Title: Campbell v. Government Employees Insurance Co.
Citation: 306 So. 2d 525
Docket Number: 45167
State: Florida
Issuer: Florida Supreme Court
Date: December 18, 1974

306 So. 2d 525 (1974)
Harvey CAMPBELL, Petitioner,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY, a Corporation, Respondent.
No. 45167.

Supreme Court of Florida.
December 18, 1974.
Rehearing Denied February 13, 1975.
*526 Lefferts L. Mabie, Jr., Levin, Warfield, Middlebrooks, Graff, Mabie, Rosenbloum &amp; Magie, Pensacola, and Robert Orseck, of Podhurst, Orseck &amp; Parks, Miami, for petitioner.
Benjamin W. Redding, Barron, Redding, Boggs &amp; Hughes, Panama City, and Leon Handley, Gurney, Gurney &amp; Handley, Orlando, for respondent.
ERVIN, Justice.
We review through writ of conflict certiorari the decision of the District Court of Appeal, First District, in Government Employees Insurance Co. v. Campbell, 288 So. 2d 513.
The principal question involved in this review is whether from the factual situation appearing in the majority and dissenting opinions of the District Court it was proper for the District Court to reverse as a matter of law the trial court's judgment awarding compensatory and punitive damages to plaintiff, the insured, entered pursuant to a jury's verdict finding that the defendant, a public liability automobile insurer, had failed to exercise good faith in protecting its insured by a timely settlement of a claim of an injured child against insured as tort-feasor within policy limits of insurer's coverage, resulting in insured having to pay several thousand dollars excess above policy limits.
We first set forth portions of the District Court opinions in this cause appearing in 288 So. 2d 513, et seq., including the majority opinions originally and on rehearing, and the dissenting opinion of Judge Boyer, in order to demonstrate conflict.
From the original majority opinion written by Judge Carroll for the District Court, it appears:
On rehearing the majority of the District Court, Judges Rawls and Wigginton, adhered to the opinion written by Judge Carroll. Judge Boyer dissented. The majority said:
Judge Boyer pointed out in his dissenting opinion:
It appeared to us that conflict of decisions existed due to the nature of the several District Court opinions and we issued writ of certiorari. As for the dissenting opinion being a predicate for conflict certiorari, see Commerce National Bank in Lake Worth v. Safeco Ins. Co. (Fla. 1973), 24 So. 2d 205. Having ascertained conflict existed we then examined the transcript of record, which bolstered our view of decisional conflict.
Conflict appeals between the instant District Court decision and Auto Mutual Indemnity Company v. Shaw, 134 Fla. 815, 184 So. 852. In the latter case it was held an insurance company owed an obligation to its insured by virtue of its contract to negotiate with claimant in good faith, and that its decision not to settle must be the result of weighing of probabilities in a fair and honest way; and that its decision should be honest and intelligent and a good faith conclusion based upon a knowledge of the facts and circumstances upon which liability was predicated and upon a knowledge of the nature and extent of the injuries as far as they reasonably could be ascertained.
Conflict was also predicated upon the holding of the Third District Court of Appeal in Old Equity Life Insurance Company v. Levenson (Fla.App. 1965), 177 So. 2d 50. There, it was said:
Another basis for conflict is the announced rule of Florida case law that in determining whether there is good or bad faith in particular circumstances the issue is ordinarily left for a jury to decide. For example, in Sample v. Hundred Lakes Corporation, 107 Fla. 568, 145 So. 193, the circumstances involved whether a promissory note had been purchased in good faith. This Court answered saying:
These cases were cited for conflict by Petitioner Campbell. We took them into consideration along with other pronouncements of this Court that usually jury determinations of factual circumstances of the nature of those herein should not be disturbed by appeal courts. See, for example, Westerman v. Shell City (Fla. 1972), 265 So. 2d 43.
The District Court reversed the entire judgment for the insured, both compensatory and punitive damages, and attorney's fees. This included allowance therein for the excess of $8500 over policy limits which insured was required to pay Washington because of the failure of insurer to timely settle Washington's claim within the policy limits.
The District Court reversed in disregard of the following factual considerations which the jury decided showed bad faith of insurer in refusing to timely settle the Washington claim:
1. Insurer's trial attorney testified as to the Washington case that his feeling toward the case was that he would have only a 20 to 30 percentage chance of winning. He had this feeling even before the trial judge had directed out the defense of contributory negligence pursuant to Alabama law, in which state the accident occurred.
2. Carrier knew before trial that eight-year-old Larry Washington had suffered a pelvic injury manifested by separation of the symphysis pubis and separation of the sacroiliac joint, producing a difference in leg lengths of one and one-half inches which was a permanent deformity. Carrier knew Larry would be required to wear an orthopedic shoe permanently and he would not be able to compete or participate in athletic sports because of possible further damage to the pelvis.
3. Although insurer never offered claimant more than $2500 in settlement, it had set up a reserve of $4250. Three months before trial the injured claimant's attorney wrote insurer's attorney:
He specifically advised insurer's counsel that the verdict in the Washington case would probably exceed $10,000. These offers and advices were ignored by carrier and its claims examiner.
4. Carrier's lawyer wrote the insured:
This advice to insured did not square with the facts, because no counter offer or reduction of the $7500 offer of claimant was ever attempted by insurer.
5. After the Washington trial and denial of motion for new trial therein there was still opportunity for carrier to settle the judgment recovery of $18,500, pending its appeal. Claimant's attorney at that time indicated to carrier he would accept settlement on payment of the $10,000 policy coverage limit plus an assignment from the insured of the latter's right of action against carrier for failing to settle the case. The carrier refused the offer from Washington but inconsistently advised insured by letter:
6. The insured was never advised by carrier after the Washington judgment and before it became final he could still have been protected from excess exposure by the payment by carrier of the amount of the policy limit plus an assignment by insured of his cause of action for the excess. This offer of Washington was not communicated to insured. Carrier's counsel testified his reason for not bringing Washington's offer to insured's attention was that "it was so illogical," disregarding the fact that he, carrier's counsel, had suggested it in the first place.
We are unimpressed with the statement and reasoning of the District Court on rehearing reading:
This suggestion sets up a straw man and knocks him down. It is a hypothetical assumption of nonexistent facts designed to counter the bad faith failure of the insurer to timely settle the Washington claim within the limits of its coverage. Appellate courts are hardly at liberty to postulate converse facts as a predicate for substituting evidentiary findings guised as matters of law for a jury's verdict upon facts actually produced at trial. Postulated professional malpractice hardly can be equated to the actual facts to excuse the carrier as a matter of law. The reasoning employed was based on an irrelevant assumption of nonexistent facts and quite farfetched.
Bad faith in a factual situation of this kind is not a matter of law but is a question of fact for the jury. Compare South Florida Rail Company v. Rhoads (1889), 24 Fla. 40, 5 So. 633; Sample v. Hundred Lakes Corporation, supra; Central National Insurance Company v. Gonzales (Fla.App. 1974), 295 So. 2d 694; Cheek v. Agricultural Insurance Co. of Watertown, N.Y., 432 F.2d 1267 (5th Cir.1970); Liberty Mutual Insurance Company v. Davis, 412 F.2d 475 (5th Cir.1969); Springer v. Citizens Casualty Company, 246 F.2d 123 (5th Cir.1957); Davis v. National Pioneer Insurance Company (Okla. App. 1973), 515 P.2d 580; Buie v. Barnett National Bank (Fla. 1972), 266 So. 2d 657.
In Auto Mutual Indemnity Co. v. Shaw, supra, we aligned Florida with those states whose standards for determining liability in an excess judgment case is bad faith rather than negligence. We ruled therein that such matters as reasonable diligence and ordinary care were material in determining *531 bad faith. Traditionally, reasonable diligence and ordinary care are considerations of fact  not of law.
In this case the trial judge and jury agreed that the total failure of insurer to timely consider the interest of the insured while considering settlement offers and concealing from insured the offer made after trial and misrepresenting the gravity of the claim constituted elements of a reckless disregard of the rights of the insured. This continued recklessness was clearly substantiated by the Washington verdict and judgment for $18,500 against insured. Even after this verdict, carrier withheld from insured the Washington offer to release Campbell from liability by a settlement within policy limits and an assignment to Washington of Campbell's claim for the excess against insurer. It rejected this final offer of Washington's, resulting in Campbell being "stuck" with the $8500 excess. Instead, carrier falsely advised that it must appeal unless he was willing to pay $5500 on the liability.
Punitive damages are recoverable by an aggrieved to serve the predominant function of deterrence and punishment. In nearly all states punitive damages are recognized to be recoverable. They are no longer looked upon as monstrous but are awarded to vindicate wrongs arising from antisocial behavior. The incentive to bring actions for punitive damages is favored because it has been determined to be the most satisfactory way to correct evil-doing in areas not covered by the criminal law. Punitive damages have helped to maintain public tranquillity by permitting the wronged plaintiff to take his revenge in the courtroom and not by self-help.
Compensatory damages do not always fully compensate in grievous situations nor do they have a general salutary effect under prevailing conditions to promote fair treatment of the public. At best, litigation, even when successful is an inconvenience, often an ordeal. Compensatory damages do not sometimes offer reparation for mental invasion. Moreover, it is difficult to translate pain and suffering, disfiguration, loss of enjoyment of life, loss of prospects, into compensatory dollars. Punitive damages tend to bring to punishment types of certain cases of oppressive conduct, i.e., slanders, malice, cruelties; antisocial, unethical and unfair treatment, often criminally unpunishable and which in actual life go unnoticed in the criminal law. "Punitive damages ... are awarded to the injured party as a reward for his public service in bringing the wrongdoer to account," so stated the Mississippi Supreme Court in Neal v. Newburger Co. (1929), 154 Miss. 691, 700, 123 So. 861, 863.
Numerous cases are of record where awards of punitive damages were made: Thalidomide tranquilizing drug cases where hundreds of children were deformed; cases of outrageous highhandedness, e.g., (1) bus driver accusing sick passenger of drunkenness and keeping him off the bus; (2) shattering another's building by blasting "because it was cheaper to pay damages ... than to do the work in a different way" (Funk v. Kerbaugh, 222 Pa. 18, 19, 70 A. 953, 954 (1908); (3) interference with a dead body by disinterring it on the ground deceased was not of proper faith to be there buried; (4) auto sales agency's fraudulent practice of setting back speedometers on used cars, and others.
There has been a recent spate of cases, several out of California, that vividly underscore the point that insurance companies are vulnerable to punitive damage suits by their policyholders when carriers attempt to deal with their insureds unethically. See Fletcher v. Western National Life Insurance Company (1970), 10 Cal. App. 3d 376, 89 Cal. Rptr. 78; Wetherbee v. United Insurance Co. of America (1968), 265 Cal. App. 2d 921, 71 Cal. Rptr. 764, 18 Cal. App. 3d 266, 95 Cal. Rptr. 678.
In Buie v. Barnett First National Bank of Jacksonville, supra, this Court following principles of law announced in Winn &amp; *532 Lovett Grocery Co. v. Archer (1936), 126 Fla. 308, 171 So. 214, and Dr. P. Phillips &amp; Sons v. Kilgore (1943), 152 Fla. 578, 12 So. 2d 465, reversed the First District Court of Appeal. We there quoted from the Kilgore case as follows:
The trial judge in the instant case instructed the jury
It appears to us the trial judge was not in error in concluding the course of conduct of the insurer with the policyholder was such the question of punitive damages should be decided by the jury. And the jury found from the recited facts the policyholder was entitled to punitive damages. We cannot as a matter of law gainsay them. There was involved the elements of concealment and misrepresentation  a continued course of dishonest dealing on the part of insurer toward insured.
The damages awarded insured arose out of the contractual duty of the insurer to defend the insured against the liability arising from Larry Washington's claim. Therefore, attorney's fees were recoverable pursuant to Section 627.428, F.S., as incident to the judgment recoveries of insured against insurer herein.
The decision of the District Court of Appeal is quashed with direction that on remand the judgment of the trial court be reinstated.
It is so ordered.
ADKINS, C.J., McCAIN, J., and SIEGENDORF, Circuit Judge, concur.
OVERTON, J., concurs in part and dissents in part with opinion, with which FERRIS, Circuit Judge, concurs.
OVERTON, Justice (concurring in part, dissenting in part).
I concur with the majority opinion to the extent that the verdict for the plaintiff in the trial court should be reinstated for compensatory damages and attorney's fees. The record reflects sufficient evidence to establish bad faith for lack of diligence and failure to exercise ordinary care. In my opinion, the plaintiff was entitled to be protected and made whole because of the misconduct of his insurer.
I dissent from that part of the majority opinion which allows punitive damages in this cause. The record and the evidence fail to establish a course of conduct that was malicious or intentional or such a severe breach of duty as to justify punitive damages.
I would reinstate the verdict as it pertains to compensatory damages and attorney's fees but set aside that part of the verdict pertaining to punitive damages.
FERRIS, Circuit Judge, concurs.
[*]  At the time of the accident Larry was eight years old and a pedestrian.