Named risk policy only covers what it agrees to cover

Ibaldo Arencibia has bought a travel insurance – one that he thought was a broad, “no-fault” policy. When the insurer refused to provide coverage for a canceled trip, Arencibia sued. Arencibia is appealing the district court’s refusal of his claim of unfair enrichment and violation of the racketeering and corrupt organizations Act (RICO) and the lower court’s refusal to allow him to change his complaint.

IN Ibaldo Arencibia v. AGA Service Company dba Allianz Global Assistance, Jefferson Insurance Companyno. 21-11567, United States Court of Appeals, Eleventh Circuit (May 12, 2022) resolved the Eleventh Circuit dispute.

CLAIMS

On August 17, 2019, Arencibia purchased a return ticket on the American Airlines website from Miami, Florida, to Bogota, Colombia. When he booked his ticket, Arencibia was offered the opportunity to buy travel insurance from AGA Service Company, which does business as Allianz Global Assistance (“Allianz”). Arencibia decided to buy the travel insurance in exchange for paying a premium of 36.83 USD. Following his purchase, Allianz Arencibia emailed a copy of the 36-Page Individual Travel Insurance Policy (the “Policy”), which provided that he could terminate the insurance for any reason within ten days of purchase and receive a full refund.

Later, Arencibia was offered a period of temporary employment in the United States on dates that overlapped with his planned trip to Bogota. Arencibia claims that “[t]Considering he was ‘insured’, he called the Allianz and was told that “his labor dispute was not covered by his [travel insurance] policy.”

The Alliance representative urged Arencibia to cancel its flight and file a policy claim to “see what could be done.” Arencibia did so and received a letter from Allianz which formally refused to provide coverage under the insurance. Allianz announced that the insurance is a named travel insurance program for risks, which means that it only covers the specific situations, events and losses included in the insurance, and only under the conditions described. Cancellation of travel due to work obligation is not included among these reasons.

Based on this theory, Arencibia sued American Airlines, Allianz and Jefferson, claiming declaratory relief, unfair enrichment, violation of the Florida Deceptive and Unfair Trade Practices Act, violation of the Federal RICO Charter and false advertising.

All three respondents filed a motion for inadmissibility and the USDC granted American Airlines a motion for inadmissibility and two district courts, one in Texas and the other in Florida, dismissed the amended complaint in its entirety without permission to change.

DISCUSSION

Although the district court rejected all of Arencibia’s claims, he appeals on the rejection of only two – his claim for unjust enrichment and for RICO violations.

Unfair enrichment

The district court rejected Arencibia’s unjustified profit claims for two independent reasons. First, it considered that there was no private right to sue under the Florida Unfair Insurance Trade Practices Act (FUITPA) for damages caused by false or misleading insurance coverage commitments. Second, it considered that the claim for unjustified profit should be rejected on the ground that there was a valid agreement between the parties.

The Eleventh Circuit concluded that since there was a valid contract between Arencibia and the insurance companies, there was no unfair enrichment and the USDC’s decision was upheld. Florida law requires a party to establish all of the following in order to make an unauthorized profit claim:

1. a benefit conferred on a defendant by the plaintiff,
2. the defendant’s estimate of the benefit, and
3. the defendant’s acceptance and retention of the benefit in circumstances which would make it unfair for him to retain it without paying the value of it. [Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1274 (11th Cir. 2009)]

The general rule in Florida is that the fair remedy for unfair enrichment is not available if there is an express agreement. [Ocean Commc’ns, Inc. v. Bubeck, 956 So.2d 1222, 1225 (Fla. 4th DCA 2007).]

Facts showed that the insurance companies did not distort the terms of the insurance. The policy explicitly warns consumers that flight cancellation coverage is not unlimited.

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

Although Arencibia did not read the terms of the policy before purchasing it, the eleventh district agreed with the district court that Arencibia was on request that “[t]erms, terms and exceptions apply “because the hyperlink in the offer box was conspicuous and clearly disclosed.

In addition, Arencibia does not deny that he received a full copy of the insurance shortly after the purchase and that he had ten days to review the insurance and cancel it for a full refund if he was dissatisfied for any reason. In Florida, a party is bound by its contract and required to know 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 itself of the insurance by making a claim under the insurance, and acknowledged that there was an agreement between the parties. The fact that Arencibia does not like the terms of the policy does not make the agreement impossible to enforce.

The district court’s disapproved of Arencibia’s unjustified wine-growing was established.

RICO

Section 1962 (c) of the RICO Charter requires a plaintiff to prove that a defendant participated in an illegal business “through a pattern of extortion.” 18 USC § 1962 (c).

A system of fraud requires proof of a material misstatement or omission or concealment of a material fact that is intended to defraud another of money or property. “Substantive” misrepresentations or omissions are those that have a natural tendency to influence, or may affect, the decision-maker to whom it is addressed. The misrepresentation or omission must be something that a person with ordinary caution would rely on.

Arencibia failed to reasonably claim a material misstatement, which is fatal to his RICO assertion. In addition, Arencibia failed to reasonably claim any damage caused by the alleged mail and telephone fraud.

Therefore, the district court rightly held that Arencibia could not prove any damage under RICO because he received exactly what he bargained for and paid for – insurance coverage for his return flight, with certain conditions and restrictions. In other words, Arencibia received the benefit of its find and has not suffered any damage or loss.

Consequently, his claim for RICO was correctly rejected.

It takes a great deal of courage to claim that an unread insurance policy provided coverage that the plaintiff wanted, or assumed he had purchased, when the words in the insurance policy are clearly limited to named hazards. It was ridiculous to accuse insurers of extortion because they did not pay damages for which there was no insurance. Arencibia and his lawyers should have read the policy and avoided this lawsuit. Insurers should consider a malicious indictment 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 district and the court should have sanctioned the frivolous trial and appeals.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of 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 a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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