42
Fla. L. Weekly D476bop of Form

Insurance
— Business auto — Uninsured motorist — Trial court erred in finding that an
employee of the company which was the named insured in a business auto policy
was entitled to underinsured motorist benefits for injuries suffered when he
was struck by an automobile being driven by an underinsured motorist while he
was walking in front of his employer’s offices on his way into the building —
No covered autos were involved in the accident, and employee was not a named
insured under the policy — Because policy was an excess liability policy,
there was no requirement that insured execute a written waiver or rejection of
UM coverage — Because employee was neither a named insured nor a resident
family member of an insured, he was, at best, a class II insured who could
recover UM benefits only if he was occupying or driving a covered automobile

ZURICH
AMERICAN INSURANCE COMPANY, a foreign corporation licensed to do business in
the State of Florida, Appellant, vs. JOHN CERNOGORSKY, Appellee. 3rd District.
Case No. 3D16-689. L.T. Case No. 11-26813. Opinion filed February 22, 2017. An
Appeal from the Circuit Court for Miami-Dade County, Jerald Bagley, Judge.
Counsel: Conroy Simberg and Hinda Klein, (Hollywood); McIntosh Sawran &
Cartaya, and Douglas M. McIntosh and Kimberly Kanoff Berman (Fort Lauderdale),
for appellant. Law Offices of Hugh H. Bernstein, and Hugh H. Bernstein; Law
Offices of William R. Jones, III, and William R. Jones, III; Jay M. Levy, for
appellee.

(Before
WELLS, SALTER and LOGUE, JJ.)

(WELLS,
Judge.) Zurich American Insurance Company appeals from a final judgment entered
in favor of John Cernogorsky, the plaintiff below, after a jury trial on his
claim for underinsured motorist (“UM”) coverage under a business automobile
liability policy issued to his employer, The Green Companies. Zurich claims
that it was entitled either to a summary judgment or a directed verdict because
coverage was a legal not a factual question, and because it was entitled to a
judgment as a matter of law.1 We agree and reverse.

FACTS

On
February 18, 2011, Mr. Cernogorsky was injured when struck by an automobile
while he was walking in front of The Green Companies’ offices on the way into
the building. The car that struck him was driven by an underinsured motorist.
After Mr. Cernogorsky demanded and received payment up to the insurance policy
limits ($100,000) of the motorist that struck him, he rejected the UM policy
limits ($10,000) of his own insurance and sought UM coverage under The Green Companies’
policy with Zurich.2 On August 24, 2011, alleging that he
was injured as a pedestrian while in the course and scope of his employment
with The Green Companies, Mr. Cernogorsky sued Zurich for $1,000,000 in UM
benefits. The basis of Mr. Cernogorsky’s claim for UM benefits was that: (1) he
was a covered individual under The Green Companies’ policy because the policy covered
autos not owned by The Green Companies, which according to Mr. Cernogorsky
included vehicles owned by employees; and, (2) the policy provided primary
coverage which included UM coverage that extended to him because The Green
Companies had failed to execute a UM coverage waiver as required by section
627.727(1) of the Florida Statutes.3

In
response, Zurich argued that Mr. Cernogorsky was not entitled to UM benefits
because: (1) he was not a named insured under the policy issued to The Green
Companies; (2) the subject policy was not a primary liability auto insurance
policy, but an excess liability policy, and thus not governed by section
627.727(1), but by section 627.727(2) of the Florida Statutes4 which does not require a written
rejection of UM benefits; and (3) because Mr. Cernogorsky was a pedestrian at
the time of the accident he could not recover UM benefits under this policy
even had such coverage been provided.

Both
Mr. Cernogorsky and Zurich moved for summary judgment, but both motions were
denied and this matter was set for trial solely on the coverage issue. A jury
thereafter rendered a verdict in Mr. Cernogorsky’s favor determining that
coverage existed. Zurich’s renewed motions for a directed verdict, for judgment
notwithstanding the verdict, and for a new trial were denied. Zurich appeals,
we reverse.

STANDARD
OF REVIEW

We
review the instant appeal from a final judgment interpreting the provisions of
an insurance policy to determine coverage de novo. See Penzer
v. Transp. Ins. Co., 29 So. 3d 1000, 1005 (Fla. 2010) (confirming that “a
question of insurance policy interpretation, which is a question of law, [is]
subject to de novo review”); Barcelona Hotel, LLC v. Nova Cas. Co., 57
So. 3d 228, 230 (Fla. 3d DCA 2011) (same). Where the facts are not in dispute
and the language of an insurance policy is unambiguous and not subject to
conflicting inferences, “its construction is for the court, not the jury.” Ellenwood
v. S. United Life Ins. Co., 373 So. 2d 392, 394-95 (Fla. 1st DCA 1979).
Moreover, even where an ambiguity exists, if the facts are not disputed “it is
within the province of the trial judge not the jury to resolve the ambiguity as
a matter of law.” See id.; see also Penzer, 29 So.
3d at 1005 (“ ‘[A] provision is not ambiguous simply because it is complex or
requires analysis. . . . . ‘[I]f a policy provision is clear and unambiguous,
it should be enforced according to its terms.’ ”) (quoting Garcia v. Fed.
Ins. Co., 969 So. 2d 288, 291 (Fla. 2007))). Here, because neither a factual
dispute nor an ambiguity was demonstrated to exist, the coverage issue raised
below should have been decided by the court below and on the record below, and
for the following reasons, should have been resolved in Zurich’s favor.

ANALYSIS

First,
Mr. Cernogorsky is not a named insured under the Zurich/Green Companies policy
as he claimed below. This policy issued to The Green Companies is a package
policy providing $1,000,000 in commercial general liability coverage to The
Green Companies for “covered autos.” This term, as identified in this policy,
encompasses either “hired autos” or “nonowned autos.” By definition, a “hired
auto” covered by this policy is a vehicle leased, hired, rented or borrowed by
The Green Companies. No such autos are involved in this matter. A “nonowned
auto” as defined by this policy includes autos owned by employees, but only
while they are being used for company business or “personal affairs” of The
Green Companies:

9. Nonowned “Autos” Only

Only those “autos” you do not
own, lease, hire, rent or borrow that are used in connection with your
business. This includes “autos” owned by your “employees,” partners (if you are
a partnership), members (if you are a limited liability company), or members of
their households but only while used in your business or your personal affairs.

Like
“hired autos,” no “nonowned” autos were involved in the incident that caused
Mr. Cernogorsky’s injury. In fact, Mr. Cernogorsky’s vehicle was not involved
in the incident at all. In short, no “covered autos” were involved in this
matter, thereby utterly refuting Mr. Cernogorsky’s claim that he was an insured
under this policy by virtue of these provisions.

As
the policy confirms, the only insured under this policy is The Green Companies.
The Business Auto Coverage portions of the policy state that “the words ‘you’
and ‘your’ as used in the policy refer to the Named Insured shown in the
Declarations.” The insured named in the Business Auto Declarations is “THE
GREEN COMPANIES INC (SEE NAMED INSURED ENDORSEMENT).” Not only is The Green
Companies the only named insured in the policy, other portions of the policy
also expressly exclude employees while using their own autos from the
definition of the term “insured.”

Specifically,
the Designated Insured Endorsement, which expressly applies to the Business
Auto Coverage Form, provides that “[e]ach person or organization shown in the
Schedule [of Coverages and Covered Autos] is an ‘insured’ for Liability
Coverage, but only to the extent that person or organization qualifies as
an ‘insured’ under the Who Is An Insured Provision contained in Section II of
the Coverage Form.” (Emphasis added).5 Section II of the Business Auto
Coverage Form in turn expressly excludes from the definition of the term
“insured” any employee while driving his or her own vehicle:

SECTION II — LIABILITY
COVERAGE

. . . .

1. Who is an Insured

The following are “insureds”:

a. You [The Green Companies]
for any covered “auto.”

b. Anyone else while using
with your permission a covered “auto” you own, hire or borrow except:

. . . .

(2) Your “employee” if
the covered “auto” is owned by that “employee” or a member of his or her
household.

(Emphasis
added).

In
sum, these provisions confirm that only The Green Companies is insured under
this policy for any liability that may arise from the use of a covered vehicle
even if that vehicle is owned by an employee and is being used in company
business. Mr. Cernogorsky is not an insured under Zurich’s policy.

Secondly,
the policy at issue here is not a primary liability policy subject to the
waiver of UM coverage mandate imposed by section 627.727(1) of the Florida
Statutes as Mr. Cernogorsky claims. The liability section of the Business Auto
Coverage Form provides that Zurich will pay “all sums an ‘insured’ [The Green
Companies] must pay as damages because of ‘bodily injury’ or ‘property damage’
to which this insurance applies, caused by an ‘accident’ and resulting from the
ownership, maintenance or use of a covered ‘auto’ [“hired autos” or “nonowned
autos”].” However, that same provision also expressly excludes from such
coverage bodily injury to an employee incurred during the course of his or her
employment:

SECTION II — LIABILITY
COVERAGE

. . . .

B. Exclusions

This insurance does not apply
to any of the following:

. . . .

4. Employee Indemnification
and Employer’s Liability

“Bodily injury” to:

a. An “employee” of the
“insured” arising out of and in the course of:

(1) Employment by the
“insured”; or

(2) Performing the duties
related to the conduct of the “insured’s” business; or

b. The spouse, child, parent,
brother or sister of that “employee” as a consequence of Paragraph a. above.

This exclusion applies:

(1) Whether the “insured” may
be liable as an employer or in any other capacity; and

(2) To any obligation to
share damages with or repay someone else who must pay damages because of the
injury.

The
Business Auto Coverage Form also expressly states that the coverage provided to
autos “owned” by The Green Companies (there are none) is primary while coverage
provided as to “nonowned autos” (which includes an employee’s vehicle) is
excess:

SECTION IV — BUSINESS AUTO
CONDITIONS

The following conditions
apply in addition to the Common Policy Conditions:

. . . .

B. General Conditions

. . . .

5. Other Insurance

a. For any covered “auto” you
own, this Coverage Form provides primary insurance. For any covered “auto” you
don’t own, the insurance provided by this Coverage Form is excess over any
other collectible insurance. . . .

Since
The Green Companies owns no vehicles, coverage, if it exists at all here, would
relate to “nonowned” vehicles for which this policy provides only excess coverage.6

Because
the instant policy is an excess policy, there was no need for The Green
Companies to execute a written waiver or rejection of UM coverage as required
by section 627.727(1) of the Florida Statutes. Rather, and as section
627.727(2) of the Florida Statutes confirms, “[t]he provisions of subsection
(1) which require uninsured motorist coverage to be provided in every motor
vehicle policy delivered or issued for delivery in this state, do not apply to
any policy which does not provide primary liability insurance that includes
coverage for liabilities arising from the maintenance, operation, or use of a
specifically insured motor vehicle.” § 627.727(2), Fla. Stat. (2016); see
also Hampton v. Fla. Mun. Ins. Tr., 152 So. 3d 855, 856 (Fla. 4th
DCA 2014) (finding the insurer “was not required to include uninsured motorist
protection as part of its provisions” where the subject policy provided “excess
insurance and not primary insurance for automobile accidents” and the insurer
complied with section 627.727(2)); Nieves v. N. River Ins. Co., 49 So.
3d 810, 813 (Fla. 4th DCA 2010) (“A key amendment to section 627.727 occurred
in 1984, when the legislature substantially rewrote subsections (1) and (2),
and ‘for the first time explicitly exempted policies which did not provide
primary liability insurance for specifically insured motor vehicles from the
requirements set forth in subsection (1).’ ” (quoting O’Brien v. State Farm
Fire & Cas. Co., 999 So. 2d 1081, 1087 (Fla. 1st DCA 2009))).

We
therefore reject Mr. Cernogorsky’s argument that even though the Zurich policy
included no UM coverage provisions, that coverage nonetheless was available to
him because The Green Companies had not executed a written waiver of UM
coverage. The coverage provided by the Zurich policy was excess coverage not
governed by section 627.727(1) which mandates a written UM waiver. Again, no
coverage was available to him under this policy.

Finally,
even if UM coverage were deemed available for failure to comply with the
requirements of either section 627.727(1) or 627.727(2), Mr. Cernogorsky still
would be unable to recover under the Zurich policy. UM benefits extend to both
the insured named in the policy and resident family members, defined as class I
insureds, and to others while passengers or drivers in an insured vehicle,
defined as class II insureds. See Fla. Farm Bureau Cas. Co. v.
Hurtado, 587 So. 2d 1314, 1317 (Fla. 1991) (confirming that UM benefits are
available to two classes of individuals: “class one consisting of the named
insured and resident family members; and class two consisting of those who are
insured only because they are drivers or passengers in an insured
vehicle with the consent of the named insured”) (emphasis added). Because Mr.
Cernogorsky was neither a named insured under the Zurich policy nor a resident
family member of an insured, he cannot be a class I insured. At best, he had to
demonstrate that he was entitled to recover UM benefits as a class II insured. See
Varro v. Federated Mut. Ins. Co., 854 So. 2d 726, 728 (Fla. 2d DCA 2003)
(“When the named insured is a corporation, it obviously can never have a bodily
injury or a UM claim as well as claims for coverage for family members. The
entire risk in such a situation arises from class II insureds.”).

As
the Florida Supreme Court confirmed in Mullis v. State Farm Mutual
Automobile Insurance Co., 252 So. 2d 229, 233 (Fla. 1971), the seminal
decision examining UM coverage, individuals may recover UM benefits as class II
insureds only if they are lawfully occupying or driving a covered automobile:

[Class II insureds] are
protected only if they receive bodily injury due to the negligence of an
uninsured motorist while they occupy the insured automobile of the named
insured with his permission or consent. This latter group is necessarily
restricted to occupants of the insured automobile for the purpose of coverage
identification and to show their insurable relationship to the named insured
paralleling coverage for others than named insured in automobile liability
policies.

See
also Travelers Ins. Co. v. Warren, 678 So. 2d 324, 326 n.2 (Fla. 1996)
(“[C]lass II insureds are lawful occupants of the insured vehicle who are not
named insureds or resident relatives of named insureds.”); Hurtado, 587
So. 2d at 1318-19 (“Class-one insureds are covered regardless of their location
when they are injured by an uninsured motorist. . . . On the other hand,
coverage for class-two insureds is limited to occupancy in the insured
vehicle.”); Alamo Rent-A-Car, Inc. v. Hayward, 858 So. 2d 1238, 1240 n.1
(Fla. 5th DCA 2003) (“Class II insureds include all other passengers in the
vehicle who are covered only by virtue of the fact that they occupy the covered
vehicle.”); Bulone v. United Servs. Auto. Ass’n, 660 So. 2d 399, 400 n.1
(Fla. 2d DCA 1995), approved, 679 So. 2d 1185 (Fla. 1996) (“Class II
includes persons occupying an insured vehicle. These passengers do not pay for
this uninsured motorist coverage, but receive its protection, essentially as
third-party beneficiaries to the family policy, because a family member
permitted them to occupy the family car.”).

It
is undisputed that at the time of the incident at issue here, Mr. Cernogorsky
was neither driving nor occupying any vehicle. He could not, therefore, secure
UM benefits as a class II insured under this policy. See State Farm.
Mut. Auto. Ins. Co. v. Bailey, 203 So. 3d 995, 998 (finding an employee was
not entitled to UM coverage under a business automobile insurance policy
because he was not “occupying” the employer’s vehicle at the time of the
accident as set forth in the policy’s UM endorsement); Davis v. Fireman’s
Fund Ins. Co., 463 So. 2d 1191, 1192 (Fla. 2d DCA 1985) (finding a tow
truck operator who was struck while changing a tire on a disabled vehicle was
not entitled to UM benefits under a business automobile policy insuring the tow
truck because he was not “occupying” the tow truck at the time of the accident,
as required by the UM policy language); State Farm Mut. Auto. Ins. Co. v.
Yanes, 447 So. 2d 945, 946 (Fla. 3d DCA 1984) (finding an employee was not
entitled to UM coverage under a business automobile policy because he was not
“occupying” the employer’s vehicle at the time of the accident as required by
the policy’s UM provisions).

Because
Mr. Cernogorsky was neither an insured under the Zurich/Green Companies policy
nor otherwise eligible to recover benefits thereunder, the judgment below must
be reversed with this matter remanded for entry of judgment in Zurich’s favor.

Reversed
and remanded with instructions.

__________________

1Zurich
also argues the trial court erred in denying its motion for a new trial because
the jury was given a dictionary definition of statutory terms and because the
court precluded it from introducing evidence of legislative history. We do not,
however, address these points as it is not necessary to do so to resolve this
matter.

2The
record also reflects that Mr. Cernogorsky also applied for, and received,
workers’ compensation insurance benefits from his employer.

3That
statute provides, in relevant part:

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 . . . .
However, the coverage required under this section is not applicable when, or to
the extent that, an insured named in the policy makes a written rejection of
the coverage on behalf of all insureds under the policy.

§
627.727(1), Fla. Stat. (2016); Tobin v. Mich. Mut. Ins. Co., 948 So. 2d
692, 694 (Fla. 2006) (stating that “[i]f an insurer fails to comply with the
[provisions of section 627.727(1)], UM/UIM coverage is provided by contract as
though the required coverage had been offered and accepted by the named insured
as a matter of law”).

4The
statute provides:

The limits of uninsured
motorist coverage shall be not less than the limits of bodily injury liability
insurance purchased by the named insured, or such lower limit complying with
the rating plan of the company as may be selected by the named insured. The
limits set forth in this subsection, and the provisions of subsection (1) which
require uninsured motorist coverage to be provided in every motor vehicle
policy delivered or issued for delivery in this state, do not apply to any policy
which does not provide primary liability insurance that includes coverage for
liabilities arising from the maintenance, operation, or use of a specifically
insured motor vehicle. However, an insurer issuing such a policy shall make
available as a part of the application for such policy, and at the written
request of an insured, limits up to the bodily injury liability limits
contained in such policy or $1 million, whichever is less.

§
627.727(2), Fla. Stat. (2016).

5This
is wholly consistent with the definition contained in the Business Auto
Coverage Form itself, which similarly defines an “insured” as one who is listed
under the Who Is An Insured provision of the policy:

SECTION V — DEFINITIONS

. . . .

G. “Insured” means any person
or organization qualifying as an insured in the Who Is An Insured provision of
the applicable coverage. Except with respect to the Limit of Insurance, the
coverage afforded applies separately to each insured who is seeking coverage or
against whom a claim or “suit” is brought.

6As
an excess policy, this policy provides coverage to The Green Companies for
third-party claims for bodily injury or property damage caused by auto
accidents in which a Green Company employee is driving his or her own vehicle
while within the course and scope of his or her employment. See Tobin
v. Mich. Mut. Ins. Co., 948 So. 2d 692, 697 (Fla. 2006) (“An ‘other
insurance’ clause describes what occurs if other insurance coverage is
available for the particular loss. It describes the application and relationship
that arises if multiple insurance contracts apply to the same loss. See
8A John Alan Appleman & Jean Appleman, Insurance Law and Practice § 4909,
at 70 (2005 Supp.). The ‘other insurance’ clause at issue in the present action
provides excess coverage once the policy limits of other insurance covering the
same risk are exhausted and is only intended to provide excess liability
coverage to the “named insured,” . . . .”).

* *
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