Maharaj v. Geico Casualty Co., 996 F. Supp. 2d 1303

Background

GEICO insured Junie Telfort with $10,000/$20,000 BI limits; on May 17, 2007 Telfort’s driving caused a crash in which a 6-year-old (Kameren Maharaj) lost his left leg.
GEICO learned of the accident quickly, investigated, and on June 8, 2007 tendered $10,000 checks for claimants accompanied by releases that included an indemnification/hold-harmless clause.
Claimant’s attorney (Metnick) demanded limits on June 5, 2007 and objected to the indemnity clause; GEICO circulated revised releases that removed property-damage language but continued to include the indemnity clause.
Communications among GEICO adjusters and home-office legal are disputed: claimant’s lawyer says GEICO refused to remove the indemnity clause; GEICO says it did not have authority to remove it without legal review and later attempted settlement with changed release terms.
Underlying suit proceeded; 2012 jury verdict awarded claimant ~$6.95 million, of which GEICO was liable for $10,000 (policy limits) and insured Telfort for the excess; claimant then sued GEICO for bad faith for failing to settle within limits.
District court denied GEICO’s summary‑judgment motion, finding disputed facts (e.g., whether claimant would have accepted limits, whether GEICO unreasonably refused to remove an overbroad indemnity clause, and whether the insured was apprised) precluded judgment as a matter of law.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether GEICO acted in bad faith by refusing to settle within policy limits	GEICO refused to remove an overbroad indemnity/hold-harmless clause, which prevented settlement and exposed insured to excess judgment	GEICO promptly offered policy limits and did not have a realistic opportunity to settle because claimants (and/or insured) would not accept $10,000	Denied summary judgment — factual disputes (claimant willingness, the indemnity clause’s effect, communications) must go to jury
Whether claimant would have accepted the $10,000 policy limits	Claimant’s testimony (including errata) and counsel’s statements create a triable question whether acceptance would occur if indemnity clause removed	GEICO relies on claimant’s initial deposition answer (“No”) to argue no willingness to settle	Court treats errata and other testimony as creating genuine dispute; cannot resolve credibility on summary judgment
Whether the indemnity/hold-harmless clause was unreasonable/overreaching and material to settlement	The clause shifted potential defense/indemnity burdens to claimant and was the sole reason limits weren’t accepted	GEICO says clause was standard to protect insured and was appropriate	Whether the clause was overreaching and caused bad faith is a factual question for the jury; summary judgment inappropriate
Whether GEICO adequately informed/consulted its insured of settlement opportunities	Plaintiff points to adjuster testimony showing insured may not have been advised of settlement negotiations	GEICO contends it kept insured informed and acted reasonably in pursuit of settlement	Court notes evidence raises factual question but plaintiff did not plead an independent failure-to-notify claim; nonetheless factual disputes preclude summary judgment on bad faith claim

Key Cases Cited

Berges v. Infinity Ins. Co., 896 So.2d 665 (Fla. 2004) (bad‑faith inquiry uses totality‑of‑circumstances standard)
Boston Old Colony Ins. Co. v. Gutierrez, 386 So.2d 783 (Fla. 1980) (insurer’s duty to advise insured of settlement opportunities and avoid exposing insured to excess judgment)
State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So.2d 55 (Fla. 1995) (insurer liable for excess judgment when acting in bad faith)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting principles)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (standard for genuine issue of material fact)
Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (nonmovant must present more than metaphysical doubt to defeat summary judgment)