News Room
Client Update – Florida Insurance Law Update
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By John Bond Atkinson, Tiffany A. Bustamante, and Lindsey Hess
We hope this Client Update finds you in good health and positive spirits. Below are a few recently published opinions related to insurance claims that may be of interest. As always, we will continue to keep you appraised of any new issues emerging in the insurance industry.
EXECUTIVE SUMMARY
Dodgen v. Grijalva, 2021 Fla. LEXIS 1657 (Supreme Court of Florida October 14, 2021)
In a case involving a discovery dispute in an automobile case, where the Plaintiff sought to discover from the Defendant, the financial relationship, if any, between Defendant’s nonparty insurer and his expert witnesses, the Supreme Court held that the trial court did not depart from the essential requirements of the law in denying Defendant’s motion for protective order.
Pelaez v. Gov’t Emples. Ins. Co., 2021 U.S. App. Lexis 28312 (11d Cir. September 20, 2021)
In a case involving bad faith allegations, the district court did not err by granting the insurer summary judgment brought by the insured and the motorcyclist because what took place before and after the insurer sent the motorcyclist’s attorney the overbroad release showed that the insurer fulfilled its duty to act in good faith.
Synergy Contracting Group, Inc., a/a/o Anne Dorrell v. Fednat Insurance Company, Nos. 2D21-144, 2D21-147 (2d Cir. December 10, 2021)
In a case involving an insurance appraisal dispute over attorneys’ fees where the parties went to appraisal after initiation of the lawsuit and the carrier issued payment pursuant to the appraisal award, the Court reversed the lower’s court judgment and held that a judgment in the insurance carrier’s favor was not a defense to liability for the Plaintiff’s attorneys’ fees.
RECENT OPINIONS
DODGEN V. GRIJALVA, 2021 Fla. LEXIS 1657 (Supreme Court of Florida October 14, 2021)
In Dodgen v. Grijalva, the Plaintiff sought to discover from the Defendant, the financial relationship, if any, between Defendant’s nonparty insurer and his expert witnesses.
The Defendant filed a motion for protective order in the trial court seeking to preclude the Plaintiff from discovering information that, if it exists would establish a financial relationship between the Defendant’s expert witness and his liability insurer, and between those witnesses and his defense law firm. After the trial court denied the Defendant’s motion, the Defendant petitioned the Fourth District for a writ of certiorari, arguing in pertinent part that the trial court’s order departed from the essential requirements of the law, namely the case of Worley v. Central Florida Young Men’s Christian Ass’n, 228 So. 3d 18 (Fla. 2017).
In Worley, the defendant sought certain discovery in an effort to establish the existence of a referral relationship between the plaintiff’s attorneys and her treating physicians. The requested information included asking if the plaintiff herself was referred to her specialists by her attorneys. The Court in Worley framed the issue as whether the attorney-client privilege protects a party from being required to disclose that his or her attorney referred the party to a physician for treatment. The Court in Worley answered this question in the affirmative and also held that the attorney-client privilege protects a law firm from producing documents related to a possible referral relationship between the firm and its client’s treating physicians. Worley concluded that the relationship between a law firm and a plaintiff’s treating physician is not analogous to the relationship between a party and its retained expert. Worley also concluded that although the evidence code allows a party to attack a witness’s credibility based on bias, the credibility of the treating physician at issue could be attacked in certain ways that did not require further discovery into a possible relationship between the physician and the plaintiff’s law firm as that discovery would require the production of communications and materials that are protected by attorney-client privilege. Worley then held that the attorney-client privilege precludes defense counsel from asking a plaintiff whether his or her attorney referred the plaintiff to a physician for treatment.
Here, the Fourth District Court concluded that the discovery issue in Worley was distinguishable. Case law has established that when a discovery order departs from the essential requirements of the law and results in material injury for the remainder of the case that cannot be corrected on appeal, relief by way of certiorari review may be granted. Further, a departure from the essential requirements of the law is something more than a simple legal error.
As noted above, Worley addressed a narrowly framed certified conflict question, whether the attorney-client privilege protects a party from being required to disclose that his or her attorney referred the party to a physician for treatment. The Court stated that nothing in Worley suggest its decision was intended to apply to any witnesses other than those attempting to make their patients well. As the decision in Worley does not address the discoverability of the financial relationship between a defendant’s nonparty insurer and the defendant’s experts the discovery order at issue here did not violate a principle of law that was clearly established by Worley. Thus, this Court concluded that the Fourth District correctly concluded that Worley did not support granting certiorari relief.
This Court also cited Springer v. West, 769 So. 2d 1068 (Fla. 5th DCA 2000), in reaching its conclusion that the trial court’s order permitting discovery related to the financial relationship between the Defendant’s insurer and defense expert was consistent with established law. Springer explained that where an issuer provides a defense for its insured and is acting as the insured’s agent, the insurer’s relationship to an expert is discoverable from the insured. Thus, Springer held that the financial relationship between a defendant’s nonparty insurer and the defense experts is discoverable. This Court held that the Fourth Circuit did not depart from the essential requirements of the law in Springer, but rather complied with the rule articulated in Springer.
In sum, this Court held that because the trial court’s order permitting discovery related to the financial relationship between the Defendant’s insurer and defense experts was consistent with established law in Springer and did not depart from any established law in Worley, it approved the result reached by the Fourth District in denying the Defendant’s petition.
Pelaez v. Gov’t Emples. Ins. Co., 2021 U.S. App. Lexis 28312 (11d Cir. September 20, 2021)
In Pelaez v. Gov’t Emples. Ins. Co., the insured was appealing the district court’s rejection of his attempt to obtain a $14,900,000 bad faith judgment from the insurer.
On April 13, 2012, Michael Conlon (“Mr. Conlon”) was driving his vehicle and hit by a motorcycle driven by John Pelaez (“Mr. Pelaez”). At the time of the crash, Mr. Pelaez did not report that there had been any injuries. On April 16, 2012 which was the next business day, GEICO assigned a claims adjuster to the incident and also received information about how to contact two detectives who were investigating the crash. On April 17, 2021, GEICO contacted Mr. Conlon and learned that Pelaez had been injured for the first time. On April 18, 2021, GEICO learned that: (1) the speed limit in the crash area was low; (2) the skid marks left by the motorcycle were 67 feet long, and (3) Mr. Conlon had not been cited for the accident. Based on these three facts, GEICO preliminarily concluded that Mr. Pelaez had been speeding and was contributorily negligent.
On April 23, 2012, GEICO received a letter of representation from Mr. Pelaez’s attorney, as well as photographs of the crash scene and a copy of the police report. The police report indicated that Mr. Conlon had failed to yield the right of way, a witness had reported Pelaez didn’t appear to be speeding, and Mr. Pelaez had suffered head and other major injuries. The very next day, on April 24, 2012, GEICO decided to proactively tender the bodily injury policy limit of $50,000 to Mr. Pelaez, even though it had not received a demand letter from Mr. Pelaez’s attorney. On April 25, 2012, GEICO’s claim adjuster called Mr. Pelaez’s attorney to offer the bodily injury policy limit and asked to inspect the motorcycle so it could make an offer on the property damage claim for the motorcycle. On April 26, 2012, GEICO hand delivered to Mr. Pelaez’s attorney’s office a bodily injury claim tender package, which contained a cover sheet listing the package’s contents, a $50,000 check inscribed with the notation “tender of per person BI limits”, and a proposed form release of “all claims”. The package also contained two letters: the first letter discussed the insurance policy’s relevant detail and the second letter discussed the terms of the proposed release. The proposed form release was titled “Release of All Claims” and purported to release Mr. Conlon and his mother (the named insured) “from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, on account of all injruies and damages, known or unknown, which have resulted or may in the future develop as a consequence of” the crash. The letter accompanying the release stated that “not all release forms precisely fit the facts and circumstances of every claim” and asked Mr. Pelaez’s attorney to call “immediately” if he had “any questions about any spect of the release.” The letter also invited Mr. Pelaez’s attorney to edit the release by sending GEICO “any suggested changes, additions or deletions with a short explanation of the basis for” them or if he preferred, send an entirely new release to GEICO.
On April 27, 2012, Mr. Pelaez’s attorney wrote again requesting insurance disclosures. Notably, the letter from Mr. Pelaez’s attorney did not respond to the tender package or GEICO’s offer of settlement. Between April 30, 2012 through May 4, 2012, Mr. Pelaez’s attorney avoided disclosing where the motorcycle was. On May 4, 2012, Mr. Pelaez’s attorney wrote to GEICO and rejected the tender of the policy limits on the bodily injury claim. The letter stated that Mr. Pelaez and his parents had decided to sue Mr. Conlon and his mother instead of settling because GEICO had tried to take advantage of the Pelaez family with an overbroad release. He specified that the GEICO release was for “all claims” instead of just “the claims that [GEICO was] paying for” because it didn’t contain a reservation for property damage. He also stated that Mr. Pelaez and his parents would have accepted the policy limits to release the bodily injury claim had GEICO offered the proper insurance benefits, specifically a $50,000 check and a bodily injury only release. Mr. Pelaez’s attorney’s letter also implicitly acknowledged GEICO’s invitation for the attorney to revise the form release because he noted that the family would not settle on a more limited release. Mr. Pelaez’s attorney exxpalined that agreeing to settle using a proper release would allow GEICO to prey on the next accident victim, therefore they were going to sue Mr. Conlon and his mother and “take every action necessary to…bring to light the way that GEICO unfairly does business.”
On May 7, 2012, Geico received the rejection letter and told Mr. Conlon’s mother its efforts to settle were unsuccessful on May 8, 2012. On May 9, 2012, GEICO responded to the rejection letter, stating that its practice was to keep bodily injury and property damage claims separate and reiterated that the release was “a proposed release” and again invited Mr. Pelaez’s attorney to send “additional language or changes” for the release. Five months after the crash, Mr. Pelaez and his family sued Mr. Conlon and his mother for negligence and GEICO hired an attorney to defend them. A month after that, Mr. Pelaez and GEICO agreed to settle the property damage claim for $7,283.06. Nearly two years after that, on the fifth day of the negligence trial involving the collision, the court entered a final judgment awarding Mr. Pelaez $14,900,000 against Mr. Conlon but stipulated that Mr. Pelaez “shall not record the judgment or try to collect it from Conlon; instead, Pelaez would seek satisfaction…solely from insurance proceeds, including from claims of ‘bad faith’ or extra-contractual damages. Mr. Pelaez and Mr. Conlon then brought common law bad faith claims against GEICO in Florida State court. GEICO removed the lawsuit to federal court. Both sides moved for summary judgment. The district court granted it to GEICO on two grounds, one of which was that no reasonable jury could concluded GEICO had acted in bad faith.
This Court in rendering its decision cited Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980). It pointed to language stating that a good faith duty obligates the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid same. The Court also pointed to language in Berges v. Infinity Ins. Co., 896 So. 2d 665, 680 (Fla. 2004) stating that “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” and that the “focus in a bad faith case is not on the actions of the claimant but rather on those of the insurer in fulfilling its obligations to the insured.” Berges, 896 So. 2d at 677.
This Court then went on to analyze whether GEICO had acted in bad faith. The Court looked at the actions of GEICO before and after it sent the overbroad release to Mr. Pelaez’s attorney. The Court emphasized the fact that GEICO had sent the release to Mr. Pelaez’s attorney and stated that it was a proposed release, not insisted on, and invited Mr. Pelaez’s attorney to make any changes if he wanted or draft an entirely new release himself. The Court also pointed out that after receiving a rejection from Mr. Pelaez’s attorney, GEICO immediately responded that the proposed release was a starting point and again invited Mr. Pelaez’s attorney to make changes to the release, which Mr. Pelaez’s attorney never did before initiating the negligence lawsuit.
The Court concluded that on a review of the facts and totality of the circumstances, GEICO did not act in bad faith when handling Mr. Pelaez’s claims against Mr. Conlon and his mother. The court emphasized the point that “in a bad faith action, there’s a difference between focusing on a claimant’s actions, which would be improper; and factoring a claimant’s actions into the totality of the circumstances analysize, which is not improper.” The Court then cited to Harvey where it implicitly recognized this difference quoting the portion of the case which stated a “[claimant’s] actions cannot let the insurer off the hook when the evidence clearly establishes that the insurer acted in bad faith in handling the insured’s claim.” The Court then stated that they were not allowing GEICO to escape liability merely because Mr. Pelaez’s and his attorney’s actions could have contributed to the failure to settle, rather Mr. Pelaez’s and his attorney’s actions show how in the totality of the circumstances, GEICO did fulfill its good faith duty to Mr. Conlon and his mother.
In sum, this Court held that no reasonable jury could conclude that GEICO acted in bad faith before, during, or after sending the proposed release to Mr. Pelaez’s attorney and therefore affirmed the district court’s entry of summary judgment in GEICO’s favor.
Synergy Contracting Group, Inc., a/a/o Anne Dorrell v. Fednat Insurance Company, Nos. 2D21-144, 2D21-147 (2d Cir. December 10, 2021)
In Synergy Contracting Group, Inc. v. Fednat Insurance Company, the Plaintiff appealed an order granting judgment in Fednat’s favor after it found that because Fednat had paid the appraisal award, there was no further breach of contract claim to be litigated and thus, Fednat was entitled to a judgment in its favor. In a companion case, Fednat appealed the denial of its motion for attorneys’ fees and costs pursuant to a proposal for settlement. The Court consolidated the two cases for the opinion.
On September 7, 2017, Anne Dorrell’s (“Ms. Dorrell”) house suffered damages as a result of “sudden and accidental water loss.” Ms. Dorrell hired Synergy to perform restorative repair work and assigned her rights in her Fednat insurance policy to Synergy. After a dispute arose between Fednat and Synergy as to the amount of compensable repairs, Synergy brought a breach of contract lawsuit against Fednat in the Pinellas County Court. Fednat then filed an answer generally denying it owed any further benefits and separately, Fednat filed a motion to compel an appraisal process under the policy to determine the amount of covered damage the property had sustained. The litigation was stayed and the parties went to appraisal. The appraisal process determined that Synergy was entitled to an additional $3,795.62 and Fednat tendered payment on May 31, 2019 to Synergy.
Following the payment of the award, Fednat argued that because it had fully compensated Synergy under the policy, the action should be dismissed with prejudice to which the county court did not agree with. On June 19, 2019, Fednat served a proposal for settlement in the amount of $100 on Synergy, which Synergy did not accept. Fednat then filed a motion for summary judgment in which it essentially requested a declaration from the court that it had fully paid the appraisal award. Synergy agreed to the entry of a partial summary judgment order which stated: Ordered and Adjudged that: 1. Defendant’s Motion is Granted insofar as the Court finds that Defendant paid the appraisal award in full and within the time limit required by the policy; 2. Plaintiff is entitled to no further benefits under the policy; 3. The Court makes no determination as to breach of contract at this time; and 4. The Court reserves jurisdiction on the parties’ entitlement to attorney fees and costs and the amount to be awarded, if any.
Then on January 28, 2020, Fednat filed a motion for entry of final summary judgment in which it argued that a final judgment, in its favor, was an administrative, ministerial matter necessary to close out the case. Fednat also pointed out that any award of fees and costs was ancillary to the breach of contract action, which according to Fednat, was now moot. On May 14, 2020, the court entered a final judgment for Fednat stating that Fednat had paid the appraisal award within the policy’s time limit, that Synergy was entitled to no further benefits, and that the court would reserve jurisdiction to determine entitlement to attorneys’ fees and costs.
Fednat then sought to enforce its rejected proposal for settlement, however, the county court rejected Fednat’s argument and stated that “on the facts of this case, the Court does not find that Defendant was the prevailing party.”
In the instant case, both parties appealed. This Court stated that the issue at hand was whether Fednat was entitled to a judgment in its favor after it paid the postlawsuit appraisal award. This Court cited the case of Astorquiza v. Covington Specialty Insurance Co., 8:19-CV-226-T, 2020 WL 6321868 at*1 (M.D. Fla. Oct. 28, 2020) in which the insurer failed to pay the owners’ claimed damages, the insureds filed a lawsuit for declaratory judgment and breach of contract, the subsequent appraisal process resulted in the insurer tendering to the insureds, and the insurer then moved for summary judgment. The Court in Astorquiza v. Covington Specialty Insurance Co. held that a summary judgment for Defendant would not be appropriate and would additionally be inconsistent with the concept underlying the confession of judgment rule—that the insurer by payment of the claim has effectively abandoned the defense of the insured’s lawsuit and conceded that its prior withholding of payment had been incorrect.
This Court agreed with the court in Astorquiza v. Covington Specialty Insurance Co., and pointed out that Fednat’s theory that the payment of a postlawsuit appraisal award renders an insured’s breach of contract claim moot is inconsistent because if this were the case, then the proper disposition of the case would have been a dismissal, not a judgment in Fednat’s favor. The court then explained that an insurer is ordinarily deemed to have breached the contract of its policy when it wrongly denies a claim. In this case, the appraisal process confirmed that Fednat had wrongly denied paying Synergy $3,795.62 of benefits under the policy. This Court stated that quantifying the amount served to expedite resolution of the litigation, but did not wipe away Fednat’s prior denial. This Court then stated that Fednat may have a defense to liability for Synergy’s fees, but a judgment in its favor is not one of them. Therefore, the court reversed the final judgment and remanded the case for further proceedings. The Court also held that it did not need to address Fednat’s appeal for denial of attorney’s fees because the underlying judgment was reversed.
Atkinson, P.A. is committed to providing you with sound guidance, representation, and defense in response to these complex legal issues and we will continue to monitor noteworthy cases. Should you have any questions with respect to this update, please feel free to contact our partners directly.
Very truly yours,
JOHN BOND ATKINSON
TIFFANY A. BUSTAMANTE
LINDSEY HESS
JBA/TB/LH