Southern District of Florida holds that material fact issues precluded summary judgment for insurer in bad faith case

By Daniel P. Mitchell, Board Certified Civil Trial Lawyer

In Tolz v. GeicoGeneral Insurance Company, ___ F. Supp. 2d ___, 22 Fla. L. Weekly Fed. D221a (S.D. Fla. Jan. 19, 2010), the U.S. District Court held that material fact issues regarding when the insurer knew that its insured may be liable for the underlying vehicular accident, and whether the insurer kept its insured informed, precluded summary judgment for the insurer in a bad faith action for extracontractual damages. The court distinguished on its facts Alog v. State Farm Mutual Auto. Ins. Co., ___ F. Supp. 2d ___, 2010 WL 727967 (S.D. Fla. Jan. 5, 2010), where the same district court granted summary judgment in an insurer’s favor, holding that no reasonable jury could find bad faith on the insurer’s part. The Alog court reasoned that the insurer had a right to investigate the extent of the injured claimant’s injuries before initiating settlement negotiations, and that it did not unreasonably delay in tendering its policy limits after completing its investigation. Curiously, the Alog court relied on Gauss v. Fortune Ins. Co., 523 So.2d 1177, 1178 (Fla. 5th DCA 1988), a case decided before State Farm Mut. Auto. Ins. Co. v. LaForet, 658 So.2d 55, (Fla. 1995) and Berges v. Infinity Ins. Co., 896 So.2d 665, (Fla. 2004), both of which hold that issues concerning an insurer’s bad faith are ordinarily for the jury. It is doubtful that a Florida state court would follow Gauss in the wake of Laforet and Berges, neither of which the Alog court cited. The Alog case is illustrative of the fact that the Florida federal courts are a much more friendly forum to insurers in bad faith actions. Indeed, the Tolz court, as noted, did not disagree with Alog’s application of Florida bad faith law, but instead, distinguished the case on its facts. Insurers sued in Florida for bad faith would be well-advised to consider removal of cases filed in state court, where diversity jurisdiction exists. Florida bad faith law is a complex, nuanced field and a trap for unwary insurers.