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MacOla v. Government Employees Ins. Co.

Supreme Court of Florida
2006 Fla. LEXIS 2532, 31 Fla. L. Weekly Supp. 690, 953 So. 2d 451 (2006)
ELI5:

Sections

Rule of Law:

An insurer's tender of policy limits in response to a statutory Civil Remedy Notice does not preclude a common law third-party bad faith claim if the underlying tort action remains pending and the insured is still exposed to an excess judgment.


Facts:

  • Frances Quigley caused an automobile accident that resulted in serious personal injuries to Michelle Macola.
  • Quigley was insured by GEICO with a bodily injury liability limit of $300,000.
  • Macola's attorney offered to settle the claim against Quigley for the $300,000 policy limit plus a small amount for property damage.
  • GEICO did not agree to the settlement offer, resulting in the expiration of the offer.
  • While a personal injury lawsuit was pending against him, Quigley filed a Civil Remedy Notice alleging GEICO violated its statutory duty to settle.
  • Within 60 days of that notice, GEICO sent a check for the $300,000 policy limits to Quigley (the insured), claiming this cured the statutory violation.
  • Quigley’s counsel did not accept the check as a full cure, and the money was not used to settle Macola's claim.
  • A trial ensued, resulting in a final judgment against Quigley for over $1.5 million, far exceeding the insurance policy limits.

Procedural Posture:

  • Macola sued Quigley for personal injuries in Florida state trial court.
  • Following the jury trial, the state court entered a final judgment against Quigley in excess of $1.5 million.
  • Macola sued GEICO for common law third-party bad faith in state court.
  • GEICO removed Macola's case to federal district court.
  • Quigley filed a separate common law third-party bad faith action against GEICO in federal district court.
  • The federal district court consolidated the two bad faith cases.
  • The federal district court granted summary judgment in favor of GEICO, ruling the tender of limits cured the bad faith claim.
  • Macola and Quigley appealed the summary judgment to the United States Court of Appeals for the Eleventh Circuit.
  • The Eleventh Circuit Court of Appeals certified questions of Florida law to the Florida Supreme Court.

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Issue:

Does an insurer's tender of policy limits in response to a Civil Remedy Notice filed pursuant to section 624.155, Florida Statutes, preclude a common law third-party bad faith cause of action when the tender occurs after a lawsuit is initiated but before an excess judgment is entered?


Opinions:

Majority - Justice Pariente

No, the tender of policy limits under these circumstances does not bar a common law bad faith claim. The Court reasoned that Florida Statute section 624.155 expressly states that the civil remedy provided therein does not preempt other common law remedies. Unlike first-party bad faith claims, which are created solely by statute, third-party bad faith claims existed at common law prior to the statute's enactment. Consequently, the statute acts as an additional remedy rather than an exclusive one for third parties. The Court noted that while the statute prevents a plaintiff from obtaining a double recovery (judgments under both theories), it does not prevent them from pursuing the common law theory. Furthermore, simply paying the policy limits to the insured after the opportunity to settle with the injured party has passed does not 'cure' the bad faith, because it leaves the insured exposed to the excess judgment and does not secure a release of liability.



Analysis:

This decision clarifies the coexistence of statutory and common law bad faith remedies in Florida. It establishes a critical distinction between first-party claims (where the statute is the exclusive remedy and strict compliance with the 'cure' provision bars suit) and third-party claims (where the statute is cumulative). The ruling prevents insurers from using the statutory cure provision as a shield to avoid liability for excess judgments after they have already missed a valid opportunity to settle a claim. It ensures that the statutory 'safe harbor' cannot be used to disenfranchise an insured who has already been exposed to financial ruin due to the insurer's prior inaction.

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