Recently, the Florida Supreme Court held against insurance companies that delay, deny and assess legitimate claims with low values in the recent decision, Fridman v. Safeco Ins. Co., No. SC13-1607, __ So.3d __, 2016 WL 743258, 41 Fla. L. Wkly. S62 (Fla. 2016) .
The Court held that an insured is entitled to a determination of liability and the full extent of his or her damages, including the amount of damages in excess of policy limits, in an uninsured/underinsured motorist (UM) action , before litigating a first party bad faith cause of action under section 624.155, Florida Statutes (2007). A determination of liability and the full extent of damages is a prerequisite to a bad faith cause of action.
Back in January 2007, Petitioner Adrian Fridman suffered injuries as a result of an automobile accident with an underinsured motorist. After the accident, Fridman filed a claim with Safeco Insurance Company of Illinois, his insurer, for the $50,000 limits of his UM policy. By October 2008, after Safeco refused to pay, Fridman filed a Civil Remedy Notice, as required by Florida law. In the notice he alleged that Safeco failed to attempt in good faith to settle his UM claim because it was a clear liability crash, significant property damage, substantial medical bills and injuries. In fact, Safeco made an offer of only $5,000.00.
In April 2009, after having received no response from Safeco within the statutory sixty-day civil remedy notice period or any time thereafter, Fridman filed a complaint against Safeco to determine liability under the UM policy and the full extent of the damages he suffered in the accident with the underinsured driver. In the complaint, he stated that he was “entitled to recover damages from the Defendant, Safeco Insurance Company of Illinois, in accordance with the Florida law regarding when an uninsured motorist insured can recover bad faith damages.
In February 2010, Fridman filed a notice of a settlement proposal pursuant to Florida Rule of Civil Procedure 1.442 and section 768.79, Florida Statutes (2010), in the amount of $50,000. Safeco did not respond and, thus, the unanswered proposal for settlement was deemed rejected after thirty days. See § 768.79, Fla. Stat.; Fla. R. Civ. P. 1.442(f).
The month before the case was originally set for trial in March 2011-over four years after the automobile accident. Safeco tendered a check to Fridman for the $50,000 policy limits, stating on the check that it was the full and final settlement of any and all claims. Fridman rejected the check containing this language. Safeco moved for a continuance, which the trial court granted.
About six months later, prior to the rescheduled trial, Safeco tendered a new check for $50,000-not containing the settlement language-and filed both a “confession of judgment” and a separate motion for entry of confession of judgment. Fridman opposed the entry of a confessed judgment, arguing, among other things, that a jury verdict would determine the upper limits of Safeco’s potential liability under a future bad faith claim.
The trial court ultimately denied Safeco’s motion to “confess judgment,” finding that to do otherwise “would ignore the plain legislative intent of section 627.727(10),” governing the damages recoverable in bad faith actions.
The case proceeded to trial, and the jury found that the underinsured driver involved in the accident was negligent and one hundred percent responsible for Fridman’s damages, which the jury determined to be $1,000,000. During the course of the trial, Safeco moved for a mistrial, alleging that Fridman’s counsel made improper comments. The trial court denied that motion.
After the trial, Safeco filed a motion for a new trial, alleging that the trial court committed several errors, including allowing Fridman’s counsel to make “impermissible, irrelevant, misleading, and inflammatory arguments” and permitting an excessive verdict that was not supported by the evidence. Safeco also timely filed a motion for remittitur of the jury’s award. The trial court denied the post-trial motions and entered a final judgment.
The trial court reserved jurisdiction in the final judgment to allow the plaintiff to amend to allege a bad faith cause of action.
The UM carrier appealed the decision and the Fifth DCA reversed holding that once the insurer tendered the policy limits, the action became moot. The Supreme Court quashed the 5th DCA’s decision finding the following:
(a) That determination of damages in the UM action is then binding, as an element of damages, in a subsequent first party bad faith cause of action against the same insurer, provided that the parties have had the opportunity for appellate review of any trial errors that were timely raised.
(b) When litigating the subsequent bad faith action, the insurer should be given the full opportunity to defend its actions related to its handling of the insured’s UM insurance claim. Although the amount of the UM verdict is a binding element of damages under section 627.727(10) in the bad faith case, the insurer is not precluded in the bad faith case from explaining its actions in failing to pay the policy limits when demanded and presenting its case for why it did not act in bad faith in the handling of the UM claim.
(c) Where a plaintiff brings a claim for UM benefits and includes a bad faith cause of action in the complaint, the appropriate procedure is to abate the bad faith action until coverage and damages have been determined. Here, it was not error for the trial court, in the final judgment in the UM case, to retain jurisdiction to allow the insured to formally amend his complaint to add a bad faith cause of action.