Summary
The Supreme Court of Florida held that prior court approval is not a prerequisite to a valid settlement offer involving a minor's claim. The court further held that Infinity Insurance Company's handling of the settlement opportunity, including its failure to ensure timely payment and adequately inform the insured, supported the jury's finding of bad faith. The court quashed the Second District Court of Appeal's decision and remanded for reinstatement of the final judgment.
Topics
Practice areas
Questions Presented
- Whether court approval or appointment of a personal representative or guardian is a prerequisite to a valid offer to settle a minor's or estate's claim.
- Whether an insurer's agreement to pay policy limits precludes a finding of bad faith as a matter of law when the insurer does not complete payment within the claimant's settlement deadlines.
- Whether an insurer has a duty to inform and advise its insured of settlement opportunities, including an offer within policy limits.
- Whether competent, substantial evidence supported the jury's finding that Infinity acted in bad faith under the totality of the circumstances.
Holdings
- Prior court approval is not a prerequisite to a valid settlement offer for a minor's claim, and the absence of prior appointment or approval does not invalidate the offer as a matter of law.
- An insurer's agreement to pay policy limits does not preclude a finding of bad faith as a matter of law where disputed facts remain regarding whether the insurer could and should have completed the settlement, paid or protected the funds, or sought an extension while acting with due regard for the insured's interests.
- An insurer's duty of good faith includes a duty to inform and advise the insured of settlement opportunities, the probable outcome of litigation, the possibility of an excess judgment, and steps the insured could take to avoid it, even when the settlement offer is within policy limits.
- Under Florida's totality-of-the-circumstances standard, competent, substantial evidence supported the jury's finding that Infinity acted in bad faith.
Key quotations
“An insurer, in handling the defense of claims against its insured, has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” (at 668-69)
“Although certainly the purpose of an insurer's obligation to act in good faith is to protect an insured from an excess verdict, an offer to settle is not invalid simply because there is a requirement of subsequent court approval.” (at 672)
“The failure to inform the insured of the settlement offer does not automatically establish bad faith; it is simply one factor for the jury to consider in determining whether the insurer acted in bad faith.” (at 680)
“In Florida, the question of whether an insurer has acted in bad faith in handling claims against the insured is determined under the "totality of the circumstances" standard.” (at 680)
Factual background
A vehicle insured by Infinity collided with another vehicle, killing Marion Taylor and seriously injuring her minor daughter. Infinity's investigation concluded that the insured driver was intoxicated and 100 percent at fault, while the minor's medical bills already exceeded the policy limits. Taylor offered to settle the estate and minor's claims for the $20,000 policy limits within specified deadlines, but Infinity failed to communicate the complete offer to Berges, failed to complete the settlement or seek an extension before the deadlines, and did not timely pursue court approval or alternative escrow arrangements. The claims proceeded to trial, producing verdicts of $911,400 and $500,000, after which Berges brought a bad-faith action.
Procedural history
After a fatal automobile collision and serious injuries to a minor, the claimants made a time-limited offer to settle within the insured's policy limits. Infinity did not complete the settlement or adequately communicate the offer before the deadlines expired, and the underlying claims resulted in judgments far exceeding the policy limits. A jury found Infinity acted in bad faith, and the trial court entered an amended final judgment of $1,893,066.41 for Berges. The Second District reversed, holding that the claimant lacked authority to make a valid settlement offer without prior court approval. The Florida Supreme Court accepted review based on express and direct conflict with Government Employees Insurance Co. v. Grounds, quashed the Second District's decision, and remanded for reinstatement of the final judgment.
Remand instructions
The Second District Court of Appeal's decision is quashed, and the case is remanded for reinstatement of the trial court's final judgment.