Ever wonder whether a liability carrier has a duty in a particular case to protect its insured by accepting an agreement offered by the claimant (1) to consent to judgment now, (2) not to execute on the insured's assets now or later, and (3) to try the bad faith case later? Well, if you have been wondering, perhaps you have not been paying attention.
The Eleventh Circuit answered this question pretty easily in a recent case. Here is the short and the long of it, first the short answer which comes as no surprise to anyone practicing in this area:
In sum, an insurer owes no duty under Florida law to enter into a so-called Cunningham [v. Standard Guaranty Insurance Co., 630 So. 2d 179 (Fla. 1994)] agreement and likewise owes no duty to its insured to enter into a consent judgment in excess of the limits of its policy.
Kropilak v. 21st Century Ins. Co., 806 F.3d 1062, 1070 (11th Cir. 2015) (case involved Florida substantive law).
And here is the long (and also hardly surprising) answer from the Eleventh Circuit in the same case:
Even if what Kropilak and Collins have proposed is different than a Cunningham agreement, Kropilak and Collins have failed to explain why an insurer is obligated to enter into the agreement proposed here when Florida law does not obligate insurers to enter into a Cunningham agreement. The agreement proposed by Kropilak and Collins, with its requirement for the entry of a consent judgment in excess of the policy limits, would arguably extend the obligation of an insurer beyond what would be required in a Cunningham agreement. In Cunningham, the insurer simply agreed to try the bad-faith action in advance of the underlying tort claim. 630 So. 2d at 180. While an insurer has a duty to act in good faith to offer the policy limits under appropriate circumstances to avoid exposing its insured to a judgment in excess of those policy limits, it has no duty on behalf of its insured to agree to a consent judgment in excess of policy limits and then subject itself to a suit for bad faith for the amount in excess of the policy limits.
Kropilak v. 21st Century Ins. Co., 806 F.3d 1062, 1069 (11th Cir. 2015).
So, no surprises here. At least we know that this appeal did not change the law, which is certainly welcome news for liability insurance carriers and practitioners who represent them in Florida and elsewhere.
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.
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