Analyzing AOBs: Are the Courts Splitting Hairs or Seeking Statutory Compliance?
February 23, 2024
Background: For years, when a bad faith action was brought pursuant to a jury verdict in excess of policy limits in the underlying UM claim, everyone assumed the jury verdict was binding in the bad faith action. Then, Bottini v. GEICO resulted in a $30.8 million-dollar verdict – over 600 times the policy’s UM limit of $50,000! GEICO appealed, and the Second DCA concluded that even if GEICO were correct that errors affected the jury’s computation of damages, any such errors were harmless in the context of this case. Basically, it refused to review the $30.8 million dollar verdict. Two months later, the U.S. District Court in King v. GEICO held that the underlying verdict of $1.6 million in a UM case actually could not serve as a basis for damages in a subsequent bad faith case without appellate review, taking Bottini one step further. Bottini brought her bad faith action in District Court, which concluded that the Second DCA did in fact review the damages, and therefore GEICO was bound by the $30.8 million dollar verdict. Meanwhile, Fridman v. Safeco came under review at the Florida Supreme Court. Fridman, then, resolved all of the questions that arose out of the original Bottini case, but not in time to save the insurer in Bottini from being stuck with a $30.8 million-dollar verdict that had never been reviewed by an appellate court. The Eleventh Circuit just issued its decision as to whether that would be allowed to stand:
On June 15, 2017, the United States Court of Appeals for the Eleventh Circuit held that the determination of damages in an underlying UM action was not binding on the parties to a bad faith action, because the insurer did not receive the right to appellate review of same. Therefore, the parties were required to litigate statutory damages.
In the underlying UM claim, Mr. Bottini died from injuries sustained in a motor vehicle accident. GEICO insured the vehicle driven by Mr. Bottini in the amount of $50,000 UM coverage. Ms. Bottini (acting as personal representative for the Estate of Mr. Bottini) filed a CRN against GEICO, alleging bad faith in the investigation of the claim. GEICO initially responded that it had not acted in bad faith, but subsequently tendered the full $50,000, along with a release. Ms. Bottini rejected both and sued GEICO for the UM benefits. The jury found in favor of Ms. Bottini for a total damages award of $30,872,266.
The trial court limited the damages to $50,000 against GEICO, but GEICO appealed for a new trial on several grounds, three of which related to the computation of damages. The majority of the Second DCA concluded that none of GEICO’s claims warranted reversal; however, one judge wrote separately to address the inevitable bad faith suit, noting that Fla. Stat. 627.155 does not explain how the fact-finder in the following lawsuit determines the “total amount” of the claimant’s damages.
Ms. Bottini brought the bad faith action in District Court and moved for summary judgment on the determination of damages that the jury found in the amount of $30,872.266. GEICO opposed the motion, stating it never received appellate review of that damages verdict, and giving effect to the verdict would violate its right to procedural due process. The District Court granted Ms. Bottini’s motion, but the Eleventh Circuit agreed to hear the appeal.
Typically, a determination of damages in a UM contract case is binding in a subsequent action for bad faith; however, the parties have a right to appellate review of the statutory-damages determination before it becomes binding in the subsequent bad faith action. See Fridman v. Safeco Ins. Co. of Ill., 185 So.3d 1214 (Fla. 2016).
In its opinion, the Eleventh Circuit briefly discussed the accrual of a bad faith action under Fla. Stat. 627.155, and concluded that the Legislature intended that damages in bad actions “shall” include any amount in excess of the policy limits. In an attempt to understand how damages were established in the bad faith action, the Circuit Court noted that the UM verdict must be binding in the bad faith action pursuant to Fridman. Fridman also, however, established that appellate courts have jurisdiction to review the damages in excess of policy limits. Keep in mind, the Fridman opinion was issued after the Second DCA’s opinion in Bottini 1, but before the Eleventh Circuit’s review of the instant matter. As such, the damages are not binding unless both parties are afforded an opportunity to obtain appellate review of any timely-raised claims of error in the determination of damages in the underlying UM action.
Applying the Florida Supreme Court’s Fridman framework to the instant case, the Eleventh Circuit concluded that GEICO did not receive appellate review of the damages to the extent that any errors impacted the damages over $50,000. However, did GEICO waive its right to appeal by not taking further action when the Second DCA did not review the specifics of the damages? The Eleventh Circuit responded in the negative, stating that any alternative procedures to the initial appeal to the Second DCA were discretionary.
Because the Florida Supreme Court held that parties have a right to appellate review, the Eleventh Circuit concluded that the Second DCA erred in failing to review GEICO’s allegations of error. Therefore, the measure of damages determined by the jury in the underlying UM action does not bind the parties in the bad faith case. (Note, however, that had GEICO not appealed to the Second DCA with allegations of error on the jury’s part with respect to the determination of damages, GEICO most likely would have waived its right to appellate review.)
Take-away: If you have a basis for appellate review of a jury verdict in excess of the UM policy limits, and a bad faith action is likely, move for review. You have a right to.
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