56 F.4th 938
11th Cir.2023Background
- Ernest Guthrie fell from a roof while working as a subcontractor for Beck Construction and became a paraplegic; medical bills exceeded $400,000 and claimed damages were several million.
- Beck Construction was insured by American Builders (primary, $1M) and Evanston (excess, $1M); Guthrie’s company was insured by Southern‑Owners ($1M), which named Beck as an additional insured and made Southern‑Owners primary for Beck‑related work.
- American Builders learned of the injury, investigated, and on Sept. 12 tendered defense/indemnity to Southern‑Owners after counsel for Guthrie sent a Sept. 5 demand; Southern‑Owners requested multiple extensions and conducted a limited investigation months later.
- On Nov. 18 Guthrie’s counsel sent a $2M demand to Evanston (copied to American Builders); Evanston tendered Dec. 10; Southern‑Owners declined to pay by the demand deadline; American Builders paid its $1M policy limit on Dec. 19 and obtained releases.
- American Builders sued Southern‑Owners in Florida court (common‑law bad faith via equitable subrogation); jury found for American Builders and awarded about $1.09M; district court denied Southern‑Owners’ JMOL and new‑trial motions; Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Did Southern‑Owners act in bad faith? | Southern‑Owners delayed investigation/settlement despite clear, serious injury and documents showing exposure; delay amounts to bad faith. | No bad faith: claimant never offered to settle with Southern‑Owners directly; Southern‑Owners requested information and extensions. | Court: Sufficient evidence for jury to find bad faith under Florida totality‑of‑circumstances standard. |
| 2) Did Southern‑Owners’ bad faith cause American Builders’ damages? | Southern‑Owners’ refusal/delay left American Builders no choice but to tender limits when Evanston and demand left a $1M gap. | Payment by American Builders was voluntary and not caused by Southern‑Owners. | Court: Jury reasonably found causation — Southern‑Owners’ delay directly contributed to American Builders’ payment. |
| 3) Did American Builders forfeit Southern‑Owners’ consent requirement (affirmative defense)? | American Builders contends its payment was involuntary because Southern‑Owners unreasonably withheld consent; thus no breach. | Southern‑Owners argues American Builders breached contract by settling without prior consent, barring recovery. | Court: Southern‑Owners failed to prove substantial prejudice or good‑faith diligence to obtain consent; jury could find no affirmative defense. |
| 4) Is the denial of summary judgment on coverage reviewable after a full trial? | (Southern‑Owners later argued) denial involved a purely legal issue and is appealable despite full trial. | American Builders: trial on the merits forfeits appeal of pretrial summary judgment denial. | Court: Forfeited at oral argument and Eleventh Circuit won’t review denial of summary judgment after full trial; affirmed. |
Key Cases Cited
- Harvey v. GEICO Gen. Ins. Co., 259 So. 3d 1 (Fla. 2018) (sets Florida bad‑faith standard and causation requirement)
- Powell v. Prudential Prop. & Cas. Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991) (delay in settlement negotiations can infer bad faith; insurer must initiate settlement where liability is clear)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (insurer duties to investigate, advise, and consider settlement)
- Ramos v. Nw. Mut. Ins. Co., 336 So. 2d 71 (Fla. 1976) (insurer must show lack of consent, substantial prejudice, and diligence to invoke failure‑to‑cooperate defense)
- Pozzi Window Co. v. Auto‑Owners Ins., 446 F.3d 1178 (11th Cir. 2006) (insurer must resolve coverage disputes promptly and with diligence)
- Mid‑Continent Cas. Co. v. Am. Pride Bldg. Co., 601 F.3d 1143 (11th Cir. 2010) (discusses elements of the consent/cooperation defense in Florida law)
- Pelaez v. Gov’t Emps. Ins. Co., 13 F.4th 1243 (11th Cir. 2021) (claimant’s conduct is a factor but focus is on insurer’s actions in bad‑faith analysis)
- Ortiz v. Jordan, 562 U.S. 180 (2011) (Supreme Court on non‑appealability of summary judgment denials after full trial)
- Carrizosa v. Chiquita Brands Int’l, Inc., 47 F.4th 1278 (11th Cir. 2022) (Eleventh Circuit rule against reviewing summary‑judgment denials after trial)