FL Insurer’s Cancellation Effective in Spite of Issuance of Certificate of Insurance
A Florida appellate court affirmed a finding by a state Judge of Compensation Claims that a subcontractor’s workers’ compensation policy had been cancelled prior to a work-related injury suffered by one of its employees and that the general contractor should be liable as an uninsured statutory employer in spite of the fact that, subsequent to the cancellation, the insurer’s agent sent the general contractor a certification that a policy was in force [Scott v. James A. Jones Constr. Co., 2021 Fla. App. LEXIS 3736 (1st DCA, Mar. 16, 2021). The appellate court stressed that the certification indicated on its face that it was for “information only.” Whether the general contractor’s reliance was reasonable under the circumstances was one factor that could be considered in determining whether the carrier was barred by from denying coverage under the doctrine of promissory estoppel.
Background
James A. Jones Construction Co. (“Jones”) was a general contractor on a project in Florida. It subcontracted part of the project to Central Florida Siding Pros, LLC (“CFSP”). NorGuard Insurance Company (“NorGuard”) issued a worker’s compensation insurance policy to CFSP through Paychex Insurance Agency.
On January 24, 2018, NorGuard issued a notice of cancellation of the policy, with an effective date of February 10, 2018. Despite the impending cancellation, Paychex issued a certificate of liability insurance (COI) for CFSP to Jones on February 6, 2018, indicating that the policy went into effect on April 29, 2017, and would expire on April 29, 2018. Claimant sustained ’his injury on April 24, 2018.
The JCC ruled that Claimant was statutorily employed by Jones and that neither CFSP nor Jones carried workers’ compensation insurance coverage that would cover him. The JCC also found the policy was not in effect on the date of accident because NorGuard had cancelled it for nonpayment of premium two months earlier. This ruling put the risk on the general contractor. See § 440.10(1)(b), Fla. Stat. (2018).
Condition Precedent to Cancellation
Claimant and Jones argued that the cancellation of the policy was ineffective because the policy contained a condition precedent to cancellation that was not met. Specifically, they claimed that the policy gave CFSP the opportunity to pay the unpaid premiums before the policy was cancelled. The JCC disagreed, finding that the policy’s only stated condition precedent to cancellation was ten days’ notice to the policyholder.
The JCC found that condition had been met because NorGuard mailed a notice of cancellation to CFSP at its last known address on January 24, 2018, for cancellation effective February 10, 2018. The appellate court agreed that under § 440.42(3), Fla. Stat. (2018), NorGuard’s action satisfied its obligation to provide notice of cancellation for nonpayment of premium under both the policy and the statute.
Promissory Estoppel Issue
Claimant and Jones also contended that NorGuard was estopped from cancelling the insurance policy because Jones relied on the COI. The JCC rejected the claim upon finding that Claimant and Jones failed to prove by clear and convincing evidence that Jones “reasonably” relied on the COI. Claimant and Jones contended the elements of promissory estoppel do not require the promisee’s reliance to be reasonable and instead require mere reliance. The appellate court noted that technically, Claimant and Jones were correct.
The appellate court noted that pursuant to decisions of the state’s Supreme Court, a promisor is affected only by reliance which he or she does or should foresee, and enforcement must be necessary to avoid injustice. The court stressed, however, that satisfaction of the latter requirement might depend on the reasonableness of the promisee’s reliance. The appellate court said any error by the JCC in focusing on the reasonableness of Jones’s reliance on the COI was harmless because the JCC’s finding that any reliance by Jones on the COI was not reasonable was supported by competent, substantial evidence. As the JCC found, the COI contained two disclaimers, including a confirmation that the document was for “information only.”
Based upon the court’s findings, the decision of the JCC was affirmed.