Opinion ID: 1694656
Heading Depth: 1
Heading Rank: 3

Heading: whether competent substantial evidence supports the jury's verdict of bad faith

Text: Having concluded that Taylor's offer did present Infinity with a valid opportunity to settle, we next address three additional issues raised in this case: (a) whether Infinity's agreement to pay the policy limits precludes a finding of bad faith as a matter of law; (b) whether the trial court erred in instructing the jury on the insurer's duty to advise of settlement opportunities in this case; and (c) whether, under the totality of the circumstances, competent, substantial evidence supports the jury verdict of bad faith. In analyzing these issues, we adhere to the well-settled principle that an appellate court will not disturb a final judgment if there is competent, substantial evidence to support the verdict on which the judgment rests. Indeed, it is not the function of this Court to substitute its judgment for that of the trier of fact. See Castillo v. E.I. Du Pont De Nemours & Co., 854 So.2d 1264, 1277 (Fla.2003) (It is a basic tenet of appellate review that appellate courts do not reevaluate the evidence and substitute their judgment for that of the jury.); Carter v. Brown & Williamson Tobacco Corp., 778 So.2d 932, 939 (Fla.2000) (quoting Helman v. Seaboard Coast Line R.R. Co., 349 So.2d 1187, 1189 (Fla.1977)) ([I]t is not the function of an appellate court to reevaluate the evidence and substitute its judgment for that of the jury.); Grounds, 311 So.2d at 168 (stating that an appellate court is not authorized to substitute its judgment for that of the trier of fact).
As the basis for concluding that Infinity could not be liable for bad faith, the Second District held that Taylor lacked the authority to make the offer. However, Infinity and Justice Cantero's dissent present an alternative basis for concluding that Infinity cannot be liable for bad faith. [5] Essentially, it is Infinity's position that because it agreed within the time deadlines to pay the policy limits, it had no obligation to consummate the settlement and actually pay the policy limits within the time deadlines. Thus, according to Infinity, it could not be liable for bad faith as a matter of law. We note that contrary to the Second District's holding in this case, Infinity and Justice Cantero assume for purposes of this issue that Taylor did have the authority to make an offer to settle his claims against Infinity's insured. We reject Infinity's argument that, because it agreed within the time deadlines to pay the policy limits, the issue of bad faith should be decided as a matter of law. To the contrary, because this issue concerns disputed issues of material fact, we conclude that it was properly submitted to the jury. Infinity's argument on this issue is two-fold. First, Infinity asserts that Taylor's time deadlines were suspended after the May 11 conversation. Consistent with Infinity's position, Fryer testified at trial that Infinity's May 11 offer to pay the policy limits, which Taylor accepted, did not include the time deadlines for payment. However, Fryer's testimony was contradicted by Taylor at trial. Taylor testified that his understanding of the May 11 conversation was that Infinity was accepting the terms of his demand letter and going to work to obtain the court approvals and pay the policy limits within the time frames set forth therein. We note that neither Fryer nor Korth, the attorney retained by Infinity, memorialized in writing their understanding that the time deadlines for consummation of the settlement were not in effect after May 11. In fact, Infinity's internal memoranda regarding the claim supports Taylor's position that the deadlines remained applicable. The May 16 retainer letter from Fryer to Korth specifically references the May 2 time demand letter from Taylor. A copy of Taylor's letter was enclosed for Korth's review. Fryer's notes of a May 23, 1990, telephone conversation between Fryer and Korth indicate that, as of that date, Korth and Fryer were both working under the impression that court approvals and settlement needed to be completed under the terms of Taylor's May 2 demand letter. [6] In an interoffice memo to his legal assistant, Korth urges that the settlement be completed quickly because the man lost his wife and his daughter was hurt very seriously and they are very intent on getting their money as quickly as possible. The thirty-day report written May 29 by Fryer's supervisor, Bobbi Hall, specifically referenced Taylor's time limits. Finally, even the misaddressed letter to Taylor from Korth indicating that Infinity was agreeing to pay the policy limits failed to set forth Infinity's position that court approvals and payment could not or would not occur within the time deadlines. Therefore, even if Taylor had received the letter, he would not have known that Infinity did not intend to complete the settlement within the time deadlines. In light of this evidence, we conclude that the issue of whether the time deadlines remained in effect after the May 11 conversation was properly submitted to the jury. Second, Infinity argues that it should not be liable for bad faith as a matter of law because it was impossible to obtain the necessary court approvals and conclude the settlement within the time periods proposed by Taylor. In this regard, both Justice Cantero's description of the deadlines as arbitrary and Justice Wells' characterization of the deadlines as artificial reflect Infinity's argument on this point. However, 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. See generally Gutierrez, 386 So.2d at 785. In fact, Infinity owed a fiduciary duty to act in Berges' best interests. See Doe v. Allstate Ins. Co., 653 So.2d 371, 374 (Fla.1995) (stating that the obligation of insurance company toward insured is a fiduciary duty requiring the exercise of good faith). We conclude that the issue as to whether Infinity could have met the deadlines if it had acted with due regard for the interests of its insured was properly submitted to the jury and resolved as a material issue of fact. Cf. Powell v. Prudential Prop. & Cas. Ins. Co., 584 So.2d 12, 14 (Fla. 3d DCA 1991) (Whether Prudential's delay in responding to Goldner's attorney's requests and its failure to inform Powell of the ten-day deadline ... were reasonable under the circumstances ... are ... material issues of fact to be submitted to the jury.). [7] At trial, both parties presented expert testimony as to the feasibility of Taylor's time-limited demand and Infinity's actions in light of that demand. Berges' experts testified that the time period was reasonable and that Infinity could have and should have been able to pay the policy limits within the time period, especially because the case involved clearly outrageous liability and extreme damages. Berges' experts also stated that if Infinity anticipated that court approvals could not have taken place within the time limit, Infinity should have tendered the funds into interest-bearing accounts or requested a time extension from Taylor before the time period expired. Consistent with the testimony of Berges' experts on this issue, we note that none of the internal memoranda regarding this claim generated by Infinity's representatives suggested that there was anything unreasonable about Taylor's time limits demand. To the contrary, the internal notes suggest that Infinity was working to complete the settlement within the time frame. Even assuming at some point Infinity realized it could not pay the money within the time periods, Infinity never conveyed this problem to Taylor. Infinity made no request that Taylor's deadlines be extended. Even after Korth informed Fryer on May 23 that there might be a problem with getting the court approvals in the remaining time period, Fryer did not notify Taylor of the difficulties or ask for an extension. In fact, even though the time limits required completion of the settlement by May 27 for the wrongful death claim and June 1 for the minor's claim, Taylor did not revoke the offer through his attorney until June 11. Assuming Taylor's conduct is a factor to consider in deciding whether Infinity acted in bad faith toward its insured, the record is devoid of any evidence that Taylor was uncooperative or in any way hindered Infinity's attempts to obtain the court approvals. When Taylor delivered his May 2 demand letter, he had already taken steps to be appointed personal representative of his wife's estate. [8] Taylor also indicated that he was aware court approvals would be necessary and stated that he would work with Infinity's attorneys to obtain the approvals. Taylor reiterated that understanding during the May 11 telephone conversation. However, after the May 11 conversation, in which Infinity agreed that its attorneys would undertake the process of obtaining the necessary approvals, no one from Infinity ever contacted Taylor within the deadline to move the court process forward. [9] Justice Wells, in his dissenting opinion, asserts that Taylor's conduct in this case evinces the use of sophisticated legal strategies employed to create bad faith claims against insurers, and that this Court should not sanction such conduct. Dissenting op. at 686 (Wells, J., dissenting). However, the jury could have found that the evidence established that Taylor's imposition of time deadlines constituted a genuine attempt to resolve the claims in an expeditious manner and that, for him, time was of the essence. Taylor advised Infinity that the deadlines were imposed because he had missed a great deal of work due to the accident, and he was getting doctor bills almost every day related to his daughter's injuries. Importantly, Infinity understood this to be the reason for Taylor's time deadlines. As Korth stated in an interoffice memo to his legal assistant, settlement needed to be completed quickly because the man lost his wife and his daughter was hurt very seriously and they are very intent on getting their money as quickly as possible. Finally, we note that Infinity's position that the lack of court approvals prevented it from consummating the settlement according to the terms of Taylor's May 2 demand is undermined by the fact that the demand presented Infinity with the option of tendering the funds into interest-bearing accounts pending court approval. Indeed, Taylor advised that if it was not possible to pay him directly within his proposed deadlines, the policy limits could be tendered into interest-bearing accounts. However, despite Taylor's suggestion to set up a special account, Fryer testified at trial that he never considered or investigated the possibility of setting up a separate account until the proper court approvals could be obtained. As the jury was instructed in this case, the issue is whether, under all of the circumstances, the insurer could and should have settled the claim within the policy limits had it acted fairly and honestly toward its insured and with due regard for his interests. In light of the foregoing evidence and accepting the facts in the light most favorable to Berges, we conclude that the question of whether Infinity acted in bad faith in failing to complete the settlement within the time deadlines, thereby insulating its insured from an excess judgment, was properly submitted to the jury.
The Second District determined, as an alternative basis for reversing the judgment, that Infinity did not owe a duty to advise Berges of Taylor's offer because the offer contemplated settling within policy limits. See Berges, 806 So.2d at 510. We thus address Berges' argument that the Second District erred in holding that Infinity did not have a duty to inform and advise Berges of Taylor's offer for settlement. Neither the Second District nor Infinity has cited a Florida case that supports the broad proposition that an insurer has no duty to inform its insured of a settlement offer that is within the policy limits. [10] The Second District's holding misapplies this Court's precedent and is contrary to Gutierrez, in which this Court held that an insurer's duty of good faith specifically obligates it  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.  386 So.2d at 785 (emphasis supplied). Where the insured reasonably relies on the insurer to conduct settlement negotiations, and the insurer fails to disclose settlement overtures to the insured, the jury may find bad faith. Powell, 584 So.2d at 14-15. The duty to inform the insured of settlement opportunities is one of the duties subsumed within the duty of good faith owed by an insurer to an insured. 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. See id. at 14 (concluding that the lack of a formal offer to settle does not preclude a finding of bad faith, but is merely one factor to be considered by the jury); Gen. Accident Fire & Life Assurance Corp. v. Am. Cas. Co., 390 So.2d 761, 765 (Fla. 3d DCA 1980) (same). Therefore, the Second District erred in ruling as a matter of law that Infinity did not breach its good faith duty to inform and advise Berges of settlement opportunities.
Finally, we address whether competent, substantial evidence supports the jury's verdict that Infinity acted in bad faith. 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. See State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So.2d 55, 63 (Fla.1995). Each case is determined on its own facts and ordinarily [t]he question of failure to act in good faith with due regard for the interests of the insured is for the jury. Gutierrez, 386 So.2d at 785; see also Campbell, 306 So.2d at 530-31 ([R]easonable diligence and ordinary care [are] material in determining bad faith. Traditionally, reasonable diligence and ordinary care are considerations of fact  not of law.). Although the issue of bad faith is ordinarily a question for the jury, this Court and the district courts have, in certain circumstances, concluded as a matter of law that an insurance company could not be liable for bad faith. For example, as noted by Justice Cantero in his dissent, in State Farm Fire & Casualty Co. v. Zebrowski, 706 So.2d 275, 277 (Fla.1997), this Court concluded that the trial court's grant of summary judgment in favor of the insurer was proper because, under section 624.155, Florida Statutes (1995), the insurance carrier did not owe a duty to the third-party claimant in the absence of an excess judgment as a matter of law. However, Zebrowski is distinguishable because this case does not involve either the interpretation of section 624.155 or the absence of an excess judgment against the insured. It is undisputed that Infinity owed a duty to its insured, Berges, to act in good faith. Moreover, where material issues of fact which would support a jury finding of bad faith remain in dispute, summary judgment is improper. See, e.g., Robinson v. State Farm Fire & Casualty Co., 583 So.2d 1063, 1069 (Fla. 5th DCA 1991) (reversing grant of summary judgment on bad faith claim where jury could find that a reasonably prudent person faced with paying the entire judgment would have settled under disputed material facts). But see, e.g., Shuster v. S. Broward Hosp. Dist. Physicians' Prof'l Liab. Ins. Trust, 591 So.2d 174, 178 (Fla.1992) (concluding that insurer could not be liable for bad faith as a matter of law where the policy provided that the insurer could settle any claim as it deems expedient and the insurer settled within policy limits). As noted above, this case was properly submitted to the jury to resolve disputed issues of material fact. Therefore, our review is limited to whether the verdict is supported by legally sufficient evidence. See Gutierrez, 386 So.2d at 785 (concluding that although the question of bad faith is generally for the jury, the verdict must be supported by legally sufficient evidence). Infinity owed a duty to Berges to investigate the facts, give fair consideration to a settlement offer that [was] not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Id. In this case, Infinity's independent investigation of the facts completed within a month after the accident revealed that this was a case of clear, if not aggravated, liability. At this time and three days before Taylor delivered his demand for the policy limits, Infinity's investigator confirmed in writing to Infinity that the driver of its insured vehicle had, while intoxicated, crossed the center line and collided head-on with Taylor's wife's car. Not only was the driver of Infinity's insured vehicle determined to be one hundred percent at fault for the accident but as of that time, Infinity knew that Mrs. Taylor, a mother of two minor children, died as a result. Infinity also knew that one of Taylor's minor daughters sustained severe injuries, resulting in over $30,000 in medical bills to date. Thus, as of April 30, one month after the accident and several days before a demand was made, Infinity knew that this was a case of clear liability and substantial damages, and that a jury verdict could far exceed the insured's minimal policy limits of $20,000. The actions of Infinity in the period following the receipt of the claim were properly considered by the jury in determining whether Infinity was acting with due regard for its insured's interests. The competent, substantial evidence to support the jury's finding consists of what the investigation revealed and Infinity's conduct after being presented with a written offer to settle for the policy limits. As discussed more extensively above, the evidence construed in the light most favorable to Berges reveals that instead of doing everything reasonably possible to complete the settlement following the May 11 conversation, Fryer never contacted Taylor again or followed up with Korth to stress the urgency of the time limits. Fryer did not memorialize his understanding of the conversation with Taylor in a letter to him. When Korth communicated to Fryer that completing the settlement within the time demands was problematic, Fryer did not contact Taylor to request an extension, inform him that there was a problem with court approval, or otherwise investigate the possibility of placing the funds into interest-bearing accounts. Instead, the time limit in the May 2 written offer simply expired without any communication from Infinity to Taylor. Lastly, although Infinity knew on April 30 that this was a case of clear liability with substantial damages, Infinity did not advise its insured, Berges, of the probable outcome of litigation that might be instituted, of the possibility of an excess judgment, or of the settlement negotiations between Taylor and Infinity until after Taylor had filed suit. After the May 11 conversation between Taylor and Fryer, Infinity failed to contact Berges until June 20, more than a month later and well after the settlement deadlines had expired. When Infinity finally did contact Berges after Taylor had withdrawn his offer and filed suit, Infinity's description of the previous negotiations with Taylor was not accurate. In a letter that for the first time informed Berges about the possibility of an excess judgment and his right to retain independent counsel, Infinity told Berges in a postscript that we have offered to pay your policy limits of $20,000 for the above claim, but Mr. Taylor refused to settle for that amount. The postscript did not mention the settlement deadlines and other terms of Taylor's May 2 settlement offer. If Infinity had advised Berges at the time the demand letter was received, Berges might have been able to obtain his own attorney who, recognizing that time was of the essence and that this was an offer that Berges could not afford to let expire, could have expedited any necessary court proceedings. The totality of the circumstances regarding Infinity's failure to act in the best interests of its insured are similar to the circumstances in Hartford Accident & Indemnity Co. v. Mathis, 511 So.2d 601 (Fla. 4th DCA), review denied, 518 So.2d 1275 (Fla.1987), in which the Fourth District stated: [I]t was clear to the carrier, from its own intra-departmental report, from the day after the accident (a) this was a horrendous injury including brain damage to a minor, (b) it was either an absolute or nearly absolute liability case, and (c) the policy limits were $25,000. Six weeks post-accident the victim's attorney orally requested policy limits ... for a complete release of its insured. This information was not conveyed to the insured. No response was given for almost a month.... The victim's attorney then sent a written formal demand for the limits and extended only ten days within which the carrier could tender $25,000. Although this court has indicted its unhappiness with ten day demand letters, under these facts we find no error justifying reversal since there was sufficient evidence from which the jury could have found a breach of the carrier's duty of good faith.... In addition, there was evidence of the carrier's failure to communicate appropriately with its insured as well as a lack of candor and complete integrity in that which it did communicate, all of which could also justify the jury's finding of bad faith. Id. at 602 (citation omitted). We conclude that the Fourth District's analysis in Hartford is equally applicable to this case. The facts of this case recounted above support the conclusion that, in the words of the trial judge, Infinity entirely dropped the ball in its handling of this case. Under the totality of the circumstances standard employed in Florida, we conclude that based on these facts, there was competent, substantial evidence to support the jury verdict that Infinity breached its duty of good faith to Berges.