Dennis Lee Kemp v. USAA Casualty Insurance Company
709 F. App'x 650
| 11th Cir. | 2017Background
- Motor-vehicle accident: Kemp’s wife died; Buckman was insured by USAA. Buckman reported the accident to USAA on Nov 12, 2010 and denied alcohol involvement.
- Kemp’s counsel sent a demand letter on Nov 16 seeking policy limits; counsel later testified she would have settled if a check arrived within 7–10 business days but the letter set a 30-day deadline.
- USAA set bodily-injury reserves at policy limits ($100,000), attempted to contact Buckman’s counsel, and on Nov 23 warned Buckman he could be personally liable for excess judgments if settlement not reached.
- Kemp withdrew the Nov 16 offer on Nov 30. USAA authorized a $100,000 offer in early December, sent a check and a release (with some improper property-damage language); the check ultimately arrived before Dec 30.
- Kemp reopened settlement talks Jan 3 with conditions, including inquiry about alcohol; Buckman invoked his Fifth Amendment right on the alcohol question. Kemp proceeded to trial and obtained a $10,000,000 verdict against Buckman.
- Kemp and Buckman sued USAA for bad faith failure to settle; the district court granted summary judgment for USAA. The Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether USAA’s handling of the claim constituted bad faith | USAA sent check late/wrong address, used improper release language, and failed to timely act on settlement conditions — these facts show negligence that supports bad faith | USAA investigated, communicated with insured and counsel, warned insured of excess exposure, and acted within the 30-day demand period; alleged errors did not cause the excess verdict | No bad faith; summary judgment for USAA affirmed |
| Whether USAA’s alleged negligence caused the failure to settle | Kemp: USAA’s errors prevented settlement and caused excess judgment | USAA: Kemp withdrew offer before most alleged errors occurred and later reopened negotiations after tendering limits | No causal link; negligence (if any) did not cause excess judgment |
| Whether USAA’s delay in tendering policy limits (not within 7–10 days) amounted to bad faith | Kemp: prompt tender within 7–10 days would likely have secured settlement | USAA: had 30 days under the demand, was investigating, and could not promptly reach counsel or obtain police report | Delay did not rise to bad faith under totality of circumstances |
| Whether USAA failed to adequately urge Buckman to comply with settlement conditions (alcohol information) | Kemp: USAA should have more strongly compelled cooperation to avoid excess judgment | USAA: warned insured about personal liability, involved defense counsel, and attempted contact with criminal counsel; client invoked Fifth Amendment | Failure to press further was not shown to cause the excess judgment nor to be bad faith |
Key Cases Cited
- Mesa v. Clarendon Nat’l Ins. Co., 799 F.3d 1353 (11th Cir. 2015) (summary judgment review and causation analysis for bad-faith failure-to-settle claims)
- Bravo v. United States, 577 F.3d 1324 (11th Cir. 2009) (choice-of-law in diversity cases)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (insurer’s duty of good faith in defense and settlement)
- Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004) (good-faith inquiry under totality of circumstances)
- Campbell v. Gov. Emps. Ins. Co., 306 So. 2d 525 (Fla. 1974) (distinguishing negligence from bad faith)