10/24/2013 Daniel Mitchell, Barr Murman 1

10/24/2013
YOU GOTTA HAVE FAITH:
HOW SMART HANDLING PREVENTS BAD FAITH
By Daniel P. Mitchell, Esq.
October 24, 2013
TEN PITFALLS OF
INSURER BAD FAITH
THE BAD FAITH SETUP TRAP
Nichols v. Hartford Ins. Co. of the
Midwest, 834 So. 2d 217 (Fla. 1st DCA 2002)
 Acceptance of settlement offer must be a
“mirror image” of the offer
 There must be a meeting of the minds as
to the offer’s essential terms
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THE MULTIPLE CLAIMANT
TRAP
Farinas v. Fla. Farm Bureau Ins. Co., 850 So.
2d 555 (Fla. 4th DCA 2003)
 Insurer should attempt to settle as many
claims as possible in a multiple claimant
situation
 Insurer may not indiscriminately settle with
one or more parties for full policy limits
 Insurer should attempt to settle more
dangerous claims where settlement of all
claims is not possible so as to minimize the
risk of excess judgments
 Insurer should consult with insured
THE CIVIL REMEDY TRAP
Oak Casualty Ins. Co. v. Travelers
Indemnity Co., 778 So. 2d 483 (Fla. 3d DCA
2001)
 Failure to respond to CRN within 60 day
period creates presumption of bad faith that
shifts burden to insurer to show why it did
not respond
THE CUNNINGHAM
PROPOSAL TRAP
Berges v. Infinity Ins. Co., 806 So. 2d 504
(Fla. 2d DCA 2001)
 Lower court case to Berges v. Infinity Ins.
Co., 896 So.2d 665 (Fla. 2004)
 Did not reject argument that failure to
accept a Cunningham proposal was act of bad
faith
 See Cunningham v. Standard Guaranty
Ins. Co., 630 So.2d 179 (Fla. 1994)
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THE FAILURE TO CURE TRAP
Paz v. Fidelity Nat’l Ins. Co., 712 So. 2d
807 (Fla. 3d DCA 1998)
 Insurer’s agreement to pay damages (as
opposed to actual payment of damages)
within 60 days of CRN did not constitute
“cure” and did not prohibit bad faith suit
THE COMMUNICATIONS
WITH INSURED TRAP
Boston Old Colony Ins. Co. v. Gutierrez,
386 So. 2d 783 (Fla. 1980)
 Insurer must advise insured of settlement
opportunities, advise as to probable outcome
of litigation, warn of possibility of excess
judgment, and advise insured of steps he or
she might take to avoid same
THE NO-DEMAND-WITHINPOLICY-LIMITS TRAP
Thomas v. Western World Ins. Co., 343 So.
2d 1298 (Fla. 2d DCA 1977)
 Insurer may be liable for bad faith even in
absence of a settlement offer
 Insurer has affirmative duty to investigate
claim and initiate settlement negotiations
where liability is clear and injuries so serious
that a judgment in excess of policy limits is
likely
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10/24/2013
THE FAILURE TO RESPOND
TRAP
Powell v. Prudential Prop. & Casualty Ins.
Co., 584 So. 2d 12 (Fla. 3d DCA 1991)
 Whether insurer’s failure to disclose
policy limits upon request by claimant
constitutes bad faith is an issue of fact
 This would include a failure to respond to
a request for disclosure pursuant to Section
627.4137
THE COBLENTZ TRAP
 Coblentz v. American Surety Co. of N.Y.,
416 F.2d 1059 (5th Cir. 1969)
 Liability insurer with notice of action
against insured that wrongfully refuses to
defend is bound as to all material matters
determined in a consent judgment against
insured, in absence of fraud or collusion
 Same applies where insurer offers defense
under reservation of right and insured
rejects defense. Taylor v. Safeco Ins. Co.,
361 So.2d 743 (Fla. 1st DCA 1978)
THE STATE COURT TRAP
Goheagan v. American Vehicle Ins. Co.,
107 So. 3d 433 (Fla. 4th DCA 2012)
Whether insurer has acted in bad faith is a
question of fact determined under totality of
circumstances
 Bad faith is decided by reviewing steps
taken by insurer to offer to settle, and not
the actions of claimant
 Insurer bears burden of proving that there
was no realistic possibility of settling
 Court on rehearing overturned summary
judgment for insurer
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10/24/2013
TEN TALISMANS
AGAINST BAD FAITH
FEDERAL COURT
Aboy v. State Farm Mut. Auto. Ins. Co., ___
F. Supp. 2d ___, 2010 WL 727967 (S.D. Fla.
Jan. 5, 2010), aff’d, 394 F. App’x 655 (11th
Cir. 2010)
 Federal Courts hold that if insurer makes
reasonable efforts to settle case, even if it is
prevented from doing so by claimant
attorney’s machinations, outcome will likely
be a finding of no bad faith
 Summary Judgment are frequent
 Remove cases to Federal Court where
possible
INSURED’S BEST INTEREST
Davidson v. Gov't Employees Ins. Co., ___ F.
Supp. 2d ___, 2010 WL 4973494 (M.D. Fla.
Oct. 26, 2010), aff’d, 422 F. App'x 790 (11th
Cir. 2011)
 “GEICO’s continuous attempts to settle by
tender of the full policy limits demonstrates
that GEICO acted in good faith”
 Issue is whether insurer’s motivation was
to act in insured’s best interests
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INVESTIGATION
Aboy v. State Farm Mut. Auto. Ins. Co., ___
F. Supp. 2d ___, 2010 WL 727967 (S.D. Fla.
Jan. 5, 2010), aff’d, 394 F. App’x 655 (11th
Cir. 2010)
 Insurer is entitled to a reasonable time to
investigate claim
 No obligation exists to accept a settlement
offer or to tender policy limits without time
for investigation
• INITIATING REQUESTS FOR
INFORMATION
Aboy v. State Farm Mut. Auto. Ins. Co., ___
F. Supp. 2d ___, 2010 WL 727967 (S.D. Fla.
Jan. 5, 2010), aff’d, 394 F. App’x 655 (11th
Cir. 2010)
 Insurer is entitled to make reasonable
requests for information substantiating
claimant’s damages and is entitled to
conclude that claimant will respond to such
requests
TENDER
Johnson v. Geico Gen. Ins. Co., 318 F.
App'x 847 (11th Cir. 2009)
 If insurer tenders policy limits (absent a
demand) as soon as it becomes reasonably
clear that insured is liable and that damages
exceed policy limits, then under totality of
circumstances, no reasonable jury could find
bad faith
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COMMUNICATION
Knipper v. Allstate Prop. & Casualty Ins.
Co., ___ F. Supp. 2d ___, 2012 WL 1004844
(N.D. Fla. Mar. 26, 2012)
 Claimant requested financial affidavit from
insured and insured refused to provide it
 Court concluded that Allstate’s efforts to
secure financial affidavit and its
communication with insured regarding
consequences of failure to provide affidavit
were adequate
MULTIPLE CLAIMANTS
Valle v. State Farm Mut. Auto. Ins. Co., ___
F. Supp. 2d ___, 2010 WL 5475608 (S.D. Fla.
Jan. 15, 2010), aff’d., 394 F. App'x 555
(11th Cir. 2010)
 10/20 policy with 8 injured plaintiffs
 Not unreasonable for insurer to request
that parties engage in a collective
settlement conference
 Approves offer of policy limits to mulitple
claimants on “global basis”
DOCUMENTATION
Davidson v. Gov't Emplovees Ins. Co., ___
F. Supp. 2d ___, 2010 WL 4973494 (M.D. Fla.
Oct. 26, 2010), aff’d, 422 F. App'x 790 (11th
Cir. 2011)
 Insurer’s careful documentation of all
communications with insured was sufficient
to support summary judgment despite claim
that insurer inadequately conveyed
settlement offers to insured
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RELEASES
Cardenas V. Geico Casualty Co., 760 F.
Supp. 2d 1305, 1306 (M.D. Fla. 2011)
 Unless claimant’s demand is conditioned
on a specific release, insurer’s submission of
a proposed release, advising claimant that it
would agree to changes requested by
insured, does not amount to bad faith
RESPONDING TO REQUESTS FOR
INFORMATION
Davidson v. Gov't Emplovees Ins. Co., ___
F. Supp. 2d ___, 2010 WL 4973494 (M.D. Fla.
Oct. 26, 2010), aff’d, 422 F. App'x 790 (11th
Cir. 2011)
 Insurer’s timely response to request for
information under Section 627.4137, Florida
Statutes, did not support finding of bad faith
LEGISLATIVE UPDATES
 SB 1284 (2013)
 HB 327; SB 1224 (2012)
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10/24/2013
Thank you!
Daniel P. Mitchell, Esquire
Email: [email protected]
Phone: (813) 223‐3951
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