Insurance Claims and Bad Faith Law Blog

Attorneys at Issue in Bad Faith Cases.

     The past two years have seen two new cases that have shaken Florida Insurance Law.  Neither case has been cited by other Courts -- yet.  This is the time to tell you about them.

     In Barry v. GEICO General Insurance Co., 938 So. 2d 613, 615-17 (Fla. 4th DCA 2006)(subscription required), an Attorney-Expert Witness testified to opinions that GEICO did not act in Bad Faith when it failed to settle the claim in that case, that the injured claimant "made it clear that she was not intending to settle", and that the actions of the Plaintiff and her Counsel "were inconsistent with a willingness to settle."  Here is the official Opinion released by the Florida Appellate Court.  The quoted summary of the Attorney-Expert's testimony appears on page 3 of the attached; see also pp. 5-7:  Download Barry_v. GEICO General Insurance Co. (Fla. 4th DCA Case No. 4D05.206 Opinion Filed Oct. 4, 2006).pdf.

     The U.S. District Court for the Middle District of Florida has expanded Barry's holding.  The District Court denied Plaintiffs' motions "to exclude evidence, argument, and references regarding the motives or conduct" of the claimants' attorney and the attorney's paralegal.  The Federal Court held in yet another Florida Bad Faith failure-to-settle case "that evidence and argument regarding the motives or conduct" of the claimants' attorney and the attorney's paralegal "is relevant and should not be prohibited."  Mendez v. Unitrin Direct Property & Casualty Insurance Co., 2007 WL 2696795 *3-*4 (M.D. Fla. Opinion Filed Sept. 12, 2007)(subscription required).  Here is the Middle District's official Opinion.  Its quoted holding will be found on pages 5-6 of the attached:  Download Mendez_v. Unitrin Direct Property & Casualty Insurance Co. (M.D. Fla. Case No. 8.06.CV.563, Opinion Filed Sept. 12, 2007).pdf.  The Mendez case has an interesting further history.  The case went to Trial which resulted in a Judgment for the Plaintiffs.  Thereafter, the Court's Online Docket shows that the case was settled.  The Federal lawsuit was then dismissed without prejudice in February, 2008.

     As I wrote at the beginning, Barry and Mendez have not been cited by other Courts as yet.  The only case known to include a cite to Barry is Mendez.  No known Court has cited to Mendez -- yet.

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No Bad Faith Claim, Coverage Not Decided: No Claims Handling Discovery.

     Where there is no pending Bad Faith claim, and Coverage is undetermined, GEICO did not have to provide "documents setting forth GEICO's general claims handling practices and procedures," including "among other things, [whether] GEICO trained its examiners regarding 'good faith claims handling,'" Florida's Third District Court of Appeal has recently held:  GEICO v. Rodriguez (Fla. 3d DCA Case No. 3D07.669, Opinion Filed June 20, 2007:  STATED NOT RELEASED FOR PERMANENT PUBLICATION).

     The nature of the lawsuit is interesting.  The appellate court describes it only as an "automobile negligence case".  The Court does not mention it, but in Florida Injured Plaintiffs who sue a Policyholder for "automobile negligence" cannot sue an Insurance Company until they hold a judgment against the Policyholder.  The Rodriguezes sued one Blanchard, a GEICO Policyholder.  Blanchard denied liability and alleged an affirmative defense of settlement.  In the Rodriguez lawsuit against him, Blanchard affirmatively alleged that Blanchard's Insurance Carrier, GEICO, had already settled with the Rodriguezes before they filed their lawsuit against Blanchard.

     The Rodriguezes, according to the appellate opinion, then served or made "discovery requests" upon GEICO including for GEICO's documents setting forth its claims handling practices and procedures and whether it trained its claims handlers in good faith claim handling practices.  This means, since GEICO could not have been a party to the Rodriguez lawsuit against Blanchard, that GEICO was a nonparty in that lawsuit and had to be subpoenaed for these documents.  None of this background is set out in the opinion on appeal, where the appellate court treated GEICO as a party raising an affirmative defense of settlement, or "accord and satisfaction," although only Blanchard could raise that affirmative defense as the ONLY party Defendant in the Rodriguez lawsuit.

     GEICO moved for a protective order, which the Trial Court denied, and the dispute reached the appellate court by a Petition for Writ of Certiorari, or request for a discretionary review of the Trial Court's ruling.  On appeal, the Rodriguezes continued to argue that GEICO "opened the door" to discovery of its claims handling practices because GEICO asserted "the  defense of settlement."   Even though Blanchard the GEICO Policyholder raised the affirmative defense--so that if anyone, Blanchard and not GEICO "opened the door"--the appellate court ignored the procedural posture and went straight to the issue of whether GEICO under these circumstances should be compelled to produce documents concerning its claims handling practices.  The "defense of settlement" was no door opener to such discovery, not in the eyes of the Third District which wrote in its opinion:

    

The argument that GEICO somehow opened the door to inquiry regarding its claims handling procedures by interposing the defense of settlement is without merit.  Either the case was settled, or it was not.  The content of GEICO's internal claims handling procedures is immaterial.

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Katrina CatClaims Revisited: State Farm Settles, Is Sued Again.

    It appears that State Farm may have been sued again for Bad Faith as a result of Hurricane Katrina Catastrophe Claims -- indirectly, this time.

    There was once a settlement agreement, among many policyholders and State Farm, in Mississippi.  The proposed settlement agreement was subject to Federal Court approval.  The Federal Judge was confronted with more questions than answers when he was presented with the proposed settlement for his approval.  The Federal Judge refused to approve it, at least until the many questions were answered.

     State Farm then reportedly reached a settlement agreement of many of the same claims with the Mississippi Insurance Commissioner's Office.  This lengthy previous history was summarized in "Update to the Update:  New Settlement in Mississippi," posted on March 20, 2007 on "Insurance Claims And Issues".   

    It is now reported that the State of Mississippi, through the Mississippi Attorney General, filed a new Complaint on Monday, June 11, 2007 in Mississippi State Court.  The new Complaint contains allegations, it is reported, that State Farm breached the (first) settlement agreement and thus breached a contract.  The new Complaint contains demands for compensatory and punitive damages.  More will be posted as the Complaint becomes available.  As of the night of June 11, 2007, there was a momentary silence on the subject on the web sites of both the Mississippi Attorney General and the Mississippi Insurance Commissioner.

     Here is a link to State Farm's Press Release of June 11, 2007,which State Farm entitled "Mississippi Attorney General's Lawsuit Threatens to Disrupt Hurricane Katrina Settlement Process with MIssissippi Insurance Department". 

     Here is a link to the whole available story on "Insurance Claims And Issues".
   
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Postscript to Secrecy.

 A postscript to the concerns about Secrecy in Settlements, which can  particularly be a concern in Bad Faith Cases in many jurisdictions, is found at Insurance Claims and Issues.   In addition to the previous posts found here concerning "Settlement of Bad Faith Claims .... When is That Settlement Confidential and Protected, And When is it Concealment and Void? " on May 23, 2007, and a second post here, addressing potential issues raised by the "World Trade Center Insurance Claims Settlement:  Confidentiality vs. Concealment Revisited" on May 24, 2007, now see also a column, "America's Secret Obsession", published in the Washington Post on Sunday, June 10, 2007 and examined in the postscript on Insurance Claims and Issues.

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