See Nunez v. Universal Prop. & Cas. Ins. Co., 2021 Fla. App. LEXIS 11628 (Fla. 3d DCA, Aug. 4, 2021).
In Nunez, the Insured reported two water loss claims – one in the kitchen and one in a bathroom. During the investigation of the claim, Universal requested the Examination Under Oath (“EUO”) of the Insured. Universal sent two letters to the Insured and her attorney on separate dates requesting the EUO before unilaterally setting the EUO via a third letter. The Insured failed to appear for the unilaterally-set EUO. Universal subsequently denied both claims due to the failure to appear and to provide certain documents. The underlying lawsuit ensued.
Prior to trial, the Court denied Universal’s Motion for Summary Judgment based on the Insured’s failure to attend the EUO. At trial, Universal argued that the Insured could not recover due to her failure to sit for an EUO. Conversely, the Insured argued that it was unreasonable for Universal to request her EUO over one hundred days after the claim was reported. Over Universal’s objection, the trial court determined that jury should be asked:
Did Universal prove by the greater weight of the evidence that Plaintiff unreasonably failed to attend her Examination Under Oath on October 1, 2015?
The jury returned a verdict for the Insured in both claims. Universal moved for judgment notwithstanding the verdict based the Insured’s failure to attend the EUO, which was again denied by the trial court.
The Insurer then filed a renewed motion for directed verdict or, in the alternative, motion for new trial. This motion was heard by a successor judge who granted Universal’s two motions in part. The successor judge found that directed verdict was appropriate as the Insured’s failure to appear for the EUO was a material breach of the policy. The successor judge further found that a new trial was warranted as the jury was not asked whether Universal suffered prejudice as a result of the material breach, pursuant to the recently-decided Am. Integrity Ins. Co. v. Estrada case. 276 So. 3d 905 (Fla. 3d DCA 2019).
The appellate court affirmed the successor judge’s rulings on both directed verdict and the motion for new trial. The appellate court found Estrada to be controlling and reaffirmed Estrada’s holding that the initial burden of proof is on the insurer to plead and prove that the insured materially breached a post-loss policy provision. The burden then shifts to the insured to prove that any breach did not prejudice the insurer. The appellate court noted that, in Nunez, the Insured “wholly failed to comply with her post-loss obligation to attend an EUO, and likewise failed to offer evidence of compliance or attempted compliance—or even a reasonable justification for the failure to attend” the EUO, which necessitated the directed verdict. The appellate court was emphatic that “actual compliance with other policy requirements or conditions is not evidence of substantial compliance with the pertinent policy requirement or condition at issue. The Insured’s compliance with other post-loss duties (e.g., promptly reporting, providing a sworn proof of loss, or providing a Recorded Statement) does not bear on whether the Insured substantially complied with the “specific, pertinent policy provision” requiring her to submit to an EUO. The Court also affirmed the grant of a new trial pursuant to Estrada as the jury was not asked whether the failure to attend the EUO prejudiced Universal.
The Takeaway: Insurers should be continually mindful of the relative burdens on both themselves and insureds as it relates specific post-loss duties. Specifically, when an insured fails to comply with a post-loss duty, it is the insurer’s burden to plead and prove that the insured materially breached the specific post-loss policy provision. Often, these issues are fact disputes that will not warrant summary judgment or directed verdict; however, Nunez presents one of the clearest examples of a situation where there was not even an inference of a factual dispute concerning the material breach. Indeed, Nunez involved an insured completely failing to attend an EUO after multiple requests and, more egregiously, the Insured did not present any evidence whatsoever of even an attempt to comply with the specific post-loss policy provision. More broadly, Nunez rebuts the common argument from plaintiff’s counsel that compliance with some of the post-loss duties excuses the complete non-performance of others (“[A]ctual compliance with other policy requirements or conditions is not evidence of substantial compliance with the pertinent policy requirement or condition at issue.”). Insurers should also be mindful that even though the insured may have materially breached the post-loss duty policy provision, the insured may still be able to recover if the insured can plead and prove the insurer was not prejudiced by the material breach.