Fife M. Whiteside v. GEICO Indemnity Company
977 F.3d 1014
| 11th Cir. | 2020Background
- Bonnie Winslett (driver) struck cyclist Terry Guthrie; GEICO accepted responsibility and told the driver it would handle the claim.
- Cyclist demanded the $30,000 policy limit; GEICO offered about $12,000; GEICO attempted follow-up calls but received no response.
- The cyclist’s attorney sued the driver and did not notify GEICO; the driver received the summons but discarded it, believing GEICO was handling the case and never informed the insurer.
- A default judgment of about $2.9 million was entered against the driver; GEICO learned of the judgment only after the term of court ended and was unable to get the judgment set aside.
- The cyclist (through a bankruptcy trustee who had been involved) sued GEICO for bad faith for refusing to settle within policy limits; GEICO invoked O.C.G.A. § 33-7-15 and policy notice clauses, proximate-cause defenses, and due-process objections to using the default judgment as the damages measure.
- The district court allowed the bad-faith claim to go to the jury (finding GEICO 70% liable); the Eleventh Circuit certified three novel Georgia-law questions to the Georgia Supreme Court rather than resolving them itself.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether O.C.G.A. § 33-7-15 and a like policy provision bar a follow-on bad-faith suit when the insurer had no notice of the original suit | The statute addresses contractual duties and does not bar an insured’s subsequent tort claim for bad faith that arises from the insurer’s refusal to settle | The statute (and identical policy term) relieves an unnotified insurer of "any liability to pay any judgment or other sum on behalf of its insureds," covering follow-on bad-faith liability | District court: statute does not bar bad-faith tort; Eleventh Circuit: question certified to Georgia Supreme Court (no definitive state-law ruling) |
| Whether an insured can sue for bad faith if coverage existed when the insurer refused to settle but lapsed before entry of the excess judgment | Coverage at the time of the insurer’s bad-faith refusal is sufficient for a later bad-faith claim even if coverage later terminates | A bad-faith action accrues only when a final excess judgment is entered; coverage must exist when judgment accrues/ is entered | District court proceeded on bad-faith theory; Eleventh Circuit certified the coverage-accrual question to the Georgia Supreme Court |
| Whether due process (under the Georgia Constitution) entitles an insurer with no notice/participation in the original suit to contest the underlying damages before that judgment may be used as the measure of damages in a bad-faith suit | The default judgment is an established measure of damages and can be used in the follow-on bad-faith suit; insurer had other opportunities to contest liability | Using an unopposed default judgment as the damage measure violates due process because the insurer had no opportunity to contest damages and the judgment may be excessive | District court used the default judgment as the damages measure; Eleventh Circuit certified the due-process question to the Georgia Supreme Court |
Key Cases Cited
- Berryhill v. State Farm Fire & Cas. Co., 174 Ga. App. 97 (1985) (failure to notify insurer relieves insurer of duty to defend and liability on resulting judgment)
- Chadbrooke Ins. Co. v. Fowler, 206 Ga. App. 778 (1992) (illustrates Georgia appellate treatment that an unnotified insurer may be relieved of liability on a default judgment)
- Canal Indemnity Co. v. Greene, 265 Ga. App. 67 (2003) (discusses insurer relief from obligations to pay judgments absent proper notice in a context involving a default judgment)
- First Acceptance Ins. Co. of Ga., Inc. v. Hughes, 305 Ga. 489 (2019) (recognizes bad-faith liability for insurer refusing to settle within policy limits under Georgia law)
- Lee v. Rest. Mgmt. Servs., 232 Ga. App. 902 (1998) (addresses Georgia courts’ limited post-term power to set aside judgments)
- Cobb Cnty. Sch. Dist. v. Barker, 271 Ga. 35 (1999) (due process requires notice and opportunity to be heard)
- Thompson v. Lagerquist, 232 Ga. 75 (1974) (reaffirms notice as foundational to due process)
- Peoples Gas Sys. v. Posen Constr., Inc., 931 F.3d 1337 (11th Cir. 2019) (federal guideline for certifying state-law questions to a state supreme court)
- CSX Transp., Inc. v. City of Garden City, 325 F.3d 1236 (11th Cir. 2003) (federal discussion of when to certify unsettled state-law issues)
- Burge v. Mid-Continent Cas. Co., 933 P.2d 210 (1996) (non-Georgia authority holding that a default judgment cannot be used against an insurer that had no notice or participation in the original suit)