Claims and Bad Faith Law Blog

FEWER HOMEOWNER'S POLICIES, FEWER HOMEOWNERS CLAIMS FOR BAD FAITH?

Fewer Homeowner's Policies may mean fewer bad faith claims but the claims that are made may result in larger awards.

 

Beware of averages and the meaning of averages.  "New-home sales tumbled 61.8 percent in the Northeast" and averaged 11.5% over the entire country.  "Economists Unfazed as Sales of New Homes Slip 11.5%," p. B5, col. 1 (Reuters report, New York Times Nat'l ed., Tuesday, October 27, 2015).

Do fewer homeowner's policies -- in particular, disproportionately fewer homeowner's policies to be issued in coming weeks and months in the Northeast -- mean fewer homeowner's insurance bad faith claims?  The numbers of these claims will undoubtedly decrease as well, but the awards on these bad faith claims may rise.

There are at least three reasons, all related to the economy.  All three are going to be in the minds of homeowner's insurance companies and their defense counsel:

1. There are fewer homeowner's policies because there are fewer people who can afford to buy new homes.  When these new homeowners make bad faith claims, it will be because they are looking for large awards to compensate them for financial distress in what is for them a bad economy.
2. Attorneys who represent these policyholders will have fewer bad faith claims available for representation and thus for awards and for their fees.  Attorneys will have incentives to maximize the awards and their fees in the few homeowner's insurance bad faith claims available in this distressed economy.
3. To the degree that the future bad faith claims are decided by juries, the jury pool will necessarily include people who cannot themselves afford new homes and who do not even have the opportunity to purchase homeowner's insurance.  To the extent that they may be inclined to blame anyone, as between the homeowners and the homeowners' insurance companies, they will not blame the homeowners.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements).  All rights reserved.

NO "REALISTIC POSSIBILITY TO SETTLE" IS AN AFFIRMATIVE DEFENSE, CARRIER'S BURDEN.

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In a decision in line with the decisions of many other Courts in insurance-bad-faith-failure-to-settle cases, a U.S. District Judge in the Southern District of Florida has denied a policyholders' motion for partial summary judgment on the legal effect of whether the insurance carrier had a realistic possibility of settling the underlying case.  The Court held in the bad faith case that "whether an insurer had a realistic opportunity to settle is relevant to the determination of bad faith, and that the insurer bears the burden of proof on this issue."  Lopez v. Allstate Fire & Cas. Ins. Co., Case No. 14-20654-Civ-COOKE/TORRES, 2015 WL 5320916, *3 (S.D. Fla. September 14, 2015).

The Court cited settled law in the Powell case, Powell v. Prudential Prop. & Cas. Ins. Co., 584 So. 2d 12, 14 (Fla. 3d DCA 1991), review denied, 598 So. 2d 77 (Fla. 1992), in support of its holding along with two other U.S. District Court decisions on point from the Northern District of Florida.

What is at first surprising about this ruling, and really the only thing about this ruling that is potentially surprising, is that in so ruling the Court in this case agreed with the insurance carrier's argument that the insurance carrier bears the burden of proof on this affirmative defense.  After a moment's thought, this is not so surprising.  Defendants like the insurance carrier in this case bear the burden of proving their affirmative defenses.  If the Court was going to allow this crucial affirmative defense to stand as pleaded, then the carrier-defendant had to acknowledge that it bears the burden of proving it.

Here is the affirmative defense which the Court accordingly ruled withstood the plaintiffs'-policyholders' motion for partial summary judgment on the insurance-bad-faith-failure-to-settle claim alleged in Lopez:

There was no realistic possibility of settlement within the policy limits pursuant to DeLaune v. Liberty Mutual Ins. Co., 314 So. 2d 601 (Fla. 4th DCA 1975)[, cert. denied, 330 So. 2d 16 (Fla. 1976)], because of Plaintiffs' attorney['s] …deliberate scheme to try and manufacture a reason to reject Allstate's good faith offer to settle Plaintiffs' claims as evidenced by his intentionally withholding pertinent information that was requested by Allstate, by feigning outrage over reasonable questions asked by defense counsel[,] …by feigning outrage over the “Colossus” letter which he knew was a letter that was automatically computer generated sent out on every file, by misrepresenting that the Colossus letter was an attempt to settle the claim, and by otherwise acting in a manner so as to obstruct and/or delay settlement of the claim.

Lopez v. Allstate Fire & Cas. Ins. Co., Case No. 14-20654-Civ-COOKE/TORRES, 2015 WL 5320916, *3 (S.D. Fla. September 14, 2015).

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements).  The Powell rule followed in the Lopez decision is discussed at length in Section 3:16, "Duty to Initiate Settlement Negotiations."

INSURANCE FOR "BAD FAITH" BREACHING CONTRACTS TO END PENALTY DISCRIMINATION?

"The legal system doesn't have any magic cure."

Alex Karakatsanis, Esquire, founder of Equal Justice Under Law, quoted by http://nyti.ms/1Kz5rJK Shaila Dewan, "Fighting Court by Court to End Judicial Policies That Fall Heavily on Poor" p. 16, col. 1 (New York Times Nat'l ed., Sunday, October 25, 2015).

 

In response to charges and to lawsuits over the use of fines and penalties by cities and counties in States as diverse as Alabama, Mississippi, Ohio and Pennsylvania, allegedly to raise money without regard to the defendant's ability to pay, many cities and counties settle.  Later, some end up breaching their pre-suit and litigation settlement contracts.  "Time and again, governments large and small have failed to follow through on their agreements, leading in some cases to renewed legal battles."  Shaila Dewan, "Fighting Court by Court to End Judicial Policies That Fall Heavily on Poor" p. 16, col. 1 (New York Times Nat'l ed., Sunday, October 25, 2015).

Seems like these "bad faith" breaches might be an appropriate time and place for carriers to invoke and, if necessary, for Courts to litigate uniform exclusions of liability coverage for breach of contract.  Exclusions of liability for breach of contract are found for example in virtually every commercial general liability policy as well as in many other types of insurance policies under which the allegedly breaching munis might make a coverage claim.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements).  All rights reserved.

 

NO COVERAGE, NO BAD FAITH -- AND NO "MORALE HAZARD" EITHER WAY.

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I have been pleasantly surprised by the tremendous response to the article I posted yesterday on Insurance Claims and Issues Blog, "LEAKING SINK IN UTAH IS EXCLUDED, BUT NOT 'MORAL HAZARD.'"  So pleased, in fact, that I am going to continue my discussion here of both the holding and the record in the Utah case.

The Magistrate Judge's holding was straight-forward enough.  First, an exclusion applied to bar coverage.  The exclusion barred all coverage for damages caused by seepage and leaking over a prolonged period, and the exclusion barred coverage under the homeowner's policy at issue when applied to the record in Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *6-*10 (D. Utah September 29, 2015)(Wells, USMJ).

The Magistrate Judge based this ruling firmly on "the plain meaning of the insurance policy."  Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *7 (D. Utah September 29, 2015)(Wells, USMJ).  "Therefore, based upon the plain language of the insurance policy, as well as case law from this district, the Court finds [that the exclusion] is not fairly susceptible to the interpretation Plaintiff suggests.  Accordingly, the insurance policy is not ambiguous."  Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *7 (D. Utah September 29, 2015)(Wells, USMJ).

Since the policy language was unambiguous, no extrinsic evidence could alter its terms or change its meaning.  As applied to the undisputed facts on the record of this case, the exclusion applied and barred coverage:

Therefore, the Court finds as a matter of law that the insurance policy is not ambiguous and Allstate did not breach the insurance contract by failing to cover Plaintiff's loss to his cabin. Accordingly, the Court finds that Plaintiff is not entitled to recovery for the loss sustained to the cabin.

Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *10 (D. Utah September 29, 2015)(Wells, USMJ).

Second, falling in line with the overwhelming majority view in this country, the Magistrate Judge ruled that where there is no insurance coverage, there cannot be an insurance bad faith claim.  The Magistrate Judge once again also considered the evidence properly in the record and concluded that there was no bad faith claim handling under the facts.  Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *11 (D. Utah September 29, 2015)(Wells, USMJ).

Early in the opinion summarizing the posture and record of this case, the Magistrate Judge quoted from a report drafted by Allstate's expert.  The Magistrate Judge did not, however, refer to the report in making any rulings.  Clearly, the "expert" report was proffered as extrinsic evidence for the purpose of testifying to an opinion that, after review of the policy language at issue in this case, the policy language could only be understood as a bar against "morale hazards."  (In writing my article on Insurance Claims and Issues Blog, I understood that this expert person was trying to refer to "moral hazards" because that would make sense, but a reader wrote to me to point out that the testimony proffered in the Wheeler case referred to "morale hazards" and not to "moral hazards.")

Clearly, this unsupported invention of drafting history was not only unnecessary to understand the language of the exclusion, but this opinion was inadmissible extrinsic evidence offered to vary the terms of an unambiguous insurance contract.  Despite the report's proffered written opinion that "morale hazards" are not covered under homeowner's policies, and the hazard of seepage and leakage at issue in this case was a "morale hazard," Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392, *4 (D. Utah September 29, 2015)(Wells, USMJ), the Court ignored the opinion and the expert's opinion had no effect on the outcome.

In the end, the "morale/moral hazard" dichotomy in the expert's report was inadmissible extrinsic evidence in this case, seemingly proffered but perhaps not fully proof-read.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements), including  Section 11:1 which addresses the general rule that where there is no coverage for first-party claims, there cannot be a first-party bad faith claim in the ordinary case.  All rights reserved.

AFTER TRIAL ON LENDER FORCE-PLACED INSURANCE PRACTICES, PUNITIVE DAMAGES.

Image ©2015 by Dennis J. Wall.   All rights reserved.

A lender force-placed insurance ("LFPI") case went to trial.  And the evidence introduced at trial has just been reported, a lot of it.  There have been many LFPI cases, but until recently most have ended in secret settlements and none has been found which ended in a trial.

Based on the evidence in this "wrongful foreclosure" action that did go to trial, a State Court Trial Judge entered judgment for the mortgagor's estate and assessed punitive damages.  On appeal, the State Court of Appeals affirmed in part and reversed in part.  When it affirmed, the appellate court affirmed multiple grounds for the trial court's holdings of liability and assessment of punitive damages.  Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 2015-NMCA-096 (N.M. Ct. App. 2015).

Lender force-placed insurance practices are ordinarily challenged in Federal Court actions.  Not one of those challenges has ended with a trial.  The Dollens case may very well present a viable way not only to publicly air out practices which affect the public, but also to provide incentive for attorneys to litigate cases in which the prospect of success does not always mean settlement.  Instead, the prospects of success in LFPI cases now can mean awards of general damages and assessments of punitive damages in favor of homeowners-mortgagors who have proven lender misconduct and resulting damages.

In Dollens, the parties stipulated that general damages amounted to $4,221.73.   Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 535 n.2, 2015-NMCA-096 (N.M. Ct. App. 2015).  This amount apparently reflects the amount due on the decedent's mortgage which the evidence shows was misapplied by the defendant mortgage servicer.  In basic terms, the evidence also displayed that the actions of the mortgage servicer dealing with the money were the predicate cause of the decedent's mortgage loan going into default.   Upon default, the mortgage servicer foreclosed on the decedent's property.  Here is what the evidence shows according to the appellate court in Dollens.

The evidence shows that the mortgage servicer had two (2) opportunities to bring the mortgage due, and that it declined the opportunity on both occasions because it paid itself before it applied the payments according to the priorities set forth in the mortgage.  The first occasion was when Minnesota Life Insurance Company paid the mortgage servicer the proceeds of a mortgage accidental death (or "MADD") insurance policy in the amount of $133,559.15.  The mortgage servicer acted as the insurance company's "agent" to sell the MADD policy to the decedent.  The servicer pocketed the "agent fees" paid by the insurance company.  Parenthetically, in the parlance of LFPI cases, "fees" of this kind are alleged "kickbacks."

Further, in Dollens, instead of applying the insurance proceeds to reduce the principal balance as the mortgage required it to do, the mortgage servicer paid itself late fees, inspection charges, and bills for charges supposedly incurred for preservation of the property.

Parenthetically, the evidence clearly shows that before Minnesota Life paid the MADD proceeds to the mortgage servicer, Minnesota Life -- in a communication from the principal to its agent -- begged the mortgage servicer not to foreclose.

The evidence also clearly shows that the servicer filed for foreclosure six days after Minnesota Life asked it to hold off on filing foreclosure proceedings.

Inexplicably, in the eyes of the appellate court, the evidence does not reflect any other response by the agent to its principal, i.e., by the mortgage servicer to the insurance company. 

The second time was just like the first, which came about when the decedent's estate brought the loan current four-and-one-half months later.  Again, the mortgage servicer paid itself late fees and property inspection fees, and left more due on the loan than would have been the case if the payment had been applied following the priorities established in the mortgage for the mortgage servicer to follow, and which, the evidence showed, for a second time it did not follow.  Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 535, 2015-NMCA-096 (N.M. Ct. App. 2015).

The appellate court affirmed the trial court's assessment of punitive damages on at least two grounds, in part here pertinent.  The first ground related to the evidence admitted at trial concerning what the appellate court called "unreasonable property inspection and preservation fees":

The Estate presented evidence at trial that Wells Fargo made excessive “drive-by” visits to the property, charging the mortgage account for each visit, and also charging for dubious preservation work orders, including orders for “winterization” in July, and multiple orders for “grass cuts” where photographic evidence presented at trial demonstrated that there was no grass.

Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 543 ¶ 32, 2015-NMCA-096 (N.M. Ct. App. 2015).  [Emphasis added.]

The appellate court also affirmed the trial court's assessment of punitive damages on account of what the appellate court termed, "misapplication of funds."  Affirmance on this claim (or group of claims) was reached "[f]or several reasons," the appellate court's conclusion in part being that "there was substantial evidence that Wells Fargo misapplied the insurance proceeds in bad faith."  Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 544 ¶ 37, 2015-NMCA-096 (N.M. Ct. App. 2015).  [Emphasis added.]

There was more evidence to come, however:

Against this backdrop, the district court heard testimony from a Wells Fargo employee that the account was handled in a “customary” manner. Thus, it was reasonable to conclude that these were not isolated errors but that Wells Fargo consistently and systematically acted in order “to increase its profits without regard for ... Decedent or his family.”

Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 545 ¶ 40, 2015-NMCA-096 (N.M. Ct. App. 2015). 

There is more to the Dollens opinion on appeal, and readers will profit from reading it in its entirety.  What has been shown here is enough to show the benefits of evidence and a record in lender force-placed insurance cases.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All rights reserved.

ATTORNEY'S FEES: APPELLATE BAD FAITH SANCTIONS ON COUNSEL AND CLIENT.

In Aspen Air Conditioning, Inc. v. Safeco Ins. Co. of Am., 170 So. 3d 892 (Fla. 3d DCA 2015), a Florida appellate court assessed sanctions of attorney's fees incurred by an insurance company on appeal "defending against allegedly baseless assertions contained in the Appellant's Initial Brief …."

The appellate court examined the appellant's charge of misrepresentation by the insurance company's lawyer.  Following its detailed examination of the record, the appellate court wrote that the appellant's allegations about the insurance company's lawyer were in bad faith.

The court awarded the insurance company its attorney's fees it incurred in having to defend against these allegations, the award being made payable both by the plaintiff and its counsel:

Because we find that Aspen's allegations are without a good faith basis, sanctions against Aspen and its counsel are warranted under both section 57.105 and Rule 9.410.

Aspen Air Conditioning, Inc. v. Safeco Ins. Co. of Am., 170 So. 3d 892, 893-94 (Fla. 3d DCA 2015).  And again, the court wrote in the end that "[a]ccordingly, we award a reasonable attorney's fee, including prejudgment interest," to be paid to the insurance company in accordance with the cited Florida Statute and Florida Appellate Rule.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements), which present many Sections on Attorney's Fees issues, featuring in particular Sections 13:12, 13:13, and 13:14 in Volume 2.  All rights reserved.

Related articles

TRENDING NATIONALLY: VIRGINIA STATUTORY ATTORNEY'S FEES FOR BAD FAITH BREACH.

TRENDING NATIONALLY: VIRGINIA STATUTORY ATTORNEY'S FEES FOR BAD FAITH BREACH.

In Revi, LLC v. Chicago Title Ins. Co., ___ S.E.2d ___, 2015 WL 5448640, *1 (Va. September 17, 2015), the Supreme Court of Virginia determined that "Code § 38.2-209(A) requires a trial judge, rather than a jury, to determine whether an insurer committed a bad faith breach of an insurance contract warranting an award of attorney's fees to the insured."

The narrow application of this ruling limits bad-faith-breach attorney's fees awards to the discretion of trial judges rather than juries in Virginia, of course.  However, the application that this holding will receive may be wider than the borders of Virginia.  The holding may have persuasive effect in jurisdictions in which judges are perhaps less receptive to insurance companies when determining bad faith, whether the bad faith determination is made pursuant to a statute or pursuant to common law or equity.

This is the language which the Supreme Court of Virginia construed, with emphasis supplied by the Court in the quotation below:

Code § 38.2–209(A) states:

[I]n any civil case in which an insured individual sues his insurer to determine what coverage, if any, exists under his present policy ... or the extent to which his insurer is liable for compensating a covered loss, the individual insured shall be entitled to recover from the insurer costs and such reasonable attorney fees as the court may award. However, these costs and attorney's fees shall not be awarded unless the court determines that the insurer, not acting in good faith, has either denied coverage or failed or refused to make payment to the insured under the policy.

*3 (Emphasis added.) 

Revi, LLC v. Chicago Title Ins. Co., ___ S.E.2d ___, 2015 WL 5448640, *3 (Va. September 17, 2015).  [As noted, emphasis by the Supreme Court of Virginia.]

Many States and Commonwealths have similar statutes, and some have common law rules similar to the thrust and purpose of the Virginia statute.  The Revi case may reach far beyond the borders of Virginia before long.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements), which present many Sections on Attorney's Fees issues in Bad Faith cases, featuring in particular Sections 13:12, 13:13, and 13:14 in Volume 2.  All rights reserved.

FEDERAL NATION-WIDE CLASS APPROVED FOR PENNSYLVANIA SETTLEMENT, MAKING 100%.

 

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The case of Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090 (W.D. Pa. September 30, 2015) was filed as a class action.  The named plaintiffs alleged claims arising out of lender force-placed insurance practices ("LFPI"), in this case, arising out of lender force-placed flood insurance practices.  The plaintiffs alleged several claims, including alleged bad faith, as is typical in such cases.  See Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *4 (W.D. Pa. September 30, 2015).

The parties' discovery was "significant," their lawyers said, and also they relied on "over 200,000 pages of documents produced" in another LFPI case.  Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *4 (W.D. Pa. September 30, 2015).

After this activity, the case settled.  The plaintiffs' lawyers and the defendants' lawyers stipulated that a class should be certified for settlement and the case settled accordingly.  After citing to many factors for approval of the stipulation, the District Judge approved the settlement.  Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090 (W.D. Pa. September 30, 2015).

This makes 100% of the lender force-placed insurance practice cases which have not gone to trial.  To say the same thing in other words, no lender force-placed insurance practices case has been located which has ever gone to trial.

Perhaps for that reason, objections to the settlement were not, the District Judge pointed out, supported by "any controlling authority."  Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *16 (W.D. Pa. September 30, 2015).

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All Rights Reserved.  No Claim to Original U.S. Government Works.

SUBROGATION, BUT YOU CAN'T CALL IT EQUITABLE … BECAUSE IT ISN'T.

In the case of Allstate Ins. Co. v. Theodotou, 171 So. 3d 163 (Fla. 5th DCA 2015), a panel of Florida's Fifth District Court of Appeal dismantled equitable subrogation.  Equitable subrogation was administered by Courts of Equity for centuries following settled principles, until this case was decided on July 24, 2015.

Equitable subrogation always required that the injured or damaged parties must be fully compensated for their injuries or damages as an element of another party seeking to stand in their shoes and sue somebody else for a part of the injuries or damages.  Parenthetically, the victim has traditionally been identified as the "creditor" in equitable subrogation, whereas in recent cases, judges often refer to the injured or damaged party by the made-up word, "subrogor."

In the case of Allstate Insurance Co. v. Theodotou, the Fifth District panel expressed confusion over this requirement.  The panel opinion even describes this requirement in terms that make it seem like something of a Florida Supreme Court innovation in 1999.  Allstate Ins. Co. v. Theodotou, 171 So. 3d 163, 166-67 (Fla. 5th DCA 2015).  Far from an innovation of the Florida Supreme Court in 1999, the requirement that the injured person must be fully compensated for the loss before anyone else can sue to recoup their payment to the injured party, this has been a requirement of equity at least until July 24, 2015.

The Florida appellate panel seemed to recognize the need for this requirement in equity when they wrote that "[s]urely, the injured victim deserves to be made whole."  Allstate Ins. Co. v. Theodotou, 171 So. 3d 163, 168 (Fla. 5th DCA 2015).  So much for that, however.  Right after making that statement, the panel shifted its attention to the party which paid the money and no longer even expressed concern about the victim. In shifting its attention away from the victim which claimed compensation for injuries, the panel shifted its attention to the party which claimed the right to recover money it had paid under an obligation to the victim.  In short, the panel shifted its attention from redressing injuries to recouping money.  And then they called this "equity."

It must be recalled that the case presented a claim for equitable subrogation, meaning that the subrogation plaintiff claimed the rights of the victim against another party.  It was not a case where the subrogation plaintiff claimed compensation for its own injuries; it was a case in which the subrogation plaintiff claimed the right to be compensated for the victim's injuries.

The panel's holding resulted from this skewed viewpoint.  It permitted the insurance company to sue medical providers who allegedly caused a part of the victim's injuries compensated by the insurance company.  The panel went further, however, and in Its opinion wrote that "equity" requires that the party which paid money to the injured victim -- here, an insurance company which paid its policy limits, which were not enough to fully compensate the victim -- should still be subrogated to the rights of the victim to sue "the Medical Providers" which allegedly increased the victim's injuries.

The panel did not explore an alternative, which would have included allowing the subrogation plaintiff to sue subsequent tortfeasors or joint tortfeasors subject to a requirement that the victim must be paid first out of any recovery.

Apparently in doubt of discarding the full compensation requirement of equity, the panel certified the following question to the Supreme Court of Florida to answer:

Is a party that has had judgment entered against it entitled to seek equitable subrogation from a subsequent tortfeasor when the judgment has not been fully satisfied?

Allstate Ins. Co. v. Theodotou, 171 So. 3d 163, 168 (Fla. 5th DCA 2015).  One judge on the three-judge panel in this case joined in certifying the question, but dissented on eliminating the full compensation requirement for equitable subrogation.

Two judges, or more, can invent this rule of recoupment, if they want to.  But they have no right to call their rule "equitable" subrogation.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements), including Section 7:9, Actions by Excess Carriers--Subrogation.  All rights reserved.