United States: Insurance Insight - Florida: Claimant's Bad-Faith Claim Doomed By Insured's Failure To Cooperate During Settlement Negotiations

A federal District Court applying Florida law recently ratified an insurer's diligent responses to a claimant's cat-and-mouse attempt to manufacture a bad-faith set-up claim. The ruling is interesting because it addresses two common situations. First, the insured did not cooperate with the insurer's attempt to meet a time-limited settlement demand, which caused the deadline to pass without settlement. Second, the claimant tried to create a no-win situation for the insurer by offering to forego collection on an excess verdict if the insurer would forego an appeal. The insurer responded appropriately with regard to both issues, providing a road map for future insurers to obtain summary judgment when put in the same situations.

The Claim

In Hinson v. Titan Ins. Co., No. 3:13-CV-394-MCR-EMT, 2015 WL 5256848 (N.D.Fla. Sept. 6, 2015), the insured caused a collision with a cyclist. A day after the collision, the adjuster had already confirmed that the insured was clearly at fault, and that the cyclist's injuries exceeded the policy limit. Accordingly, she set reserves in the amount of the policy limits to be paid out to the driver of the motorcycle. The adjuster also sent an "excess letter" to the insured, informing him that the driver's injuries could exceed the policy limits and that he could be personally liable for any excess judgment.  Within a week of the collision, the insurer sent a settlement letter offering to pay the full $10,000 bodily injury limit; the claimant's counsel rejected it. Shortly over a month following the collision, the insurer again offered the bodily injury policy limits and tendered the full policy limits for the bodily injury claim, which was also rejected.

The Demand

Three months following the collision, the insurer received from claimant's counsel a time-limited demand to settle in exchange for (1) the bodily injury policy limits, (2) an amount to cover the damages to the motorcycle plus interest and the cost of upgrades and (3) an affidavit from the insured identifying any other applicable insurance. The letter demanded compliance with all terms within 20 days. The claims adjuster for the insurer attempted to contact the insured multiple times by phone concerning the affidavit but was never able to speak with him directly. The adjuster also mailed a letter to the insured with a copy of the demand letter and an affidavit for him to execute. In addition to sending the letter, the adjuster also hand delivered a copy of the affidavit to the insured's home. Having not received the executed affidavit by the deadline to respond to the demand, the insurer responded to the demand enclosing a check for the $10,000 bodily injury limit and another check for the property damage and explaining the efforts to obtain the affidavit and that it would be forwarded upon receipt. Counsel for the injured party returned the checks because the insurer had failed to fully comply with the terms of the demand and informed the insurer that he would be proceeding with litigation. A month after the deadline to return the executed affidavit had passed, the insured finally faxed the signed affidavit which was forwarded to counsel for the injured party, but this was not accepted and the case proceeded to trial.

The Verdict and Appeal

At trial, the jury found the insured liable and awarded a verdict in excess of the policy limits. After the verdict, but before the final judgment was entered, counsel for the claimant sent the insured's defense counsel a letter offering to stay execution on the remaining judgment until after the insured pursued a bad faith suit and assigned any proceeds, and regardless of the outcome, at the conclusion of the bad faith litigation, the insured would be released and the judgment satisfied. The proposal required the insured and insurer not to pursue an appeal. However, the insurer chose to pursue an appeal and the judgment was affirmed on appeal.

Consequences of Failure to Cooperate

The insured brought this bad faith litigation against the insurer alleging that it acted in bad faith by failing to settle the claim and by refusing the forgo its right of appeal to protect the insured from the excess judgment. With regard to the failure to settle claim, the Court agreed that there were no facts to support a finding of bad faith because the insurer promptly and repeatedly attempted to settle the claim for policy limits, and the failure to meet the 20-day settlement deadline could not fairly be attributed to the insurer's bad faith when the insurer timely responded to the demand except for the affidavit which the insured was responsible to provide.

Ability to Appeal

Furthermore, the District Court found that the insurer refusing to give up its post-verdict right to appeal (which would have protected the insured from the excess judgment) did not amount to bad faith because the insurer had no obligation to accept such an offer. The Court equated this offer with a Cunningham agreement. See Cunningham v. Standard Guaranty Ins. Co., 630 So.2d 179, 181 (Fla. 1994). "Although this type of agreement offers the insured complete protection from an excess judgment, courts have concluded that an insurer's failure to enter into a Cunningham agreement does not constitute bad faith." Hinson, at *6. "The Court [found] no practical reason to differentiate between this post-verdict proposal and a Cunningham agreement for purposes of determining whether [the insurer] acted in bad faith and [found] them sufficiently analogous for the Court to conclude that [the insurer] was not under a good faith obligation to accept [the] post-verdict proposal." Id. Additionally, the Court concluded that even had the insurer acted solely in its own interest by rejecting the proposal, this is immaterial because the failure to enter this post-verdict proposal did not cause the excess judgment. See Perera v. U.S. Fid. & Guar. Co., 35 So.3d 893, 903-04 (Fla. 2010)(stating an insurer is responsible for an excess judgment that is caused by its bad faith).

Conclusion

In Hinson, it was critical to the insurer's defense that it had diligently documented (1) its affirmative offer of the policy limits, (2) its attempts to secure settlement on the terms set by the claimant and (3) the insured's failure to cooperate. This is consistent with Tips #5 and #8 of our Ten Steps for Avoiding Bad Faith Failure to Settle Claims, which is part of Dentons' Stopping The Setup training program. For more information about "Stopping The Setup" please contact the key contacts identified herein.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Sep 2018, Conference, New York, United States

Dentons is delighted to support a global IT services and consulting firm Miratech as an event host partner at their annual conference called M-Force18 New York on September 27th. The event will be held at Dentons New York office in the heart of Midtown Manhattan, opposite Rockefeller Center.

2 Oct 2018, Seminar, Dallas, United States

We are pleased to offer a program of five sessions designed specifically for in-house counsel. Topics will include:

  • In-house corporate ethical issues
  • What recent Supreme Court decisions mean for business
  • Keeping lawyers out of your benefit plans
  • Litigation tactics for in-house counsel
  • Employment issues in the age of #MeToo
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions