In a multimillion-dollar dispute stemming from a site visitors accident that badly injured a motorcyclist, a federal appeals court docket this week revived a Florida lawsuit alleging that an insurer acted in “unhealthy religion” by not reaching settlement on a declare.
A panel of the eleventh U.S. Circuit Court docket of Appeals additionally backed away from a 2019 ruling in one other case coping with bad-faith lawsuits. Such lawsuits, which usually contain allegations of misconduct by insurers, have lengthy been controversial in Florida and might be expensive to insurance coverage corporations.
The choice this week was rooted in a 2010 accident during which motorist Erika McNamara modified lanes and prompted motorcyclist Deborah Lambert to crash and endure debilitating accidents, in accordance with court docket paperwork. McNamara was driving a automobile owned by Willard Warren, a GEICO buyer who had $100,000 in bodily harm protection.
GEICO didn’t attain an settlement with Lambert’s husband, Kenneth Bennett, on paying the $100,000 in protection limits, with court docket paperwork giving totally different accounts concerning the lack of settlement. Bennett then filed a personal-injury lawsuit in Hillsborough County in opposition to McNamara and Warren.
In 2015, a settlement was reached, with judgments of $4.74 million in opposition to McNamara and $474,000 in opposition to Warren.
McNamara and Warren in 2017 filed a bad-faith lawsuit in opposition to GEICO, alleging that they confronted the “consent” judgments as a result of the insurer had not reached settlement to pay the $100,000 in protection limits to Bennett.
After the bad-faith case was moved to federal court docket, U.S. District Choose Steven Merryday in 2020 dominated in favor of GEICO. Merryday’s ruling was primarily based, at the least partially, on a 2019 opinion by the eleventh U.S. Circuit Court docket of Appeals that stated what are often known as “extra” judgments that underpin bad-faith circumstances should come via court docket verdicts — not in the kind of settlement reached within the case involving McNamara, Warren and Bennett.
However in a choice Tuesday, a three-judge panel of the Atlanta-based court docket stated the 2019 ruling “misinterpreted” Florida legislation. It stated the GEICO case ought to return to the decrease court docket.
“A remaining judgment that exceeds all accessible insurance coverage protection — no matter whether or not it outcomes from a consensual settlement or a jury verdict — constitutes an ‘extra judgment’ that may fulfill the causation factor of an insurer-bad-faith declare underneath Florida legislation,” stated the 15-page choice, written by Choose Kevin Newsom and joined by Judges Elizabeth Department and Andrew Brasher.
The choice stated McNamara and Warren are looking for within the bad-faith lawsuit to recuperate the quantities of cash within the consent judgments that exceed the $100,000 in protection limits underneath the coverage.
“Right here, Warren and McNamara’s accessible protection was $100,000,” the choice stated. “The ultimate judgments entered in opposition to them within the quantities of $474,000 and $4,740,000, respectively, constituted extra judgments as a result of they exceeded that protection. Beneath Florida legislation, it doesn’t matter that these judgments resulted from stipulated settlements as an alternative of verdicts. As a result of Warren and McNamara had been topic to extra judgments, they may show causation of their bad-faith case.”
In a short filed in 2020, attorneys for Bennett, who intervened within the attraction, stated the result of the case might have an effect on many bad-faith lawsuits.
“The difficulty earlier than the court docket is a vital one, affecting tons of if not 1000’s of circumstances throughout Florida the place the injured claimant’s damages exceed the accessible legal responsibility protection,” the transient stated. “If Cawthorn (the title of the 2019 ruling) precisely states Florida legislation and a verdict is required to function an ‘extra judgment’ within the unhealthy religion case, just about each case will find yourself going to trial.”
However GEICO attorneys final 12 months argued that the attraction needs to be rejected and pointed to the 2019 opinion.
“In sum, the existence of an extra judgment or its useful equal is a vital factor of a typical legislation unhealthy religion declare,” the insurer’s attorneys wrote. “Within the instantaneous matter (the case), there was no extra judgment or its useful equal to ascertain a vital factor of the unhealthy religion declare in opposition to GEICO.”
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