Gregory Charles Welford v. Liberty Insurance Corporation
713 F. App'x 969
| 11th Cir. | 2017Background
- Fatal 2009 car accident: Rachel Welford killed; vehicle (1992 Mercury Sable) possibly driven by Middleton with Mayhair as passenger; Zisa attempting to pass and struck pedestrians. Liability contested among Zisa, Middleton, and pedestrians.
- Liberty insured Mottsey and Mayhair with $10,000 per-person / $20,000 per-accident BI limits; Mottsey told Liberty in May 2009 that Mayhair was a witness and the Sable was not involved.
- Plaintiffs filed suit on August 21, 2009; Liberty did not start a full investigation until it received notice of service (Mottsey served Oct. 3; Liberty notified Oct. 5–8).
- Liberty offered the $20,000 per-accident limit on Oct. 9 and later pro rata checks; Welford refused initial checks and rejected a later $10,000 per-victim offer.
- Trial resulted in a $1,320,000 verdict; allocation of fault left Mottsey and Mayhair jointly/severally liable only for first $100,000; Liberty paid its $10,000 policy limit post-appeal. Mottsey assigned bad-faith claim to Welford.
- Welford sued Liberty for third-party bad faith in state court (removed to federal court); district court granted Liberty summary judgment; Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Liberty acted in bad faith by failing to investigate and make timely settlement offers | Liberty failed to investigate after May 7 notice and should have made pre-suit settlement efforts, so acted in bad faith | Liberty reasonably relied on Mottsey’s statements that the car was not involved and promptly investigated and made settlement offers once sued; negligence alone is not bad faith | No bad faith as a matter of law; summary judgment for Liberty affirmed |
| Whether insurer has an affirmative duty to initiate pre-suit settlement when liability is unclear | Welford: insurer should initiate negotiations when exposure likely | Liberty: no affirmative duty pre-suit when liability not clear; acted promptly after suit filed | Court: No per se duty here; even assuming a duty, facts didn’t show clear liability to trigger it |
| Relevance of insurer’s May 7 inaction (failure to investigate) | That inaction shows bad faith under totality of circumstances | Any failure was at worst negligence, which is insufficient for bad faith; Liberty later acted diligently | Court: May 7 omission, if negligent, did not constitute bad faith given subsequent timely investigation and settlement efforts |
| Standard for summary judgment on bad-faith claims | Jury question generally; but summary judgment appropriate if no reasonable jury could find bad faith | Same; argues record lacks facts to support a jury finding of bad faith | Held: Summary judgment proper because no reasonable jury could find Liberty acted in bad faith under Florida law |
Key Cases Cited
- Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004) (bad-faith inquiry requires viewing totality of circumstances; courts sometimes decide no bad faith as a matter of law)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (insurer’s duties: investigate, advise insured of settlement opportunities and risk of excess judgment, and give fair consideration to reasonable settlement offers)
- Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318 (11th Cir. 2014) (standard of review for summary judgment reviewed de novo)
- Powell v. Prudential Prop. & Cas. Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991) (discusses insurer duty to initiate pre-suit settlement when liability clear and excess judgment likely)
- Campbell v. Gov’t Emps. Ins. Co., 306 So. 2d 525 (Fla. 1974) (distinguishes negligence from bad faith in excess-judgment cases)
- Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415 (1996) (federal courts in diversity apply substantive state law)
- Bravo v. United States, 532 F.3d 1154 (11th Cir. 2008) (courts should predict how state courts would decide unsettled state-law questions)