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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."
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