In a fairly recent and unofficially reported decision, the Federal Eleventh Circuit Court of Appeals upheld a jury instruction in a Florida Bad Faith case: Download GEICO General Insurance Co. v. McDonald (11th Cir. Opinion Filed Nov. 30, 2008). The jury in that Third-Party Bad Faith case rendered a verdict in favor of the Plaintiffs-Policyholders. A Third-Party Bad Faith case involves a Liability Insurance Policy, as distinct from a First-Party Bad Faith case which involves an Insurance Policy issued directly to the Policyholder, such as a Homeowner's Insurance Policy or other Property Insurance Policy for example.
The jury instruction in the recent Federal Case charged the jury that the Defendant Liability Insurance Company "has the burden to show that there was no realistic possibility of settlement within policy limits." This comes straight out of Florida State Insurance Bad Faith Law. The Eleventh Circuit concisely held that this "was not an inaccurate statement of Florida law that misled the jury as it was taken directly from" the Florida State Court decision in Download Powell v. Prudential Property & Casualty Insurance Co. (Fla. 3d DCA 1991).
Parenthetically, the Eleventh Circuit quoted from an earlier First-Party Bad Faith case which relied on my Book, Litigation and Prevention of Insurer Bad Faith (now in its Second Edition, published by Shepard's/McGraw-Hill, 2009 Supplement in process to be published by West). In my Book, I reported that the legal standard governing a First-Party Insurer's settlement conduct is one of reasonableness. The Florida Appellate Court in the case of Download Cruz v. American United Insurance Co. (Fla. 3d DCA 1991) quoted and applied that standard in a First-Party Bad Faith case, appropriately enough. The GEICO General Court also quoted that legal standard of reasonableness governing a Third-Party Insurer's settlement conduct.
If the legal standards governing Insurers' settlement conduct in First-Party cases were ever different from those governing Insurers' settlement conduct in Third-Party cases, they may be merged in Florida now.
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