Opinion ID: 470090
Heading Depth: 2
Heading Rank: 2

Heading: The Bad Faith Claim

Text: 8 The Supreme Court of Florida has recently held that, absent a prior assignment of the cause of action, once an injured party has released the tortfeasor from all liability, or has satisfied the underlying judgment, no [bad faith action for excess damages] may be maintained. Fidelity and Casualty Co. v. Cope, 462 So.2d 459 (Fla.1985). In Cope, the personal representative of a third party fatally injured in an automobile collision sought to recover from the insurer of a person who had been found liable to the estate that portion of the damages in excess of the insured's policy limits that the representative had not yet recovered from other sources. Prior to filing suit, however, Cope had executed a release and satisfaction of judgment in favor of the insured. The release was not preceded or accompanied by an assignment to the injured party of any bad faith claim then existing in favor of the insured. The Florida Supreme Court held that the release barred a subsequent bad faith claim for excess damages, whether brought by the injured party or the insured. 9 Appellant argues that Cope does not bar his claim because the settlement agreement between appellant and the accident victim did not completely release the insured. Instead, Flowers simply agreed to withhold execution of the excess judgment against appellant's assets and to satisfy the judgment at the conclusion of the bad faith action appellant agreed to prosecute. Appellant thus would have us characterize the settlement agreement not as a release, but as essentially an assignment of the bad faith claim to Flowers, which would not extinguish the claim under Cope. 10 The Supreme Court of Florida clearly held in Cope, however, that if an insured is no longer exposed to any loss in excess of the limits of his liability insurance policy, he no longer has any claim he might previously have had against his insurance company for bad faith failure to settle within policy limits. Thus if an injured third party releases the insured from liability, any bad faith claim then retained by the insured arising out of his liability to the injured third party ceases to exist, because the insured is no longer exposed to any excess damages. In this case the settlement agreement assured appellant that he would not be held liable personally for the excess judgment to which he agreed. We find that arrangement substantively indistinguishable from the release and satisfaction that was at issue in Cope. 11 An insured's bad faith claim against his insurance company is the property of the insured and, under Florida law, apparently may be assigned to the injured party. Thomas v. Lumbermens Mutual Casualty Co., 424 So.2d at 37. In that event the assignee, by virtue of the assignment, becomes entitled to assert whatever claim the insured may have had against the insurance company prior to the assignment. If the assignment is made when the insured is, because of the bad faith of the insurer, exposed to losses in excess of his coverage, the assignee presumably receives something of value. We assume without deciding that the assignment of the insured's claim may serve as consideration for the injured party's release of the insured from any further liability without at the same time extinguishing the bad faith claim. It is clear as a matter of Florida law, however, that if, prior to any valid assignment of the insured's bad faith claim, the injured party releases the insured from any further liability for the excess damages that are alleged to have resulted from the bad faith of the insurer, the bad faith claim is extinguished. That is what the Florida Supreme Court held in Cope. 12 In the real world of litigation, it is sometimes thought more desirable for one particular person or entity rather than another to prosecute or defend a claim. Some might consider a jury in a bad faith case more likely to sympathize with the wronged insured than an assignee of his claim. Perhaps the situation was so perceived in this case, for the agreement executed to release the insured from further exposure was carefully drafted so that the insured would appear as the plaintiff in the case against his insurance carrier. To that end, it was clearly provided that whatever claim the insured may have against the insurance company was not yet assigned, but remained then the property of the insured. 13 As has been said many times before, one cannot both have his cake and eat it, too. It is clear as a matter of Florida law that, in the absence of a prior assignment of the bad faith claim, no such claim remains after the insured is released from liability for any damages he otherwise might have suffered as a result of the insurer's bad faith. That is precisely what happened here. In dismissing appellant's bad faith claim, the district court thus correctly applied Florida law. The judgment appealed from is therefore AFFIRMED in its entirety.