First party automobile policy claims involving assertions of class action could be defeated under certain circumstances
Aug 13, 2010
A recent Fourth District Court of Appeal decision resulted in the reversal of class certification in an action brought against an insurance company on behalf of premium finance companies.
Prior to certifying a class action, a trial court must conduct a rigorous analysis to determine whether the elements for class certification exist, including whether sufficient evidence has been offered by the plaintiff that the putative class members are sufficiently numerous so that separate joinder of each class member’s claim is impracticable. In addition, the class definition must permit a court to reasonably ascertain if a person or entity is a class member. This often contentious element of proof of numerosity in a class action lawsuit was the subject of the Fourth District Court of Appeal decision in the case of Canal Ins. Co. v. Gibraltar Budget Plan, Inc., 35 Fla. L. Weekly D1690 (Fla. 4th DCA July 28, 2010).
In Canal, three premium finance companies filed a class action lawsuit against the insurer on the basis that the insurer did not pay interest on past due payments of unearned premium after cancellation of four insurance policies within the thirty (30) day time limit mandated by the Florida Insurance Code. The trial court certified the case as a class action finding, among other required elements, that the members of the class were so numerous, that separate joinder of each member was impracticable and the class definition would allow a court to reasonably determine if a person or entity was a member of the class.
On appeal, Canal argued that there was insufficient proof to establish the numerosity requirement found by the court in its class action certification. The Fourth District Court of Appeal agreed with Canal and reversed the trial court’s certification of the case as a class action.
In its decision, the court found that the premium finance companies failed to establish a sufficient record to support the finding that the members of the class were sufficiently numerous. To evidence the assertion that there were over 100 class members, the premium finance companies relied upon a list of premium finance companies issued by the Florida Office of Insurance Regulation, the four claims at issue filed by the named plaintiffs and the deposition testimony of a representative of Canal indicating that the insurer processed at least two hundred premium finance cancellations during the applicable time period.
The appellate court found that the premium finance companies did not build a sufficient factual bridge between the evidence established and the requirement that there be proof of sufficiently numerous class members. The court evaluated the proof filed by the premium finance companies and determined that the number of premium finance companies which were claimed to exist included many duplicates, leaving the actual total at about one-half the number asserted. Further, there was no proof that the premium finance companies on the list did business with Canal or that the other premium finance companies received late payment of unearned premium without the statutorily required amount of interest.
The court acknowledged that 200 cases could be sufficient to establish numerosity. However, there must be some connection in the evidence between the putative class members and cancellations that included the untimely return of unearned premium without the appropriate interest.
In addition, the court found that the class definition failed to limit class membership to only those premium finance companies that received unearned premiums from Canal without the required interest. Therefore, by failing to properly define the class, this aspect of the numerosity element was also unmet and the trial court’s class certification was not supported.
It is instructive that first party automobile policy claims involving assertions of class action will be defeated unless the class plaintiffs can establish not only that there are a sufficient number of potential class members, but that those class members were involved with the defendant insurance company in the specific scenario which is the subject of the lawsuit. Careful dissection of the specific evidence is extremely important in order to properly evaluate any class action under these circumstances.
Please note that the appellate court’s opinion has not been published in the permanent law reports and therefore, until released, it is subject to revision or withdrawal.