Bad Faith Bulletin June 19, 2012

Shortly after the recently issued Florida Supreme Court decision in QBE Ins. Corp. vs. Chalfonte Condominium Apartment Association, Inc. 2012 W.L. 1947863 (Fla. 2012), the Fourth District Court of Appeals issued its opinion in Goheagan vs. American Vehicle Insurance Company, 2012 W.L. 2121082 (Fla. 4th DCA 2012) which favorably decided a bad faith case for an insurer.The Fourth District Court, in a two to one decision, affirmed a summary final judgment in favor of an automobile liability insurer in a bad faith case predicated on an insurer’s alleged failure to settle.

The insurer, following notice of a serious injury claim, made multiple efforts to contact both the injured party, who was comatose and later succumbed to her injuries, as well as various family members in an effort to tender the minimal bodily injury liability limits and protect the insured.  The insurance professional was initially notified by a family member that the injured party was represented by an attorney, but the attorney’s contact information was not initially provided, nor in multiple follow up attempts to obtain same.  The insurance professional finally made contact with the attorney after multiple attempts; however, by the time contact was made a wrongful death lawsuit had been filed.  The carrier eventually tendered its $10,000.00 in bodily injury coverage sixty-one (61) days post accident.  The plaintiff’s alleged that the insurer should have actually tendered its full policy limits and not simply made repeated calls to the claimant’s family.  The policy limits tender was twice rejected and, although fully defended by the insurer, the result was a multi-million dollar excess verdict.

In the resulting bad faith claim, the Appellate Court rejected plaintiff’s contentions and concluded that the adjuster’s “attempts to contact Goheagan five times would hardly appear to constitute the lack of diligence and care envisioned as an example of a bad faith claim.”  While the plaintiff’s bar will contend that the impact of the decision should be constrained to the facts of the case, the Court importantly ruled that the insurer’s failure to offer or tender the policy limits to a party known to be represented by an attorney, when the attorney was not identified to the insurer, did not constitute bad faith as a matter of law.  This finding was predicated on Fla. Admin. Code R. 69B-220.201(3)(i), part of the adjuster’s code of ethics, which prohibits an adjuster from attempting to negotiate a claim directly with a party known to be represented by counsel.  The Court’s opinion appears to be largely swayed by the multiple efforts of the insurance professional to make contact with the claimant’s counsel which were repeatedly put off.

The resulting lesson is that the adjuster and insurer who can demonstrate sincere and pro-active efforts to investigate and pursue settlement opportunities will have powerful, if not dispositive, evidence to oppose a bad faith action.  This case also underscores the need to fully and accurately document in the claim file all steps taken by the claims professional to settle a case.  It was the existence of these documented efforts that allowed the carrier to prevail on summary judgment.

Should you have any questions concerning the holdings or implications of the Goheagan decision please contact Joe Kissane or Trevor Hawes in the firm’s Jacksonville office at telephone number (904) 672-4031.