PBCBA BAR BULLETINS pbcba_bulletin_May 2019 | Page 20

PERSONAL INJURY C o r n e r

Elements of Insurance Bad Faith
TED BABBITT
Harvey v GEICO Gen. Ins. Co., 259 So. 3d 1
(Fla. 2018) is an excellent treatise on the
fundamental principles of insurance bad
faith in Florida. The case involved a $8.47
million verdict in a death case involving a
51-year-old plaintiff survived by a wife and
three children. It was undisputed that the
automobile accident which resulted in the
death was clearly the fault of the insured
and that the probabilities of a verdict far
in excess of the $100,000.00 liability policy
was likely to occur.
Prior to filing suit, the plaintiff’s attorney
sought a statement from the insured driver
for the purpose of determining what other
coverage or assets might be available
to cover the incident. The adjuster for
GEICO failed to even inform the insured
that the statement was requested and
did not even respond to a letter from the
plaintiff’s attorney regarding the taking of
such a statement. The insured specifically
requested GEICO to inform the plaintiff’s
attorney that he was cooperating fully,
and the adjuster supervisor specifically
instructed the adjuster to relay that
message to the plaintiff’s attorney, but the
adjuster never did.
Subsequently a bad faith action was
brought against GEICO on behalf of its
insured which resulted in a $9 million
verdict against GEICO and a finding by the
jury that GEICO had acted in bad faith. The
case went up to the Fourth District Court of
Appeals which reversed, finding that as a
matter of law the evidence was insufficient
to establish bad faith and that there was
evidence that the insured had contributed
to the excess verdict and that, therefore,
GEICO could not be held liable.
The Supreme Court reversed the Fourth
District reiterating the law of Florida on bad
faith litigation as set forth in the seminal
cases of Boston Old Colony Insurance Co.
v. Gutierrez, 386 So. 2d 783 (Fla. 1980) and
Berges v. Infinity Insurance Co., 896 So. 2d
665 (Fla. 2004). In Boston Old Colony, supra ,
at 785 the Supreme Court held
“in handling the defense of claims against
its insured,” the insurer “has a duty to use
the same degree of care and diligence as
a person of ordinary care and prudence
should exercise in the management of his
own business. This duty arises from the
nature of the insurer’s role in handling the
claim on the insured’s behalf – because
the insured “has surrendered to the insurer
all control over the handling of the claim,
including all decisions with regard to
litigation and settlement, then the insurer
must assume a duty to exercise such
control and make such decisions in good
faith and with due regard for the interests
of the insured.” We explained in great detail
what this duty requires of insurers:
This good faith duty obligates the insurer
to advise the insured of settlement
opportunities to advise as to the probable
outcome of the litigation, to warn of the
possibility of an excess judgment, and
to advise the insured of any steps he
might take to avoid same. The insurer
must investigate the facts, give fair
consideration to a settlement offer that
is not unreasonable under the facts, and
settle, if possible, where a reasonably
prudent person, faced with the prospect
of paying the total recovery, would do so.
Because the duty of good faith involves
diligence and care in the investigation and
evaluation of the claim against the insured,
negligence is relevant to the question of
good faith.
In Harvey at 13 the insurer did advise its
insured of the likelihood of an excess
judgment and tendered the limits of the
policy only nine days after the accident.
Nevertheless, the Supreme Court in Harvey,
supra, explained why these actions did
not absolve the insurer of potential bad
faith liability. An insurer is not absolved
of liability simply because it advises its
insured of settlement opportunities, the
probable outcome of the litigation, and the
possibility of an excess judgment. Rather,
the critical inquiry in a bad faith 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.
In Harvey at 13, the Supreme Court makes
PBCBA BAR BULLETIN
20
clear that there is an affirmative duty on
the part of an insurer in a significant injury
case to initiate negotiations in order to get
the case resolved on behalf of its insured.
In a case “[w]here liability is clear, and
injuries so serious that a judgment in excess
of the policy limits is likely, an insurer has
an affirmative duty to initiate settlement
negotiations.” Powell v. Prudential Prop. &
Cas. Ins. Co., 584 So. 2d 12, 14 (Fla. 3rd DCA
1991). In such a case, where “[t]he financial
exposure to [the insured] [i]s a ticking
financial time bomb” and “[s]uit c[an] be
filed at any time,” any “delay in making an
offer under the circumstances of this case
even where there was no assurance that
the claim could be settled could be viewed
by a fact finder as evidence of bad faith.”
Goheagan v. Am. Vehicle Ins. Co., 107 So. 3d
433, 439 (Fla. 4th DCA 2012) (citing Boston
Old Colony, 386 So. 2d at 785).
The Fourth District relied in large part on
Federal cases which have announced law
inconsistent with Boston Old Colony, supra,
and Burgess, supra.
Federal citations
other than those of the United States
Supreme Court are not binding on a Florida
Court and, in fact, Federal cases granting
summary judgment based on the Federal
rules have limited precedential value in
Florida summary judgment cases because
Florida law is different with respect to
summary judgment. The Supreme Court so
stated at Page 20 Footnote 2 and cited Byrd
v. BT Foods, Inc., 948 So. 2d 921, 923–24 (Fla.
4th DCA 2007).
(Continued on next page)
Visit our CLE library
cle.palmbeachbar.org