Geico General Insurance Co. v. Paton, No. 4D12—4606, 2014 WL 4626860 (Fla. 4th DCA Sept. 17, 2014)
Florida’s Fourth District Court of Appeal held that a jury’s determination of the insured’s damages in an underlying trial to recover UM benefits was binding on an insurer in a subsequent bad-faith trial. In reaching its decision, the court examined the bad-faith statute, its history, and Florida case law.
On January 1, 2008, Kelly Paton, a passenger, was injured in a car accident caused by the negligence of an underinsured driver. The driver’s insurance company, Geico General Insurance Company (“Geico”), paid Paton the $10,000 bodily injury liability limit. Paton’s mother maintained uninsured/underinsured motorist (“UM”) coverage with Geico, with $100,000 in coverage. Paton’s attorney demanded the $100,000 policy limit from Geico. Geico made settlement offers of $1,000 and later $5,000 in an attempt to settle the case. The UM case went to trial. The jury returned a verdict in Paton’s favor and against Geico, awarding $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 a new trial. Judgment was entered in favor of Paton but was limited to the $100,000 UM policy limit. Geico paid the judgment.
Paton then amended her complaint to add a claim for bad faith, pursuant to Fla. Stat. § 624.155. Before trial, Paton moved in limine to exclude evidence of damages. Paton argued that the excess verdict returned in the UM trial established the damages she could recover under her bad-faith claim. In opposition, Geico filed motions in limine seeking to exclude from evidence the verdict returned in the UM trial, and to require Paton to prove her damages anew in the bad-faith trial. The circuit court granted Paton’s motions and denied Geico’s motions.
At the bad-faith trial, consistent with its rulings on the motions in limine, the trial court removed the damages issue from the jury’s consideration with an instruction that the court would award damages in an amount allowable under Florida law if its verdict was for the plaintiff. The jury found for the plaintiff, and the circuit court entered a final judgment in the amount of the excess verdict from the UM trial ($369,247), plus prejudgment interest.
In its appeal, Geico argued that the circuit court erred by treating the excess verdict from a UM trial as conclusive evidence of Paton’s damages in the bad-faith trial, thereby denying Geico procedural due process and violating its right to appeal and access to the courts.
The court addressed the issue of whether, in the bad-faith trial, the insured is required to prove once again her damages, instead of relying on the jury’s damage determination made in the underlying action to recover UM benefits.
The court held that the jury’s determination of damages in the underlying action to recover UM benefits was binding on the insurance company in the subsequent bad-faith trial.
In reaching its decision, the court considered the language of the bad-faith statute, the Florida Supreme Court’s jurisprudence on first-party bad-faith actions, and noted Geico’s failure to challenge the damage award after the first trial or in the appeal of the bad-faith action.
The court explained that the Legislature created a first-party bad-faith cause of action by its 1982 enactment of Fla. Stat. § 624.155. In 1992, the Legislature passed § 627.727(10), which provides:
The damages are 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.
The court stated that case law construing the bad-faith statute provides further support for the court’s conclusion that the initial action between the insurer and the insured fixes the amount of damages in a first-party bad-faith action. The court noted that in State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 59 (Fla. 1995), the Florida Supreme Court applied section 627.727(10) and reiterated that the initial action for first-party benefits, which sets the insured’s damages arising from an accident, determines the extent of the insured’s damages in a first-party bad-faith case. Laforet, 658 So. 2d at 56-57 ( “Section 627.727(10) provides that the damages recoverable from an uninsured motorist insurance carrier in a bad faith action brought under section 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.”).
The court further explained that “[f]orcing 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.” The court noted that 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.
The court rejected Geico’s argument that the procedure used in this case frustrated its appellate rights because it was unable to challenge the full amount of the jury’s verdict in the underlying UM action. The court explained that Florida Rule of Civil Procedure 1.530(a) provides that a “new trial may be granted to all or any of the parties and on all or a part of the issues.” The court stated that because Geico never filed a Rule 1.530(a) motion, the court was “left to guess at what errors might have infected the first trial.” The court noted that many types of legal errors might have applied equally to damages above and below the $100,000 policy limit, such that the entire amount of damages was interrelated for the purpose of being appealable. The court explained, “Because the damages in the first trial fixed the amount of bad faith damages and an order denying a motion for new trial could have addressed damages in excess of $100,000, an appeal after the final judgment in the first trial directed at the total amount of damages thus would have fallen within the constitutional parameters of the jurisdiction of this Court as an appeal from a ‘final judgment[ ] or order[ ]’ of the trial court. Art. V, § 4(b)(1), Fla. Const.”
The court also addressed Judge Altenbernd’s concurring opinion in Geico General Insurance Co. v. Bottini, 93 So. 3d 476 (Fla. 2d DCA 2012), where Judge Altenbernd expressed concern that a district court of appeal would not have jurisdiction to consider the propriety of damages in excess of the amount included in the judgment on appeal. The court stated that where a jury’s damage award far exceeds the amount of a final judgment, the “final judgment or order” language of Art. V, § 4(b)(1) should be expansively read to include an appeal from an order denying a new trial in the first-party suit for uninsured motorist benefits. The court stated, “The final judgment subsumes the earlier order’s resolution of the jury’s damage determination so that the total amount is an immediately appealable issue.”