TIPSFORAUTOPRACTITIONERS
NOBODY’S PERFECT NOT EVEN THE 11TH CIRCUIT
I
BY DALE SWOPE
t is a testament to our judicial system and our judges how often the courts get to the right answer. They are, at any time, working on many different types of cases in disparate fields, maybe addressing issues that even the experts in those fields disagree about, and it is amazing how well the system works. Even more amazing are our Federal Circuit Courts, who are working with federal criminal and all types of federal civil cases, and then on top of that the separate law of several states on Erie cases that come before them. It should therefore come as no surprise that there are times when it all breaks down, and an opinion gets written that people who work in the affected field just stare at, slack jawed, aghast that such a large miss has occurred. See, e.g., Kropilak v. 21st Cent. Ins. Co., 806 F.3d 1062 (11th Cir. 2015). First, a little background. Everybody knows that in Florida, liability insurers owe a duty of good faith to their insureds, and are obligated to settle claims against their insureds if given the opportunity to do so. Moreover, insurers are not just required to enter the simple, “give me a release and I will give you some money” type transactions. If the best settlement possible is one that leaves the insureds exposed to liability, the carrier still has to accept it, using its expertise and experience to the insureds benefit in order to “blot out the most liability possible” for the insured. Liberty Mut. Ins. Co. v. Davis, 412 F.2d 475 (5th Cir. 1969). This notion is repeated in the Powell presumption that when an insurer fails to initiate settlement discussions, it is presumed that the case could have settled within the amount of the policy limits, or so close that the insured could have contributed the surplus necessary to close the gap. Powell v. Prudential Prop. & Cas. Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991). It also is a fundamental, foundational concept of Florida law that if the insurer can protect its insured with a protective agreement, whereby the
insured has a judgment entered against him for a reasonable amount, but then obtains a release in exchange for an assignment, it is a nonnegotiable absolute obligation for the insurer to tell the insured about the offer, in order to allow the insured to accept. This requirement has been around since at least 1974 when Campbell v GEICO was decided. 306 So. 2d 525 (Fla. 1974). In that case, an excess judgment had already been entered against the insured and was on appeal. The claimant offered to give the insured a release if he would drop his appeal and assign his claims against GEICO. Even 40 years ago, GEICO was GEICO, so they never even told the insured about this offer, and in fact told him that the lowest offer they received would have required thousands of dollars from the insured to accept. The Supreme Court not only held this to be bad faith, but it was so outraged that GEICO had squelched this fabulous opportunity for its insured that it permitted the plaintiff to pursue punitive damages against GEICO. That might actually be the only time punitives have specifically been approved in a third-party bad faith case in Florida, which gives you a sense of how strongly this duty is embedded into Florida law. In Kropilak the injured plaintiffs had it in their head that the insurer had acted in bad faith, which of course the insurer denied. Just like Campbell. In Kropilak, everybody involved seemed to acknowledge that the plaintiff’s case was worth more than the policy limits that had been tendered, and in fact it was worth more than $150,000. The insurers own attorneys and adjusters even confirmed this.
18 | January/February 2016 | www.FloridaJusticeAssociation.org