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In Ellison v. Willoughby, 326 So. 3d 214 (Fla. 2d DCA 2021), one Willoughby asserted claims for Uninsured Motorist coverage and for bad faith against his UM carrier. Mr. Willoughby settled all his claims for a single undivided amount. In other words, Willoughby's settlement with his UM carrier did not state how much would go to coverage and how much was paid on account of the alleged bad faith.
Florida's Second District Court of Appeal held that under these circumstances, and perhaps in any case involving settlements of bad faith claims, not a penny of Mr. Willoughby's settlement was a "collateral source" under Florida law here:
Moving on to whatever portion of the settlement is allocable to Mr. Willoughby's claim for bad faith damages, the above-cited cases (upon which the trial court relied to deny setoff) involved settlements for UM benefits within the applicable policy limits. We have uncovered no case law addressing the question of whether extracontractual damages paid to a first-party claimant on a UM bad faith claim are subject to setoff. By statutory definition, “collateral sources” means “payments made to the claimant ... pursuant to ... automobile accident insurance that provides health benefits or income disability coverage; and any other similar insurance benefits.” § 768.76(2)(a) 2 (emphasis added). An extracontractual payment on a bad faith claim does not appear to meet this definition because it is not a payment of “benefits.”
Ellison v. Willoughby, 326 So. 3d at text following Headnote 10 (page numbers not available from Westlaw at the time of this blog article).
The appellate court had previously affirmed the trial court's holding that UM coverage payments were not "collateral sources" under Florida law, either.
The appellate court certified its decision on the UM settlement of "Mr. Willoughby's claim for bad faith damages" to the Supreme Court of Florida as a question of great public importance, in the following words:
IS A SETTLEMENT PAYMENT MADE BY AN UNINSURED MOTORIST INSURER TO SETTLE A FIRST-PARTY BAD FAITH CLAIM SUBJECT TO SETOFF UNDER SECTION 768.041(2) OR A COLLATERAL SOURCE WITHIN THE MEANING OF SECTION 768.76?
Ellison v. Willoughby, 326 So. 3d at text following Conclusion.
In Conrad v. Owners Ins. Co., No. 20–cv–02173–KMT, 2021 WL 5280188 (D. Colo. November 12, 2021) (Tafoya, USMJ), a federal Magistrate Judge applied the federal standard for admissibility of expert testimony to a proffered expert in an insurance case: Reliability, not correctness.
The Court described the proffered expert as an experienced attorney, and a former Colorado Insurance Commissioner. Conrad, 2021 WL 5280188, at *1.
The witness will be permitted to testify to insurance industry standards. Conrad, 2021 WL 5280188, at *2.
However, the witness will not be allowed to testify to legal conclusions. This includes the expert's testimony about Colorado's version of the Unfair Claim Settlement Practices Act. "While [the proffered expert] is permitted to testify as to insurance industry standards and may testify that defendant's conduct did not conform with those standards, he may not apply legal standards from caselaw or statutes to state an opinion that defendant's conduct violated caselaw or statutes." Conrad, 2021 WL 5280188, at *3.
Finally, the witness will be permitted to testify on the duty of good faith and fair dealing implied in the Underinsured Motorist insurance contract at bar, even though bad faith and unfair dealing was not alleged as a cause of action separate from breach of the UIM contract at issue.Conrad, 2021 WL 5280188, at *4.
Reliability, not correctness. That is the standard for admitting expert opinions into evidence in federal court, including in insurance cases.
In Desmet v. Scottsdale Ins. Co., No. CIV-20-330-J, 2021 WL 5173637 (W.D. Okla. October 21, 2021), a federal judge in the Western District of Oklahoma confronted and resolved issues of Oklahoma law concerning Umbrella/Excess Policies, Primary Policies, Uninsured Motorist Coverage, and Good Faith Duties among all of it.
In this case, an Umbrella Policy was at bar. This particular type of Excess Policy required Underlying Insurance, of course. Duties did not incept or begin under the Umbrella Policy until the Underlying Insurance was exhausted, in sum and in substance.
Further, Oklahoma law made and makes Uninsured Motorist Coverage primary. In this case, the Underlying Insurance including primary insurance was not exhausted before the plaintiff sued the Umbrella for alleged bad faith. (Under Oklahoma law, only primary carriers are required to offer U.M. Coverage but in this case, the Umbrella Policy offered U.M. Coverage as a part of the Umbrella contract.)
Moreover, the terms of the contract are equally clear that all underlying insurers must have paid or been held liable to pay the full amounts of their UM coverage policies before the Umbrella Policy was triggered. Umbrella Policy at 9, 24, 27, 32. As such, Defendant's liability did not attach until the insurers of all the underlying insurance had paid or been held liable to pay the full amount of their respective UM coverage liability.
Desmet, 2021 WL 5173637, at *4.
Since the Umbrella Carrier was sued before its Duties of Good Faith ever incepted or even began, the Court granted its Motion for Summary Judgment on the bad faith claims alleged against it in this case.
The plaintiff requested leave to amend but the time for amendments established by the Court's Scheduling Order had already passed, and even if the request to amend were to be considered, the Court wrote that it was presented only with general arguments that 'justice requires leave to amend' without any particularized grounds to amend, the lack of good cause, and the issue of diligence, among other things mentioned by the Court while denying leave to amend here.
In the end, as the Rolling Stones never sang, 'Time Is Not On My Side, oh no, it's not.'
The nature of underinsured/uninsured motorist coverage in a given jurisdiction can determine the outcome of a bad faith claim against the UM/UIM carrier.
In Washington, uninsured/underinsured motorist coverage is secondary to liability coverage, which is primary:
Plaintiff received $95,000.00 and left over $1 million in liability insurance coverage on the table. Thus, Plaintiff cannot now argue that the available liability insurance coverage was inadequate to compensate for his injuries.
The purpose of UIM coverage is to place the insured in the same position as if a tortfeasor carried adequate liability insurance. [Citation omitted.] Thus, a UIM insured is not entitled to be put in a better position by virtue of colliding with an uninsured or underinsured motorist than by colliding with a tortfeasor that carries adequate liability insurance. [Citations omitted.]
In Washington, an “underinsured motor vehicle” is one for which “either no bodily injury or property damage liability bond or insurance policy applies at the time of an accident,” or where the “the sum of the limits of liability under all … insurance policies applicable to a covered person after an accident is less than the applicable damages which the covered person is legally entitled to recover.” RCW 48.22.030(1) (emphasis added). The fundamental policy underlying UIM is that liability insurance is primary, while UIM insurance is secondary. The intent is that UIM insurance supplement but not supplant liability insurance.
Dean v. GEICO Ins. Agency Inc., No. 2:20-cv-01496-BAT, 2021 WL 4963638, at *3-*4 (W.D. Wash. October 26, 2021) (Tsuchida, USMJ).
When an insured settles for less than the liability limits, as here, the insured's settlement is evidence in Washington that the insured's damages are less than the available UIM limits. Accordingly, the Magistrate Judge granted the UIM carrier's motion for summary judgment on all claims including the bad faith claim in this case and dismissed the case with prejudice. Dean, 2021 WL 4963638, at *4.
On the day before the Magistrate Judge in Washington ruled in the Dean case, a U.S. District Judge ruled in another UIM case, this one in Nevada. The defendant once again is GEICO. Sahinov v. GEICO Adv. Co., No. 2:21-CV-919 JCM (VCF), 2021 WL 4954311 (D. Nev. October 25, 2021).
The defendant UIM carrier filed a motion to dismiss an insured's extracontractual claims. The insured pled three groups of extracontractual claims. The District Court dismissed them all without prejudice, and all for the same reason: The claims were not alleged with enough facts but were alleged with slogans in the eyes of the District Judge, so that the claims were not plausible when they were presented to the District Judge in this Nevada case.
First, in Nevada there is an implied covenant of good faith in every contract. That includes underinsured motorist insurance contracts. However, the insured in this case pled the same facts that the insured pled in support of a claim for breach of contract. There are not two claims for the same breach of contract under Nevada law, and an alleged breach of the implied covenant is redressable as a contract claim under Nevada law. Sahinov, 2021 WL 4954311, at *2-*3.
Second, there is an actionable tort of bad faith under Nevada law. That can include an alleged bad faith denial of UIM benefits. However, the insured must allege what was not alleged in this case:
To state a claim for bad faith, the insured must plausibly allege that: (1) an insurer denied a claim; (2) without any reasonable basis; and (3) with the knowledge or reckless disregard of any reasonable basis to deny coverage. [Citation omitted.] Bad faith requires an insurer was actually or impliedly aware that there was no reasonable basis to deny the claim.
Sahinov, 2021 WL 4954311, at *3.
Third and finally, the Nevada Unfair Claim Settlement Practices Act conveys a statutory claim or cause of action for bad faith. Once again, however, the allegations in the complaint in this case did not convey plausibility on the statutory claim here. Sahinov, 2021 WL 4954311, at *4-*5.
Accordingly, the District Judge in Nevada dismissed all extracontractual claims without prejudice in this case.
GEICO General Insurance Company removed a case from Florida State Circuit Court to U.S. District Court on February 5, 2021.
On February 9, the District Judge issued basically a "show cause" Order (unwritten, known in the Middle District of Florida as an "Endorsed Order") why the case should not be remanded, the requisite jurisdictional amount not appearing from the file. The Federal Judge acted on her own motion.
GEICO General responded on the last day given by the Federal Judge to show a jurisdictional basis for the case being in Federal Court. That was February 16, one week to the day as it turns out, from the date that the District Judge issued the "show cause" Order.
Seventeen days after GEICO General Insurance Company filed the removal papers, this case was remanded. Rocha v. GEICO Gen. Ins. Co., No 8:21-cv-291-VMC-AEP, 2021 WL 672701 (M.D. Fla. February 22, 2021).
The Federal Judge did not say so, but a review of PACER (Public Access to [Federal] Court Electronic Records) reveals that this was an Uninsured Motorist case in two counts, one count for insurance coverage and the other count for alleged insurer bad faith. Rocha v. GEICO General Insurance Co., Complaint, Doc. No. 1-1 (Exhibit 1 to GEICO's Notice of Removal), filed Feb. 5, 2021 (M.D. Fla. Case No. 8:21-cv-291-VMC-AEP).
The complaint did not allege a sum certain for the plaintiff's alleged damages. Not surprisingly, the plaintiff alleged only the jurisdictional amount in Florida Circuit Court where he filed his lawsuit in the first place, $30,000.00. GEICO argued this deficiency was made up by the plaintiff's demand for $100,000.00 policy limits, by his Civil Remedy Notice of Insurer Violation that the case "was clearly worth" more than the $100,000.00 policy limits, and by his allegation of a "permanent injury."
The demand was legally insufficient to support federal jurisdiction in an amount in excess of $75,000.00 exclusive of interest and costs because "demand letters do not automatically establish the amount in controversy." Rocha, 2021 WL 672701, at *2.
The Court looked for "additional factual support." It did not find additional factual support in the plaintiff's Civil Remedy Notice required by Florida's bad faith statute. In Florida, the CRN is merely a condition precedent to suing for bad faith later. Rocha, 2021 WL 672701, at *2.
That left the possibility that there was additional factual support in this record that the plaintiff's damages established an amount in controversy in excess of $75,000.00. The District Judge did not find additional factual support in what the record showed about the plaintiff's damages, either. "The only concrete damages incurred fall below $37,000, and no information has been provided to reasonably calculate other categories of damages." Rocha, 2021 WL 672701, at *2.
The amount in controversy not having been established in this case, the Federal Court found that it lacked subject-matter jurisdiction and remanded the case back to Florida State Court.
The Federal judge did not mention the insurer bad faith claim one time. The only time that the Court mentioned "bad faith" at all was in a parenthetical quoted from another case that CRN's "'are precursors to bad-faith-failure-to-settle claims that may be brought against an insurer in the future.'" Rocha, 2021 WL 672701, at *2 (citation omitted). That was all.
Clearly, claims of insurer bad faith do not command the attention of judges regardless of everything else.
In Moultrop v. GEICO General Insurance Co., ___ So. 3d ___, Nos. 4D19-225 & 4D19-1580, 2020 WL 5372296 (Fla. 4th DCA Sept. 9, 2020) (STATED NOT FINAL), a UM insurance carrier introduced evidence of settlement negotiations in a bad faith trial. As the saying goes, "It seemed like a good idea at the time." The carrier got a bad faith judgment in its favor in the trial court.
The results on appeal, however, were not a good idea at least for the carrier. The judgment in the carrier's favor was reversed because the carrier introduced the settlement evidence in the bad faith trial. The evidence was contained in the carrier's action log in its claim file and included demands and offers made at mediation. Although the carrier argued that this wasn't really evidence of settlement negotiations or of privileged mediation communications, the appellate court did not buy the argument.
The case was remanded for a new trial because of the same thing, namely, the carrier introduced evidence of settlement negotiations in the case in which it obtained a judgment in its favor. That judgment is gone now.
There are three reasons that the appellate court ruled the way it did. First, the settlement evidence was irrelevant to the focus of a bad faith trial, the appellate court ruled:
It is well established that “the focus in a bad faith case is not on the actions of the claimant, but rather on those of the insurer in fulfilling its obligations to the insured.” [Citations omitted.] The introduction of the plaintiffs’ offer had nothing to do with whether the UM carrier acted in bad faith when it failed to tender its policy limits until June 2, more than three months after the CRN expired.
The UM carrier’s introduction of the plaintiffs’ settlement offer was solely to demonstrate that the plaintiffs, not the UM carrier, acted in bad faith. Because the activity log note was irrelevant, the court erred in admitting it into evidence. § 90.401, Fla. Stat. (2019).
Moultrop v. GEICO General Ins. Co., 2020 WL 5372296, at *4.
The second reason that the judgment in favor of GEICO General was reversed on appeal is that when the insurance company introduced evidence of settlement negotiations in the trial court, it did something prohibited by Florida evidence rules embodied in a Florida Statute, Section 90.408: It introduced evidence of settlement negotiations. Moultrop v. GEICO General Ins. Co., 2020 WL 5372296, at *5.
Third and finally, the appellate court reversed the judgment and remanded for a new bad faith trial because the settlement evidence was also prohibited evidence of privileged communications made at a mediation, in violation of Sections 44.403 and 44.405 of the Florida Statutes. Moultrop v. GEICO General Ins. Co., 2020 WL 5372296, at *5-*6.
Under the circumstances, the judgment of no bad faith did not last very long in this bad faith case.
Disagreeing with what it recognized to be a minority of decisions from the Middle District and the Southern District of Florida, a federal judge in the Southern District followed the majority rule and dismissed a premature insurance bad faith claim without prejudice, in Terenzio v. LM Gen. Ins. Co., ___ F. Supp. 3d ___, 2019 WL 7841718 (S.D. Fla. April 18, 2019). The Terenzio case presented a premature claim of Uninsured/Underinsured Motorist carrier bad faith under Florida law:
The Court finds that dismissal is a better remedy than abatement. For one, it appears that a majority of federal district courts in Florida have ruled in favor of dismissal. [Citation omitted.] Because it is unsettled whether abatement of a premature bad-faith claim is permitted in federal court, the Court favors the outcome that does not risk running afoul of Article III of the Constitution or the Federal Rules of Civil Procedure. Therefore, the Court will dismiss without prejudice, rather than abate, Plaintiff's bad-faith claim.
Terenzio, 2019 WL 7841718, at *3.
The decision by a federal court in Terenzio in Florida has implications for solving the same problem in federal courts across the United States.
Damages in an insurance bad faith action can be different from damages under Underinsured Motorist Coverage.
In Palmer v. Owners Ins. Co., No. 18-cv-01953-JLK, 2019 WL 7370372, at *3 (D. Colo. Nov. 6, 2019), the plaintiffs-policyholders of UIM Coverage, claimed damages in their bad faith suit that were in addition to damages available for breach of the UIM Coverage in their policy:
Ultimately, the Palmers brought suit against Owners for breach of contract and both statutory and common law bad faith breach of an insurance contract. Their damages include Mr. Palmer’s past medical bills, his future medical bills, past and future income loss, Mrs. Palmer’s loss of consortium, and any other non-economic and physical impairment damages they can prove at trial. Owners attacks the Palmers’ allegations regarding Mr. Palmer’s lost future income and Mrs. Palmer’s loss of consortium.
The Court held that the policyholders could recover damages both for lost future income and for Mrs. Palmer's loss of consortium under their bad faith claims, and the Court accordingly denied the carrier's motion for summary judgment.
Image courtesy of the Florida Department of Agriculture and Consumer Services.
The general rule in the Middle District of Florida, with some exceptions, has been that if a Florida statutory bad faith claim under Fla. Stat. § 624.155 is premature, the defendant's remedy is to have it abated rather than dismissed.
In Pranger v. Garrison Prop. & Cas. Ins. Co., No: 6:19-cv-1099-Orl-40EJK, 2019 WL 5448284 (M.D. Fla. Aug. 6, 2019), the Court addressed what it labeled a premature statutory bad faith claim in an Underinsured Motorist Case. The District Judge in this Middle District of Florida case dismissed it and expressly declined to abate it.
Ruling as though this were the inevitable result and ignoring the clear Middle District of Florida precedent, the District Judge cited a pair of cases that ruled in favor of the exception of dismissal rather than abatement of a premature Florida statutory bad faith claim, and declined in the Court's "discretion" to abate it in this case:
Defendant argues that Count II, which alleges a claim for bad faith pursuant to § 624.155 of the Florida Statutes, should be dismissed as premature. Plaintiff agrees that the claim is premature but argues that abatement, rather than dismissal, is proper. “[I]t is this Court’s position that until a bad-faith claim has a factual basis to support it—i.e., the plaintiff’s claim for [underinsured motorist] benefits has been resolved in the plaintiff’s favor—such claim is prematurely brought.”
Pranger, 2019 WL 5448284, at *1. Sometimes exceptions swallow the rules, if we let them.
$1 MILLION PUNITIVE DAMAGES FOR BAD FAITH BREACH OF INSURANCE CONTRACT.
In Mazik v. GEICO General Ins. Co., No. B281372, 2019 WL 2150799 (Cal. 2d DCA, Div. 2, May 17, 2019), a California jury awarded $313,508.00 in damages for delayed payment in bad faith of an Uninsured Motorist (UIM) claim. The jury also assessed $4Million in Punitive Damages.
A California trial judge reduced the punitive damages assessment to $1 Million. GEICO appealed only the judgment for punitive damages.
A California appellate court affirmed. In simple and basic terms, the California appellate panel held that the evidence of insurer bad faith conduct in the record of that case was sufficient to support the judgment of bad faith including punitive damages, and the assessment fell within the constitutionally permissible range of punitive damages assessments:
We reject GEICO’s arguments and affirm. There is sufficient evidence in the record to show that GEICO’s managing agent ratified conduct warranting punitive damages. In concluding that Mazik’s claim was worth far less than the policy limits, GEICO disregarded information provided by Mazik showing that he had a permanent, painful injury, and instead selectively relied on portions of medical records that supported GEICO’s position that Mazik had fully recovered. As reduced by the trial court, the $ 1 million in punitive damages (approximately three times the amount of compensatory damages) is within the constitutionally permitted range in view of the degree of reprehensibility of GEICO’s conduct.
Mazik v. GEICO General Ins. Co., No. B281372, 2019 WL 2150799, at *1 (Cal. 2d DCA, Div. 2, May 17, 2019).
In Liang v. Progressive Cas. Ins. Co., 2019 WL 1925954 (N.Y. App. Div., 2d Dep't, Feb. 5, 2019), the appellate court agreed with the trial court that there are "triable issues of fact" on the Underinsured Motorist Claim that Mr. Liang filed as administrator of his mother's estate.
The appellate court also agreed with the trial court that under New York standards of insurer bad faith, "[h]ere, Progressive established, prima facie, that it did not act in bad faith, since its conduct, under the circumstances, did not constitute a gross disregard of Liang's interests."
The appellate court continued:
Progressive conducted an investigation and had an arguable basis for disclaiming coverage (citations omitted). In opposition, the plaintiff's conclusory assertions failed to raise a triable issue of fact as to whether Progressive's conduct constituted a gross disregard of Liang's interests (citations omitted).
The only disagreement between the appellate court and the trial court in this case was that the appellate court ordered that Progressive's motion for summary judgment should have been granted on the bad faith claim, and not simply that the bad faith claim should be dismissed. Liang v. Progressive Cas. Ins. Co., 2019 WL 1925954, at *3 (N.Y. App. Div., 2d Dep't, Feb. 5, 2019).
An underinsured motorist (UIM) policyholder's bad faith claims were not barred by claim preclusion, i.e., by res judicata or estoppel, where the bad faith claims were based on the UIM carrier's alleged conduct after the policyholder had prevailed in arbitration on her claim for the full UIM policy limits. She filed suit to enforce the arbitration award and obtained a judgment in her favor, following which the carrier paid the UIM policy limits and the policyholder dismissed her case. Searcy v. Endurance Ins. Co., 243 F. Supp. 3d 1146 (D. Nev. 2017).
The UIM carrier defended its conduct occurring after the policyholder filed suit to enforce the arbitration award and, in this case, after the judgment confirmed the arbitration award, on the ground that the policyholder's bad faith claims should have been brought before the conduct occurred, in basic and simple terms. The District Judge disagreed. And so, in the end, yet another gamble in Nevada did not pay off.
In Duncan v. GEICO Gen. Ins. Co., No. 8:17-CV-40-T-30TGW, 2017 WL 4574605 (M.D. Fla. October 13, 2017), the Court held that perfection is not required in the handling of an Uninsured Motorist (UM) claim to avoid a bad faith claim in Florida.
But medical expert testimony is required, the same Court held, if the bad faith UM claim is based on the carrier's alleged handling of the policyholder's permanent injury. Since the plaintiff-policyholder did not introduce expert medical evidence into the record that he was permanently injured, the District Judge granted the UM carrier's motion for summary judgment on his bad faith claim.
After bad faith claims were dismissed under Pennsylvania law in this Federal case, amended bad faith claims related to alleged investigation and evaluation of uninsured motorist (UM) claim stated claims upon which relief could be granted, in Meyers v. Protective Ins. Co., NO. 3:16-CV-01821, 2017 WL 4516712 (M.D. Pa. October 10, 2017).
Another Federal case has lined up in favor of abating and not dismissing a statutory bad faith claim in Florida in a case for UM coverage, where coverage has not yet been determined: "The Court, consistent with its past rulings on this issue, considers abatement of the bad faith claim to be the appropriate remedy." Cooper v. Progressive Am. Ins. Co., No: 5:17–cv–70–Oc–30PRL, 2017 WL 784816, at *2 (M.D. Fla. March 1, 2017).
In Nibert v. GEICO Casualty Co., ___ P.3d ___, No. 16CA0322, 2017 WL 710504, 2017 COA 23 (Colo. Ct. App. Div. V February 23, 2017) (STATED NOT RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS UNTIL AFTER REHEARING OR CERTIORARI REVIEW, IF ANY), a policyholder sued her underinsured motorist (UIM) carrier on both a common law bad faith claim, and on a statutory claim of delayed payment of policy benefits. Both claims required proof on the issue of "reasonableness" of the carrier's behavior.
However, more than proof that the UIM claim was "fairly debatable" was required to prove "reasonableness":
Contrary to Geico Casualty's argument, the tendered instruction went beyond the reasonableness of a challenge to a claim that is fairly debatable. Instead, the instruction, as tendered, misstated the law by effectively conflating the reasonableness elements of the common law bad faith claim and the statutory delay claim by inquiring only into whether Nibert's claim was fairly debatable. Colorado law is clear that whether a claim is fairly debatable is not the sole inquiry in a reasonableness analysis.
Nibert v. GEICO Casualty Co., ___ P.3d ___, No. 16CA0322, 2017 WL 710504, AT *2 ¶ 12, 2017 COA 23 (Colo. Ct. App. Div. V February 23, 2017) (STATED NOT FINAL).
The Colorado appellate court affirmed a trial court's judgment entered on jury verdicts in favor of the policyholder on both of her claims against the UIM carrier in this case.
On Halloween, the Third Circuit Court of Appeals affirmed a Rule 12(b)(6) dismissal of claims including bad faith claims in Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379 (3d Cir. October 31, 2016).
The Third Circuit also took jurisdiction to decide on appeal the District Court's grant of summary judgment to the insurance carrier on the last remaining count of the policyholder's complaint in this case.
The policyholder claimed that among other things the carrier breached its duty of good faith and fair dealing under New Jersey law. The appellate court quoted her allegations in her lawyers' own words:
Ensey alleges that GEICO breached the implied covenant of good faith and fair dealing in four ways: (i) when it “failed to offer insureds ... the option of higher available UM/UIM coverage limits when insureds increased their BIL coverage limits,” (ii) when it used “unlicensed agents to sell such increased BIL coverage limits so the agents would be unaware of their obligation to so advise insureds,” (iii) when it failed “to provide CSFs [coverage selection forms] and Buyer's guides after insureds purchased increased liability limits,” and (iv) when it denied “UM/UIM claims thereafter based on the reduced limits purportedly ‘chosen by the insureds.’ ”
Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379, at *3 (3d Cir. October 31, 2016).
The policyholder apparently argued her insurance bad faith claim in terms of New Jersey's law of the covenant of good faith and fair dealing which is implied in all contracts. At any rate, that is how the Third Circuit addressed her fact allegations about UM/UIM coverage options which, it said, were legally insufficient to support a claim of bad faith here.
She argued that the implied covenant is breached when the defendant either acted in bad faith or demonstrated some other kind of inequitable conduct in the course of performing a contractual obligation. The Third Circuit agreed with this statement of New Jersey law, but held that the policyholder's fact allegations were legally insufficient to meet that legal standard. Accordingly, the Third Circuit affirmed the dismissal of her bad faith claims against the carrier in this case. Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379, at *3-*4 (3d Cir. October 31, 2016).
In Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743 (D. Nev. September 26, 2016), the policyholder's underinsured motorist (UIM) claim was at issue. The insurance carrier took a long time to decide whether it would, or would not, pay the claim. The insurance carrier argued that its failure to deny the UIM claim was actually a defense to a bad faith claim. Undisputed evidence of this delay prevented the entry of summary judgment in the carrier's favor on the policyholder's claim for bad faith, however:
State Farm argues at length that Hackler cannot show bad faith because she cannot show a decision to deny benefits. (See ECF No. 55 at 4-5.) However, as courts in this district and elsewhere have recognized, sitting on a claim for an extended period is functionally equivalent to a denial. (Citations omitted.) As such, the Court finds State Farm's understanding of the requirements of showing bad faith needlessly narrow.
Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *4 (D. Nev. September 26, 2016).
In Spearman v. Progressive Classic Ins. Co., 276 Or.App. 114, 127-28, 366 P.3d 821, 828 (Or. Ct. App. 2016), the appellate court held en banc that by disputing the types of damages alleged by the plaintiff, the defendant U.M. carrier was not disputing U.M. "coverage" so as to entitle the insured to attorney's fees in Oregon even though the dispute could include a contention that the insured was not entitled to a certain type of damages at all:
Our determination that “damages due the insured” is a reference to the amount of damages (if any) that the insured would be entitled to recover from the uninsured motorist provides a clear answer to the remaining question. Although we agree with plaintiff that defendant's pleadings were enough to put at issue the possibility that plaintiff would recover no benefit in the UM action, the allegations raised issues only as to the damages that the insured would be entitled to recover from the uninsured motorist.
In its answer, in response to plaintiff's allegation that he sustained noneconomic damages, defendant admitted that plaintiff sustained “some” injury in the collision with the uninsured motorist but disputed “the nature and extent of [p]laintiff's alleged injuries.” On its face, that allegation disputes only the amount of plaintiff's damages. Although plaintiff contends the allegation could have permitted a determination that plaintiff is entitled to zero noneconomic damages, ORS 742.061(3) does not preclude disputes about individual categories of damages. A dispute about whether plaintiff sustained economic damages would still be a dispute regarding the amount of the damages due the insured as a result of the collision.
Next, in response to plaintiff's allegation of economic damages for medical expenses, defendant's answer disputed “the reasonableness and necessity of some of [p]laintiff's accident-related medical expenses.” In response to two of plaintiff's requests for admissions, defendant similarly disputed some, but not all, of plaintiff's alleged injuries: “Admit that Plaintiff sustained ‘some’ injury as a result of the accident alleged in the Complaint; however, Defendant denies the nature and extent of Plaintiff's injuries” and “Admit that some of the treatment was necessary; Defendant denies the reasonableness, necessity, relatedness and extent of some of Plaintiff's treatment.” Again, facially, those allegations dispute only the amount of plaintiff's damages.
In Johnson v. State Farm Mut. Auto. Ins. Co., No: 6:15–cv–1942–Orl–31TBS, 2016 WL 1127748 (M.D. Fla. March 21, 2016) (Presnell, J.), the plaintiff in State Court received a jury verdict in excess of policy limits on a UM claim. She then asked for and received leave to amend to allege a bad faith claim. The Florida State Court Judge left entry of the judgment open, however.
The UM carrier removed the case to Federal Court. The Federal Judge denied the plaintiff's motion to remand the case to State Court. The UM carrier then asked the Federal Judge to dismiss the bad faith claim. As there was no final determination of damages in the UM case because there was no final, appealable judgment, the Federal Court granted relief but refused to dismiss. Instead, the Federal Judge abated the UM bad faith claim "pending entry of judgment and any appeal taken by State Farm." Johnson v. State Farm Mut. Auto. Ins. Co., No: 6:15–cv–1942–Orl–31TBS, 2016 WL 1127748, at *2 (M.D. Fla. March 21, 2016) (Presnell, J.).
The Federal Judge did not say so, but his reasoning was apparent that the State Judge retained jurisdiction over the UM case for at least the purpose of entering judgment on the jury verdict.
In the first-party bad faith case of Batchelor v. GEICO Casualty Co., 2014 WL 3906312 (M.D. Fla. June 9, 2014), GEICO contended that it would be deprived of due process if it could not get answers to its damages interrogatories.
The interrogatories certainly appear to be standard, form interrogatories used in U.M. cases. They inquire into the plaintiff's damages sustained in the given accident, what physicians she has seen, what injuries she claims, what effects the accident had on her employment history and capacities, and so on.
The interrogatories were served in a bad faith case.
Ms. Donna Batchelor is GEICO's insured. She was injured in an auto accident. She had U.M. coverage of $30,000.00 under a policy issued by GEICO. After GEICO refused to pay the U.M. coverage, Donna Batchelor sued GEICO and a jury in a Florida State Court determined her damages at $1.8 Million.
The U.M. trial court granted GEICO's motion to reduce the verdict to the U.M. policy limit of $30,000.00. GEICO appealed the result (except, certainly, the trial court's ruling limiting the plaintiff's recoverable damages to the U.M. policy limits). Florida's Fifth District Court of Appeal affirmed.
GEICO served its U.M. interrogatories in the instant first-party bad faith lawsuit. A motion to compel filed on behalf of GEICO presented the argument that GEICO would be denied due process in the bad faith lawsuit if it were not allowed to serve U.M. interrogatories inquiring into the plaintiff's damages from the accident. This argument was based on a State District Court of Appeal Judge's concurring opinion in a case, which was followed by two U.S. District Judges in two later cases.
The due process argument was successful in front of a U.S. Magistrate Judge in the bad faith case, who granted the motion to compel the plaintiff to answer interrogatories about what damages she incurred in the auto accident, until the argument reached a third U.S. District Judge, in the Middle District of Florida.
As the District Judge pointed out, the due process argument which originated in a State DCA Judge's concurring opinion and "which is wholly unsupported by authority--is contrary to Florida law and, indeed, to the ... majority opinion itself."
GEICO's position might have been made stronger if the interrogatories in question were written to ask what damages Ms. Batchelor claimed in this bad faith lawsuit. Instead, the interrogatories are a form used in U.M. cases directed to the issue of damages sustained in the underlying automobile accident. So, GEICO's position here was that due process would be denied if a U.M. carrier could not send out another set of U.M. interrogatories to ask about damages already fixed by a verdict, reduced in a judgment to U.M. policy limits by motion, and affirmed on appeal to a State District Court of Appeal.
The District Court rejected the due process argument on these facts:
This Court cannot discern any due process violation from this procedural posture. Defendant fully litigated the issue of the extent of Plaintiff's damages, argued that issue on appeal, and obtained a ruling from the appellate court. It has received all of the process to which it is due.
Batchelor v. GEICO Casualty Co., 2014 WL 3906312 *3 (M.D. Fla. June 9, 2014).
GEICO's position may yet prevail. One of the U.S. District Court cases mentioned as accepting this argument on certain facts, is the subject of a pending appeal in the U.S. Eleventh Circuit Court of Appeals. The Batchelor opinion may be one District Judge's comment on that pending issue.
GEICO also argued that the underlying jury verdict was not a determination of bad faith damages. This contention appears to be contrary to the language of Florida's "Bad Faith Statute," Fla. Stat. § 624.155(8), which provides that "[t]he damages recoverable pursuant to this section ... may include an award or judgment in an amount that exceeds the policy limits." The District Judge in this case disposed of this argument as follows:
Defendant's position would improperly read the words "award or" out of the statute. If the legislature intended only for the amount of a judgment to establish the damages, those words would be superfluous.
Batchelor v. GEICO Casualty Co., 2014 WL 3906312 *4 (M.D. Fla. June 9, 2014). [Emphasis by the Court.]
I was going to include the interrogatories for you to see, so I copied them from the motion to compel from the electronic court file on PACER. They are not quoted in the Court's opinion, although the Court's decision in Batchelor becomes clearer on reading the defendant's interrogatories and the plaintiff's answers and objections. When I copied them from the Court File, however, the copy came with a formatting command embedded in the motion to number the paragraphs, so the formatting started over again at paragraph number 1 instead of beginning with paragraph number 5 and ending with paragraph number 15. Renumbering some eleven paragraphs is more work than I anticipated, and so I intend to post the interrogatories separately later.
In the case of Wilt v. Depositors Insurance Co., 2013 WL 6195768 (M.D. Fla. November 26, 2013), a U.S. Magistrate Judge recommended that a plaintiff's motion for remand in an insurance case be denied. The U.S. District Judge "adopted, confirmed, and approved" the report "in all respects," but added a thought of her own.
The District Judge added to the observation of the Magistrate Judge that settlement demand letters ordinarily do not, standing alone, establish that the amount in controversy is in excess of $75,000 for federal jurisdiction to attach in diversity cases. However, in this case the District Judge added the thought that the settlement demand letters in this case "provide sufficient information to support the notion that Plaintiff is seeking in excess of the jurisdictional minimum." Wilt v. Depositors Insurance Co., 2013 WL 6195768 *1 n.1 (M.D. Fla. November 26, 2013).
To put this in context, the Magistrate Judge's report and the District Judge's "adoption, confirmation and approval" of that report "in all respects," were based on three (3) independent reasons for ruling.
First, this is an uninsured/underinsured motorist coverage case in which the plaintiff-policyholder is seeking the remaining UM limits of $275,000.00 out of a policy limit of $300,000.00. She alleged in her complaint that the UM policy limit of $300,000.00 was not enough to compensate her for the injuries she sustained in an automobile accident caused by an underinsured motorist. That alone was sufficient for the Magistrate Judge to recommend that the plaintiff's motion for remand be denied as to the required $75,000+ amount in controversy, Wilt v. Depositors Insurance Co., 2013 WL 6195768 *7 (M.D. Fla. November 26, 2013), and for the District Judge to agree. Wilt v. Depositors Insurance Co., 2013 WL 6195768 *1 (M.D. Fla. November 26, 2013).
Second, in a second count in addition to the coverage count, the plaintiff in this case alleged a claim for insurer bad faith. She accordingly attached a copy of her Florida Civil Remedy Notice of Insurer Violation to her complaint. In the CRN, the plaintiff-policyholder's attorney wrote that "'her claim has a value well in excess of the remaining available [UM/UIM] policy limits of $275,000.00'". Wilt v. Depositors Insurance Co., 2013 WL 6195768 *3, *4 (M.D. Fla. November 26, 2013). This, too, was an independent basis for the Magistrate Judge's recommendation that the plaintiff's motion to remand be denied in this case. She, the Magistrate Judge, wrote that "[t]he Civil Remedy Notice attached to [the] Complaint also supports a finding that the amount in controversy exceeds $75,000.00. This is further evidence from which it can be reasonably inferred that the amount in controversy exceeds $75,000.00." Wilt v. Depositors Insurance Co., 2013 WL 6195768 *7 (M.D. Fla. November 26, 2013). The District Judge again agreed. Wilt v. Depositors Insurance Co., 2013 WL 6195768 *1 (M.D. Fla. November 26, 2013).
The Magistrate Judge and the District Judge seemed to part company on the District Judge's third ground for approving the report, however, namely on whether the settlement demand letters in this particular case could be a basis for denying remand. The Magistrate Judge took the view that she had already recommended for two good and sufficient reasons that the plaintiff's remand motion be denied. To the Magistrate Judge, then, "it is not necessary to consider the letter memorializing the $300,000 settlement offer [i.e., plaintiff's settlement demand] to conclude that the amount in controversy is satisfied." Wilt v. Depositors Insurance Co., 2013 WL 6195768 *7 (M.D. Fla. November 26, 2013).
However, the District Judge's take was a little different. To her, the "settlement demand letters here" were a part of the "reasonable deductions, reasonable inferences and reasonable expectations" which a Federal Court is permitted to draw or to take into account, as the case may be, from a complaint and its exhibits in considering a motion to remand. Wilt v. Depositors Insurance Co., 2013 WL 6195768 *1 * n.1 (M.D. Fla. November 26, 2013).
So, there you have it, the context of what one U.S. District Judge meant when she wrote that settlement demand letter supports the "notion" of $75,000+.
Elizabeth Caserta was walking with her boyfriend along a roadside at night. An unknown driver of a car hit them both. Ms. Caserta's boyfriend, Edward Carcarey, died from his injuries. Ms. Caserta "suffered minor injuries and subsequent emotional distress." Caserta v. GEICO General Insurance Co., 2012 WL 6604613 *1 (3d Cir. December 19, 2012)(case involved Pennsylvania substantive law).
Mr. Carcarey's mother "had an automobile insurance policy with GEICO that included uninsured motorist coverage." Edward Carcarey was clearly an "insured." Ms. Caserta contended that she, too, is an insured and sued GEICO for alleged breach of the insurance contract and for Bad Faith. Caserta v. GEICO General Insurance Co., 2012 WL 6604613 *1 (3d Cir. December 19, 2012).
Neither the Trial Court nor the Third Circuit panel decided whether Ms. Caserta is GEICO's "insured" in this situation. In fact, the appellate panel carefully pointed this out in a footnote. Caserta v. GEICO General Insurance Co., 2012 WL 6604613 *2 n.1 (3d Cir. December 19, 2012). Rather, despite Pennsylvania State Trial Court decisions to the contrary, the Federal Appellate panel like the Federal District Judge, determined that there is no Coverage because there is no legally recognized tort in Pennsylvania:
Our task, as a federal court sitting in diversity, is “to apply state law and not to form it.” Coviello, 233 F.3d at 716 (3d Cir.2000). For purposes of bystander liability under Pennsylvania law, Caserta is not “closely related” to Edward Carcarey, her boyfriend. As a result, we conclude that her claim fails as a matter of law, and she cannot recover under Suzanne Carcarey's GEICO policy.
Caserta v. GEICO General Insurance Co., 2012 WL 6604613 *3 (3d Cir. December 19, 2012). The appellate panel accordingly affirmed the lower court's Judgment on the Pleadings in favor of GEICO in this case. Parenthetically, although the panel did not mention it, apparently the Judges were of the prevailing view that where there is no Coverage, there is no Bad Faith either. See December 20, 2012 article posted here on Insurance Claims and Bad Faith Law Blog.
If there had been Pennsylvania State Court decisions denying the existence of the tort under the circumstances alleged by Ms. Caserta, the decision would probably make sense. However, by reaching a decision that despite case law to the contrary, several Federal Judges decide that State law should not and would not recognize the legal existence of a tort here, the panel actually did what it said it would not do, which in the panel's own quoted words, is to form State law and not to apply it.
Merry Christmas and Happy Holidaysto Allin 2012, and a Happy New Year to All in the year to come!
In a First-Party Bad Faith Case in Florida, a Federal Court was confronted with a Plaintiff's-Policyholder's First Motion in Limine to Limit Evidence at Trial to the Relevant Time Period.
The case is Alexander v. GEICO, 2012 WL 5382051 (M.D. Fla. November 1, 2012). The Plaintiff, Randolph Alexander, was caught in an automobile accident involving four vehicles in 2005. He made a claim for Coverage under his GEICO Uninsured/Underinsured Motorist Policy. It has limits of $50,000/$100,000. Mr. Alexander filed suit against GEICO for his "UM benefits" in 2007. Alexander v. GEICO, 2012 WL 5382051 *1 (M.D. Fla. November 1, 2012).
After he filed his UM benefits lawsuit, Mr. Alexander filed two Civil Remedy Notices of Insurer Violation ("CRNs") outlining GEICO's failure to pay, in essence. The first CRN was filed in 2008, and the second in 2009.
Thereafter, Mr. Alexander obtained a verdict, apparently in the UM case against GEICO, and apparently for the damages caused to him by the other parties in the automobile accident. The verdict amount was entered into a Judgment after the amount was reduced by setoffs to $212,356.95.
The District Judge did not reveal when Mr. Alexander's Bad Faith Claim or Claims was or were alleged in a lawsuit, but his Florida First-Party Bad Faith Claims could only have been alleged under Florida Statute Sections 627.727(10), Florida's UM Statute, and 624.155, Florida's Bad-Faith Statute. Following the Verdict and Judgment, "Alexander seeks to collect the balance of the verdict from GEICO based upon its alleged bad faith failure to settle within the $50,000 policy limits." Alexander v. GEICO, 2012 WL 5382051 *1 (M.D. Fla. November 1, 2012). Parenthetically, the Federal Court did not explain whether or in what way GEICO had a duty in the first place to settle Mr. Alexander's claims, if any, against the other parties involved in the four-vehicle automobile accident.
Instead, this decision revolves around only Mr. Alexander's First Motion in Limine to Evidence at Trial to the Relevant Time Period. In that motion, Mr. Alexander asserted that the relevant time period for any and all evidence on the Bad Faith Claims ended when the time period for responding to his second CRN ended. His argument ran to the effect that his filing of a CRN is a condition precedent to First-Party Bad Faith Claims like his and, that being so, "the improper conduct alleged must necessarily pre-date the expiration of the CRN." Alexander v. GEICO, 2012 WL 5382051 *1 (M.D. Fla. November 1, 2012).
The Federal Judge decided this open question of Florida law in favor of the Plaintiff-Policyholder in this case. The Court appears to have observed that Mr. Alexander's Bad Faith Claims are based at least in part on the Florida Bad-Faith Statute, and although there is no other authority on the issue, in the Court's opinion the structure of the Statute required the Court to grant Mr. Alexander's motion:
[S]ection 624.155(3)(b) requires the CRN to “state [ ] with specificity ... the facts and circumstances giving rise to the violation,” which leads to the logical conclusion that the conduct constituting the alleged bad faith must have occurred prior to the plaintiff filing the CRN.
Although the parties have not cited Florida case law directly on point—and the Court is unable to locate any—this conclusion also appears in alignment with related Florida bad faith case law.
* * *
Thus, evidence of GEICO's actions taken after the expiration of the second CRN is not relevant to the issue of bad faith and will not be admissible at trial.
Alexander v. GEICO, 2012 WL 5382051 *3 (M.D. Fla. November 1, 2012).
Not content to rest on this decision which "the Court believes ... to be legally correct," the Federal Court also noted in a footnote "that the facts appear to be that GEICO was on notice of the pertinent facts well before the expiration of the second CRN." Alexander v. GEICO, 2012 WL 5382051 *3 & n.1 (M.D. Fla. November 1, 2012). [Emphasis added.]
It is well settled in Florida that a statutory First-Party Bad Faith action is premature until two conditions have been satisfied: First, the First-Party Insurance Company raises no defense which would defeat Coverage including but not limited to situations where the Coverage Defense has been raised and adjudicated against the Insurance Company by a Florida Court of competent jurisdiction; and, Second, the actual extent of the Insured's loss has been finally determined, meaning that a recognized determination has been made as to liability and the extent of damages.
Recognizing these twin conditions, a Florida Appellate Court has recently held that an Appraisal Award can qualify as a required "final determination". Trafalgar at Greenacres, Ltd. v. Zurich American Insurance Co., 2012 WL 3822215 *2 (Fla. 4th DCA September 5, 2012). This decision appears to resolve an open question of Florida law as to whether an Appraisal Award can ever qualify as a final determination of the Insured's loss, meaning both liability and the extent of damages, for purposes of Florida's Bad Faith Statute, Fla. Stat. § 624.155. See 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 11:24 (2012 Supplement, 3d Edition West Publishing Company).
It has also been recently held, although not deciding an open question in Florida law, that a Policyholder pursuing a statutory First-Party Bad Faith cause of action cannot allege that there has been a final determination of liability where the Policyholder's Breach of Contract case is still pending. Lime Bay Condominium, Inc. v. State Farm Florida Insurance. Co., 94 So. 3d 698, 699 (Fla. 3d DCA 2012). See, in addition, Maraist v. State Farm Mut. Auto. Ins. Co., 2012 WL 3536759 *1 (N.D. Fla. 2012)(granting Underinsured Motorist Carrier's Motion to Dismiss its Insured's Bad-Faith Claim because Florida law "requires not an allegation but a determination" of liability and the extent of the Insured's damages [emphasis added]).
In another recent case, a Federal Court effectively held that under Florida law, a First-Party Insurance Carrier cannot close its eyes to the extent of information it could obtain about its Insured's damages where the available information indicated an investigation of the Claim was called for. In the case of King v. GEICO, 2012 WL 4052271 *4 (M.D. Fla. September 13, 2012), GEICO's Insured filed a First-Party Bad Faith lawsuit against GEICO based in part on these allegations concerning a claim as to which GEICO did not conduct any additional investigation into the extent of its Insured's, Mr. King's, injuries after it received its Insured's Settlement Offer nor after GEICO received the Insured's Civil Remedy Notice of Insurer Violation of Florida's Bad-Faith Statute:
Although having the right to do so during the sixty-day window following the filing of the CRN, GEICO never attempted to obtain a statement under oath from King, to receive medical authorization allowing access to King's medical providers and treating physicians, or to conduct a compulsory medical examination of King to ascertain the severity of his damages. Nor did GEICO seek review of King's medical records by a physician or an opinion from an outside attorney as to the value of King's claim. In sum, GEICO made no efforts to investigate the claim beyond review of the demand package, either at the time of the initial settlement offer or upon receipt of the CRN.
The Court held that GEICO "presents a strong argument that it acted in good faith" at the time it received the CRN from its Insured, by pointing to its lack of actual knowledge of facts developed later which would show that its Insured's injuries were severe. Nonetheless, GEICO's Motion for Summary Judgment on this record was denied "because a reasonable jury could find that, under the totality of the circumstances, GEICO's failure to further investigate King's claim at the time it received the CRN amounted to bad faith". King v. GEICO, 2012 WL 4052271 *4 (M.D. Fla. September 13, 2012). [Emphasis added.]
The Court further held that the Civil Remedy Notice at issue in that case was sufficiently specific to satisfy Florida law, in part because "[g]iven the settlement letter detailing King's medical expenses and prognosis received by GEICO just two months prior to the CRN, common sense dictates how GEICO might have responded given the information provided." King v. GEICO, 2012 WL 4052271 *8 (M.D. Fla. September 13, 2012).
In Ardrey v. USAA Casualty Insurance Co., 2012 WL 831620 (M.D. Fla. March 12, 2012), Download Ardrey v. USAA Casualty Ins. Co. (M.D. Fla. Case No. 8.12cv08, Order Filed March 12, 2012) PUBLIC ACCESS, a Federal District Court considered a Motion to Dismiss a Bad Faith Claim under Florida's Bad-Faith Statute. USAA based its Motion to Dismiss in part on an alleged failure of a USAA Uninsured Motorist Policyholder to comply with a statutory condition precedent of completing a legally sufficient Civil Remedy Notice form.
As reported by the Court in this case, USAA argued that certain specific Bad Faith claims alleged by the Plaintiff must be dismissed for failure to comply with the statutory condition precedent:
Because none of these specific violations were identified in the CRNs, USAA argues that Plaintiff's unfair settlement practices claim based on these alleged violations must be dismissed.
Id.at *3.
Plaintiff opposed the Motion to Dismiss in this regard on the ground that she went to the website of the Florida Office of Insurance Regulation (formerly the Florida Department of Insurance), and there she filled out a form Civil Remedy Notice or "CRN" which she printed and sent to USAA. She contended that "she cannot be faulted for failing to list the specific statutory subsections in the CRNs, because the CRN form was provided online by the Department and she was required to select the statute that was violated from a drop-down menu. Thus, Plaintiff contends that she did not have the option to identify the specific subsections that USAA violated. Id.
The Federal Judge did not address this contention directly. However, the Federal Judge granted USAA's Motion to Dismiss in this regard, holding:
Furthermore, given the complete lack of any information in the CRN regarding the specific ways in which Plaintiff believed that USAA engaged in unfair settlement practices, the Court finds that the CRNs did not provide USAA with sufficient notice of her unfair settlement practices claim.
Id.
Two things come immediately to mind as a result of this decision. First, the OIR may need to provide statutory-compliant options as a part of its online Civil Remedy Notice form.
Second, after this case, at least, it will do Policyholders no good to rely on the OIR's online CRN form rather than on what the Florida Statute requires.
The UIM carrier, GEICO, raised Florida's Bad Faith Statute, Fla. Stat. § 624.155, as a defense to the Bad Faith Claim. Its Affirmative Defense on this ground already having been stricken once, GEICO re-alleged it in a half-dozen paragraphs as follows:
As its Second Affirmative Defense, GEICO states that the Plaintiff's claim is governed by § 624.155, Florida Statutes, and that GEICO is entitled to the following protections afforded to GEICO by that statute:
a. To the extent that Plaintiff's Civil Remedy Notice failed to comply with the requirements of Florida Statute § 624.155, Plaintiff failed to fulfill a condition precedent to the present action.
b. To the extent that the allegations set forth in Plaintiff's Amended Complaint are broader than the allegations set forth in Plaintiff's Civil Remedy Notice, Plaintiff fails to fulfill a condition precedent to the present action.
c. The provisions of Florida Statute § 624.155 regarding punitive damages apply to the present action. There is no basis for punitive damages to be sought or awarded.
d. To the extent that Plaintiff's allegations do not constitute bad faith as defined by Florida Statute § 624.155 and Florida law, Plaintiff's Amended Complaint fails to state a cause of action.
e. To the extent that Plaintiff alleges damages in her Amended Complaint that are not allowed by Florida Statute § 624.155, Plaintiff's Amended Complaint fails to state a cause of action.
Id. at *1, quoting GEICO's Second Affirmative Defense in this case.
The Plaintiff-Policyholder again filed a motion to strike this Affirmative Defense as legally insufficient. The United States Magistrate Judge agreed and granted the motion to strike. The Court based its ruling on four grounds:
This was a legal argument, not an Affirmative Defense which must be based on allegations of fact under the Federal Rules of Civil Procedure. In particular, "subparagraphs 'c' and 'e'" were stricken as "statements of law; [they are] not affirmative defenses."
It is "devoid of any factual allegations to support its legal conclusions." As such, this alleged Affirmative Defense "fails to give Plaintiff notice of the grounds of the defense and is likely to lead to surprise and undue prejudice."
The Court noted that "each subpart" of this alleged Affirmative Defense begins with the words, "[t]o the extent." "Absent specifics, which GEICO has not supplied, it is impossible to know whetherany part of the second affirmative defense applies in this case." [Emphasis added.] To put it another way, it is not enough to know how many angels can dance on the head of a pin; the knowledge required is specific to the facts of this case, whether or not it applies to the facts in other cases pending or yet to be filed.
Finally, GEICO attempted to allege what once was called "a general denial" of the Plaintiff's compliance with a supposed condition precedent. Under Federal Rule of Civil Procedure 9(b), however, and under most Rules of Civil Procedure extant in 2012, a denial of compliance with a condition precedent must be alleged with particularity.
Id. at *2.
The Court nonetheless granted GEICO further leave to file and serve another Amended Affirmative Defense, but only "if, consistent with counsels' obligations" under Federal Rule of Civil Procedure 11, GEICO can allege "specific failures" by Plaintiff to comply with Fla. Stat. § 624.155, "which put at issue relevant legal and factual matters." Id. at *3. [Emphasis added.]
In Florida, First-Party Bad Faith Cases may be filed under a Statute, Section 624.155. One of the statutory conditions precedent to filing a Section 624.155 lawsuit is a Civil Remedy Notice of Insurer Violation. The complainant sends the original to the Florida Office of Insurance Regulation (formerly the Florida Department of Insurance), and sends a copy to the affected Insurer which has a certain amount of time to "cure" the alleged Bad Faith.
State Farm was Ms. Betty Bollinger's Uninsured/Underinsured Motorist carrier. She was injured in an automobile accident with a third-party tortfeasor and State Farm gave her permission to settle with the tortfeasor for the tortfeasor's liability policy limits. Ms. Bollinger then demanded the $10,000 UM/UIM Policy Limits on her own State Farm Policy on the ground that her Damages exceeded the liability policy limits of the tortfeasor and her UM/UIM Coverage should compensate her for her uninsured loss. State Farm at first declined. Id.at *1.
Ms. Bollinger then sued State Farm in Florida State Court, apparently for alleged First-Party Bad Faith in addition to her UM/UIM Policy Limits. State Farm reconsidered its position on offering the UM/UIM Policy Limits to her, and decided to offer the limits after Ms. Bollinger filed suit. This time, she did the declination. Her lawsuit proceeded to Trial and a Jury awarded Ms. Bollinger $410,000.00. It was then that State Farm removed the lawsuit to Federal Court. Id.
However, no-one filed or served a Civil Remedy Notice before Ms. Bollinger's lawsuit was filed in the first place. Id.at *2. The Federal Court held that the lack of a statutorily required Civil Remedy Notice was sufficient grounds for dismissal in and of itself.
For that reason alone, the Federal Court held, there was no basis for Federal Jurisdiction. The Federal Court accordingly dismissed Ms. Bollinger's lawsuit on the ground of lack of Federal Jurisdiction, specifically, on the ground that Ms. Bollinger's First-Party Bad Faith Claim was not yet "ripe". Id.at *3.
The glaring absence of a Civil Remedy Notice can be fatal to any action for Florida First-Party Bad Faith. In this recent decision under Florida Statute Section 624.155, the Court held that where there is no Civil Remedy Notice, there is no Federal Case.
Lee S. Haramis, Sr., sued Allstate's Insured in Florida State Court. Allstate settled that lawsuit. Mr. Haramis executed "a Complete Release of All Claims and Agreement to Hold Harmless and Indemnify". The only insurance policy limits referenced in that Release, according to a highly respected Federal Judge now on senior status, were policy limits for Bodily Injury and Property Damage Liability Coverages. See Haramis v. Allstate Property & Casualty Insurance Co., 2011 WL 5510730 *1-*2 (M.D. Fla. November 10, 2011), Download Haramis v. Allstate Property and Casualty Insurance Co. (M.D. Fla. Case No. 3.11cv455, Order Filed Nov. 10, 2011) PUBLIC ACCESS.
Mr. Haramis then sued Allstate as personal representative of his daughter's Estate, seeking Uninsured Motorist benefits. Allstate defended itself by raising the Release in the earlier lawsuit.
The Federal Judge held that the earlier Release did not entitle Allstate to Summary Judgment in the U.M. lawsuit. Instead, the Release is "ambiguous," the Court held, denying Allstate's Motion for Summary Judgment. In pertinent part, although the Release of the first lawsuit recited on its face that it was for policy limits, "[t]he Court notes that the only policy limits referenced in the Release are those for bodily injury coverage and property damage liability coverage. The release is silent as to uninsured motorist coverage limits." Id. at *3. [Emphasis added.]
Parenthetically, the Release in the first lawsuit was drafted to include an express Release "'from any claims whatsoever arising from allegations of bad faith dealing, breach of insurance contract, negligent claims adjustment or otherwise actionable conduct by [Defendant] in its claims defense activities ....'" In addition, although the Court did not dwell on the fact, the earlier Release expressly applied to certain claims and not others. It reached claims "'of any kind or nature (other than claims for first-party insurance, medical, or governmental benefits from other entities not named herein)....'" Id. at *2.
The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida on November 30 and December 1, 2011. The author will be speaking on two panels.Here is a link to the American Conference Institute Website Page which features this Conference including registration. If you or someone you know would like to attend, the ACI is offering a discount to the readers of this weblog. If you would like to explore the ACI discount offer, contact:
Priority Code: TM-MGN
Marc Gerstein Delegate Coordinator Office: 1-212-352-3220 x5432
The parties' Joint Stipulation and Motion presented the parties' request to the Court in this Underinsured Motorist Insurance Bad Faith Case "to stay the liability portion of Plaintiff's bad faith claim until the actual damages Plaintiff suffered have been determined." Id.
The Federal Judge granted this stipulated Motion. The Court offered two grounds: (1) Under Florida Statutory First-Party Bad Faith Law, the Insured's underlying damages first have to be determined before any Bad Faith Claim will lie, and (2) simultaneous discovery on Coverage and Bad Faith issues, the parties in this case stipulated, could cause "'improper production of the claim file and other work product discovery before the determination of damages.'" Id. at *2.
Although this ruling came in response to a Stipulated Joint Motion, the concepts it offers are very much worthwhile putting before the Courts for their consideration, i.e., presenting these arguments, certainly from the Defendant Insurance Companies' point of view in all Bad Faith cases. This is particularly true where the Damages to be determined are not simply underlying Damages but the extracontractual or Bad Faith Damages, the determination of which may prejudice the simultaneous determination of Bad Faith Liability.
In cases in which a damages determination of underlying damages as distinct from extracontractual or Bad Faith Damages is a condition precedent to a Bad Faith Claim, and in which discovery is likely to be stayed anyway as a result until underlying damages are determined, Policyholders too have an interest in saving time and expense through a vehicle such as the Stipulated Joint Motion in this case.
Mark S. Shapiro, Esquire is listed on Pacer, the Federal Courts' Online Docket, as a Counsel of Record for the Defendant in the Ross case. Together, the author of this post and Mr. Shapiro will present the Florida Workshop at the American Conference Institute on Bad Faith Litigation in Orlando, Florida which will be held November 30 - December 1, 2011.
