Mediator/Coverage Counsel Perspectives – Mediating Coverage Issues
August 11, 2022
Following the issuance of the Supreme Court’s decision in Fridman v. Safeco, the Southern District of Florida had occasion to consider a unique set of circumstances in a bad faith case. In Levesque v. GEICO, the Southern District denied GEICO’s motion to bifurcate the issue of extra-contractual liability from the determination of the insured’s actual damages.
In the prior uninsured motorist (“UIM”) case, GEICO confessed judgment in the amount of the policy limits prior to trial. GEICO then moved to dismiss the case since the court could not grant any further relief than what GEICO had already confessed. That precise procedure was the subject of the Supreme Court’s decision in Fridman, a procedure which the Court condemned. Fridman held that the insured is still entitled to have the jury determine the full amount of its damages, notwithstanding the fact that the insurer has confessed judgment in the amount of the policy limits. Therefore, the unique posture in which GEICO found itself in Levesque will not recur.
However, the Levesque case points out the down-side of GEICO’s strategy to preclude the jury in the UIM case from determining the insured’s full damages. If the insured is precluded from proving its damages in the UIM case, it must necessarily be entitled to prove them in the subsequent bad faith case. GEICO argued that allowing the jury to consider evidence of bad faith, as well as the insured’s full damages, was likely to prejudice the jury and cause it to award higher damages than it otherwise would have. The Southern District (correctly, in my opinion) refused to bifurcate, holding, “If evidence of the insured’s damages, including those in excess of the policy limits, is not unduly prejudicial in a case where liability for causing the car accident is simultaneously determined, it is difficult to see how it would be unduly prejudicial in this case, where the potential liability is for mishandling an insurance claim rather than for causing the car accident.” That logic is unassailable.
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