Full Opinion

IN THE SECOND DISTRICT COURT OF APPEAL, LAKELAND, FLORIDA June 19, 2020 OWNERS INSURANCE COMPANY, ) ) Appellant, ) ) v. ) Case No. 2D18-2309 ) ALLSTATE FIRE AND CASUALTY ) INSURANCE COMPANY and ) JAMES M. HORNE, JR., ) ) Appellees. ) ) BY ORDER OF THE COURT: Allstate's Motion for Rehearing, Clarification and Certification of Question and for Rehearing En Banc is granted in part, and the prior opinion dated October 25, 2019, is withdrawn and the attached opinion is issued in its place. The motion for rehearing is granted; the additional relief requested by Allstate is denied as moot. I HEREBY CERTIFY THE FOREGOING IS A TRUE COPY OF THE ORIGINAL COURT ORDER. MARY ELIZABETH KUENZEL, CLERK NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT OWNERS INSURANCE COMPANY, ) ) Appellant, ) ) v. ) Case No. 2D18-2309 ) ALLSTATE FIRE AND CASUALTY ) INSURANCE COMPANY and ) JAMES M. HORNE, JR., ) ) Appellees. ) ) Opinion filed June 19, 2020. Appeal from the Circuit Court for Manatee County; Gilbert Smith, Jr., Judge. Patricia D. Crauwels, Josh R. Dell, and Arthur S. Hardy of Matthews Eastmoore, Sarasota, for Appellant. DeeAnn J. McLemore and Charles W. Hall of Banker Lopez Gassler P.A., Saint Petersburg, and Jaime Delgado of Kallins, Little & Delgado, P.A., Palmetto, for Appellee Allstate Fire and Casualty Insurance Company. No appearance for Appellee James M. Horne, Jr. ATKINSON, Judge. Owners Insurance Company (Owners) appeals the entry of a final summary judgment in favor of Allstate Fire and Casualty Insurance Company (Allstate) in an action filed by Allstate against Owners and Allstate's insured, James M. Horne, Jr. (Horne). Horne resided with his mother and stepfather, who had an automobile insurance policy with Owners. The Owners policy provided uninsured motorist (UM) coverage but only afforded it to relatives who did not own an automobile. Horne got into an accident while driving his own automobile. Allstate sought a declaration that Horne was covered under the Owners policy for injuries he suffered in the accident. Because the Owners policy provided basic liability coverage to resident relatives, the trial court correctly concluded that Owners was required to provide UM coverage to Horne. In its initial brief, Owners argued that "the basic liability coverage under the Owners policy extends only 'to relatives who do not own an automobile.' " However, upon a closer examination of the policy adjured by Allstate in its rehearing motion, these relatives are only excluded from the extended liability coverage of unlisted automobiles that is provided in Section IV of the policy, entitled "Individual Named Insured." Section II of the policy, entitled "Liability Coverage," provides the following: We will pay damages for bodily injury and property damage for which you become legally responsible because of or arising out of the ownership, maintenance or use of your automobile (that is not a trailer) as an automobile. We will pay such damages . . . on behalf of any relative using your automobile (that is not a trailer). This provision affords Horne, who is a relative as that term is defined in the policy, basic liability coverage when driving one of the listed automobiles. Neither Owners nor Allstate cited to the Section II Liability Coverage provision in their briefs. Owners argued that, pursuant to the exclusion in Section IV, "Horne is not afforded basic liability coverage under the clear terms of the Owners policy since he was a relative who owned an automobile at the time of the accident." -2- Without gainsaying Owners' assertion that the policy did not provide Horne with basic liability coverage, Allstate countered that Horne was nonetheless entitled to statutorily mandated UM coverage because he was a Class I insured by virtue of his being "a resident relative of the named insureds." In its motion for rehearing, Allstate correctly argues that Horne was entitled to UM coverage because "he is insured for basic liability coverage" under the overlooked Section II Liability Coverage provision. Owners asserts that this argument is waived because Allstate failed to raise the issue prior to rehearing. However, "if a trial court reaches the right result," as it did here, that decision "will be upheld if there is any basis which would support the judgment in the record." See Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 644 (Fla. 1999); Jaworski v. State, 804 So. 2d 415, 419 (Fla. 4th DCA 2001) ("As an appellate court, . . . we are obligated to entertain any basis to affirm the judgment under review, even one the appellee has failed to argue."). Under Florida law, if a motor vehicle liability insurance policy provides bodily injury liability coverage, then it must also provide UM coverage to those insured under the policy. See § 627.727(1), Fla. Stat. (2013). "[W]here an insured is injured while occupying an owned vehicle that is not listed on the policy, the insured is 'entitled to uninsured motorist coverage even if he would not have been entitled to liability coverage had the accident in question been his fault.' " GEICO Indem. Co. v. Perez, 260 So. 3d 342, 349 (Fla. 3d DCA 2018) (quoting Omar v. Allstate Ins. Co., 632 So. 2d 214, 215 (Fla. 5th DCA 1994)); see also Gov't Emps. Ins. Co. v. Douglas, 654 So. 2d 118, 120 (Fla. 1995) ("Uninsured motorist protection does not inure to a particular motor -3- vehicle, but instead protects the named insured or insured members of his family against bodily injury inflicted by the negligence of any uninsured motorist under whatever conditions, locations, or circumstances any of such insureds happen to be in at the time." (quoting Coleman v. Fla. Ins. Guar. Ass'n, 517 So. 2d 686, 689 (Fla. 1988))). Thus, the Section IV exclusion from extended coverage of relatives who own their own vehicle does not justify exclusion of those individuals from the UM coverage to which they are statutorily entitled by virtue of being "insured" under Section II. See § 627.727(1) (requiring motor vehicle liability insurance policies that provide bodily injury liability coverage to provide "uninsured motor vehicle coverage . . . for the protection of persons insured thereunder"). A policy may include specified provisions that exclude certain insureds from UM coverage if the named insured knowingly accepts such a limitation and the insurer offers a reduced premium. See § 627.727(9); Douglas, 654 So. 2d at 120 ("[T]o limit coverage validly, the insurer must satisfy the statutorily-mandated requirement of notice to the insured and obtain a knowing acceptance of the limited coverage . . . [and must] file revised, decreased premium rates for such policies."). However, Owners neither obtained the informed acceptance nor provided the reduced rates required of insurers that include the statutory exceptions to the UM-coverage mandate in their policies. See § 627.727(9). Since the Owners policy provides basic liability coverage to Horne, Florida law mandates the provision of UM coverage to him as well. As such, the trial court correctly granted summary judgment in favor of Allstate. Affirmed. -4- ROTHSTEIN-YOUAKIM, J., Concurs. VILLANTI, J., Concurs in result only with opinion. VILLANTI, Judge, Concurring in result only. I concur in the decision to grant rehearing in this case, and I concur in the overall result reached by the majority, which affirms the final summary judgment in favor of Allstate, because I believe this result is compelled by the supreme court's decisions in Government Employees Insurance Co. v. Douglas, 654 So. 2d 118 (Fla. 1995), and Mullis v. State Farm Mutual Automobile Insurance Co., 252 So. 2d 229 (Fla. 1971). However, if I was writing on a clean slate, I would hold that the Owners policy does not provide UM coverage to Horne for the reasons outlined in Justice Overton's dissenting opinion in Douglas. The undisputed facts in this case establish that James Horne, Jr., owned a 2013 Kia Optima. He was the named insured on a policy issued by Allstate that covered the Kia and which included UM coverage in the amount of $100,000 per person and $300,000 per accident. In August 2013, Horne was living with his mother and stepfather, Robin and James Hanusa. The Hanusas owned four vehicles, which they insured under a policy issued to them by Owners. The Owners policy included UM coverage on each of the four vehicles in the amount of $500,000 per person and per accident. Horne's -5- vehicle is not covered by the Owners policy, nor is Horne listed as a driver of any of the vehicles insured under the Owners policy. The Hanusas' UM coverage from Owners was "stacked," as that term has come to be used in connection with the statutory UM coverage required by section 627.727, Florida Statutes (2013). Because the Hanusas elected "stacked" UM coverage, they were entitled to add the UM limits on each of their insured vehicles together, providing them with a total of $2,000,000 in UM coverage should a covered accident occur. On August 27, 2013, Horne was injured in an automobile accident while driving his Kia. Horne subsequently made a claim for UM benefits with Allstate. Seeing an opportunity to reduce its potential UM exposure, Allstate took the position that Horne was also covered for UM benefits under the Hanusas' Owners policy. If it were successful in this argument, Allstate would be responsible for only that portion of Horne's damages that his UM limits bore to the total UM limits available, or 1/21st of the total damages. Owners disagreed with Allstate's coverage position, pointing to several exclusions in its policy language. Allstate subsequently filed a declaratory judgment action, seeking a ruling from the court concerning Horne's entitlement to UM coverage under the Owners policy. The parties filed cross-motions for summary judgment, and the trial court entered final summary judgment in favor of Allstate, thereby ruling that the Owners policy provided UM coverage to Horne for the accident. Owners then brought this appeal. When this court is called upon to resolve a question concerning the extent of UM coverage, we must consider three legal issues: (1) does the policy language, by -6- its own terms, provide coverage to the claimant;1 if not, (2) does section 627.727(1), as interpreted by the supreme court in Douglas and Mullis, permit the insurer to exclude UM coverage for the claimant; and if not, (3) has the insured validly elected "non- stacked" UM coverage that would permit the insurer to enforce the exclusions to UM coverage itemized in section 627.727(9) against the claimant. See generally State Farm Mut. Auto. Ins. Co. v. Smith, 198 So. 3d 852, 854 (Fla. 2d DCA 2016). Here, as I will discuss below, the language of the Owners policy plainly excludes UM coverage for Horne under the relevant circumstances. Nevertheless, under the express language of Douglas and Mullis, the supreme court has held that such exclusions are unenforceable when the policy provides "stacked" UM coverage. And while I recognize that the decisions in Douglas and Mullis are controlling,2 I do not believe that those decisions are supported by either the text of section 627.727 or public policy. I will address each of these issues in turn. 1. Policy Language The majority holds that because Horne is "an insured" under the Owners policy, he must be covered by the UM coverage on that policy. However, what is 1I use the word "claimant" rather than "plaintiff" because there are times, as in this case, when the person seeking UM coverage is not the injured party. Here, the "plaintiff" is Allstate, while the "claimant" is Horne. 2The Mullis decision applied an earlier version of section 627.727—section 627.0851—and that section has since been amended and recodified as section 627.727. Technically, therefore, the Mullis decision has been superseded by statute. See Douglas, 654 So. 2d at 120 (discussing the 1987 amendment to the UM statute and stating its belief that the amendment was in response to Mullis and changed the state of the law). However, the rationale of the Mullis decision was followed and reaffirmed by the supreme court in Douglas. Therefore, my disagreement with Douglas is also a disagreement with Mullis. -7- immediately clear from a reading of the Owners policy is that Horne is not "an insured" in this instance under either the liability or UM portions of the policy. Section I of the Owners policy contains the following definitions applicable to this analysis: 9. Relative means a person who resides with you and who is related to you by blood, marriage or adoption. Relative includes a ward or foster child who resides with you. .... 12. You or your means the first named insured shown in the Declarations and if an individual, your spouse who resides in the same household. Hence, as used throughout the policy, "you" or "your" refer solely to James and Robin Hanusa. Because Horne was Robin Hanusa's son and because he was residing with the Hanusas at the time of the accident, he qualifies as a "relative," or, as is commonly used in insurance parlance, a resident relative. Section II of the Owners policy specifies the extent of the liability coverage extended by the policy. It provides, in pertinent part: We will pay damages for bodily injury and property damage for which you become legally responsible because of or arising out of the ownership, maintenance or use of your automobile (that is not a trailer) as an automobile. We will pay such damages: (1) on your behalf; (2) on behalf of any relative using your automobile (that is not a trailer); (3) on behalf of any person using your automobile (that is not a trailer) with your permission or that of a relative; and (4) on behalf of any person or organization legally responsible for the use of your automobile (that is not a trailer) when used by you, a relative, or with your permission or that of a relative. -8- (Underline emphasis added.) Under this policy language, it is clear that Horne, as a resident relative, is covered for liability only if and when he is using one of the automobiles owned by James or Robin Hanusa and insured under the Owners policy. This portion of the policy does not provide liability coverage to Horne when he is driving a vehicle not owned by the Hanusas, such as his own 2013 Kia, because at that point he is not using "your," i.e., the Hanusas', automobile. Section IV of the Owners policy extends liability coverage to some additional circumstances when the named insured is an individual, as was the case here with the Hanusas. In that instance, liability coverage is extended as follows: a. The Liability Coverage provided for your automobile (that is not a trailer) also applies to an automobile (that is not a trailer) not: (1) owned by or furnished or available for regular use to you or anyone living with you. However, we will cover your liability for your use of an automobile (that is not a trailer) owned by or furnished for the regular use of a relative. .... b. We extend this coverage only: (1) to you; (2) to relatives who do not own an automobile (that is not a trailer); and (3) to anyone legally responsible for the use of the automobile (that is not a trailer) by the persons in (1) and (2) above. c. We do not cover: (1) the owner of the automobile (that is not a trailer). (Underline emphasis added.) Under this coverage extension, the Owners policy provides the Hanusas with liability coverage when they are driving a non-owned -9- automobile. This coverage extension also applies to resident relatives who do not own an automobile. Here, because Horne owns an automobile, i.e., his 2013 Kia Optima, this coverage extension does not apply to him. Moreover, even when one of the Hanusas or their resident relatives are driving a non-owned automobile, the policy will not cover the owner of the automobile. Thus, were Robin Hanusa to be in an accident while driving Horne's Kia, the liability coverage under the Owners policy would cover her liability, but it would not cover Horne's liability as the owner of the Kia. When considered objectively, this exclusion makes sense. If the Hanusas are driving an automobile they do not own, their liability coverage will protect them. If one of their resident relatives who does not own an automobile is driving an automobile not owned by the Hanusas, this liability coverage will protect them. However, if a resident relative owns an automobile, that automobile should be insured by that resident relative under a policy that includes liability coverage specifically to protect that resident relative. To allow the resident relative to own an automobile, fail to insure it, and then piggy-back on the liability coverage of the relative they live with allows that resident relative "to cheat on this State's clearly established policy of financial responsibility for motor vehicle owners." Douglas, 654 So. 2d at 121 (Overton, J., dissenting). Turning then to the UM coverage, I note that the Owners policy provides UM coverage in two broad types of instances: a. We will pay compensatory damages, including but not limited to loss of consortium, any person is legally entitled to recover from the owner or operator of an uninsured automobile because of bodily injury sustained by an injured person while occupying an automobile that is covered by SECTION II – LIABILITY COVERAGE of the policy. - 10 - b. If the first named insured in the Declarations is an individual, this coverage is extended as follows: (1) We will pay compensatory damages, including but not limited to loss of consortium, you are legally entitled to recover from the owner or operator of any uninsured automobile because of bodily injury you sustain: (a) when you are not occupying an automobile; or (b) when occupying an automobile which is not insured by SECTION II – LIABILITY COVERAGE of the policy. (2) The coverage extended in 2.b.(1) above is also afforded to a relative who does not own an automobile. (Underline emphasis added.) Under this policy language, the Hanusas and their resident relatives who do not own an automobile have UM coverage when they are occupying one of the automobiles covered by the policy, when they are occupying a non-owned automobile, or when they are not occupying any automobile at all, such as, for example, when they are pedestrians or passengers on a bus or in a shared-ride van. However, as with liability coverage, UM coverage does not extend to a resident relative who owns an automobile because, as with liability coverage, that resident relative should have an automobile insurance policy on his or her own automobile that should provide UM coverage to that resident relative as the owner of the automobile. In short, under the plain language of the Owners policy, Horne is not entitled to UM coverage for the injuries he sustained in this accident. My analysis on this point is neither novel nor unprecedented. In fact, this court addressed the identical factual scenario just two years ago and concluded that the plain language of the applicable automobile policy specifically excluded coverage for an adult child who was a resident relative but who owned and insured his or her own vehicle. In State Farm Automobile Insurance Co. v. Lyde, 267 So. 3d 453, 455 (Fla. 2d DCA 2018), a mother - 11 - and daughter lived together in the same house. The mother owned a Kia Sorrento and the daughter owned a Kia Soul, both of which were insured by State Farm under separate policies. Id. Both vehicles were insured for UM coverage, but the daughter's policy had $25,000 in UM coverage while the mother's policy had $100,000 in UM coverage. Id. In May 2013, the daughter was driving her own vehicle when she was involved in an accident with an uninsured motorist. Id. at 456. Rather than seeking UM coverage under her own policy, the daughter sought UM coverage under her mother's policy, contending that she was entitled to such as a resident relative. Id. This court held that the provision in the mother's State Farm policy that excluded coverage "for an insured who sustains bodily injury while occupying a vehicle owned by you or any resident relative if it is not your car" excluded the daughter from UM coverage under the mother's policy when the daughter was driving her own separately insured car. Id. at 457-58 (italics in original) (agreeing with State Farm's argument that "the unambiguous language of the mother's policy excludes the daughter from UM coverage in this circumstance"). The plain language of the Owners policy at issue in this case compels the same conclusion. Under the plain language of the policy, Horne is not covered for either liability or UM when he is driving his own separately insured automobile. Therefore, we must turn to the second step of the analysis and determine whether UM coverage is statutorily required under these circumstances. 2. Section 627.727 - 12 - The Douglas decision purports to base its holding on the language of the UM statute, section 627.727(1).3 The applicable portion of that section provides: No motor vehicle liability insurance policy which provides bodily injury liability coverage shall be delivered or issued for delivery in this state with respect to any specifically insured or identified motor vehicle registered or principally garaged in this state unless uninsured motor vehicle coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom. § 627.727(1). The Douglas court interpreted this statutory language to mean that UM coverage must be provided to "protect[ ] the named insured or insured members of his family against bodily injury inflicted by the negligence of any uninsured motorist under whatever conditions, locations, or circumstances any of such insureds happen to be in at the time." Douglas, 654 So. 2d at 120 (emphasis added) (quoting Coleman v. Fla. Ins. Guar. Ass'n, 517 So. 2d 686, 689 (Fla. 1988)). The problem with the Douglas court's reasoning is that the statutory language requires an insurer to provide UM coverage only for those persons and in such circumstances as are "insured thereunder" for liability. For insurance purposes, circumstances matter, and if a particular person is not "insured thereunder" for liability in a particular set of circumstances, the statute does not require that the person nevertheless be insured for UM. Horne is not insured under the liability portion of the Owners policy when he is driving his own separately insured automobile. Therefore, to the extent that section 627.727(1) requires Owners to extend reciprocal UM coverage to 3The Mullis decision does the same under the prior UM statute, section 627.0851, Florida Statutes (1967). - 13 - those covered by the liability portion of the policy, Horne is not entitled to UM coverage because he is not entitled to liability coverage in this instance. The fact that Horne would be insured under the liability portion of the Owners policy under different circumstances, such as if and when he was driving one of the automobiles owned by and insured by the Hanusas, does not render him "insured thereunder" for all purposes. It certainly does not make him "insured thereunder" when he is driving his own car that is separately insured. Despite the "insured hereunder" language of section 627.727(1), the Douglas court dispensed with any analysis or consideration of the circumstances of the accident in question when determining whether UM coverage is available, holding: Uninsured motorist protection does not inure to a particular motor vehicle, but instead protects the named insured or insured members of his family against bodily injury inflicted by the negligence of any uninsured motorist under whatever conditions, locations, or circumstances any of such insureds happen to be in at the time. 654 So. 2d at 120 (quoting Coleman, 517 So. 2d at 689). I simply see no basis for this broad expansion of UM coverage in the statutory language, and I would apply the statute based on its plain language if I were not bound by Douglas.4 3. Public Policy Finally, I see no public policy basis for the broad scope of UM coverage apparently required by the language of Douglas. Both Douglas and Mullis dealt with situations in which either the named insured or a resident relative was injured while 4Because the Hanusas purchased "stacked" UM coverage, I do not reach the issue of whether the exclusions for resident relatives who own vehicles would be enforceable had they purchased "non-stacked" coverage as permitted by section 627.727(9). - 14 - driving a vehicle that the insured owned but had chosen not to insure. See Douglas, 654 So. 2d at 119; Mullis, 252 So. 2d at 231. In each case, the supreme court expressed concern that insurers should not be permitted to whittle away at coverage that the insured had purchased, albeit purchased only on other automobiles. In this case, Horne acted as a financially responsible automobile owner. He purchased insurance—including liability coverage and UM coverage—for himself through Allstate, and he paid premiums for that coverage. He was injured by an uninsured motorist, and he sought UM coverage from Allstate. Rather than complying with its contractual obligations to Horne, Allstate seeks to shift the lion's share of its obligations onto Owners because of the mere fortuity that Horne was living with his mother and stepfather at the time of the accident. There is no public policy that is furthered by such a shift in responsibility. Moreover, the Douglas decision—and this one—disincentivize the purchase of liability and UM coverage by automobile owners who live with relatives. The import of this decision is that the one relative who owns the automobile least expensive to insure can purchase liability and UM coverage and all the other relatives who live with him or her can piggy-back onto that coverage rather than purchase their own. Such a policy "results in an interpretation of [section 627.727] that is contrary to this State's strong policy of financial responsibility for owners of motor vehicles." Douglas, 654 So. 2d at 123 (Overton, J., dissenting). Further, in this case, these decisions result in an inequitable windfall to Allstate. Allstate charged Horne a premium for $100,000 in UM coverage. Nevertheless, when called upon to afford Horne with the UM coverage for which he had - 15 - fully paid, Allstate worked diligently to shift the vast majority of its responsibility onto Owners. While Allstate will be called upon to pay only 1/21st of any of Horne's damages, I am quite confident that Allstate will not be refunding Horne for 20/21st of his UM premium. This result both disincentivizes the purchase of automobile insurance and violates public policy. For all of these reasons, while I recognize that I am bound to follow the Douglas and Mullis decisions, I believe they punish those who comply with their financial obligations in a way that is detrimental to all Floridians. I therefore concur in this result only because I am bound to by Douglas and Mullis. - 16 -