Florida Attorneys: Bad Faith Law Just Got Better
Those of us who do personal injury litigation have been hoping for several opinions to come out in regards to bad faith litigation. Our patience has been amply rewarded. Two Florida 4th District Court of Appeal opinions have been recently released that add significant tools to our battle against insurance companies who don’t play nice. Both of these opinions warrant complete reading as they provide a lot of ammunition when dealing with bad faith situations.
First Party Bad Faith Cause of Action
The first case is Geico vs. Paton, a September 17, 2014 opinion that hasn’t even reached the reporters. In this case, GEICO was facing a first party bad faith action involving underinsured motorist coverage. The issue on appeal was whether the injured party/insured was required to prove her damages again, instead of relying upon the underlying damage termination by the jury in the first trial. The trial lawyer previously demanded tender of the $100,000 underinsured policy limits that Paton should have been entitled to. Geico characteristically offered a few thousand dollars. The case went to trial, even after the trial lawyer reduced the demand to $22,500. A jury awarded almost $500,000! Because of existing case law, the actual final judgment was limited to the $100,000 in policy limits. After the final judgment was entered, Paton amended her complaint and added a claim for bad faith under Florida statute 624.155.
The case then proceeded to a second trial in which Geico tried to get a second bite at the apple. Geico tried to argue and demonstrate that the plaintiff’s damages were less than claimed. Once proof of the underlying jury verdict was presented, the trial judge took the issue of damages from the jury’s consideration with an instruction that the court would award damages in an amount allowable under Florida law if the jury found there was bad faith. Obviously, the jury did so. Geico then argued due process was violated by the judge refusing to allow them to demonstrate that the plaintiff’s damages were something less than what the first jury had determined. This argument really makes no sense, but they went there anyway.
The premise of the Paton opinion is supported by the 1982 enactment of Florida statute 624.155, which created a first party bad faith cause of action by an insured against their uninsured/underinsured motorist (UM) carrier. Subsequent to this enactment, the legislature further expounded on the theory and included any amount in excess of the claimant’s policy limits, without regard to whether the damages were caused by the insurance company. Several opinions indicated that this was going to be the end result, but Geico continued with its position. Forcing retrial of the plaintiff’s damages in a first party bad faith trial made no sense to the judges at any level. Especially given Geico participated in the first trial and should be stuck with the results of its defense of the first claim. Apparently Geico’s lawyers haven’t heard of the res judicata theory!
New Procedure to Include Count for Bath Faith Before Claim Determined
The other opinion issued on the same day is Safeco vs. Beare, another uninsured/underinsured motorist claim in which the wise trial counsel included a count for bad faith even before the underlying claim had been determined. This is a new procedure that many lawyers are now espousing. At the time of the filing of the lawsuit for UM benefits, many lawyers, including LaBovick Law Group, are including a count for bad faith failure to tender benefits. Candidly, if a case is at the point in time of being in litigation, then one may as well include account for bad faith. The problem that has never been addressed, is what happens to the theoretically unripe bad faith claim while the underlying claim for damages/benefits is litigated? The Beare decision establishes the proper procedure for putting that claim on hold while the underlying claim for damages/benefits continues. Safeco appealed arguing that it would be irreparably harmed by the denial of its motion to dismiss the bad faith claim. Arguing that the claim was premature was unsuccessful as the court simply abated the bad faith count.
Of interest, another common tactic is also illustrated in this opinion. The addition of the bad faith count was filed over a year after the original negligence lawsuit, which prevented Safeco from moving the case to federal court. A petition for removal to federal court cannot be filed if a case is more than one year old, regardless of amendment. The appellate court agreed that this could be construed as irreparable injury, but killed Safeco on the merits of the underlying argument and held that where a first party bad faith action is joined with a claim for UM benefits, the appropriate relief is to abate the bad faith action until liability and damages under the policy had been established. In rejecting a claim that the Florida Supreme Court holding in Vest v. Travelers Insurance Company, required dismissal rather than abatement, the Beare court distinguished that opinion as dicta in regards to summary judgment versus dismissal of a premature claim. The issue in the Vest case was the choice between summary judgment and dismissal and not between abatement and dismissal. Additionally, several years after the Vest opinion had been issued, the Florida Supreme Court suggested, in the case of Allstate Indemnity Company v. Ruiz that abatement would be preferable when coverage and bad faith actions are filed together. Thus, it was not clear that Vast provided the only method of handling a premature bad faith claim.
What do these two opinions mean for the perceivable future?
The first lesson to be learned is that when suing for uninsured or underinsured motorist benefits, you may as well include a bad faith count because the worst that can happen is it will be abated versus dismissed.
Additionally, when litigating bad faith in the subsequent trial, you don’t have to worry about reestablishing damages. Insurance carriers that lost the underlying trial that resulted in a verdict in excess of benefits is now stuck with the end result of their lawyers work.
Image courtesy of freedigitalphotos.net by suphakit73