Articles Posted in Bad Faith

In a recent case, the Florida Supreme Court issued an opinion in an appeal involving a certified question about whether a personal injury damages award must be reduced by a payment the plaintiff received to settle a bad faith claim against his uninsured motorist insurance carrier. The two laws at issue in the case were sections 768.041(2) and 768.76(1), Florida Statutes (2012).

The Respondent/plaintiff (Respondent) was badly injured in a car crash. Following the accident, he sued the Petitioner/defendant (Petitioner) bringing a vicarious liability claim based on the Petitioner’s co-ownership of the other automobile involved in the crash. Additionally, the Respondent also sued his own uninsured motorist insurance carrier to recover policy benefits for statutory bad faith damages. The Respondent and his insurer settled prior to the trial for $4 million. The subsequent trial against the Petitioner resulted in a $30 million jury verdict for the Respondent. The Petitioner then asked the trial court to set off the pre-trial $4 million insurance settlement against the damages award, but the trial court denied the motion.

On appeal, the Second District Court of Appeals affirmed the denial of the setoff request. Additionally, it certified a two part question: Is a settlement payment made by an uninsured motorist insurer to settle a first-party bad faith claim subject to setoff under section 768.041(2) or a collateral source within the meaning of section 768.76? The appeals court answered no to both parts of the question, ultimately holding that neither statute authorized a setoff in the present case. The appellate decision explained that writing on a blank slate, it would have found the Petitioner entitled to a setoff under section 768.041(2), but it decided that this Court’s case law precluded that result.

In a recent case, the United States Court of Appeals for the Eleventh Circuit issued an opinion in an appeal involving a bad faith claim in an insurance case under Florida law. The plaintiff-appellant was injured in a car accident and subsequently sued the defendant-appellee, USAA General Indemnity Company, for bad faith. At trial, after the parties had conducted discovery, USAA moved for summary judgment, which the district court granted. The court concluded that there was no genuine dispute as to the bad faith claim because USAA had, at most, acted negligently in handling the claim. While that alone was sufficient for summary judgment in the eyes of the district court, the court further concluded that no reasonable jury could find USAA’s conduct caused the plaintiff to obtain the excess judgment against the insured party because the evidence showed that the plaintiff’s lawyer never intended to settle the case, granting summary judgment. The plaintiff then filed a timely appeal.

The accident that triggered the case involved three drivers: the insured, the plaintiff, and a non-party. On July 29, 2017, the insured lost control of his van and struck the non-party. The collision caused the insured to veer into oncoming traffic, landing on top of the plaintiff’s vehicle. The plaintiff suffered catastrophic injuries, including a torn aorta and several broken bones. He was airlifted from the crash site to the hospital, where he remained in a medically induced coma in the ICU for ten days before spending an additional three weeks in the hospital and rehabilitation facilities. A few days after the accident, USAA warned the insured of the possibility of an excess judgment and then again on August 8 and in a letter on October 26. Additionally, USAA began to investigate the case by collecting statements, corresponding with the plaintiff’s attorney, and obtaining the police report. Eventually, USAA tendered the policy limits, offering to settle with the plaintiff in exchange for a release of liability. The plaintiff’s attorney never offered to settle or sent a counteroffer.

Following the district court’s granting of summary judgment, the plaintiff filed an appeal contending that the district court erred because a reasonable jury could find in his favor on both the elements of a bad faith claim. Bad faith claims under Florida law are made up of two elements: (1) bad faith conduct by the insurer, which (2) causes an excess judgment to be entered against the insured. The Eleventh Circuit opinion emphasizes the critical inquiry in a bad faith action is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment. Applying a totality of the circumstances analysis, the court was satisfied that there was a genuine issue of material fact as to whether USAA’s handling of the insured’s claim amounted to bad faith. The appellate decision first looked at the delay in initiating settlement negotiations. The court then points out the delay by USAA in providing information to the plaintiff and his attorney necessary to settle the case. Finally, regarding causation, the court found that a reasonable jury faced with the record could find that USAA caused, or at least contributed substantially, the entry of the excess judgment against the insured. The Eleventh Circuit reversed and remanded the decision to the lower court.

Florida insurance companies review thousands of property damages claims a year. In an effort to expedite claims, companies require claimants to abide by various requirements. Many companies enforce a requirement to provide “sworn proof of loss.” Insurance companies claim that requirement allows them to assess claims quickly and fairly. Issues often arise when a claimant suffers a loss but fails to abide by the proof of loss requirement.

Several Florida cases address lawsuits involving a claimant’s failure to provide a sworn proof of loss. Together the cases hold that if a claimant files a lawsuit against an insurance company before submitting a required sworn proof of loss, the company is relieved of its duties under the policy, thus barring the lawsuit. However, if the claimant submits the proof of loss untimely, but before filing a lawsuit, courts will permit the lawsuits and determine whether the delay prejudiced the company.

Recently, a Florida appeals court issued an opinion addressing a case involving an untimely sworn proof of loss. The homeowner purchased an insurance policy from the company in 2017. A condition of the policy was that the insurance company had “no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us.” The homeowner appealed the lower court’s summary judgment ruling in favor of her home insurance company. At issue is a policy that requires the claimant to send a sworn proof of loss to the company within sixty days of the company’s request.

Under Florida law, those who bring a bad-faith claim against an insurance company for failing to settle a lawsuit must prove various elements. One element involves establishing that the insurance company’s conduct caused the insured’s loss. There are different ways to demonstrate this requisite caution element. One such method is by providing evidence that the insured experienced an “excess judgment” because of the company’s actions.

Typically, excess judgments must exist for the court to have jurisdiction to hear a Florida bad faith insurance claim. Excess judgments refer to instances when a judgment in a case is for a higher amount than the insured party has under their insurance policy limit. Excess judgments leave the at-fault party personally liable to the victim for their losses in these situations. Further, it fails to fully compensate the injury victim for damages because individual parties often lack the funds to pay a claim.

Bad faith arises when the insurance company owes the insured a duty, and the company breaches the duty, and because of the breach, an injury occurs. While Florida law requires insurance companies to settle a case where a reasonably prudent person would do so, mere negligence does not amount to bad faith.

The District Court of Appeal issued an opinion in favor of a homeowner’s in a Florida bad faith insurance dispute. According to the record, lightning struck the homeowner’s residence in July 2009, causing serious property damage. The owner filed a claim with his insurance provider, who determined the amount of loss and made payments over eight years. However, in 2017 the homeowner disputed the paid amount, and the insurance company invoked the appraisal provision. While the appraisal process was ongoing, the owner filed a notice of his intent to file a bad faith claim against the insurance company. Amongst several claims, the insurance company argued that the sixty-day cure period was tolled pending the appraisal award and payment cured the bad faith allegations.

Under Florida law, insurance companies maintain two distinct duties: contractual and statutory. As such, first, they must timely evaluate and pay benefits. In most cases, the insurance policy conditions dictate how the parties must proceed before an insurer fulfills a claim. For example, as is the case in this situation, the provider might maintain the right to invoke an appraisal.

Second, they must act in reasonably good faith in evaluating claims. If a party experiences damages by an insurance company’s failure to comply, they may pursue civil action against the company.

The District Court of Appeal in Florida issued a decision in an insurance coverage dispute in a case involving the insurance company’s liability provision. According to the facts, the insurance company insured the homeowner’s residence. A failed cast iron sanitary plumbing system in the home caused water to escape and cause damage to the dwelling. The cast-iron pipes deteriorated because of wear and tear, deterioration, and corrosion.

The insurance company permitted coverage for the water damage for $10,000, under the Limited Water Endorsement (LWD) in the policy. The homeowners claimed that the insurance company owed them additional funds for the cost of tearing out and replacing the concrete slab. The owners cited language in the primary policy, which stated that the company covered losses related to water damage, including the cost of tearing out and replacing necessary parts. Finally, the parties agree that the policy does not cover the repair or replacement costs of the corroded pipes.

The parties agree to most of the policy terms; however, they disagree with the liability provision in the LWD endorsement. The company argues that the $10,000 applies to water damage and the related costs, whereas the homeowners contend that the limitation applies only to the water damage.