Yes. Even if There is No Statutory Third Party Bad
Faith Cause of Action Available.
In Florida, there are two (2) causes of action for alleged Bad Faith in Settlement by a Liability Insurer (or "Third Party" Insurer). One is Common Law Bad Faith. The second is a Statutory Cause of Action under the Florida Bad Faith Statute, Section 624.155, enacted in 1990.
Last Thursday, a unanimous Supreme Court of Florida, with one Justice concurring in the result, responded to the Eleventh Circuit Court of Appeals in a case implicating Common Law Third Party Bad Faith Actions but the Federal Court was asking about Statutory Bad Faith. To reduce the likely confusion in this matter, the Florida Supreme Court rewrote and rephrased the Eleventh Circuit's questions about Florida "Bad Faith" Law. The Supreme Court also condensed those questions into one.
The Supreme Court then went on to answer (its own) reworded single question. The Court's answer certainly was foreseeable, and so is the result.
Here is the Court's own announced holding which describes the essential facts behind the question: "We hold that an insurer's tender of the policy limits to an insured in response to the filing of a civil remedy notice under section 624.155 by the insured, after the initiation of a lawsuit against the insured but before entry of an excess judgment, does not preclude a common law cause of action against the insurer for third-party bad faith."
The Supreme Court took only a slightly larger amount of words to state the rephrased question and then unanimously answer it "no":
DOES THE TENDERING OF THE POLICY LIMITS BY AN INSURER IN RESPONSE TO THE FILING OF A CIVIL REMEDY NOTICE UNDER SECTION 624.155 FLORIDA STATUTES (2005), BY THE INSURED AFTER THE INITIATION OF A LAWSUIT AGAINST THE INSURED BUT BEFORE ENTRY OF AN EXCESS JUDGMENT[,] PRECLUDE A COMMON LAW BAD FAITH CAUSE OF ACTION BY THE INSURED AND INJURED THIRD PARTIES?
Here is the Supreme Court's complete decision: Download macola_v. Government Employees Insurance Co. (Fla., Case No. SC05-1021, Opinion Filed Thursday, October 26, 2006).pdf.
In a nutshell, the procedural background of this case unravels in this pretty simple way. After an automobile accident, GEICO's Policyholder, Mr. Frances Quigley, was sued for personal injuries and property damage by Ms. Michelle Macola. The Policyholder, Mr. Quigley, sent a Civil Remedy Notice of Insurer Violation form to GEICO to cease and desist its alleged Bad Faith for failing to settle the Macola lawsuit against Quigley. In other words, Mr. Quigley was telling GEICO to settle with Macola. After GEICO's receipt of its Policyholder's Civil Remedy Notice, GEICO contended that it "cured" its alleged Bad Faith and tendered its policy limit -- sending the $300,000 alleged limit to its Policyholder Quigley and NOT to Ms. Michelle Macola, the Injured Claimant who sued Quigley in the underlying case. The Policyholder's lawyer specifically stated to GEICO that although the check was received it "did not constitute acceptance. [The Policyholder's lawyer] did not deposit or cash the check." (Florida Supreme Court slipsheet opinion at 4. [Italics added.]
In Florida, a Civil Remedy Notice of Insurer Violation form is required in order for anyone to pursue a Cause of Action under the Florida Bad Faith Statute. However, the sending of a Civil Remedy Notice of Insurer Violation form has never meant that the Plaintiff is required to pursue a Statutory Cause of Action. Moreover, it appears that the Plaintiffs here never filed any claim alleging the Florida Statutory Cause of Action.
Instead, GEICO was sued in two Common Law Third Party Bad Faith cases, one filed by Quigley and the other filed by Macola. The two Common Law Third Party Bad Faith cases were consolidated into one Federal case. The Federal District Judge was convinced that there was likely an election of remedies by the Plaintiffs between Common Law Third Party Bad Faith Claims, on the one hand, and Statutory Third Party Bad Faith Claims on the other hand. Alternatively, the Federal Judge held in favor of GEICO on the ground that if there was no "election of remedies," then there was a satisfaction because the policy limits were tendered.
The Florida Bad Faith Statute specifically provides however that Bad Faith remedies available in Florida are cumulative and not preemptive. Further, for decades Policyholders and Injured Claimants and all other Plaintiffs claiming Bad Faith Damages in Florida have been awarded Damages for far more than "policy limits" -- even where the policy limits were actually paid and cashed and deposited and not just 'tendered'.
The Federal Judge entered judgment in favor of GEICO for the reasons noted above. The Federal Trial Court's judgment was appealed to the Federal Eleventh Circuit Court of Appeals. Against this background of Florida Bad Faith Law and with these facts, then, the Federal Eleventh Circuit Court of Appeals certified its questions to the Supreme Court of Florida. The Supreme Court of Florida rephrased those questions into one, and answered the rephrased question, above. These particular Florida Third Party Bad Faith cases against GEICO are thus free to go on.
Note for future cases that the Supreme Court pointed out carefully in footnote 2 that it was not asked, and did not suggest, "whether the facts in this case would give rise to a common law cause of action for third-party bad faith ...."
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 LEGAL ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
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