Charles R. Hinson v. Titan Insurance Company

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14485
Non-Argument Calendar
________________________
D.C. Docket No. 3:13-cv-00394-MCR-EMT
CHARLES R. HINSON,
Plaintiff-Appellant,
versus
TITAN INSURANCE COMPANY,
TITAN INDEMNITY COMPANY,
Defendants-Appellees,
W I OF FLORIDA INC.,
Defendant.
________________________
Appeal from the United States District Court
for the Northern District of Florida
________________________
(August 8, 2016)
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Before WILLIAM PRYOR, ROSENBAUM, and FAY, Circuit Judges.
PER CURIAM:
This is a diversity-of-citizenship suit, governed by Florida law, brought by
Plaintiff-Appellant Charles Hinson alleging bad faith on the part of his insurer,
Defendants-Appellees Titan Insurance Company and Titan Indemnity Company
(collectively, “Titan”) 1, in failing to settle a claim against Hinson and to advise
him of the settlement offer. The district court granted summary judgment in favor
of Titan. After careful review, we vacate and remand for further proceedings.
I. BACKGROUND
This case arises out of a motor-vehicle accident on September 27, 2007.
Hinson was driving in Pensacola, Florida, when he failed to yield the right of way
in an intersection and struck a motorcycle operated by Martin Almand. Almand’s
left leg was crushed in the accident, and his motorcycle was a total loss. As a
result of the accident, Almand had emergency surgery that night and was still in
intensive care the following day.
At the time of the accident, Hinson was insured under a Titan automobile
insurance policy, which provided bodily-injury liability limits of $10,000 per
person and $20,000 per accident and identical property-damage liability limits.
1
As the district court noted, the record is not clear regarding “which company issued the
policy or the relationship between the Defendants.” In any case, this lack of clarity has no
bearing on our opinion or the district court’s summary-judgment order.
2
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Hinson promptly reported the accident to Titan. The next day, a Titan insurance
adjuster investigated the incident, determined Hinson was at fault, and quickly
realized that Hinson’s liability could exceed the $10,000-per-person bodily-injury
limit. Titan sent Hinson a letter on September 28 stating that Almand’s claim
could exceed the policy limits, that the matter could proceed to litigation, and that
Hinson could be personally liable for a judgment in excess of the policy limits.
By October 1, four days after the accident, Almand’s hospital bill had
exceeded $69,000. That same day, Titan offered Almand the full $10,000 bodily-
injury limits in exchange for an executed Release of All Claims. On October 8,
Almand informed Titan that he had retained the law firm of Green & Bradford,
P.A. (James Green and Bobby Bradford), to represent him in the matter. Titan
promptly repeated the October 1 offer to Green & Bradford.
On October 16, Attorney Green, on behalf of Almand, sent Titan a letter
stating that they were “currently investigating this matter and [were] not in a
position to settle at this time,” and that they would send a settlement offer once
they were ready. Titan again offered the bodily-injury limits on November 7, and,
on November 19, tendered a $10,000 check payable to the Almands, Green &
Bradford, and the hospital at which Almand had received treatment. A Titan
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claims note2 reflects that Titan attempted to call Hinson on December 5 but was
told that he would be home after 5 p.m.
On December 26, Titan received a demand letter from Attorney Bradford,
who stated that Almand was willing to settle if eight material terms were met
within twenty days of December 21, the date of the letter. In other words, Titan
and Hinson had until January 10, 2008, to comply with the terms of the offer. The
terms included the following: (1) tender of the bodily-injury policy limits, with the
check made payable to the Almands and the law firm only, not the hospital; (2) a
statement under oath from Hinson setting forth the existence of any additional
insurance; and (3) payment of the replacement cost of the motorcycle plus various
specified upgrades. The letter concluded, “This is an offer to enter into a unilateral
contract that can only be accepted by strict performance of all of its material
terms.”
Though the offer letter was received by Titan on December 26, the Titan
adjuster with primary responsibility for handling Almand’s claim against Hinson
did not review it until January 2, 2008. On that date, the adjuster attempted to call
Hinson at his landline home phone. Hinson was not at home, but, according to the
2
In support of its motion for summary judgment, Titan submitted evidence of its internal
notes detailing its actions and other information relating to Almand’s claim against Hinson. We
refer to these notes as “claims notes.”
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adjuster, she reached Alice Kilpatrick, Hinson’s then-fiancée who lived with him. 3
The adjuster advised Kilpatrick of the settlement offer and the need for Hinson to
execute a sworn statement regarding additional insurance coverage. The adjuster
attempted to call again on January 3 and 4 in the afternoon, but the calls would not
go through. A claims note entered on January 3 states, “Attempted to call [policy
holder]. Number would not go through, states I should try my call again later?”
The adjuster never spoke with Hinson, and Hinson testified that he was not told by
Kilpatrick that Titan had called.
On January 4, Titan sent Hinson a letter by regular mail regarding Almand’s
settlement offer. The letter notes that the demand letter and a proposed affidavit
were enclosed. The letter advises of the policy limits and of the possibility of an
excess judgment, and it suggests that Hinson may wish to consult an attorney, who
“will advise you of your legal rights and the possible steps to take to avoid an
excess judgment.” The letter also states, “As part of the attorney’s demand in this
case, he is requesting an affidavit of no other insurance be completed by you and
forwarded to his attention. . . . It is very important that you have this completed
immediately.” Hinson testified that he did not remember seeing this letter and that,
during the time the settlement offer was open, he did not know of the offer or his
need to provide an affidavit.
3
According to the district court, Kilpatrick died shortly after this lawsuit was filed. As a
result, we do not have the benefit of Kilpatrick’s testimony.
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Also on January 4, Titan asked Jeffrey Neu, a claims manager in Pensacola,
to hand deliver the affidavit to Hinson at his home. Hinson was not at home when
Neu arrived on the afternoon of January 4, but Neu spoke with a woman who was
at the home, believed by Titan to be Kilpatrick. According to Neu, he gave the
woman the affidavit and told her it needed to be signed and notarized. Neu did not
know the purpose for which the affidavit was sought or that there was a specific
due date by which the affidavit needed to be returned. Hinson testified that he did
not receive an affidavit from Titan on January 4 or any other day, and that he was
not even aware that someone from Titan had come to his home on January 4. He
further testified that he would have promptly returned the completed affidavit had
he known he needed to do so.
Titan did not make any further attempts to contact Hinson before January 10,
the settlement-offer deadline. Hinson did not return a notarized affidavit by the
deadline. On January 10, Neu delivered the settlement package to Almand’s
attorneys without the affidavit of additional insurance from Hinson. In a cover
letter to the package, Titan explained that it had unsuccessfully attempted to secure
the affidavit from Hinson, stating, “His phone has been disconnected and he has
not responded to our many attempts [to contact him].” According to a January 14
memorandum dictated by Attorney Bradford, he had his staff conduct a records
search of Hinson and obtained two phone numbers, one of which he called. He
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was told that Hinson was not available but that he would be home after 5:00 p.m.
In other words, Hinson’s phone was not disconnected.
On January 16, Bradford sent Titan a letter returning the checks and stating
that Almand had rejected Titan’s attempt to settle. A short while later, Almand
filed suit against Hinson in Florida state court. Ultimately, the case proceeded to a
jury trial, resulting in a nearly $2 million judgment against Hinson. In his
deposition for this case, Bradford testified that the matter would have settled if not
for the failure to timely submit the affidavit from Hinson.
Hinson filed this bad-faith action against Titan in June 2013. Titan timely
removed the case to the United States District Court for the Northern District of
Florida, and later moved for summary judgment. Upon consideration of Titan’s
motion for summary judgment and Hinson’s response in opposition, the district
court determined that there was no genuine issue of material act as to whether
Titan acted in bad faith in handling the claim against Hinson. Accordingly, the
district court granted summary judgment to Titan. This is Hinson’s appeal.
II. APPLICABLE LAW
A. Standard of Review
We review de novo a district court’s grant of summary judgment, applying
the same legal standards that governed the district court. Bradley v. Franklin
Collection Serv., Inc., 739 F.3d 606, 608 (11th Cir. 2014). Summary judgment is
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appropriate when “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
At the summary-judgment stage, the court’s function is simply to determine
if there is a “genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249, 106 S. Ct. 2505, 2511 (1986). To do so, the court must accept the non-
moving party’s version of the facts and draw all reasonable inferences in his favor.
Bradley, 739 F.3d at 608. The court may not weigh the evidence or make
credibility determinations. Carter v. Butts Cty., Ga., 821 F.3d 1310, 1318 (11th
Cir. 2016). “[T]here is no issue for trial unless there is sufficient evidence favoring
the nonmoving party for a jury to return a verdict for that party.” Anderson, 477
U.S. at 249, 106 S. Ct. at 2511. Therefore, summary judgment may be granted
“[i]f the evidence is merely colorable or is not significantly probative.” Id. at 249–
50, 106 S. Ct. at 2511 (citations omitted).
B. The Law of Bad Faith in Florida
Under Florida law, which governs this diversity case, an insurer has a duty
to handle claims against its insured in good faith. Berges v. Infinity Ins. Co., 896
So. 2d 665, 672 (Fla. 2004); see id. at 682-83 (“In exchange for [the insured’s]
relinquishment of control over settlement and the conduct of the litigation, the
insurer obligates itself to act in good faith in the investigation, handling, and
settling of claims brought against the insured.”). An insurer that breaches the duty
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to act in good faith, thereby exposing an insured to an excess judgment, may be
held liable in a bad-faith action. See Rosen v. Fla. Ins. Guar. Ass’n, 802 So. 2d
291, 294 (Fla. 2001) (“[T]he essence of a bad-faith cause of action is to remedy a
situation in which an insured is exposed to an excess judgment because of the
insurer’s failure to properly or promptly defend the claim.”). A plaintiff must
show “a causal connection between the damages claimed and the insurer’s bad
faith.” Perera v. U.S. Fid. & Guar. Co., 35 So. 3d 893, 903–04 (Fla. 2010).
“Good faith” generally means that an insurer must reasonably act in the best
interests of its insured. Berges, 896 So. 2d at 677. “The standard of care that an
insurer must exercise in handling claims against its insured is the same degree of
care and diligence as a person of ordinary care and prudence should exercise in the
management of his own business.” Mesa v. Clarendon Nat’l Ins. Co., 799 F.3d
1353, 1359 (11th Cir. 2015) (internal quotation marks omitted). Whether an
insurer acted in good faith is judged by the “totality of the circumstances.” Berges,
896 So. 2d at 680. Further, the focus in bad-faith actions is “not on the actions of
the claimant but rather on those of the insurer in fulfilling its obligations to the
insured.” Id. at 677.
An insurer’s duty of good faith, according to the Florida Supreme Court,
includes the obligations to “advise the insured of settlement opportunities, to
advise as to the probable outcome of the litigation, to warn of the possibility of an
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excess judgment, and to advise the insured of any steps he might take to avoid [an
excess judgment].” Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785
(Fla. 1980) (emphasis added). The duty also requires the insurer to “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. In addition, “[b]ecause
the duty of good faith involves diligence and care in the investigation and
evaluation of the claim against the insured, negligence is relevant to the question of
good faith.” Id.
Finally, while summary judgment may be appropriate in certain cases,
Berges, 896 So. 2d at 680 (“[T]his Court and the district courts have, in certain
circumstances, concluded as a matter of law that an insurance company could not
be liable for bad faith.”), the question of bad faith is, as a general matter, one
reserved for the jury due to the flexible and expansive nature of the bad-faith
inquiry. Id. at 672–73; see id. at 677 (“We conclude that the issue as to whether
[the insurer] 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.”); Gutierrez, 386 So. 2d at 785 (“The question of failure to
act in good faith with due regard for the interests of the insured is for the jury.”).
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III. DISCUSSION
Hinson contends that sufficient evidence exists that Titan acted in bad faith,
precluding summary judgment. He asserts that Titan failed to act with due regard
for his interests when it omitted property damage from its attempts to settle the
claim in October and November 2007, despite knowing that Almand’s motorcycle
was totaled, and also conditioned those early settlement offers on a release of the
property-damage claim. Further, Hinson argues, Titan failed to properly advise
him about Almand’s settlement offer and the steps he needed to take to avoid an
excess judgment. Specifically, Hinson asserts, Titan failed to take adequate steps
to inform him about the need for and significance of the affidavit of other
insurance requested as part of the settlement offer.
After reviewing the “totality of the circumstances” in this case in the light
most favorable to Hinson, we agree with Hinson that genuine issues of material
fact preclude entry of summary judgment in favor of Titan on Hinson’s bad-faith
claim, particularly as it relates to Titan’s conduct upon receiving the time-limited
settlement offer from Almand on December 26. Accordingly, the question of
whether Almand’s claim against Hinson could have settled had Titan acted with
due regard for the interests of its insured should be submitted to the jury and
resolved as a material issue of fact. See Berges, 896 So. 2d at 677.
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For starters, a possibility for settlement existed in January 2008 following
Almand’s proposal of the time-limited settlement offer. The settlement offer listed
eight material terms that needed to be met by January 10, twenty days from the
date of the letter. One of the terms was a notarized affidavit from Hinson listing
any other additional insurance coverage. According to Almand’s attorney
Bradford, the central reason the matter ultimately did not settle was because Titan
did not submit the affidavit from Hinson along with the rest of the settlement
package. Hinson testified that he would have promptly completed the requested
affidavit had he known about it. We therefore focus our inquiry on Titan’s efforts,
upon receiving the settlement offer from Almand, to advise Hinson of the offer and
of the steps he might take to avoid an excess judgment. See Gutierrez, 386 So. 2d
at 785.
As the district court recognized, substantial evidence supports Titan’s
contention that it acted in good faith. Titan ultimately complied with all seven
settlement terms that were within its direct control. And it is undisputed that Titan
attempted to contact Hinson several times about the settlement offer and his need
to complete the affidavit. Specifically, Titan called his home three times, sent him
a letter, and had someone personally deliver the affidavit to his home. Despite
these efforts, and given the short period of time in which to act, Titan was unable
to get in touch with Hinson or to obtain the affidavit from him by the deadline.
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The district court concluded that, given Titan’s undisputed efforts to contact
Hinson about the affidavit, any failure to settle was not attributable to Titan’s bad
faith, but rather was “attributable to Hinson.”
Nevertheless, other evidence supports Hinson’s contention that Titan failed
to act with diligence and care in advising him of the settlement offer and of the
steps he needed to take to avoid an excess judgment. See Campbell v. Gov’t Emps.
Ins. Co., 306 So. 2d 525, 530–31 (Fla. 1974) (“[R]easonable diligence and
ordinary care [are] material in determining bad faith.”). Well before receiving
Almand’s settlement offer, Titan knew that Hinson was liable and that he
potentially faced a personal judgment far in excess of the policy limits. Almand’s
settlement offer presented an opportunity for settlement nearly within policy limits,
but time was of the essence due to the time limit imposed by the offer. However,
Titan waited nearly a week to attempt to contact Hinson about the offer. Granted,
some of the delay was attributable to the holidays, as the letter was sent on
December 21 and not received until December 26, but Titan’s claims notes reflect
that Almand’s offer letter was first reviewed on December 31, a Monday. Titan
did not attempt to contact Hinson until January 2. By that point, more than half the
time on the offer had expired.
While Titan made several attempts to contact Hinson between January 2 and
January 4, the evidence of these efforts can reasonably be construed as showing a
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lack of care and diligence in advising Hinson of the settlement opportunity and of
any steps he might take to avoid excess liability. See Gutierrez, 386 So. 2d at 785.
First, Titan called Hinson during times in which it had notice that he would be
working and not at home. The same goes for the hand delivery of the affidavit
during the afternoon of January 4, when, as Titan knew from the earlier
conversation with Kilpatrick, Hinson was likely to be working. Second, the letter
Titan sent to Hinson did not identify the deadline by which the affidavit needed to
be returned, nor did it clearly explain the significance of the affidavit. Titan
acknowledges that it “failed to specifically detail what would happen if Hinson
failed to comply with the demand requirement.” Third, Neu, the person who hand-
delivered the affidavit to Hinson’s home, did not know the purpose for which the
affidavit was needed or that there was a specific due date by which the affidavit
needed to be returned. Finally, Hinson testified that he had no knowledge of
Titan’s efforts to contact him and that Kilpatrick would have told him had Titan
informed her about the settlement offer and the need for the notarized affidavit.
This evidence suggests that Titan failed to contact Hinson during a time and in a
manner adequate to timely advise him of the offer and of what he needed to do to
avoid an excess judgment.
We also find it significant that, following January 4, Titan made no further
attempts to contact Hinson until after the January 10 deadline had passed, despite
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never speaking with Hinson personally or ensuring that he had notice of the offer.
Titan’s efforts to contact Hinson were limited to the three-day period from January
2 to January 4. Moreover, Titan never inquired of Almand’s attorney whether it
could get an extension of time based on its difficulties in contacting Hinson.
The district court dismissed this evidence as insufficient to create a genuine
issue of fact because it showed “negligence, at best,” but negligence is relevant to
the question of bad faith. See Gutierrez, 386 So. 2d at 785; Campbell, 306 So. 2d
at 530–31. Specifically, this evidence suggests that Titan did not handle Hinson’s
case with the same degree of care and diligence Titan would have used to handle
its own affairs. See Mesa, 799 F.3d at 1359. Overall, we conclude that Hinson has
presented sufficient evidence to create a genuine issue of material fact regarding
whether Titan handled the claim against Hinson in good faith. See Gutierrez, 386
So. 2d at 785.
Titan complains that the short deadline of the offer was a deliberate attempt
by Almand’s attorney to fabricate a bad-faith claim. That may be a reasonable
inference from the events, and one a jury may very well believe, but it is not the
only reasonable inference, nor is it directly relevant to the question before us. See
Berges, 896 So. 2d at 677 (the bad-faith inquiry focuses on the actions of the
insurer, not on the actions of the claimant). Almand’s attorney testified that the
claim would have settled if the requested affidavit had been provided, and a Titan
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adjuster testified that the claim could and should have settled. In other words, a
reasonable jury could find that the settlement offer was legitimate and made in
good faith. Because this appeal is from a summary-judgment motion, we draw this
inference in Hinson’s favor. See Bradley, 739 F.3d at 608.
Titan also argues that it provided adequate notice to Hinson under Florida
law by sending him a letter regarding the settlement offer, even if Hinson did not
receive the letter. Yet the caselaw Titan cites for this proposition, concerning
notice of cancellation of a policy under the terms of the policy, has little to no
relevance to the law of bad faith, set out above. See Burgos v. Indep. Fire Ins. Co.,
371 So. 2d 539, 541 (Fla. Dist. Ct. App. 1979) (“The well established principle of
law with regard to the issue of notice of cancellation is that proof of mailing a
notice of cancellation to a named insured at the address stated in the policy is
sufficient compliance with the policy provision requiring notice to the insured.”);
see also Best Meridian Ins. Co. v. Tuaty, 752 So. 2d 733, 735–36 (Fla. Dist. Ct.
App. 2000) (addressing a similar notice provision in an insurance policy).
Finally, Titan faults Hinson for failing to provide adequate contact
information or to respond to Titan’s requests for information. However, the
evidence reflects that Titan had accurate contact information for Hinson, and
Hinson testified that he did not know about Titan’s efforts to contact him.
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As for Hinson’s contention that Titan acted in bad faith by effectively
excluding property damage from earlier settlement offers, the facts do not show a
reasonable possibility for settlement at the time of those offers in October and
November 2007. As a result, this evidence cannot on its own support a bad-faith
claim because it does not establish “a causal connection between the damages
claimed and the insurer’s bad faith.” See Perera, 35 So. 3d at 903–04.
Nonetheless, the evidence may be relevant to the “totality of the circumstances”
regarding Titan’s handling of Almand’s claim against its insured. See Berges, 896
So. 2d at 680. Because we find other genuine issues of material fact that preclude
summary judgment, we leave any questions about the relevance of this evidence to
be addressed upon remand.
In sum, although substantial evidence shows that Titan handled the claim
against Hinson in good faith, other evidence supports Hinson’s claim that Titan
failed to act with due regard for his interests. As a result, the issue of whether
Titan could have fully complied with the terms of the settlement offer by the
deadline if it had acted with due regard for Hinson’s interests is one that should be
resolved by a jury as a question of fact. See id. at 677. For these reasons, we
vacate the grant of summary judgment in favor of Titan and remand for further
proceedings.
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IV. CONCLUSION
For the reasons stated, we VACATE the judgment of the district court and
REMAND this case for further proceedings consistent with this opinion.4
4
We do not consider Hinson’s contention, raised for the first time in his reply brief, that
the district court failed to consider or address expert testimony he submitted in opposition to
Titan’s motion for summary judgment. See Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678,
682–83 (11th Cir. 2014) (declining to address arguments raised for the first time in a reply brief).
We therefore DENY AS MOOT Titan’s Motion for Leave to File a Supplemental Brief, or in the
Alternative, a Motion to Strike Reply Brief, relating to that issue.
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