Arrowood Indemnity Co. v. Acosta, Inc.
2011 Fla. App. LEXIS 1915
| Fla. Dist. Ct. App. | 2011Background
- Arrowood issued a $10 million excess D&O policy to Acosta; Acosta failed to disclose a prior turnover suit in its application.
- Acosta faced a separate underlying suit filed by creditors of a competitor, which National Union and Arrowood declined to defend, leaving Acosta to defend and settle at its own expense.
- Arrowood moved for summary judgment in 2008, raising defenses including non-disclosure and non-exhaustion of Acosta's primary policy.
- Arrowood made an oral settlement offer of $50,000, Acosta countered with $1 million; Arrowood later offered $1,000 as judgment, which Acosta rejected.
- The trial court granted summary judgment for Arrowood; Acosta’s appeal and the subsequent fee motion challenged the good faith of the $1,000 offer.
- The trial court denied fees, applying an objective standard and deeming the offer not made in good faith; the appellate court reversed and remanded for a subjective good-faith analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred by applying an objective standard to good faith. | Acosta argues Arrowood’s offer should be judged subjectively. | Arrowood contends objective factors determine good faith. | The trial court erred; subjective analysis required. |
| Whether the offer of judgment can be deemed not in good faith based on objective factors alone. | Acosta asserts objective factors are insufficient without Arrowood’s justification. | Arrowood maintains objective criteria are controlling when assessing good faith. | Objectively based findings must be supplemented by Arrowood’s justification; remand needed. |
| What standards govern the ‘good faith’ requirement under Fla. Stat. § 768.79(7)(a)? | Acosta relies on cases requiring a reasonable foundation for the offer. | Arrowood emphasizes a traditional good-faith standard can be satisfied by perceived reasonableness. | Good faith rests on a reasonable foundation, including subjective belief, not solely objective factors. |
| Should the appellate court remand to apply the correct standard and make findings on Arrowood's basis for the $1,000 offer? | Acosta seeks remand to develop the record on subjective justification. | Arrowood would be aided by reaffirming the standard and reviewing the evidence. | Remand directed to apply proper subjective standard and make explicit findings. |
Key Cases Cited
- City of Neptune Beach v. Smith, 740 So.2d 25 (Fla. 1st DCA 1999) (good faith requires a reasonable foundation for the offer)
- Schmidt v. Fortner, 629 So.2d 1036 (Fla. 4th DCA 1993) (foundation for good faith exists if offer is justifiable by known/believed facts)
- Weinstein, 747 So.2d 1019 (Fla. 3d DCA 1999) (good-faith requirement satisfied if there is a reasonable foundation for the offer)
- Gurney v. State Farm Mut. Auto. Ins. Co., 889 So.2d 97 (Fla. 5th DCA 2004) (objective evidence may inform whether offer was made in good faith)
- Fox v. McCaw Cellular Commc’ns of Florida, Inc., 745 So.2d 330 (Fla. 4th DCA 1998) (consideration of the totality of the case record may inform good faith)
- Zachem v. Paradigm Properties Mgmt. Team, Inc., 867 So.2d 1263 (Fla. 1st DCA 2004) (nominal offers may be appropriate where exposure is minimal and supported by reasonable basis)
- Sharaby v. KLV Gems Co., Inc., 45 So.3d 560 (Fla. 4th DCA 2010) (reasonable basis for nominal offers exists only when undisputed record shows no exposure)
- Wagner v. Brandeberry, 761 So.2d 443 (Fla. 2d DCA 2000) (subjective motivations and beliefs of offeror may determine good faith)