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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Expert Witnesses-Lawyers Testify On Insurance Issues.

In last month's Seminar at the Orange County Bar Association in Orlando, Florida, "Survey of Insurance Issues EVERYONE Should Know," one of my topics was an Overview and Recent Cases.  Two recent cases in particular, one Federal and one State, decided issues concerning the admissibility of Expert Testimony from Lawyers on Insurance topics and both were cases involving claims of Good Faith - Bad Faith.

 IN THIS NEW FEDERAL CASE, THE LAWYER-EXPERT WAS PROFERRED ON THE ISSUE OF LIABILITY POLICY LIMITS THAT WERE REDUCED AS ATTORNEY'S FEES AND COSTS WERE INCURRRED:  In Pueblo Country Club v. AXA Corporate Solutions Insurance Co., 2007 WL 951790 *5 (D. Colo. March 28, 2007), the Federal Court held that a jury is "entitled" to hear the testimony of a lawyer-Expert Witness presented by the policyholder that the insurance company defendant knew "that attorneys' fees and costs were reducing the available policy limits," even though the policyholder allegedly was exposed to a judgment in excess of the same policy limits which were being reduced by the insurance company's instructions to defense counsel that resulted in incurring the fees and costs.

STATES ALSO ALLOW EXPERT WITNESSES-LAWYERS TO TESTIFY ON INSURANCE ISSUES

Similarly, in Johnson v. Tennessee Farmers Mutual Insurance Co., 205 S.W.3d 365, 371-72 (Tenn.  2006), an Attorney-Expert testified to opinions that the  insurance company "failed to adequately evaluate the case, that it should have settled the case, and that its failure to do so was in bad faith."

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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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Florida Statute Conveys Additional Bad Faith Cause of Action, Court Rules.

     A new Florida appellate decision reinforces the absolute need for familiarity with local laws allowing Bad Faith causes of action:  Download Anthony_Rogers_M.D. v. Chicago Insurance Co. (Fla. 4th DCA Case No. 4D06-1255, Opinion Filed 05.16.07).7.pdf.

     In this new decision, the Florida appellate court held that Section 627.4147 of the Florida Statutes conveys a statutory cause of action for Insurer Bad Faith.  This is in addition to both the Florida Bad Faith Statute, Section 624.155, and the Florida common law.  The new statutory cause of action applies only to a certain few, however.  Section 627.4147 instead regulates insurance policies for persons who purchase a specified "professional liability policy" with a "medical malpractice insurer", said the Court in this new case.

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World Trade Center Insurance Claims Settlement: Confidentiality vs. Concealment Revisited.

    A post in this space on May 23, 2007 addressed the issue of Confidentiality vs. Concealment in or of Settlements of Bad Faith Claims under Florida law.  It is reported on May 24, 2007 that confidentiality provisions are found in a global settlement of unspecified World Trade Center Insurance Claims resulting from 911:  Charles V. Bagli, "Insurers Agree to Pay Billions at Ground Zero," New York Times Online, May 24, 2007.  It is unclear whether these confidentiality provisions apply to things other than the amount each insurance company participating in the settlement will pay.  It is unknown at this time whether the settlement agreement purports to address Insurance Coverage Claims, or whether it includes any alleged or potential Bad Faith Claims.

     It is also unclear whether discovery could be compelled in a Florida Court, on the ground that Florida law voids as concealment the attempted confidentiality of these settlement agreement provisions contained in a  settlement agreement reached in another State such as New York, in this case.   Further, what New York law may have to say about "confidentiality" vs. "concealment," if anything, is unknown to this writer.  To state the issue is the first step to be prepared for the issue.

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Settlement of Bad Faith Claims .....

  .... When is That Settlement Confidential and Protected,
                 And When is it Concealment and Void?

There may be an issue under Florida law, whether a settlement of Bad Faith Claims can be kept confidential by the parties as a provision of their settlement agreement, even with a Court's approval.   Under Florida Statute Section 69.081(4):

Any portion of an agreement or contract which has the purpose or effect of concealing a public hazard, any information concerning a public hazard, or any information which may be useful to members of the public in protecting themselves from injury which may result from the public hazard, is void, contrary to public policy, and may not be enforced.

    A "public hazard" under this statute includes any "person" or "procedure" "that has caused and is likely to cause injury."  Fla. Stat. § 69.081(1).    No Court shall enter an order or judgment, it is provided in this statute, "[e]xcept pursuant to this section," which order or judgment has, among other things, "the purpose or effect of concealing a public hazard" or "of concealing any information which may be useful to members of the public in protecting themselves from injury which may result from the public hazard."  Id. (3).

  Time and the Courts will tell which settlement of Bad Faith Claims is confidential and protected, and which is concealment and void.

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CatClaims, Coverage, Part Disclaimer With Part Payment ....

                            and Florida Statutory Bad Faith.

    Two days before this post, Florida's First District Court of Appeal issued a Catastrophe Claim decision in a First Party Bad Faith case.  The decision does not represent new law but it is significant.  The results are a reminder to people who have handled Claims of this kind and a caution to people who have not.  Here is a link to the case:  http://opinions.1dca.org/written/opinions2006/11-15-06/05-5503.pdf.

    Hurricane Ivan totalled the residence of Mr. and Mrs. Roy and Kerry Golmon in 2004.  Vanguard is the Golmons' Homeowner's Insurance Company.  Vanguard paid part of its policy limits for the residence, a fact which is buried in the opinion, but left unpaid some of the loss to Mr. and Mrs. Golmons' dwelling, and Vanguard did not pay any part of the Golmons' other claimed losses such as Other Structures, Personal Property, and Loss of Use among others.  Vanguard denied any remaining Coverage on the ground that is at the heart of many, many CatClaims Coverage disputes:  Vanguard refused to pay the full policy limit(s) "because the loss to the Golmons' property was caused by both wind damage, which was covered under the policy, and flood damage, which was not covered." 

    The Golmons sued Vanguard for breach of contract and for Florida Statutory Bad Faith.  Vanguard filed a motion to dismiss the Statutory Bad Faith counts which the Trial Court denied.  On appeal, Florida's First District applied established law to hold two things:  First, in Florida establishing Insurance Coverage is a necessary first step or condition to pursuing these Statutory Bad Faith Claims and, in addition, the Insurance Company would be prejudiced if it was forced to defend itself simultaneously on the Contract Claim and on the Bad Faith Counts.  The First District reached these twin holdings regardless of the fact that "Vanguard's attorney conceded at the hearing that the insurer had some liability under the policy".  (Vanguard paid part of its policy limit for loss that Vanguard apparently admitted is covered under its policy.)  The First District held that the Trial Court's finding that Insurance Coverage is undisputed in this case, is erroneous:  "Both the existence of liability and the extent of damages are elements of a statutory cause of action for bad faith that must be determined before a statutory cause of action for bad faith will lie."

    In quashing the Trial Court's Order, however, the First District strongly suggested that the Trial Court should consider abating but not dismissing the Bad Faith Claims against Vanguard while the case goes forward on the Contract Claims in which the issue of Coverage will be determined.
 
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.