State Farm's claim representative investigated and denied coverage in part based on the Alvarezes' statement that the toilets had not overflowed, that they had the kitchen drain lines repaired, and that there was no water damage to the interior of their home.

State Farm reported finding no accidental direct physical loss and, therefore, no covered claim, and sent two letters in November 2010 and April 2011 confirming denial of coverage to the Alvarezes. The denial of coverage letters noted that the Alvarezes were not claiming any direct water damage loss inside the house.

The Alvarezes did not appeal the decision or contradict the letters of denial.

In March 2012, the Alvarezes' public adjuster sent State Farm a sworn proof of loss signed by the Alvarezes asserting that a water damage loss had occurred in 2009, and attesting to loss in the amount of $82,967.92.

State Farm's claim reviewer noted that the 2009-10 inspector's report indicated no interior water damage, just slow toilets and a repaired kitchen J-pipe and drainage.

In 2013, State Farm conducted an extensive re-inspection of the Alvarezes' home and found nothing to indicate water damage, except a small warping of one lower cabinet toe-kick, attributed not to water damage but to improper installation.

Thereafter, the Alvarezes sued State Farm for breach of contract.

State Farm answered, citing policy exclusions and the defense that the Alvarezes had made material misrepresentations in pursuing their claim relating to the scope and amount of their claimed loss.

In response to the Alvarezes' motion for summary judgment on coverage, the trial court entered an order granting the Alvarezes' motion for partial summary judgment (identifying the issue as one of “liability,” rather than “coverage”) and reserved the question of damages for the jury.

The trial court denied the Alvarezes' motion for summary judgment on State Farm's misrepresentation defense, allowing that issue to proceed to trial, too.

Discovery included reports from the original 2010 insurance inspection, as well as proof that when the Alvarezes had applied to another insurer for homeowners insurance, they certified that their home had no existing damage, in direct contradiction to their sworn proof of loss to State Farm.

Trial proceeded on the issues of damages and material misrepresentation. The verdict form asked the jury to determine whether the Alvarezes had made a material misrepresentation to State Farm “by exaggerating the extent of the loss” and how much damages should be awarded.

During their deliberations, the jury asked the trial court: “If we decide the plaintiff made a material misrepresentation, can we still give plaintiff compensation?” The court advised the jury, “[i]n answer to your question, be advised that I have given you all the law that applies to this case.”

The jury ultimately found that the Alvarezes had materially misrepresented the facts. The jury also awarded the Alvarezes $6,000 in damages, the amount State Farm's plumber testified the kitchen drain repairs would cost.

The trial court granted State Farm's motion for final judgment in its favor, with no damages payable to the Alvarezes, and the dispute reached a Florida appellate court.

The Appellate Court's Decision

The appellate court affirmed.

In its decision, the appellate court explained that the State Farm policy on the Alvarezes' home contained a “valid provision voiding the policy upon material misrepresentation of fact” by the Alvarezes. The appellate court added that the jury found that the Alvarezes had violated that provision by making material misrepresentations of fact in their claim to State Farm.

As a matter of law, the appellate court said, the jury's finding of material misrepresentation voided coverage for the Alvarezes' claim. Therefore, the appellate court concluded, the trial court had properly determined as a matter of law that the jury's verdict finding material misrepresentation voided the Alvarezes' coverage for their claimed loss and the trial court had “correctly rendered judgment in favor of State Farm with no entitlement to damages.”

The case is Alvarez v. State Farm Florida Ins. Co., No. 3D17-2261 (Fla. Ct. App. April 17, 2019). Attorneys involved include: Alvarez, Feltman & DaSilva, PL, and Brian C. Costa and Paul B. Feltman, for appellants/cross-appellees. Law Office of Ubaldo J. Perez, Jr., P.A.; Russo Appellate Firm, P.A., and Elizabeth K. Russo, for appellee/cross-appellant.