Heather R. Eres v. Progressive American Insurance Company
998 F.3d 1273
11th Cir.2021Background
- In May 2007 Eli Villareal (intoxicated) crashed into Heather Eres’s car; Eres was permanently injured and her son was killed; Villareal later pleaded guilty and was imprisoned.
- Progressive (Villareal’s insurer) promptly decided to tender the $10,000 BI limits to Eres and $10,000 to the son’s estate and repeatedly told Eres’s counsel it was ready to pay.
- March 2009: Macaluso (new counsel for Eres) sent a time‑limited demand conditioned on strict compliance—policy disclosures, an affidavit from Villareal of no other coverage, $650 for the son’s belongings, and a release that would only release the insured (no hold‑harmless/indemnity). Deadline: April 10, 2009.
- Progressive responded April 8 with the $20,000 draft checks, policy disclosure, $650, and proposed releases that reserved Eres’s ability to pursue future medical claims but included waiver‑of‑subrogation language; outside counsel also provided Villareal’s affidavit and Progressive invited edits to the releases.
- Macaluso (after the deadline) rejected the release as overbroad; Eres obtained a judgment >$10M against Villareal, then sued Progressive for third‑party bad faith; district court granted summary judgment for Progressive.
- Eleventh Circuit affirmed: considering the totality of circumstances, Progressive acted diligently and in the insured’s interest; at most there was negligence in claims handling, not bad faith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Progressive acted in bad faith by failing to settle within policy limits | Progressive’s proposed release was a non‑conforming, overbroad rejection of the demand; refusal to accept or correct it shows bad faith causing excess judgment | Progressive promptly offered policy limits, complied with demand items, produced affidavit, and offered to let plaintiff strike disputed language; acted diligently for insured | No bad faith as a matter of law—totality shows insurer acted with diligence and due regard for insured’s interests |
| Whether Progressive’s release (waiver of subrogation) was equivalent to a hold‑harmless/indemnity clause and thus a non‑conforming counteroffer | Waiver‑of‑subrogation is “in the nature of” a hold‑harmless clause, so release failed strict‑compliance requirement | Release did not include express hold‑harmless/indemnity language; pre‑2009 law did not clearly equate waivers of subrogation with hold‑harmless clauses, so insurer’s position was reasonable | Court: Not clearly equivalent in April 2009; reasonable insurer could treat waiver‑of‑subrogation as not tantamount to hold‑harmless—no bad faith on that basis |
| Effect of state appellate decision (Villareal v. Eres) on bad‑faith claim | Villareal collaterally estops Progressive from denying it failed to accept the offer and confirms the release was non‑conforming, supporting bad faith | Villareal decided contract interpretation (acceptance) but did not resolve whether insurer acted in bad faith; Progressive does not re‑litigate acceptance here | Villareal precludes relitigation of acceptance but does not establish bad faith; it does not entitle plaintiff to judgment on bad faith claim |
Key Cases Cited
- Harvey v. GEICO Gen. Ins. Co., 259 So. 3d 1 (Fla. 2018) (articulates insurer’s duty of good faith and totality‑of‑circumstances bad‑faith inquiry)
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (recognizes insurer’s duty to exercise control over settlement in insured’s interest)
- Thompson v. Commercial Union Ins. Co. of New York, 250 So. 2d 259 (Fla. 1971) (authorizes direct action by judgment creditor against tortfeasor’s insurer for bad faith)
- Mesa v. Clarendon Nat’l Ins. Co., 799 F.3d 1353 (11th Cir. 2015) (affirming summary judgment for insurer where conduct at worst showed negligence, not bad faith)
- Villareal v. Eres, 128 So. 3d 93 (Fla. Dist. Ct. App. 2013) (state appellate decision holding Progressive’s response failed to accept the settlement demand and treating subrogation waiver as "in the nature of" a hold‑harmless clause)