760 F. Supp. 2d 1305
M.D. Fla.2011Background
- Cardenas procured a GEICO auto policy with $10,000 per person/$20,000 per occurrence liability limits, covering April–October 2006.
- After a 2006 Sarasota accident involving claimants, GEICO advised Cardenas of the policy limits and potential excess liability, and explained his right to counsel.
- GEICO received a Florida Section 627.4137 disclosure request from claimant's counsel and attempted to gather information over several months with limited response from the claimants' attorney.
- In August 2006, Luhrsen sent a demand letter offering to settle within policy limits, conditioned on certain releases and hold-harmless language; GEICO sought a proposed release and continued negotiations.
- Cardenas eventually accepted the settlement offer on September 11, 2006 with documents and $66 additional contribution, but GEICO inadvertently failed to deliver a policy copy; later corrective steps were taken.
- The claimants obtained a judgment against Cardenas for $970,019, well above policy limits, prompting this bad-faith-to-settle suit by Cardenas against GEICO.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was GEICO's conduct in settlement good faith notwithstanding the hold-harmless terms? | Cardenas: GEICO breached duty by not mirroring acceptance with hold-harmless language. | GEICO: acted promptly and in good faith; attempted to obtain a release, no unilateral advantage taken. | GRANTED: GEICO acted in good faith; no triable bad-faith conduct. |
| Did GEICO's failure to deliver a second policy copy defeat liability for bad faith? | Cardenas: inadvertent policy-copy failure shows lack of good faith. | Geico provided policy copy and acted promptly; error immaterial to overall conduct. | No; failure was immaterial to good-faith assessment. |
| Whether a mirror-image acceptance was required to prove bad faith. | Cardenas: mirror-image acceptance with hold-harmless language was necessary to show bad faith. | Geico offered a standard release; no requirement of mirror-image acceptance to demonstrate good faith. | No; mirror-image acceptance not required to show absence of bad faith. |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995) (duty of good faith in settlements; third-party exposure to excess judgment)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So.2d 783 (Fla. 1980) (duty to advise insured of settlement possibilities and excess risk)
- Johnson v. Geico Gen. Ins. Co., 318 Fed.Appx. 847 (11th Cir. 2009) (no obligation to accept settlement offers or tender policy limits without time to investigate)
- Macola v. Gov't Emp. Ins. Co., 953 So.2d 451 (Fla. 2006) (bad faith requires more than negligent conduct; totality of circumstances)
- DeLaune v. Liberty Mut. Ins. Co., 314 So.2d 601 (Fla. 4th DCA 1975) (negligence alone does not prove bad faith)
- Barry v. Geico Gen. Ins. Co., 938 So.2d 613 (Fla. 4th DCA 2006) (insurer's duty includes assessing realistic possibility of settlement)
- Shin Crest PTE, Ltd. v. AIU Ins. Co., 368 Fed.Appx. 14 (11th Cir. 2010) (insurer's attempt to obtain release can fulfill duty to insured)
- Maldonado v. First Liberty Ins. Corp., 546 F. Supp. 2d 1347 (S.D. Fla. 2008) (summary judgment appropriate where no evidence of bad faith)
- Caldwell v. Allstate Ins. Co., 453 So.2d 1187 (Fla. 1st DCA 1984) (insurer's duty to act fairly in settlement)