Novoa v. Geico Indem. Co., No. 13—10704, 2013 WL 5614269 (11th Cir. Oct. 15, 2013).
The Eleventh Circuit affirmed the district court’s order granting summary judgment in favor of an insurer in a third-party bad-faith case, ruling there was insufficient evidence for a reasonable jury to find that the insurer acted in bad faith or that the alleged bad faith caused the excess judgment. This case provides further support for the principle that, under Florida law, insurer bad faith cannot be established based solely on evidence that the liability insurer could have done a better job of handling the claim. Evidence of carelessness or negligence may be relevant to proving bad faith, but to establish bad faith there must be sufficient evidence showing the insurer acted solely on the basis of their own interests in settlement.
Geico Indemnity Company insured Christopher Meldon under an automobile policy of insurance that provided $10,000 of bodily injury liability coverage and $10,000 of property damage liability coverage per incident. On November 10, 2007, Jose Ordonez stopped to help a stranded motorist, Ethel Walker, repair a flat tire on her car. During the repair, Meldon (driving under the influence of alcohol) swerved off the road, killing Ordonez and striking Ordonez’s vehicle and Walker’s vehicle. Ordonez died as a result of the collision, and the Ordonez and Walker vehicles were both damaged.
The accident was reported to Geico on the day it occurred. Three days later, the Geico claims adjuster interviewed Meldon and discussed the facts of the accident. Two weeks later, on November 27, 2007, Geico sent a letter to Ordonez’s surviving spouse, Viviana Novoa, enclosing a check for the $10,000 bodily injury liability limits. The letter advised Novoa to discuss with her insurance carrier whether she had uninsured motorist coverage available and asked her to provide Geico with her insurance information so that Geico could evaluate the property damage portion of her claim. Also included in the letter was a document entitled a “release of all claims.” Although the letter stated that Novoa’s property-damage and bodily-injury claims were being handled separately and implied that the release would only extinguish her bodily injury claims, the release stated that it applied to all of Novoa’s claims arising from the accident. In subsequent depositions, Geico stated that its intent was that the release would only extinguish Novoa’s claims for bodily injury against Meldon and that her property-damage claims would be resolved separately once Geico obtained the relevant information from Novoa and Walker, both of whom were asserting property-damage liability claims against Geico’s policy.
Novoa did not cash the check or sign the release. On December 12, 2007, she sent Geico a letter demanding $3,100 under the property damage portion of the policy. The letter directed Geico to contact her if it needed further information. Geico did not respond immediately to this demand letter, nor did it present the demand immediately to Meldon. On January 11, 2008 (i.e., 30 days after sending the demand letter), Novoa filed a complaint asserting a wrongful-death claim against Meldon.
On January 18, 2008, Geico requested Walker’s property-damage information. On January 28, 2008, Geico received Walker’s response and immediately sent a letter to Novoa offering $1,425.29 to settle the property damage claim. In its January 28 letter (which was sent before Geico received a copy of the wrongful-death complaint), Geico explained that because Walker’s claim under the property damage policy was $18,650 and Novoa’s claim was for $3,100, the prorated amount for Novoa’s claim under the $10,000 per incident policy was $1,425.29.
On the same date, Geico sent a letter to Meldon advising that the property damage claims arising from the accident exceeded his $10,000 policy limits, that Meldon would be liable for the excess, and that Geico would attempt to settle the property-damage claim within the policy limits.
On February 7, 2008, Novoa rejected Geico’s offer of $10,000 for her claim and returned the check to Geico. Novoa had previously decided on January 9, 2008, to hire an attorney and to file a lawsuit. Her attorney later testified that after January 9 it was “unlikely” that Novoa would accept an offer to settle the bodily injury liability claim within the $10,000 policy limits.
In the bad-faith claim, Novoa asserted the position that she would have settled the entirety of her claims against Geico and Meldon if Geico had offered $13,100 (i.e., $10,000 for bodily injury and $3,100 for property damage), rather than $11,425.29 it offered. Additionally, Novoa stated that another reason for not agreeing to settle was that Geico had not responded quickly enough to her demand for $3,100 for property damage, even though her December 12, 2007 letter demanding $3,100 for property damage did not set a deadline for a response and Geico sent Novoa a letter on January 28, 2008, offering $1,425.29 to settle her property damage claim (and explaining that it was based on a prorated amount).
Novoa’s lawsuit proceeded to trial and resulted in a final judgment for Novoa against Meldon in the amount of $16,591,426.07. Novoa subsequently filed her bad-faith action against Geico, seeking to recover the full amount of the excess judgment from Geico.
Whether the district court correctly granted summary judgment in favor of Geico?
Summary judgment was properly granted in favor of Geico because Novoa failed to provide sufficient evidence for a reasonable jury to find that Geico acted in bad faith. Instead of substantiating her claim with evidence showing bad faith, Novoa merely provided a litany of ways she thought Geico should have handled her claim better. Taken as true, Novoa’s allegations simply demonstrate that Geico could have improved its claims process, not that Geico acted in bad faith. Moreover, Novoa did not provide evidence that Geico’s alleged bad faith caused the excess judgment.
In rejecting Novoa’s argument that Geico acted in bad faith by not diligently pursuing a settlement, the court stated: “To fulfill the duty of good faith, an insurer does not have to act perfectly, prudently, or even reasonably. Rather, insurers must ‘refrain from acting solely on the basis of their own interests in settlement.’ State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 58 (Fla. 1995).” The court stated that evidence of carelessness may be relevant in proving bad faith, but that Florida law provides that the “standard for determining liability in an excess judgment case is bad faith rather than negligence,” as stated in Campbell v. Gov’t Emps. Ins. Co., 306 So. 2d 525, 530 (Fla. 1974).
In holding that Novoa failed to provide evidence that Geico’s alleged bad faith caused the excess judgment, the court noted that Novoa’s claim that she would have settled her $16 million cases if Geico had offered her only $1,674.71 more in property damage is “patently self-serving” and that Novoa provided “no reason why she would settle an undisputed claim for over a thousand times less than its actual value or why she never proposed such a favorable settlement until after filing this suit.”