Florida Intermediate Appellate Court Affirms Summary Judgment In Bad Faith Failure To Settle Case; Aligns With Federal Courts On Bad Faith “Set ups”

In Goheagan v. American Vehicle Ins. Co., ___ So. 3d ___, 37 Fla. L. Weekly D1388a (Fla. 4th DCA Jun. 13, 2012), the Fourth District upheld a summary judgment in a third-party common law bad faith case premised on an insurer’s alleged failure to settle. The claimant’s decedent was rendered in a coma, from which she never recovered, in a February 24, 2007 vehicular accident. She died on May 12, 2007. The insured quickly reported the loss and the insurer sent an excess letter. By March 1, 2007, the claims adjuster had concluded that liability was clear and that damages exceeded the minimal policy limit. The adjuster timely set about to adjust the claim, and learned early on from the decedent’s stepfather that the mother was attorney-represented. The adjuster attempted to learn from the mother the name of the attorney in five separate telephone calls, but she was, on each occasion, put off by the mother. On April 19, the adjuster learned that the mother/personal representative had filed a wrongful death suit. Subsequent attempts to tender policy limits were rejected, and the lawsuit resulted in an excess verdict.

In the ensuing bad faith action, the court granted the insurer’s motion for summary judgment. On appeal, the claimant argued that the insurer should have tendered a check for policy limits despite the fact that it knew she was represented by an attorney. However, the appellate court stated that it would have been “a check that could not be cashed.” The court cited Fla. Admin. Code R. 69B-220.201(3)(i), which provides that “[a]n adjuster shall not negotiate or effect settlement directly or indirectly with any third-party claimant represented by an attorney, if the adjuster has knowledge of such representation, except with the consent of the attorney.” The court reasoned that this administrative rule precluded the adjuster from proffering a settlement check to a claimant known to be attorney-represented. The Fourth District also rejected the affidavit of an expert on insurance claims offered by the claimant in opposition to the summary judgment motion, holding that it contained “factual and legal conclusions” that were immaterial to the question of whether the insurer failed to act with due regard to the insured’s interests.

The court cited federal court cases, among them Barnard v. Geico General Insurance Co., 2011 WL 2039560 (N.D. Fla. May 25, 2011), aff’d, 448 F. App’x 940 (11th Cir. 2011), Aboy v. State Farm Mutual. Auto. Ins. Co., 394 F. App’x 655 (11th Cir. 2010), and McGuire v. Nationwide Assurance Co., 2012 WL 712965 (M.D. Fla. Mar. 5, 2012), all of which involved apparent bad faith “set ups.” In which claimants and their attorneys had arguably sought to prevent insurers from settling claims against their insureds. The court stated that bad faith only exists where an insurer sought to further solely its own interest, instead of that of its insured, and not where the insurer had in good faith attempted, albeit unsuccessfully, to settle the case.

The court cited G. Young & J. Clark, The Good Faith, Bad Faith, and Ugly Set-up of Insurance Claims Settlement, 85 Fla. Bar. J. 9, 14-15 (Feb. 2011), for the proposition that “the claim for ‘bad faith’ failure to settle should be exactly that — only for situations in which the insurer truly is refusing in bad faith to settle, not when it is in fact attempting to settle the claim.” Despite a vigorous dissent by Judge Polen, the Fourth DCA aligned itself with the Florida federal district courts, which have almost uniformly expressed antipathy toward any hint of a set up. Whether this inclination will be upheld by the Florida Supreme Court in light of its seemingly conflicting decision in Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004), however, is a question for another day.