Opinion ID: 1694656
Heading Depth: 2
Heading Rank: 1

Heading: Whether Infinity's Agreement to Pay the Policy Limits Precludes a Finding of Bad Faith as a Matter of Law

Text: 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.