Carithers v. Mid-Continent Casualty Company
3:16-cv-00988
M.D. Fla.Jul 16, 2019Background
- In 2011 the Carithers sued their homebuilder Cronk Duch for latent construction defects; Cronk Duch tendered defense to its insurer Mid‑Continent, which denied a defense based on the "manifestation" trigger (damages manifested after policies expired).
- Cronk Duch consented to judgment in the underlying state action; Cronk Duch assigned its coverage claims to the Carithers (reserving certain fees), who sued Mid‑Continent in federal court (Coverage Action) for breach of the duty to defend/indemnify.
- The district court applied the injury‑in‑fact trigger and found coverage; the Eleventh Circuit affirmed the duty to defend and adopted the injury‑in‑fact trigger for this dispute in Carithers v. Mid‑Continent (782 F.3d 1240), concluding Mid‑Continent should have offered a defense given legal uncertainty.
- After entry of judgment and payment by Mid‑Continent, the Carithers filed this bad‑faith action under Fla. Stat. § 624.155 alleging statutory bad faith and a pattern‑and‑practice for punitive damages; discovery on pattern issues was bifurcated by the court.
- Mid‑Continent moved for summary judgment (arguing incorrect denial of defense cannot be bad faith as a matter of law because weight of authority supported its view), moved to exclude plaintiff’s expert (McIntosh), and filed the Carithers’ mediation statement; the Court held oral argument and ruled on these motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Mid‑Continent is entitled to summary judgment on bad‑faith claim | Carithers: denial of defense was bad faith given duty to resolve uncertainty in insured’s favor and other factors show unfair handling | Mid‑Continent: although denial was incorrect, contemporaneous district‑court authority supported its position, so no bad faith as a matter of law | Denied — summary judgment improper because bad faith is a fact‑intensive inquiry for the jury considering totality of circumstances |
| Admissibility / use of Carithers’ mediation statement | Carithers: mediation statement is privileged and inadmissible; disclosure prejudicial and untimely | Mid‑Continent: filed it to impeach Carithers’ affidavit about settlement willingness | Motion to strike denied without prejudice — Court did not rely on the statement for summary judgment and found disputes of fact on damages; plaintiffs may renew before trial on different grounds |
| Exclusion of expert Douglas McIntosh | Carithers: McIntosh is experienced in advising insurers, auditing claims, and training on claims handling — qualified and his opinions are reliable/helpful | Mid‑Continent: McIntosh lacks insurer operational experience, limited construction defect claims work, and opinions are unreliable | Denied — McIntosh is qualified under Rule 702; his experience supports his methodology and opinions are admissible subject to cross‑examination and trial objections |
| Scope/timing of discovery re: pattern and practice claim and motion to compel | Carithers: seek broader discovery and relief compelled | Mid‑Continent: opposes broadening now; requests briefing on bifurcation | Court deferred ruling on motion to compel; ordered plaintiffs to propose a discovery plan for pattern/practice and briefing on bifurcation; set deadlines for responses |
Key Cases Cited
- Carithers v. Mid‑Continent Cas. Co., 782 F.3d 1240 (11th Cir. 2015) (affirming duty to defend and discussing insurer’s obligation to resolve legal uncertainty in insured’s favor)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (recognizing insurer’s good‑faith duties to insured)
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial court gatekeeping role for expert reliability)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert gatekeeping applies to all expert testimony)
- United States v. Frazier, 387 F.3d 1244 (11th Cir. 2004) (standards for expert admissibility under Rule 702)
- Garcia v. GEICO Gen. Ins. Co., 807 F.3d 1228 (11th Cir. 2015) (expert testimony may be relevant to evaluate weight of legal authority and reasonableness of coverage decisions)