Robert Kropilak v. 21st Century Insurance Company, 806 F.3d 1062

On Oct. 7, 2008, Kropilak was injured when Collins turned in front of his motorcycle; Collins was insured by 21st Century with $10,000 per-person/$20,000 per-accident limits.
21st Century tendered the $10,000 policy limits by mailing a check to Kropilak’s attorney on Nov. 13, 2008 (received Nov. 17); Kropilak refused to cash it and later sued Collins.
After litigation, Kropilak obtained a jury verdict of $173,097.07; 21st Century paid the $10,000 limits (plus $2,500 property damage), leaving Collins personally liable for the excess.
On Mar. 5, 2010, Kropilak’s counsel sent a settlement-opportunity letter proposing a consent judgment for $150,000 against Collins with a covenant not to execute and reservation of the plaintiffs’ bad-faith claim against 21st Century.
Plaintiffs asserted two bad-faith theories against 21st Century: (1) Powell theory — delayed tender of policy limits (the jury found bad faith on delay but also found no realistic possibility of settling within limits); and (2) failure to accept the March 5, 2010 settlement proposal (district court excluded evidence of this letter via motion in limine).
The district court entered judgment for 21st Century; plaintiffs appealed the exclusion of evidence concerning the March 5, 2010 proposal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether evidence of the Mar. 5, 2010 settlement-opportunity letter was admissible to support a bad-faith claim	The letter offered to settle within policy limits via a consent judgment while preserving a bad-faith claim against insurer; evidence is relevant to insurer’s duty/refusal	The proposal was a Cunningham-type/consent-judgment agreement in which insurer has no duty to participate; admitting it would be prejudicial	Evidence excluded; district court did not err — insurer has no duty to enter such agreement
Whether insurer has a duty under Florida law to enter a Cunningham-like or consent-judgment settlement that preserves a bad-faith claim	Insurer should have a duty to accept reasonable settlement mechanisms that protect the insured and still allow bad-faith claims against insurer	Florida law does not impose a duty to enter Cunningham agreements or to agree to consent judgments that create excess exposure beyond policy limits	No duty to enter Cunningham or consent-judgment agreements; exclusion affirmed

Jones v. Fla. Ins. Guar. Ass’n, 908 So. 2d 435 (Fla. 2008) (insurer duty to defend/indemnify explained)
Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980) (insurer must act in good faith and diligence for insured’s interests)
Campbell v. Gov’t Emps. Ins. Co., 306 So. 2d 525 (Fla. 1974) (insurer can be liable for bad faith for refusing reasonable pretrial settlement within limits)
Cunningham v. Standard Guar. Ins. Co., 630 So. 2d 179 (Fla. 1994) (describes agreements to try bad-faith action before underlying tort; courts treat such agreements specially)
Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004) (insurer has no duty to accept a Cunningham agreement)
Perera v. U.S. Fid. & Guar. Co., 35 So. 3d 893 (Fla. 2010) (Cunningham agreements characterized as functional equivalent of an excess judgment)
Macola v. Gov’t Emps. Ins. Co., 953 So. 2d 451 (Fla. 2006) (insurer duties include advising insured of settlement opportunities and warning of excess judgment risk)
Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 483 F.3d 1265 (11th Cir. 2007) (negligence relevant to insurer good-faith duty)