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