Raul A. Pelaez v. Government Employees Insurance Company
13f4th1243
11th Cir.2021Background
- On April 13, 2012, John Pelaez was seriously injured in a motorcycle-car collision involving Michael Conlon (an additional driver on his mother’s GEICO policy).
- GEICO assigned an adjuster the next business day, investigated, and within 11–13 days proactively tendered the $50,000 bodily-injury (BI) policy limit.
- The tender package included a proposed "Release of All Claims" (broad language) but expressly described the release as proposed and invited Pelaez’s attorney to submit edits or a new release.
- Pelaez’s attorney rejected the tender, saying the release was overbroad (would not exclude property-damage claims) and refusing to propose revisions; suit followed and a consent/judgment for $14,900,000 was entered against Conlon (insurer not a party).
- Pelaez sued GEICO for common-law bad faith; the district court granted summary judgment for GEICO, concluding no reasonable jury could find bad faith. The Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GEICO acted in bad faith by tendering BI limits accompanied by an overbroad release | Pelaez: the overbroad "all claims" release carried a known risk of rejection and showed GEICO put its interests ahead of its insured | GEICO: promptly investigated and tendered limits; the release was merely proposed and GEICO invited edits or a replacement; Pelaez never requested specific language | No bad faith. Under the totality of the circumstances GEICO acted in good faith; summary judgment affirmed |
| Whether GEICO’s proactive, unsolicited tender satisfied its duty to the insured | Pelaez: a tender that creates foreseeable rejection may not satisfy the insurer’s duty | GEICO: quick investigation and immediate tender once liability and injury were clear shows diligence and protection of the insured | Held for GEICO: the insurer diligently acted to protect its insured and initiated settlement efforts promptly |
| Role of claimant/attorney conduct in the bad-faith analysis | Pelaez: insurer cannot avoid bad faith by pointing to claimant conduct | GEICO: claimant and counsel declined to cure the alleged release problem and never counteroffered; their conduct is relevant to causation | Court: claimant conduct is relevant to the totality-of-the-circumstances but cannot alone absolve insurer; here claimant conduct supports no bad faith |
Key Cases Cited
- Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (defines insurer’s duty of good faith in handling defense, settlement, and warning of excess exposure)
- Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004) (bad-faith focus is on insurer’s actions; totality-of-the-circumstances standard)
- Harvey v. GEICO Gen. Ins. Co., 259 So. 3d 1 (Fla. 2018) (insurer must act promptly when liability and serious injury make excess judgment likely; claimant conduct cannot automatically absolve insurer)
- Eres v. Progressive Am. Ins. Co., 998 F.3d 1273 (11th Cir. 2021) (an overbroad release can create a jury question only when insurer refuses to cure; totality-of-the-circumstances analysis)
- State Farm Fire & Cas. Co. v. Zebrowski, 706 So. 2d 275 (Fla. 1997) (summary judgment appropriate where no reasonable jury could find bad faith)
- Perera v. U.S. Fid. & Guar. Co., 35 So. 3d 893 (Fla. 2010) (breach of duty of good faith may give rise to bad-faith cause of action)