Opinion ID: 1694656
Heading Depth: 1
Heading Rank: 7

Heading: of settlements and settlement authority

Text: Of course, oral settlement agreements, like other oral contracts, are valid and enforceable. See, e.g., United States v. Pepper's Steel & Alloys, Inc., 289 F.3d 741, 742 (11th Cir.2002) (referring to a prior case on appeal where the court found that the insurer's oral offer to settle for $2 million, accepted two years later, formed a valid settlement agreement); Bankers Sec. Ins. Co. v. Brady, 765 So.2d 870, 872-73 (Fla. 5th DCA 2000) (holding that an oral settlement agreement between the parties' representatives with settlement authority was binding); Long Term Mgmt., Inc. v. University Nursing Care Ctr., Inc., 704 So.2d 669, 673 (Fla. 1st DCA 1997) (holding that a verbal settlement agreement is enforceable); Boyko v. Ilardi, 613 So.2d 103, 104 (Fla. 3d DCA 1993) (holding that execution of settlement documents was not a condition precedent to the oral settlement agreement, but rather a procedural formality which both parties to the settlement agreement were obliged to perform); see also Granicz v. Morse, 603 So.2d 103, 103 (Fla. 2d DCA 1992) (enforcing a verbal loan repayment agreement made by shareholders). Therefore, as soon as Taylor became the estate's personal representative and became his child's legal guardian and the court approved the settlement, Taylor could enforce Infinity's agreement to pay the policy limits. [14] This, of course, is where the problem lies. Two obstacles remained to Taylor's ability to officially and legally settle the claims so that he could execute releases and Infinity could forward the agreed-upon payment of the policy limits. The first obstacle concerned administration of his wife's estate. Only the estate's personal representative has the authority to settle its claims. See Pearson v. DeLamerens, 656 So.2d 217, 220 (Fla. 3d DCA 1995) (The personal representative is the individual having the power to enter into settlements of wrongful death actions); § 731.201, Fla. Stat. (1989) (defining letters of administration as the authority granted by the court to the personal representative to act on behalf of the estate of the decedent); § 768.20, Fla. Stat. (1989) (providing that a wrongful death action shall be brought by the decedent's personal representative, who shall recover for the benefit of the decedent's survivors and estate). On May 11, when Infinity agreed to pay the policy limits, Taylor had not yet become the estate's personal representative, which is why Infinity offered to assist in that endeavor. The second obstacle was that his injured daughter was a minor. Therefore, under Florida law, because his daughter's claim exceeded $5000, Taylor could not officially settle it until a court appointed him the guardian and after a court determined that the settlement was in the minor's best interest. See § 744.387(3), Fla. Stat. (1989) (requiring court approval for a guardian to collect a settlement or execute a release); Shea v. Global Travel Mktg., Inc., 870 So.2d 20, 24 (Fla. 4th DCA 2003) (recognizing that in Florida statutory law prohibits a minor child's natural guardian from binding her to a settlement in excess of [the statutory amount] without the court's approval), review granted, 873 So.2d 1223 (Fla.2004); Sullivan v. Dep't of Transp., 595 So.2d 219, 219 (Fla. 2d DCA 1992) (holding that no settlement of a minor's claim exceeding $5000 is effective without court approval); Orkin Exterminating Co. v. Lazarus, 512 So.2d 1120, 1121 (Fla. 3d DCA 1987) (noting that where a judgment to a minor exceeds $5000, only a court-appointed guardian may execute a satisfaction of judgment). Taylor had not yet become his daughter's legal guardian for purposes of the settlement, and obviously had not obtained court approval. These legal prerequisites never have been disputed. Taylor recognized them in his first demand letter; both Infinity and Taylor retained counsel to accomplish them; and at trial, Berges's expert admitted that until the court approved the settlement of the minor's claim and until Taylor posted bond and became the estate's personal representative, any release he signed was not legally effective. The trial court in this case instructed the jury that [o]nly the Personal Representative of a deceased person is entitled to recover damages for the benefit of [the] decedent's survivors and estate and that no agreement as to settlement of claims exceeding five thousand dollars made on behalf of an injured minor or minor survivor in a wrong[ful] death action is binding or enforceable against the minors without court approval. The parties agreed this was the applicable law. Thus, Taylor could legitimately offer to settle and Infinity could accept in principle. After all, Taylor was the decedent's husband and the natural guardian of the child. I agree that the district court erred in concluding otherwise. See Berges, 806 So.2d at 508-09. The parties could not, however, consistent both with Florida law and with Infinity's obligations to the insured, officially consummate the settlement until the court papers were complete. See Nichols v. Hartford Ins. Co. of Midwest, 834 So.2d 217, 220 (Fla. 1st DCA 2002) (concluding that an insurer's tendering of a check did not complete the settlement because the motorists' attorney was not authorized to cash the check until the terms of release were agreed to; therefore, no settlement agreement existed), review denied, 845 So.2d 890 (2003); Erhardt, 729 So.2d at 529-30 (holding that execution of releases is an implicit condition of settlement); Auerbach v. McKinney, 549 So.2d 1022, 1029, 1031 (Fla. 3d DCA 1989) (holding that payments made in settlement of a minor's claim where no guardian had been appointed and no court approval was given were unauthorized and violated state law). The district court was correct, therefore, insofar as it concluded that Taylor lacked the capacity to conclude the settlement within the relevant time frame. See 806 So.2d at 509. Despite the fact that Taylor and Infinity had orally agreed to settle for the policy limits as soon as the legal requirements were accomplished, on June 11, Taylor, through counsel, unilaterally revoked the offer solely because Infinity did not deliver payment within his arbitrary deadlines (because of the mistyped zip code, Taylor had not received Korth's May 24 letter by that time). Taylor withdrew the offer even though the two conditions both parties recognized were necessary to payment of the settlement proceeds had not been fulfilled. First, Taylor was not yet the authorized personal representative of the estate. Infinity had inquired whether Taylor's attorney was continuing to handle the personal representative matter for Taylor, but the attorney's office would not say. Although Taylor was conditionally appointed personal representative on May 14, he did not inform Infinity of this fact (nor did his attorney, who apparently was continuing to handle the estate). Moreover, he had not yet posted the bond the court had required for issuance of the letters of administration. (He did not do so until June 20  the same date he received Korth's misdirected letter  after which he filed suit against Infinity.) Neither had the guardianship and court approval of the minor's settlement yet been obtained. In fact, the day after revoking the offer, Taylor's attorney instructed Korth to discontinue work on the guardianship proceedings and thus eliminated any possibility of concluding settlement of the minor's claim. Thus, Taylor did not have authority either on behalf of the estate or on behalf of his minor daughter at any time before he revoked his offer, and he did not obtain the requisite letters of administration for the estate until about the time he filed suit. [15] In fact, in the tort litigation against the insured, Taylor successfully contended that as a matter of law ... there was no settlement between Taylor and Infinity because Taylor lacked the necessary authority to sign the required releases. 806 So.2d at 507. The trial court granted Taylor summary judgment on Infinity's affirmative defense of settlement. Id. Given that Taylor never obtained the authority to legally execute the settlement within his arbitrary deadlines of 25 and 30 days after his initial demand letter, Infinity could not have been acting in bad faith by not forwarding payment at that time. Berges contends that Infinity either had to tender the money to Taylor by Taylor's arbitrary deadlines or segregate the funds in an interest-bearing account. Even had Infinity placed the money in such accounts, however, Taylor would have been no closer to obtaining it and concluding the settlement than he already was, as he could not recover the funds until his appointments as guardian and personal representative were complete. A bad faith claim concerns the insurer's failure to effect a settlement, and Infinity's failure to meet any of Taylor's terms that did not lead to or advance the parties to settlement are irrelevant. The pivotal legal fact remains that had Infinity actually delivered the policy proceeds to Taylor before he was authorized to execute the necessary releases, Infinity could have exposed Berges, as the insured, to additional claims. See Sullivan v. Dep't of Transp., 595 So.2d 219 (Fla. 2d DCA 1992) (holding that a previous settlement agreement involving a minor did not bar a subsequent wrongful death claim because the court had not approved the settlement); Erhardt, 729 So.2d at 530 (holding that an insurer's requirement that an injured party execute releases was implicit in the settlement and stating, it would have made no sense for [the insurer] to tender its policy limits if there remained a possibility that it could still be liable for further claims by Erhardt arising from the same incident). As the district court stated: Given the insurer's duty to protect its insured in settlement negotiations, the insurer has no obligation to settle unless the settlement offer would protect its insured. 806 So.2d at 508. The duty of good faith was owed to Berges, not to Taylor. Taylor's demand letter recognized that before he could receive payment under a settlement, he needed to obtain legal authority. Because Taylor lacked authority to settle before he withdrew his offer, however, Infinity did not have a reasonable opportunity to conclude the settlement. The majority places the insurer in an untenable position: it finds bad faith because the insurer did not forward payment to Taylor when he was not yet legally authorized to execute a release; and yet, had Infinity done so, it could have been exposed to a bad faith claim.