Bad Faith Blog

An insured motorist who sustained injuries in a motor vehicle accident brought a first party bad faith action alleging the automobile insurer acted in bad faith in attempting to settle the claim for underinsured motorist (UIM) benefits. The district court granted summary judgment for the insurer; however, the Eleventh Circuit held that although actions of the insured or the insured’s lawyer were part of the “totality of circumstances” to be considered in bad faith claims, there were factual issues that still existed precluding summary judgment.

The Eleventh Circuit considered whether the insurer was bound by a settlement agreement between a homeowner’s association insured and a homeowner, settling the homeowner’s claim for attorneys’ fees by stipulating the homeowner would not enforce the resulting consent judgment against the homeowner’s association. The Eleventh Circuit found these Florida Coblentz Agreements unenforceable against insurers if tainted with fraud or collusion. There was substantial evidence to support the district court’s bench trial determination the negotiations were conducted in bad faith. Therefore, the Eleventh Circuit affirmed the district court’s Judgment that the settlement agreement could not be enforced against the insurer.

Summary: The insured, a county in Florida, and personal representative of deceased accident victim’s estate brought a declaratory judgment action against the County’s excess insurer seeking a declaration the County was allowed to settle the personal representative’s underlying wrongful death claim without the excess insurer’s consent and without the Florida legislature passing a special claims bill. The Eleventh Circuit, affirmed in part, vacated in part, and remanded the district court’s decision. The Eleventh Circuit found the frustration of purpose doctrine did not apply to allow the insured County to satisfy its self-insured retention limit, which exceeded the statutory sovereign immunity cap. Also, the sovereign immunity statute did not allow the insured County to settle the claim without the insurer’s consent given the language in the excess insurance policy. Finally, fact issues precluded summary judgment whether the excess insurer acted in bad faith in refusing to consent to the insured County’s proposed settlement with the personal representative in the wrongful death lawsuit.

Franklin Kropilak was badly injured when Collins made a left hand turn in front of his motorcycle. The insured was cited by a police officer just after the accident. 21st Century had the police report within in one week and within in two weeks knew that the hospital lien was $33,888. The policy for Collins provided for a liability limit of $10,000 for the crash. Thirty-seven days after the accident the insurer mailed to the attorney for the plaintiff a check for the policy limits. The plaintiff never accepted the policy limits. He did not cash the check. More than a year later in March the plaintiff proposed a settlement whereby consent judgment would be entered against Collins for $150,000 but Kropilak would agree to pursue only the insurance company for the amount in excess of her coverage. 21st Century did not agree to this proposed settlement, which the parties referred to as a Cunningham agreement.

Summary: Liberty Insurance insured Lisa Mottsey had loaned her car to her daughter who in turn let her boyfriend drive. While driving down a county road Mottsey’s car was passed by Zisa driving at a “reasonable speed.” Zisa struck three pedestrians walking side-by-side down a dark county road wearing dark clothes without any illumination resulting in two deaths and one serious injury. Mottsey had limits of $10,000 per person and $20,000 per occurrence. After a $1.3 million jury verdict was returned against Mottsey’s driver and the passing driver assessing 38 percent of the responsibility to Mottsey’s driver, Mottsey’s bad faith claim was assigned to the estate of the plaintiff who pursued a Powell claim against Liberty. The federal court judge granted summary judgment in favor of Liberty.