Articles Posted in Bad Faith

In a recent case, the Florida Supreme Court issued an opinion in an appeal involving a certified question about whether a personal injury damages award must be reduced by a payment the plaintiff received to settle a bad faith claim against his uninsured motorist insurance carrier. The two laws at issue in the case were sections 768.041(2) and 768.76(1), Florida Statutes (2012).

The Respondent/plaintiff (Respondent) was badly injured in a car crash. Following the accident, he sued the Petitioner/defendant (Petitioner) bringing a vicarious liability claim based on the Petitioner’s co-ownership of the other automobile involved in the crash. Additionally, the Respondent also sued his own uninsured motorist insurance carrier to recover policy benefits for statutory bad faith damages. The Respondent and his insurer settled prior to the trial for $4 million. The subsequent trial against the Petitioner resulted in a $30 million jury verdict for the Respondent. The Petitioner then asked the trial court to set off the pre-trial $4 million insurance settlement against the damages award, but the trial court denied the motion.

On appeal, the Second District Court of Appeals affirmed the denial of the setoff request. Additionally, it certified a two part question: 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? The appeals court answered no to both parts of the question, ultimately holding that neither statute authorized a setoff in the present case. The appellate decision explained that writing on a blank slate, it would have found the Petitioner entitled to a setoff under section 768.041(2), but it decided that this Court’s case law precluded that result.

On March 24, 2023, Florida Governor Ron DeSantis signed a far-reaching tort reform bill into law. The new law enacts several major changes to the Florida negligence liability system, the standard for bad-faith insurance claims, and the use of contingency-fee multipliers when calculating attorneys’ fees. Each of these changes directly influences how plaintiffs are able to pursue their claims in Florida moving forward. The announcement of the changes triggered a rush to the courthouses with negligence lawsuits in advance of its effective date, suggesting that the bill will curtain the overall tort liability landscape throughout the state.

Modified Comparative Negligence

The headline of the changes enacted by the Florida tort reform bill is the statewide shift from a pure comparative negligence system to a modified comparative negligence system. Under the old pure comparative negligence system, a plaintiff could recover an amount in proportion to the defendants’ percentage of responsibility for the plaintiff’s injuries regardless of the plaintiff’s liability. In practice, that meant that if a defendant was 30% responsible for a plaintiff’s injuries, the plaintiff could recover 30% of the damages associated with the injury from the defendant, even if the plaintiff was 70% liable. Under the old system, the plaintiff had four years to file a negligence lawsuit.

Under the new system, a plaintiff is able to recover in proportion to the defendants’ percentage of responsibility only if the plaintiff’s own share of responsibility is 50% or less. Meaning that if a plaintiff is more than 50% liable, the plaintiff cannot recover from the defendant. Additionally, the plaintiff has two years to file a negligence lawsuit, not four.

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In a recent case, the United States Court of Appeals for the Eleventh Circuit issued an opinion in an appeal involving a bad faith claim in an insurance case under Florida law. The plaintiff-appellant was injured in a car accident and subsequently sued the defendant-appellee, USAA General Indemnity Company, for bad faith. At trial, after the parties had conducted discovery, USAA moved for summary judgment, which the district court granted. The court concluded that there was no genuine dispute as to the bad faith claim because USAA had, at most, acted negligently in handling the claim. While that alone was sufficient for summary judgment in the eyes of the district court, the court further concluded that no reasonable jury could find USAA’s conduct caused the plaintiff to obtain the excess judgment against the insured party because the evidence showed that the plaintiff’s lawyer never intended to settle the case, granting summary judgment. The plaintiff then filed a timely appeal.

The accident that triggered the case involved three drivers: the insured, the plaintiff, and a non-party. On July 29, 2017, the insured lost control of his van and struck the non-party. The collision caused the insured to veer into oncoming traffic, landing on top of the plaintiff’s vehicle. The plaintiff suffered catastrophic injuries, including a torn aorta and several broken bones. He was airlifted from the crash site to the hospital, where he remained in a medically induced coma in the ICU for ten days before spending an additional three weeks in the hospital and rehabilitation facilities. A few days after the accident, USAA warned the insured of the possibility of an excess judgment and then again on August 8 and in a letter on October 26. Additionally, USAA began to investigate the case by collecting statements, corresponding with the plaintiff’s attorney, and obtaining the police report. Eventually, USAA tendered the policy limits, offering to settle with the plaintiff in exchange for a release of liability. The plaintiff’s attorney never offered to settle or sent a counteroffer.

Following the district court’s granting of summary judgment, the plaintiff filed an appeal contending that the district court erred because a reasonable jury could find in his favor on both the elements of a bad faith claim. Bad faith claims under Florida law are made up of two elements: (1) bad faith conduct by the insurer, which (2) causes an excess judgment to be entered against the insured. The Eleventh Circuit opinion emphasizes the critical inquiry in a bad faith action is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment. Applying a totality of the circumstances analysis, the court was satisfied that there was a genuine issue of material fact as to whether USAA’s handling of the insured’s claim amounted to bad faith. The appellate decision first looked at the delay in initiating settlement negotiations. The court then points out the delay by USAA in providing information to the plaintiff and his attorney necessary to settle the case. Finally, regarding causation, the court found that a reasonable jury faced with the record could find that USAA caused, or at least contributed substantially, the entry of the excess judgment against the insured. The Eleventh Circuit reversed and remanded the decision to the lower court.

In a recent case, the Third District Court of Appeals in Florida issued an opinion in an appeal involving an insurance claim between the Appellants, the plaintiff, and the Appellee, Citizens Property Insurance Corporation (Citizens). The plaintiff sued Citizens after a claim for hurricane damage he filed was denied by Citizens due to late notice. Citizens moved for summary judgment on the basis that the plaintiff failed to promptly report his claim. The trial court granted summary judgment, and the plaintiff appealed.

The plaintiff was issued a homeowners policy by Citizens. The policy expressly barred any hurricane claims filed outside of a three-year window. Additionally, the policy requires claimants to give prompt notice of damages for claims. In the aftermath of Hurricane Irma, the plaintiff’s home sustained interior and exterior damage to his residence. He retained a public adjuster, and two years and seven months after the storm, he reported a claim to Citizens. Citizens responded by denying the claim, stating that due to the length of time that had passed between the date of the loss and the date the loss was reported, Citizens considers the loss to be a late report claim. Citizens then assigned a field adjuster. According to the field adjuster’s report, due to the passage of time, he was unable to determine if the exterior or interior damages were the result of Hurricane Irma. Citizens requested photographs and documentary evidence from the public adjuster, without success, though the plaintiff did tender a written proof of loss. Citizens denied the claim, asserting late notice.

At trial, the plaintiff testified that he noticed leaks throughout his residence the day after the storm struck. He stated that he observed roof leaks and attempted to effectuate repairs using tar approximately one month after the hurricane. The next year, the plaintiff made more roof repairs, including tile replacement, but did not report damages to Citizen. The plaintiff cited a lack of fluency with the terms of his policy as the reason why he did not report the damage at the time.

Florida insurance companies review thousands of property damages claims a year. In an effort to expedite claims, companies require claimants to abide by various requirements. Many companies enforce a requirement to provide “sworn proof of loss.” Insurance companies claim that requirement allows them to assess claims quickly and fairly. Issues often arise when a claimant suffers a loss but fails to abide by the proof of loss requirement.

Several Florida cases address lawsuits involving a claimant’s failure to provide a sworn proof of loss. Together the cases hold that if a claimant files a lawsuit against an insurance company before submitting a required sworn proof of loss, the company is relieved of its duties under the policy, thus barring the lawsuit. However, if the claimant submits the proof of loss untimely, but before filing a lawsuit, courts will permit the lawsuits and determine whether the delay prejudiced the company.

Recently, a Florida appeals court issued an opinion addressing a case involving an untimely sworn proof of loss. The homeowner purchased an insurance policy from the company in 2017. A condition of the policy was that the insurance company had “no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us.” The homeowner appealed the lower court’s summary judgment ruling in favor of her home insurance company. At issue is a policy that requires the claimant to send a sworn proof of loss to the company within sixty days of the company’s request.

Under Florida law, those who bring a bad-faith claim against an insurance company for failing to settle a lawsuit must prove various elements. One element involves establishing that the insurance company’s conduct caused the insured’s loss. There are different ways to demonstrate this requisite caution element. One such method is by providing evidence that the insured experienced an “excess judgment” because of the company’s actions.

Typically, excess judgments must exist for the court to have jurisdiction to hear a Florida bad faith insurance claim. Excess judgments refer to instances when a judgment in a case is for a higher amount than the insured party has under their insurance policy limit. Excess judgments leave the at-fault party personally liable to the victim for their losses in these situations. Further, it fails to fully compensate the injury victim for damages because individual parties often lack the funds to pay a claim.

Bad faith arises when the insurance company owes the insured a duty, and the company breaches the duty, and because of the breach, an injury occurs. While Florida law requires insurance companies to settle a case where a reasonably prudent person would do so, mere negligence does not amount to bad faith.

The District Court of Appeal issued an opinion in favor of a homeowner’s in a Florida bad faith insurance dispute. According to the record, lightning struck the homeowner’s residence in July 2009, causing serious property damage. The owner filed a claim with his insurance provider, who determined the amount of loss and made payments over eight years. However, in 2017 the homeowner disputed the paid amount, and the insurance company invoked the appraisal provision. While the appraisal process was ongoing, the owner filed a notice of his intent to file a bad faith claim against the insurance company. Amongst several claims, the insurance company argued that the sixty-day cure period was tolled pending the appraisal award and payment cured the bad faith allegations.

Under Florida law, insurance companies maintain two distinct duties: contractual and statutory. As such, first, they must timely evaluate and pay benefits. In most cases, the insurance policy conditions dictate how the parties must proceed before an insurer fulfills a claim. For example, as is the case in this situation, the provider might maintain the right to invoke an appraisal.

Second, they must act in reasonably good faith in evaluating claims. If a party experiences damages by an insurance company’s failure to comply, they may pursue civil action against the company.

The District Court of Appeal in Florida issued an opinion in an appeal stemming from an insurance dispute between an insurance company and the insured. The insurance company appealed a final judgment against them after a lower court found that the insured’s material breach of the contract was immaterial.

According to the record, storm damage prompted the homeowner to file a claim with the insurance company. The insurance company argued that the policy bars the homeowner from filing suit because he failed to comply with the three post-loss conditions in the insurance contract. Specifically, the violations include the homeowners’:

  1. Failure to provide the insurance company with prompt notice of the loss.

The District Court of Appeal in Florida issued a decision in an insurance coverage dispute in a case involving the insurance company’s liability provision. According to the facts, the insurance company insured the homeowner’s residence. A failed cast iron sanitary plumbing system in the home caused water to escape and cause damage to the dwelling. The cast-iron pipes deteriorated because of wear and tear, deterioration, and corrosion.

The insurance company permitted coverage for the water damage for $10,000, under the Limited Water Endorsement (LWD) in the policy. The homeowners claimed that the insurance company owed them additional funds for the cost of tearing out and replacing the concrete slab. The owners cited language in the primary policy, which stated that the company covered losses related to water damage, including the cost of tearing out and replacing necessary parts. Finally, the parties agree that the policy does not cover the repair or replacement costs of the corroded pipes.

The parties agree to most of the policy terms; however, they disagree with the liability provision in the LWD endorsement. The company argues that the $10,000 applies to water damage and the related costs, whereas the homeowners contend that the limitation applies only to the water damage.

An appellate court recently issued an opinion in a bad faith insurance lawsuit stemming from an accident between an 18-year-old driver and a motorcyclist. The accident occurred when the 18-year-old turned into a median in front of the biker. The biker slammed into the driver’s car with such force that the vehicle spun 180 degrees. The biker suffered serious injuries from the collision and was airlifted to a hospital.

The 18-year-old was driving his mother’s car at the time of the accident, and when he called the insurance company, he reported property damage but neglected to report any physical injuries. The insurance company interviewed the driver, who disclosed that the biker suffered injuries, and he indicated that the biker might have been speeding. The preliminary insurance investigation revealed that the accident occurred in a low-speed limit area, the motorcycle left long skid marks, and the driver did not receive a citation. With these facts, the insurance company concluded that the biker was likely contributorily negligent.

About ten days after the accident, the insurance company decided to tender the bodily injury limits to the biker; however, they asked the biker’s attorney if they could inspect the motorcycle. The next day the insurance company delivered a “tender package” to the biker’s attorney. The package included a cover sheet and described the content of the delivery, which included a $50,000 check and a form that released the company of “all claims.” The letter invited the biker’s attorney to edit the release or suggest changes to a release. The biker’s attorney did not address the release but rejected the offer stating the insurance company was trying to take advantage of the biker and his family by including an overbroad release.

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