Joshua Moore v. GEICO General Insurance Company ( 2018 )

Case: 17-13655 Date Filed: 12/14/2018 Page: 1 of 14
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-13655
________________________
D.C. No. 8:13-cv-01569-SCB-AEP
JOSHUA MOORE,
Plaintiff-Appellant,
versus
GEICO GENERAL INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(December 14, 2018)
Case: 17-13655 Date Filed: 12/14/2018 Page: 2 of 14
Before MARCUS, NEWSOM, and EBEL, ∗ Circuit Judges.
PER CURIAM:
Plaintiff Joshua Moore sued his automobile insurer, Defendant GEICO
General Insurance Company (“GEICO”), alleging GEICO acted in bad faith in
failing to settle a claim against Moore that eventually resulted in a multi-million-
dollar verdict against Moore. After a jury found that GEICO had acted in bad
faith, the district court granted GEICO a new trial, ruling that the court had erred in
allowing evidence of how Peak Property and Casualty Company (“Peak”), another
insurance company, had handled claims against its separate insured arising from
the same car wreck. GEICO won the second trial. Moore challenges the district
court’s decision to grant a new trial. Having jurisdiction under 28 U.S.C. § 1291,
we AFFIRM because the district court did not abuse its discretion in determining
that it erred during the first trial in admitting evidence of the fact and process
involved whereby Peak settled the claims against its insured. We also conclude
that the district court did not abuse its discretion in determining that this
evidentiary error warranted a second trial.
I. BACKGROUND
This case stems from a tragic car wreck on a Florida highway. Richard
∗The Honorable David M. Ebel, Senior United States Circuit Judge for the United States Court
of Appeals for the Tenth Circuit, sitting by designation.
2
Case: 17-13655 Date Filed: 12/14/2018 Page: 3 of 14
Waters, drunk and on opioids, cut off Moore, a twenty-one-year-old college
student. Moore sped to catch up with Waters and when he did, the two exchanged
hand gestures. Waters caused Moore to change lanes several times and then, with
Moore in the left lane and perhaps on his cell phone, Waters twice swerved his
vehicle into Moore’s truck. The second time, Moore lost control, crossed the
median, and ran head-on into Amy Krupp and her ten-year-old son (“victims”).
After several weeks in the hospital, Krupp died. Her son lived, but suffered lasting
brain injuries. Moore had internal injuries and a shattered right leg. Waters drove
off but was eventually arrested and sent to prison.
Waters was insured by Peak, but he had only $10,000 in property damage
coverage. Moore’s parents insured the vehicle he was driving with GEICO, but
their policy provided only bodily injury coverage of $10,000 per person/$20,000
per occurrence, and $10,000 in property damage coverage.1
The victims’ family hired attorney Lance Holden to represent the victims,
their family members, and Krupp’s estate (collectively “claimants”). Just weeks
after the car wreck, Holden made essentially identical settlement offers to both
Waters’ and Moore’s insurers: If, among other things, the insurer, within twenty-
one days, paid claimants the full amount of available coverage, submitted a
1
Moore’s expert witness testified that Florida only requires that drivers carry property damage
liability coverage and not bodily injury liability coverage.
3
Case: 17-13655 Date Filed: 12/14/2018 Page: 4 of 14
document for claimants to sign releasing only the insureds and provided affidavits
from the insureds or their insurance agents swearing that there was no other
available insurance, claimants would fully release the insureds from any further
liability stemming from the accident. Waters’ insurer, Peak, complied with these
conditions and claimants settled their claims against him.
Moore’s insurer, GEICO, tried to settle, but claimants found GEICO’s
efforts inadequate, primarily because (1) GEICO provided a form document that
released, not only its insureds, but also “all officers, directors, agents or employees
of the foregoing [named insureds], their heirs, executors, administrators, agents, 2
or assigns” (Jt. ex. 22 at 2), and (2) GEICO provided vague and incomprehensible
affidavits from its insureds, the Moores, regarding the possible availability of
additional insurance.3 Rejecting GEICO’s efforts to settle their bodily injury
claims, claimants sued Moore in Florida state court, where a jury returned a verdict
of approximately $45 million in claimants’ favor. The jury further found,
however, that Moore was responsible for only 10% of claimants’ injuries. The
state court, therefore, entered judgment against Moore for over $4 million, an
amount equal to the percentage that he was at fault.
2
Notably this release would have released any claims that claimants might have against GEICO
itself, and Holden was adamant against that because of a prior experience he had had with
another insurer in a different case.
3
GEICO was later able to settle the property damage claim by paying claimants the $10,000
property damage coverage.
4
Case: 17-13655 Date Filed: 12/14/2018 Page: 5 of 14
A month after the Florida court entered judgment against him, Moore
initiated this federal litigation against GEICO, asserting a claim under Florida law
that GEICO had acted in bad faith in failing to settle with claimants for his
coverage limits when GEICO had the opportunity to do so. Under Florida law, an
insurer owes its insured a duty to handle claims against the insured in good faith.
See Harvey v. GEICO Gen. Ins. Co., —So.3d—, 2018 WL 4496566, at *4 (Fla.
Sept. 20, 2018). This includes a fiduciary obligation to use good faith to protect its
insured from a judgment that exceeds the limits of the insured’s policy. See id. at
*1. The Florida Supreme Court has explained that,
[I]n handling the defense of claims against its insured, the insurer has a
duty to use the same degree of care and diligence as a person of ordinary
care and prudence should exercise in the management of his own
business.
....
. . . The insurer must investigate the facts, give fair consideration
to a settlement offer that is not unreasonable under the facts, and settle,
if possible, where a reasonably prudent person, faced with the prospect
of paying the total recovery, would do so.
Id. at *4 (quoting Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785
(Fla. 1980)). “The question of whether an insurer has acted in bad faith . . . is
determined under the totality of the circumstances.” Id. (quoting Berges v. Infinity
Ins. Co., 896 So. 2d 665, 680 (Fla. 2004)). “[T]he critical inquiry . . . is whether the
insurer diligently, and with the same haste and precision as if it were in the
5
Case: 17-13655 Date Filed: 12/14/2018 Page: 6 of 14
insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.” Id.
“The damages claimed by an insured in a bad faith case must be caused by
the insurer’s bad faith.” Id. at *5 (internal quotation marks omitted). In light of
that, GEICO alleged, as affirmative defenses in this case, “that, under the totality
of the circumstances, GEICO did not have a realistic opportunity to settle the
subject claim within the applicable policy limits,” and “that the claimants . . . were
unwilling to settle their claims against [Moore] within the applicable policy
limits.”4 (Doc. 13 at 5 ¶¶ 27–28.) GEICO’s defense, then, was two-fold: GEICO
did not act in bad faith, but, even if it had, Moore’s damages—primarily the multi-
million-dollar state court judgment entered against him—were not caused by that
bad faith because claimants had no intention of ever settling their claims against
Moore for the small amount of insurance coverage he had with GEICO.
Prior to trial, GEICO filed a motion in limine, requesting under Fed. R.
Evid. 403 that the district court prohibit Moore from (1) “presenting evidence,
testimony, or argument that the underlying claim ‘could’ have been settled, that
[claimants were] willing to settle, or that GEICO had an opportunity to settle the
4
Technically, these assertions are not affirmative defenses, as it is the plaintiff’s burden in a bad
faith claim to prove that the substantive claim against him or her could have been settled had the
insurance company acted diligently and reasonably. See Berges, 896 So. 2d at 679.
Nevertheless, because GEICO had pled this as an affirmative defense, the district court
submitted it to the jury as an affirmative defense. In addition, the court instructed jurors that it
was Moore’s obligation to prove that the “insurance company . . . could have and should have”
settled the claims. (Doc. 140 at 9.)
6
Case: 17-13655 Date Filed: 12/14/2018 Page: 7 of 14
underlying claim because [claimants] settled with PEAK”; and (2) “presenting
evidence, testimony, or argument relating to PEAK’s handling of a claim against
Waters.” (Doc. 72 at 7 (emphasis added).) The district court denied GEICO’s
motion, ruling in full:
While the Court agrees that the claimants’ willingness to settle the
property damage claim may be quite different from their willingness to
settle their large bodily injury claims, the Court cannot say that
evidence of the property damage settlement is completely irrelevant or
unfairly prejudicial. GEICO is free to vigorously cross-examine
witnesses about the difference between such claims at trial.
(Doc. 88 at 8.)5
During trial, Moore frequently put on evidence and made argument that
Peak was able to settle claimants’ property damage claim against its client for the
property limits of that policy. Ultimately, the jury found that GEICO had acted in
bad faith. After the verdict, however, the district court granted GEICO’s Fed. R.
Civ. P. 59(a) motion for a new trial, ruling that the court had erred in permitting the
jury to hear evidence of claimants’ settlement with the other insurer, Peak, and the
manner in which Peak successfully processed the claim against its client. In
granting a new trial, the district court ruled: “During the retrial, the Court finds that
no evidence regarding Peak should come in.” (Doc. 165 at 16.) The matter thus
proceeded to a second jury trial, where GEICO prevailed. Moore now appeals,
5
Everyone proceeded to trial with the understanding that evidence regarding Peak’s settlement
and its claims handling was admissible.
7
Case: 17-13655 Date Filed: 12/14/2018 Page: 8 of 14
arguing only that the district court abused its discretion in granting GEICO’s
motion for a new trial which vacated the first jury verdict Moore had obtained for
more than $4 million dollars.
II. DISCUSSION
In granting GEICO a new trial, the district court made two determinations,
1) that the court erred under Fed. R. Evid. 403 in allowing evidence of claimants’
settlement efforts with Peak, and 2) that under Fed R. Civ. P. 59(a) the evidentiary
error warranted a new trial. Moore challenges both of those determinations, each
of which is committed to the trial court’s discretion.
A. The district court did not abuse its discretion in determining that evidence
of claimants’ settlement with Peak should have been excluded under Fed. R.
Evid. 4036
Rule 403 provides that “[t]he court may exclude relevant evidence if its
probative value is substantially outweighed by a danger of one or more of the
following: unfair prejudice, confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence.” A Rule 403
determination is committed to the district court’s discretion. See United States v.
Dixon, 901 F.3d 1322, 1345 (11th Cir. 2018), petition for cert. filed, No. 18-6917
(U.S. Nov. 29, 2018). “Inherent in this abuse of discretion standard is the firm
6
The district court did not expressly invoke Rule 403 when it granted the new trial. But the
district court’s reasons for granting the new trial appear clearly to employ a Rule 403 analysis,
and GEICO premised its pretrial motion in limine on Rule 403.
8
Case: 17-13655 Date Filed: 12/14/2018 Page: 9 of 14
recognition that there are difficult evidentiary rulings that turn on matters uniquely
within the purview of the district court, which has first-hand access to documentary
evidence and is physically proximate to testifying witnesses and the jury.” Tran v.
Toyota Motor Corp., 420 F.3d 1310, 1315 (11th Cir. 2005) (internal quotation
marks, alteration omitted).
Evidence of claimants’ settlement with Peak certainly had some probative
value. The manner in which Peak handled the claims against its insured was
probative, at a minimum, to counter GEICO’s evidence that it could not understand
claimants’ settlement conditions, which were the same for both insurers. Evidence
of Peak’s claims handling also bolstered Moore’s expert’s testimony as to the
insurance industry’s custom and practice in handling claims of catastrophic
injuries. Moreover, the fact that claimants settled with Peak was relevant to
counter GEICO’s argument that claimants never intended to settle their claims for
the minimal insurance coverage available.
On the other hand, the probative value of this evidence was diminished
because the claim Peak settled was not identical nor even substantially similar to
the claim GEICO was handling. Peak’s insured had only property damage
coverage and, between that coverage and the property damage coverage that
GEICO provided its insured Moore, there was no likelihood that claimants’
property damage claims would exceed that available coverage. By contrast,
9
Case: 17-13655 Date Filed: 12/14/2018 Page: 10 of 14
GEICO provided its insured, Moore, not only property damage coverage, but also
bodily injury coverage. The amount of that bodily injury coverage, however, was
minimal. Faced with catastrophic bodily injury claims, there was a clear
possibility of a bodily injury judgment against Moore that would far exceed his
coverage. The claims Peak settled, then, were significantly different from the
claims GEICO was handling.
Moore argues that the insurance claims involving Peak and GEICO were
analogous because Peak had an obligation to try to settle the bodily injury claims
as well as the property damage claims, even though Peak’s insurance policy
provided only property damage coverage. Moore cites to a Florida Court of
Appeals case, Allstate Indemnity Co. v. Oser, 893 So. 2d 675, 677 & n.1 (Fla. 1st
Dist. Ct. App. 2005). This argument directly contradicts Moore’s expert’s
testimony that Peak had no “duty of good faith to settle [claimants’] bodily injury
claims made against” Waters. (Doc. 147-2 at 151.) Further, and more importantly,
Oser is clearly distinguishable because in Oser the property insurance carrier had
arguably voluntarily assumed some responsibility for settling the bodily injury
claims, whereas Peak never undertook any action to defend against or to assume
any responsibility for the bodily injury claims.
Continuing then to the balancing of probative value against unfair prejudice,
required by Rule 403, the district court did not abuse its discretion in determining
10
Case: 17-13655 Date Filed: 12/14/2018 Page: 11 of 14
that the probative value of Peak’s settlement was outweighed by “the danger of . . .
unfair prejudice” to GEICO and of “confusing the issues [and] misleading the
jury.” Fed. R. Evid. 403. In particular, there was a danger that jurors would rely
on evidence of the manner in which Peak handled the claims against its insured to
find that any other manner of claims-handling (such as the approach employed by
GEICO) amounted to bad faith. There was a risk that jurors would find that,
because Peak hired attorneys to draft a release that met claimants’ settlement
demand, the fact that GEICO did not hire attorneys to draft such a release
amounted to bad-faith claims-handling. This danger was present, even though, as
Moore argues, he never expressly argued to the jury that GEICO acted in bad faith
by handling the claim against Moore differently than Peak handled the claim
against its insured.
Moore next argues that evidence of Peak’s settlement of the claims against
its client was not prejudicial because there was independent evidence that GEICO
acted in bad faith, apart from evidence of how Peak was able to settle the claim
against its insured. Although there certainly was independent evidence that
GEICO may have acted in bad faith in the way it processed the claimant’s claim
against its insured (Moore), that evidence was not so overwhelming that we can
conclude that the introduction of how Peak handled the claim against its insured
had no prejudicial effect on the jury’s deliberations. Thus, we cannot conclude that
11
Case: 17-13655 Date Filed: 12/14/2018 Page: 12 of 14
the district court abused its discretion in determining that the probative value of the
Peak evidence was substantially outweighed by a danger that the evidence would
unfairly prejudice GEICO, confuse the issues or mislead jurors. See United Auto.
Ins. Co. v. Estate of Levine, 87 So. 3d 782, 785–86 (Fla. 3d Dist. Ct. App. 2011)
(holding, in addressing claim that insurer acted in bad faith in failing to settle a
claim, that trial court did not abuse its discretion in excluding evidence that insurer
promptly settled two other claims resulting from same accident, after weighing the
probative value of evidence of those other settlements against its unfair prejudicial
impact on jury); see also id. (stating that conducting “a trial within a trial” on the
insurer’s handling of other claims ran risk of distracting jury from its proper focus
on the insurer’s handling of the claim at issue in the bad-faith case).7
B. The district court did not abuse its discretion in determining that its
evidentiary error warranted a new trial under Fed. R. Civ. P. 59(a)
Having upheld the district court’s ruling that it committed error under
Federal Rule of Evidence 403, the question remains whether the district court erred
in concluding that that error warranted a new trial under Rule 59.
7
In a diversity action, federal law governs procedural issues, and “rules of procedure encompass
rules of evidence, and therefore, the Federal Rules of Evidence, not state evidentiary rules, apply
to evidentiary disputes in a federal diversity action.” ML Healthcare Servs., LLC v. Publix
Super Markets, Inc., 881 F.3d 1293, 1299 (11th Cir. 2018) (internal quotation marks, alterations
omitted). So, although Levine conducted the same weighing that federal Rule 403 requires,
Levine is not directly controlling except to the extent that Florida substantive law informs a
court’s determination of the probative value of the evidence to prove a substantive Florida bad-
faith claim.
12
Case: 17-13655 Date Filed: 12/14/2018 Page: 13 of 14
We “review the grant of a new trial pursuant to Rule 59 for abuse of
discretion.” Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1242 (11th Cir.
2008). Because here we are reviewing the district court’s decision to grant a new
trial in order to correct its own evidentiary error, rather than because the district
court found that the jury’s verdict was against the weight of the evidence, we
afford the district court “wide discretion” in ordering a new trial. Williams v. City
of Valdosta, 689 F.2d 964, 973–75 & 974 n.8 (11th Cir. 1982); see also Aronowitz,
513 F.3d at 1242.
“[N]o error in admitting . . . evidence . . . is ground for granting a new trial”
unless the error “affect[ed] any party’s substantial rights.” Fed. R. Civ. P. 61; see
also United States v. Jeri, 869 F.3d 1247, 1259 (11th Cir.), cert. denied, 138 S. Ct.
529 (2017). The district court acknowledged that rule and further recognized
factors relevant to determining whether admission of Peak’s settlement affected
GEICO’s substantial rights. Those factors include “the number of errors, the
closeness of the factual disputes, the prejudicial effect of the evidence, the
instructions given, and whether counsel intentionally elicited the evidence and
focused on it during the trial.” Ad-Vantage Tel. Directory Consultants, Inc. v.
GTE Directories Corp., 37 F.3d 1460, 1465 (11th Cir. 1994). Although we might
have come out otherwise if reviewing this matter de novo, we cannot say that, after
considering those factors, the district court abused its discretion in concluding a
13
Case: 17-13655 Date Filed: 12/14/2018 Page: 14 of 14
new trial was warranted. The factual disputes in this case—particularly the
questions of whether GEICO handled the claim against Moore in bad faith and
whether claimants would have ever settled their bodily injury claims against Moore
for the minimal amount of insurance coverage he had—were certainly close
questions. Furthermore, these close questions went to the critical issues that the
jury had to decide. See Peat, Inc. v. Vanguard Research, Inc., 378 F.3d 1154, 1162
(11th Cir. 2004) (considering this fact in deciding whether a new trial was
warranted). The district court’s error in admitting evidence of Peak’s settlement
went directly to these determinative issues. During the initial trial, the trial court
never instructed the jury to limit its consideration of the Peak-settlement evidence.
Thus, here we cannot find an abuse of discretion when the district court ordered a
new trial under Rule 59 because of its prior evidentiary error in the first trial.
III. CONCLUSION
Having found no abuse of discretion, we AFFIRM the district court’s
decision to grant the new trial.
14