RTFP – Refusal to Read the Full Policy Doesn’t Require Insurer to Fulfill Insured’s Belief

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Posted on May 20, 2022 by Barry Zalma

Ibaldo Arencibia’s purchased a travel insurance policy – one he believed to be a broad, “no-fault” policy. When the insurer declined to provide coverage for a canceled trip, Arencibia sued. Arencibia appeals the district court’s dismissal of his claims for unjust enrichment and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and the lower court’s refusal to allow him to amend his complaint.

In Ibaldo Arencibia v. AGA Service Company d.b.a. Allianz Global Assistance, Jefferson Insurance Company, No. 21-11567, United States Court of Appeals, Eleventh Circuit (May 12, 2022) the Eleventh Circuit resolved the dispute.
THE ALLEGATIONS

On August 17, 2019, Arencibia purchased a roundtrip airline ticket on American Airlines’ website from Miami, Florida, to Bogota, Colombia. When booking his ticket, Arencibia was offered the option of purchasing travel insurance from AGA Service Company, doing business as Allianz Global Assistance (“Allianz”). Arencibia decided to purchase the travel insurance in exchange for the payment of a $36.83 premium. Following his purchase, Allianz emailed Arencibia a copy of the 36-page Individual Travel Insurance Policy (the “Policy”), which provided that he could cancel the Policy for any reason within ten days of purchase and receive a full refund.

Later, Arencibia was offered a stint of temporary employment in the United States on dates that overlapped with his planned trip to Bogota. Arencibia alleges that, “[t]hinking he was ‘insured,” he telephoned Allianz and was told that “his work conflict was not covered by his [travel insurance] policy.”

The Allianz representative directed Arencibia to cancel his flight and submit a claim under the Policy to “see what could be done.” Arencibia did so, and received a letter from Allianz formally declining to provide coverage under the Policy. Allianz advised that the Policy is a named perils travel insurance program, which means it covers only the specific situations, events and losses included in the Policy, and only under the conditions described. Trip cancellation due to being required to work is not included among those reasons.

Based on this theory, Arencibia sued American Airlines, Allianz, and Jefferson, alleging claims for declaratory relief, unjust enrichment, violation of the Florida Deceptive and Unfair Trade Practices Act, violation of the federal RICO statute, and false advertising.

All three defendants filed motions to dismiss and the USDC granted American Airlines’ motion to dismiss and two district courts, one in Texas and another in Florida dismissed the amended complaint in its entirety without leave to amend.
DISCUSSION

Although the district court dismissed all Arencibia’s claims, on appeal he challenges the dismissal of just two – his claims for unjust enrichment and for RICO violations.
Unjust Enrichment

The district court dismissed Arencibia’s unjust enrichment claim for two independent reasons. First, it held that there is no private right of action under Florida’s Unfair Insurance Trade Practices Act (FUITPA) for damages caused by false or deceptive representations concerning insurance coverage. Second, it held that the unjust enrichment claim was due to be dismissed because a valid contract existed between the parties.

The Eleventh Circuit concluded that since a valid contract existed between Arencibia and the insurers there was no unjust enrichment and the USDC’s decision was affirmed. Under Florida law, to state a claim for unjust enrichment, a party must establish all the following:

a benefit conferred upon a defendant by the plaintiff,

the defendant’s appreciation of the benefit, and

the defendant’s acceptance and retention of the benefit under circumstances that would make it inequitable for him to retain it without paying the value thereof. [Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1274 (11th Cir. 2009)]

The general rule in Florida is that the equitable remedy of unjust enrichment is unavailable if an express contract exists. [Ocean Commc’ns, Inc. v. Bubeck, 956 So.2d 1222, 1225 (Fla. 4th DCA 2007).]

The facts demonstrated that the insurers did not misrepresent the terms of the Policy. The Policy expressly warns consumers that Flight cancellation coverage is not unlimited.

The Policy also details the “covered reasons” that would trigger coverage – for example, if the insured or a family member became ill or injured, if the insured is in a traffic accident on the departure date, or if the insured is required to attend a legal proceeding during the trip.

Even if Arencibia did not read the terms of the Policy before purchasing it, the Eleventh Circuit agreed with the district court that Arencibia was on inquiry notice that “[t]erms, conditions, and exclusions apply” because the hyperlink in the offer box was conspicuous and plainly disclosed.

In addition, Arencibia does not deny that he received a full copy of the Policy shortly after his purchase and that he had ten days in which to review the Policy and cancel it for a full refund if he was dissatisfied for any reason. In Florida a party is bound by his contract and charged with knowledge of its contents. [Allied Van Lines, Inc. v. Bratton, 351 So.2d 344, 347-48 (Fla. 1977); Rocky Creek Ret. Props., Inc. v. Estate of Fox, 19 So.3d 1105, 1108 (Fla. 2d DCA 2009)]

Finally, Arencibia availed himself of the insurance by making a claim under the Policy, effectively conceding that a contract existed between the parties. The fact that Arencibia does not like the terms of the Policy does not serve to make the contract unenforceable.

The district court’s dismissal of Arencibia’s unjust enrichment claim was affirmed.
RICO

Section 1962(c) of the RICO statute requires that a plaintiff prove that a defendant participated in an illegal enterprise “through a pattern of racketeering activity.” 18 U.S.C. § 1962(c).

A scheme to defraud requires proof of a material misrepresentation, or the omission or concealment of a material fact calculated to deceive another out of money or property. “Material” misrepresentations or omissions are ones having a natural tendency to influence, or capable of influencing, the decision maker to whom it is addressed. The misrepresentation or omission must be one on which a person of ordinary prudence would rely.

Arencibia failed to plausibly allege a material misrepresentation, which is fatal to his RICO claim. Moreover, Arencibia failed to plausibly allege any injury caused by the alleged mail and wire fraud.

Therefore, the district court correctly held that Arencibia could not demonstrate any injury under RICO because he received exactly what he bargained and paid for – insurance coverage for his round-trip flight, subject to certain conditions and restrictions. In other words, Arencibia received the benefit of his bargain and has not suffered any injury or loss.

Accordingly, his RICO claim was correctly dismissed.
ZALMA OPINION

It takes a great deal of gall to allege that an insurance policy, not read, provided a coverage that the plaintiff wanted, or assumed he purchased, when the words of the policy are clearly limited to named perils. It was ridiculous to charge insurers with racketeering for failing to pay a claim for which no insurance existed. Arencibia and his lawyers should have read the policy and avoided this litigation. The insurers should consider a malicious prosecution action against Arencibia and his lawyers for accusing them, without evidence, of a RICO violation and forcing them into extensive litigation and an appeal to the Eleventh Circuit and the court should have sanctioned the frivolous lawsuit and appeals.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].

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