually been convicted of five felonies in July 1998.  It was later determined that this misrepresentation was innocent in that it was based on a misunderstanding as to the actual date when Mrs. Johnson had been convicted, and that Universal would not have issued the policy had it known the truth about Mrs. Johnson’s criminal history.

The Johnsons sued Universal for coverage and Universal counterclaimed, arguing that it was entitled to void the policy pursuant to Section 627.409.  The Johnsons claimed that Universal could not rely on Section 627.409 to void the policy because the Voidance Condition imposed a more stringent standard than Section 627.409 – i.e., it required that the misstatements be intentional in order to void the policy.  The trial court agreed, and Universal appealed.

The appellate court reversed.  Although it acknowledged that parties to insurance policies are free to contract out of the requirements of state or federal law (provided they don’t violate public policy in the process), the appellate court concluded that the Universal policy did not impose a stricter standard for voiding its policy than Section 627.409.  The court first noted that the Johnsons’ interpretation of the Voidance Condition’s third prong rendered it superfluous of the condition’s other two prongs, in violation of Florida law.  The court also rejected the Johnsons’ argument that the third prong required intent based on the Voidance Condition’s title, “Concealment or Fraud,” even though concealment and fraud require intent.  Specifically, the court reiterated its prior holding that, “headings or subheadings of a document do not dictate the meaning of the entire agreement, especially where the literal language of the heading is contrary to the agreement’s overall scheme.”

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