Court Opinion

ID: 3208126
Source: CourtListenerOpinion
Date Created: 2016-05-31 20:01:12.621929+00
Date Added: 2024-06-11T14:45:48.484974
License: Public Domain

Case: 15-12352   Date Filed: 05/31/2016   Page: 1 of 10

                                                         [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                            No. 15-12352
                        Non-Argument Calendar
                      ________________________

               D.C. Docket No. 6:10-cv-00640-RBD-KRS

ANTONIO JAMES JIMENEZ,

                                              Plaintiff-Appellant,

                               versus

GOVERNMENT EMPLOYEES INSURANCE COMPANY,

                                               Defendant-Appellee.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Florida
                     ________________________

                             (May 31, 2016)

Before WILSON, ROSENBAUM and ANDERSON, Circuit Judges.

PER CURIAM:
                Case: 15-12352        Date Filed: 05/31/2016        Page: 2 of 10

        Plaintiff-Appellant Antonio James Jimenez appeals from the district court’s

denial of his motion for judgment as a matter of law or, alternatively, for a new

trial in this diversity action alleging breach of contract and bad faith against

Defendant-Appellee Government Employee Insurance Company (“GEICO”).

Jimenez sought below to enforce a so-called Coblentz agreement made between

himself and the estate of Pablo Pinedo, a non-party who was killed in an

automobile accident for which Jimenez was at fault, against GEICO. 1 After trial,

the jury found that GEICO had acted in bad faith by failing to settle Pinedo’s

wrongful death claim against Jimenez but returned a negative response to the

question of whether the Coblentz agreement was “reasonable in amount and not

tainted by bad faith, fraud, or collusion or without any effort to minimize liability.”

Accordingly, the district court held that the Coblentz agreement was not

enforceable and entered judgment in favor of GEICO. Jimenez filed a post-trial

motion for judgment as a matter of law arguing that a reasonable jury would not

have a legally sufficient evidentiary basis to find either that the Coblentz

       1
         Coblentz agreements are named for the former Fifth Circuit case. See Coblentz v. Am.
Sur. Co. of N.Y., 416 F.2d 1059 (5th Cir. 1969). In Bonner v. City of Prichard, 661 F.2d 1206,
1209 (11th Cir.1981) (en banc), this court adopted as binding precedent all decisions of the
former Fifth Circuit handed down prior to October 1, 1981. Coblentz agreements permit an
insured party to “enter into a reasonable settlement agreement with the [injured party] and
consent to an adverse judgment for the policy limits that is collectable only against the insurer.”
Garcia v. GEICO Gen. Ins. Co., 807 F.3d 1228, 1230 n.1 (11th Cir. 2015) (quoting Perera v.
U.S. Fid. & Guar. Co., 35 So. 3d 893, 900 (Fla. 2010)). “[I]f a liability insurer is informed of an
action against its insured[] but declines to defend the insured, the insurer may be held to a
consent judgment entered in that action, absent fraud or collusion.” Stephens v. Mid-Continent
Cas. Co., 749 F.3d 1318, 1321 (11th Cir. 2014).
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agreement was unreasonable in amount or the product of bad faith. The district

court found that the verdict was supported by sufficient evidence and denied the

motion. On appeal, Jimenez argues that the district court erred in denying his

motion for judgment as a matter of law. For the reasons discussed below, we

affirm. 2

                                        I. Background

       On March 4, 2006, Antonio James Jimenez caused a car accident killing two

people. One of the deceased was Pablo Pinedo, a Central Florida resident who was

survived by a minor child that lived with his birth mother in Uruguay. At the time

of the accident, Jimenez was insured by GEICO under an automobile insurance

policy that provided bodily injury coverage in the amount of $10,000 per person

and $20,000 per occurrence. Although Jimenez later admitted fault for the car

accident, he originally lied about the circumstances surrounding the accident, fled

the scene of the accident, filed false police reports, and advised GEICO that his car

had been stolen. Jimenez was later charged with eight criminal counts related to

the accident and is currently serving a ten-year prison term for leaving the scene of

an accident involving a death and failing to render aid.

       2
         Because we conclude that there was sufficient evidence for a jury to find both that the
settlement was not reasonable and that the settlement was not made in good faith, and therefore
hold that the district court did not err in denying Jimenez’s motion for judgment as a matter of
law, we do not reach Jimenez’s alternative argument that the district court abused its discretion
in denying his motion for a new trial based upon the formulation of the jury charge.
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      When GEICO learned of Plaintiff’s misrepresentations, it filed an action in

the Ninth Judicial Circuit Court of Florida seeking a declaratory judgment that its

automobile insurance policy did not provide coverage to Jimenez for the accident.

While the declaratory judgment action was pending, GEICO declined an offer

from Pinedo’s estate (“the Estate”) to settle a suit for the policy limit of $10,000.

The Estate then filed a wrongful death suit against Jimenez. GEICO offered to

defend Jimenez in the wrongful death suit under a reservation of rights, which

Jimenez rejected. Jimenez then entered into a Coblentz agreement with the Estate.

      The relevant terms of the Coblentz agreement at issue in this appeal are as

follows. Jimenez stipulated to a judgment against himself and in favor of the Estate

“in the amount of $1,000,000.” Additionally, Jimenez assigned to the Estate “any

and all claims, rights, benefits or chooses [sic] in action that Jimenez may have

against GEICO,” including “the full amount of the judgment in the case, plus any

interest, cost or attorney’s fees that may lawfully accrue thereon.” The parties

further stipulated that the Estate could “if it desires, prosecute the assigned claims

in its own names” or, alternatively, could “require Jimenez to prosecute such

assigned claims in his own name.” In the event that the Estate requested the latter

option, the agreement provided that “Jimenez shall be represented by counsel

approved by the estate and their counsel, Mark A. Nation, Esquire, and Rick L.

Martindale, Esquire.” In return, and as consideration, the Estate agreed that it

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would seek satisfaction of the judgment only from GEICO and would not execute

or attempt to execute against Jimenez. Finally, the parties agreed that in the event

that Jimenez was requested to prosecute the actions against GEICO, Jimenez’s

attorneys’ contingent fees would be 25% of the gross recovery plus costs if

resolved within six months after initiating litigation, 33 1/3% plus costs if resolved

within the first year, and 40% plus costs if resolved after the first year following

the initiation of litigation.

       Thereafter, the Florida state court found that Jimenez did not make

“material” misrepresentations regarding the accident and thus GEICO was not

permitted to deny coverage.

       On April 23, 2010, Jimenez filed a complaint in the instant action in the

District Court for the Middle District of Florida alleging that GEICO had breached

its contract and its duty of good faith by failing to settle the Pinedo claim up to the

bodily injury liability limits under Jimenez’s automobile liability insurance policy.

The case proceeded to trial. On December 8, 2014, the jury was presented with the

following two issues:

              1. Do you find by a preponderance of the evidence that
              GOVERNMENT EMPLOYEES INSURANCE
              COMPANY acted in bad faith by failing to settle the
              Pablo Pinedo wrongful death claim against its insured,
              ANTONIO JAMES JIMENEZ?

              2. Do you find that the consent judgment entered into by
              Antonio James Jimenez was reasonable in amount and
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             not tainted by bad faith, fraud, or collusion or without
             any effort to minimize liability?

      The jury returned a verdict answering YES to the first question and NO to

the second question. Accordingly, the district court held that the Coblentz

agreement was not enforceable and entered final judgment in favor of GEICO. On

January 8, 2015, Jimenez filed the instant motion for judgment as a matter of law.

The district court denied the motion on April 28, 2015. This appeal timely

followed.

                               II. Standard of Review

      We review a district court’s ruling on a motion for judgment as a matter of

law de novo. Hubbard v. BankAtlantic Bancorp, Inc., 688 F.3d 713, 723 (11th Cir.

2012). In deciding a motion for judgment as a matter of law, we review all the

evidence, drawing all reasonable inferences in favor of the nonmoving party. Id. at

724. Judgment as a matter of law is appropriate where “the court finds that a

reasonable jury would not have a legally sufficient evidentiary basis to find for the

party on that issue.” Fed. R. Civ. Pro. 50(a).

                                   III. Discussion

      Jimenez brings this suit against GEICO pursuant to a Coblentz agreement

between himself and the Estate. To recover from GEICO the sums assigned to the

Estate under the Coblentz agreement, Jimenez must prove that (1) GEICO

wrongfully refused to defend Jimenez in the underlying state court action; (2)
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GEICO had a duty under the insurance policy to indemnify Jimenez; and (3) that

the settlement between Jimenez and Pinedo was reasonable and made in good

faith. See Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318, 1322 (11th Cir.

2014); see also Chomat v. N. Ins. Co. of N.Y., 919 So. 2d 535, 537 (Fla. 3d D.C.A.

2006). GEICO has not challenged the jury’s finding that GEICO wrongfully

refused to defend Jimenez in the underlying state court action. Nor has GEICO

challenged the district court’s finding that it had a duty under the insurance policy

to indemnify Jimenez. Rather, the only question on appeal is whether there was

sufficient evidence for a reasonable jury to conclude that the Coblentz agreement

entered into by Jimenez and the Estate was not reasonable in amount and not made

in good faith. We agree with the district court that there was ample evidence to

support a jury finding on both prongs.

      The dual good faith and reasonableness requirements are imposed out of the

“real concern in this type of case” that “the settlement between the claimant and

the insured may not actually represent an arm’s length determination of the worth

of the plaintiff’s claim.” Steil v. Fla. Physicians’ Ins. Reciprocal, 448 So. 2d 589,

592 (Fla. 2d D.C.A. 1984). In a case like this one involving a consent judgment

with a covenant not to execute, the insured “has little or nothing to lose because he

will never be obligated to pay.” Id. “As a consequence, the settlement of liability

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and damages may have very little relation to the strength of the plaintiff’s claim.”

Id.

      Florida law provides that the “test as to whether the [Coblentz] settlement is

reasonable and prudent is what a reasonably prudent person in the position of the

defendant [the insurer] would have settled for on the merits of plaintiff’s claim.”

Wrangen v. Pa. Lumbermans Mut. Ins. Co., 593 F. Supp. 2d 1273, 1279 (S.D. Fla.

2008) (citing Home Ins. Co. v. Advance Mach. Co., 443 So. 2d 165, 168 (Fla. 1st

D.C.A. 1983)). “In determining whether a settlement is reasonable, a Florida court

considers not only such objective factors as the extent of plaintiff’s injuries, but

also ‘certain subjective factors . . . including the degree of certainty of the

tortfeasor’s subjection to liability, the risks of going to trial and the chances that

the jury verdict might exceed the settlement offer.’” Id. (citing Home Ins. Co., 443
So. 2d at 168). “[P]roof of reasonableness is ordinarily established through use of

expert witnesses to testify about such matters as the extent of the defendant’s

liability.” Id. (emphasis omitted) (quoting Chomat 919 So. 2d at 538). “A

determination of reasonableness of the settlement agreement is made in view of the

degree of probability of the insured’s success and the size of the possible

recovery.’” Id. (emphasis omitted) (quoting Indep. Fire Ins. Co. v. Paulekas, 633
So. 2d 1111, 1114 (Fla. 3d D.C.A. 1994)).

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      Florida law provides that bad faith “may be established by evidence of a

false claim, or collusion in which the plaintiffs agree to share the recovery with the

insured, or an absence of any effort to minimize liability.” Bond Safeguard Ins. Co.

v. Nat. Union Fire Ins. Co. of Pittsburgh, Pa., No. 6:13-cv-561-Orl-37DAB, 2014
WL 5325728, at *9 (M.D. Fla. Oct. 20, 2014) (citing Chomat, 919 So. 2d at 538

and Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 534 F. App’x 926, 928

(11th Cir. 2013)). Courts have found bad faith where, for example, the amount of

the settlement was not subject to good faith negotiations. See, e.g., id.; Culbreath

Isles Prop. Owners Ass’n, Inc. v. Travelers Cas. & Sur. Co. of Am., No. 8:12–cv–

2928–T–26EAJ , 2015 WL 9434387, at *7 (M.D. Fla. Oct. 22, 2015).

      In the instant case, the undisputed evidence showed that no wrongful death

lawsuit was ever served on Jimenez. No discovery was conducted before the

parties entered into the Coblentz agreement. No depositions were taken. No

interrogatories were sent. In determining that $1,000,000 was an appropriate

settlement amount, the parties did not reference worklife tables to determine the

worklife expectancy of the deceased. Nor could counsel for the Estate or Jimenez’s

expert witness answer basic questions about Pinedo’s financial situation.

Cunningham, counsel for the Estate, did not know how much Pinedo’s tax return

showed he was making at the time of his death, the amount of his rent, or the

amount he spent on utilities, food, or entertainment. Nor did Cunningham know

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how much money Pinedo was sending to Uruguay to support his child. De Armas,

the attorney called by Jimenez to offer expert witness testimony on the

reasonableness of the settlement, admitted that he also had not examined Pinedo’s

tax returns, his earnings, or his spending patterns. The parties did not hire a life

planner or economist to project out net accumulations or expenses. For these

efforts, the Coblentz agreement provided that counsel would be generously

compensated in contingency fees and costs. The lawyers drafted the settlement and

Jimenez, who was already serving time in prison, gave his agreement in exchange

for the release from liability.

      On this record, we cannot conclude that no reasonable jury could find that

the Coblentz agreement was unreasonable and reached by collusion between

Jimenez’s and the Estate’s counsel or by an absence of effort to minimize liability.

Therefore, the judgment of the district court is affirmed.

             AFFIRMED.

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