Geico General Insurance v. McDonald

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 08-11973 ELEVENTH CIRCUIT
NOV 20, 2008
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK
D. C. Docket No. 05-00073-CV-T-17MAP
GEICO GENERAL INSURANCE COMPANY,
Plaintiff-Counter-
Defendant-Appellant,
versus
JACK A. MCDONALD,
PENNY MCDONALD,
BRANDI MCDONALD,
Defendants-Counter-
Claimants-Appellees.
__________________________________________________________________
05-00164-CV-T-1
JACK MCDONALD,
PENNY MCDONALD,
BRANDI MCDONALD,
Plaintiffs-Appellees,
GEICO GENERAL INSURANCE COMPANY,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(November 20, 2008)
Before BIRCH, BLACK and PRYOR, Circuit Judges.
PER CURIAM:
GEICO General Insurance Company (GEICO) appeals the final judgment
following a jury verdict in favor of Jack A. McDonald, Penny McDonald, and
Brandi McDonald (the McDonalds). GEICO asserts two issues on appeal: (1) the
district court erred in giving a jury instruction that required the jury to resolve all
disputes in the evidence in favor of the plaintiffs, and (2) the district court erred in
denying GEICO’s Rule 50 motion for judgment as a matter of law because there
was no evidence of bad faith conduct on the part of the GEICO adjusters.
This case is a consolidation of two declaratory actions, each seeking a
determination of whether GEICO acted in bad faith in failing to settle a claim
brought by Tracy Giovo against the McDonalds for a motor vehicle accident that
occurred on August 21, 1998. Following a five-day trial, the jury determined
GEICO had acted in bad faith, and entered a judgment against GEICO for the
amount of the underlying judgment that exceeded the McDonalds’ policy limits.
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I.
GEICO objected to the following jury instruction:
In your determination of whether GEICO General Insurance
Company acted in bad faith in the handling of the Giovo claim
against Jack McDonald, Penny McDonald, and Brandi McDonald,
any question about the possible outcome of a settlement effort should
be resolved in favor of Jack McDonald, Penny McDonald, and Brandi
McDonald. GEICO General Insurance Company has the burden to
show that there was no realistic possibility of settlement within policy
limits.
GEICO asserts the district court erred in instructing the jury to resolve any
questions regarding the outcome of settlement efforts in favor of the McDonalds.
GEICO asserts this was not an accurate statement of Florida law and misled the
jury. GEICO asserts the instruction was tantamount to giving the McDonalds a
directed verdict.
“We review jury instructions de novo to determine whether they misstate the
law or mislead the jury to the prejudice of the party who objects to them.” United
States v. Campa, 529 F.3d 980, 992 (11th Cir. 2008). As long as the instructions
adequately reflect the law, the district court has wide discretion as to the style and
wording used in the instructions. Id.The district court’s basis for this instruction was Powell v. Prudential
Property and Casualty Insurance Co., 584 So. 2d 12, 14 (Fla. 3d DCA 1991). In
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Powell, the trial court entered a directed verdict for the insurer at the conclusion of
the plaintiff’s case in an action for bad faith failure to settle an insurance claim.
Id. at 13. Florida’s Third District Court of Appeal reversed the trial court. Id.Included in its reasoning was the following:
Any question about the possible outcome of a settlement effort should
be resolved in favor of the insured; the insurer has the burden to show
not only that there was no realistic possibility of settlement within
policy limits, but also that the insured was without the ability to
contribute to whatever settlement figure that the parties could have
reached.
Id. at 14.
The district court’s jury instruction was not an inaccurate statement of
Florida law that misled the jury as it was taken directly from Powell. Additionally,
we reject GEICO’s contention the instruction was tantamount to giving the
McDonalds a directed verdict, as the district court correctly instructed that GEICO
had the burden of showing there was no possibility of settlement within policy
limits. If GEICO had met that burden at trial, the jury could have reasonably
found GEICO did not act in bad faith.
II.
GEICO asserts the district judge erred in failing to grant its Rule 50 motion
for judgment as a matter of law because the McDonalds presented absolutely no
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evidence of bad faith conduct on the part of the GEICO adjusters and thus, as a
matter of law, the evidence was insufficient to create a question of fact. GEICO
asserts the evidence, at most, established mere negligence in the handling of the
Giovo claim, and mere negligence does not support a finding of bad faith under
Florida law.
“We review a district court’s ruling on a motion for judgment as a matter of
law under Rule 50 de novo, examining the evidence in the light most favorable to
the non-moving party . . . .” Optimum Techs., Inc. v. Henkel Consumer Adhesives,
Inc., 496 F.3d 1231, 1251 (11th Cir. 2007). “The question before the district court
regarding a motion for judgment as a matter of law remains whether the evidence
is legally sufficient to find for the party on that issue.” Id. at 1252 (alteration and
internal quotations omitted).
The focus of a bad faith case is on the actions of the insurer in fulfilling its
obligations to the insured. Berges v. Infinity Ins. Co., 896 So. 2d 665, 677 (Fla.
2004). The insurance company owes the insured a fiduciary duty to act in the
insured’s best interest. Id. “The legal standard governing an insurer’s settlement
conduct is one of reasonableness.” Cruz v. Am. United Ins. Co., 580 So. 2d 311,
312 (Fla. 3d DCA 1991). “Bad faith may be inferred from a delay in settlement
negotiations which is willful and without reasonable cause.” Powell, 584 So. 2d at
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14. “Where liability is clear, and injuries so serious that a judgment in excess of
the policy limits is likely, an insurer has an affirmative duty to initiate settlement
negotiations.” Id.GEICO’s argument fails. Viewing the evidence in the light most favorable
to the McDonalds, the evidence was sufficient to create a question of fact
regarding whether GEICO’s actions were reasonable. The evidence showed that
although GEICO identified this claim as one that would far exceed policy limits,
GEICO never sent the McDonalds the letter it had prepared advising them of the
potential for excess liability. During GEICO’s settlement negotiations with
Giovo, Giovo tendered a settlement offer, but GEICO counteroffered less than
Giovo requested for loss of use of her vehicle. GEICO then sent the McDonalds a
letter advising GEICO had complied with Giovo’s demands and detailing its offer
of settlement. Giovo then rejected GEICO’s counteroffer and proceeded to
litigation. GEICO did not send the McDonalds an excess letter until after
settlement negotiations failed and Giovo had filed suit. After a jury trial,
judgment was entered in favor of Giovo and a final judgment of $1,117,475.65
was entered against the McDonalds. After collateral source setoffs were
calculated, an amended final judgment of $1,088,041.51 was entered against the
McDonalds.
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The evidence showed that although GEICO attempted to settle with Giovo,
it did not keep the McDonalds informed of the settlement negotiations. GEICO
exposed the McDonalds to a significant excess judgment without the McDonalds’
knowledge. GEICO made a counteroffer on Giovo’s offer, but represented to the
McDonalds it had complied with Giovo’s demands. Regardless of whether mere
negligence is enough to find bad faith under Florida law, the evidence was legally
sufficient to find that GEICO’s conduct was more than mere negligence and that
GEICO acted in bad faith.
AFFIRMED.
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