GEICO GENERAL INSURANCE COMPANY, Appellant, v. KELLY PATON, Appellee.
No. 4D12-4606
DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT
September 17, 2014
July Term 2014
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Michael L. Gates, Judge; L.T. Case No. 09-13697(12).
Philip M. Burlington of Burlington & Rockenbach, P.A., West Palm Beach, and Richard M. Benrubi of Liggio & Benrubi, P.A., West Palm Beach, for appellee.
Louis K. Rosenbloum of Louis K. Rosenbloum, P.A., Pensacola, for Amicus Curiae, Florida Justice Association.
GROSS, J.
We affirm the final judgment in this first-party bad faith action brought by an insured against her underinsured motorist carrier and write to address one issue: whether, in the bad faith trial, the plaintiff was required to once again prove her damages, instead of relying on the jury‘s damage determination in the first trial, which also established the liability of the tortfeasor. We hold that the jury‘s determination of damages in the first trial was binding on the insurance company in the bad faith trial.
On January 1, 2008, Kelly Paton, a passenger, was injured in a car accident due to the negligence of the underinsured driver. The driver‘s insurance company, GEICO General Insurance Company (“Geico“), paid Paton the $10,000 policy limit. Paton‘s mother maintained uninsured/underinsured coverage with Geico, with $100,000 of coverage. Paton‘s attorney, Darryl Kogan, demanded the $100,000 policy limit from Geico. Geico offered $1,000. After Geico‘s expert reviewed Paton‘s MRI which, according to her expert, showed that she had two lumbar herniations, Geico maintained its $1,000 offer. Later, Geico raised its offer to $5,000, but returned to the $1,000 offer after Paton refused to settle. In an attempt to resolve the case, Paton, against Kogan‘s advice, reduced her demand to $22,500. Geico did not respond to this offer.
The case went to trial. The jury returned a verdict in Paton‘s favor and against Geico. In closing argument, plaintiff‘s counsel did not suggest a specific amount for Paton‘s intangible losses. The jury awarded $10,000 for past pain and suffering, and $350,000 for future pain and suffering. The verdict set Paton‘s total damages at $469,247.
Geico did not file a motion for new trial.
Judgment was entered in favor of Paton, but was limited to the $100,000 UM policy limit. Geico paid the final judgment.
With leave of court, Paton amended her complaint to add a claim of bad faith under
At the bad faith jury trial, there were two issues of fact: 1) whether the attorney representing Paton in the underlying litigation met a statutory notice requirement and 2) whether Geico failed to act in good faith to settle Paton‘s claim. Consistent with the rulings on the motions in limine, Paton presented evidence of the verdict returned in the UM trial and the trial
The jury found for the plaintiff. The circuit court entered a final judgment in the amount of the excess verdict from the UM trial ($369,247) plus prejudgment interest.
Geico argues that the circuit court erred by treating the excess verdict from the UM trial as conclusive evidence of Paton‘s damages in the bad faith trial, thereby denying the company procedural due process and violating its right to appeal and access to the courts. Geico‘s position is not well taken based on (1) the wording of the statute creating the bad faith cause of action, (2) the Supreme Court‘s jurisprudence in first party bad faith actions, and (3) Geico‘s failure to challenge the damage award after the first trial or in this appeal.
By its 1982 enactment of
Two later statutory amendments firmly established that the damages in a first-party bad faith case include the total amount of the plaintiff‘s damages that were caused by the original third-party tortfeasor, even an amount in excess of policy limits. See Chs. 90-119, § 55, 92-318, § 80, Laws of Fla.
The damages recoverable pursuant to this section [624.155] shall include those damages which are a reasonably foreseeable result of a specified violation of this section by the authorized insurer and may include an award or judgment in an amount that exceeds the policy limits.
In 1992, the Legislature passed
The damages recoverable from an uninsured motorist carrier in an action brought under s. 624.155 shall include the total amount of the claimant‘s damages, including the amount in excess of the policy limits, any interest on unpaid benefits, reasonable attorney‘s fees and costs, and any damages caused by a violation of a law of this state. The total amount of the claimant‘s damages is recoverable whether caused by an insurer or by a third-party tortfeasor.
According to the Supreme Court, these two statutes reflect the Legislature‘s determination “that damages in first-party bad faith actions are to include the total amount of a claimant‘s damages, including any amount in excess of the claimant‘s policy limits without regard to whether the damages were caused by the insurance company.” Laforet, 658 So. 2d at 60.
In the context of a first-party bad faith action, the underlying action between the insured and the insurer establishes two elements that must exist for the bad faith cause of action to accrue—the liability of the uninsured tortfeasor and the extent of the plaintiff‘s damages in the underlying accident. In Blanchard v. State Farm Mutual AutomobileInsurance Co., 575 So. 2d 1289, 1291 (Fla. 1991), the Supreme Court wrote that:
an insured‘s underlying first-party action for insurance benefits against the insurer necessarily must be resolved favorably to the insured before the cause of action for bad faith in settlement negotiations can accrue. It follows that an
insured‘s claim against an uninsured motorist carrier for failing to settle the claim in good faith does not accrue before the conclusion of the underlying litigation for the contractual uninsured motorist insurance benefits. Absent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff‘s damages, a cause of action cannot exist for a bad faith failure to settle.
(Emphasis added). Applying
Section 627.727(10) provides that the damages recoverable from an uninsured motorist insurance carrier in a bad faith action brought undersection 624.155 and the 1990 amendment thereto shall include the total amount of a claimant‘s damages, including any amount in excess of the claimant‘s policy limits awarded by a judge or jury in the underlying claim.
658 So. 2d at 56-57 (emphasis added); see also Progressive Select Ins. Co. v. Shockley, 951 So. 2d 20, 20 (Fla. 4th DCA 2007) (recognizing that “both the existence of liability and the extent of damages are elements of a statutory cause of action for bad faith“); State Farm Mut. Auto. Ins. Co. v. O‘Hearn, 975 So. 2d 633, 635 (Fla. 2d DCA 2008) (stating that “[t]here is an abundance of case law that holds that a first-party bad faith claim does not accrue until there has been a final determination of both liability and damages in an underlying coverage claim“). Thus, based on the Florida Supreme Court‘s construction of the applicable statutes, the initial action between the insurer and the insured fixes the amount of damages in a first-party bad faith action.
Forcing retrial of a plaintiff‘s damages at a first party bad faith trial, as Geico urges, is such bad policy that we do not glean even a hint of its existence in any case the Supreme Court has decided in this area. Under Blanchard, the recovery of damages in the first-party action for insurance benefits is necessary for the accrual of the bad faith claim. Geico participated fully in the first trial with an opportunity to challenge the plaintiff‘s evidence and a powerful motive to suppress the amount of damages. When it comes to a judge or jury‘s factual determination of damages, Florida‘s policy is not to give multiple bites at the same apple absent some legal infirmity in the first trial. As one federal district judge has observed,
[f]orcing plaintiffs to relitigate their damages in first-party bad faith actions would have serious ramifications, including: running the almost-certain risk of inconsistent verdicts; potentially raising comity issues between state and federal courts; creating a discrepancy (surely unintended and definitely illogical) between first- and third-party bad faith claims; placing an inexplicable burden on plaintiffs to prove their cases twice; and causing a great deal of judicial inefficiency.
Batchelor v. Geico Cas. Co., No. 6:11-cv-1071-Orl-37GJK, 2014 WL 3906312, *4 (M.D. Fla. June 9, 2014). To a limited extent, Geico could have addressed damages in the bad faith trial by arguing that the amount of damages awarded in the first trial could not reasonably have been foreseen, so there was an absence of bad faith.
We reject Geico‘s position that the procedure used in this case has frustrated its appellate rights because it was unable to challenge the full amount of the jury‘s
In this area of the law, we do not discern the constitutional conundrum identified by Judge Altenbernd‘s concurring opinion in Geico General Insurance Co. v. Bottini, 93 So. 3d 476 (Fla. 2d DCA 2012). There the jury verdict found that the plaintiff‘s damages were $30,872,266 and the trial court entered a final judgment for the applicable policy limits of $50,000. Id. at 477. In light of this disparity, the majority held that “even if Geico were correct that errors may have affected the jury‘s computation of damages,” any such errors were harmless given the amount of the judgment. Id. In his special concurrence, Judge Altenbernd expressed concern that a district court of appeal would not have jurisdiction to consider the propriety of damages in excess of $1,050,000, an amount that Geico conceded would have been proper after a finding of liability, because that amount was not included in the judgment on appeal. Id. at 478.
When applied to the issue presented in Bottini—where a jury‘s damage award far exceeds the amount of a final judgment—the “final judgment or order” language of
The harmless error approach of the Bottini majority would also appear to allow for a challenge to damages in the bad faith case; the harmless error finding would not preclude later consideration of the propriety of damages in excess of $50,000. Bottini would allow for this practical option where the trial judge defers ruling on the propriety of any amount of damages in excess of the final judgment until after a finding of bad faith
in the second trial; in this instance an appellate challenge to the amount of damages would occur after the entry of a final judgment in the bad faith case.2 Whether the bad faith cause of action has been abated or added by amendment, the record and damage issue are all part of the same case. If there is a jurisdictional bar to reviewing damages in the appeal of that lawsuit, the practical advantage of this option is its compliance with the First Rule of Judicial Economy by postponing a ruling on the legal propriety of a damage award until those damages are triggered by a bad faith determination.3,4
We have considered the other arguments raised on appeal and find no reversible error.
Affirmed.
CIKLIN, J., and KASTRENAKES, JOHN, Associate Judge, concur.
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Not final until disposition of timely filed motion for rehearing.