Erika L. McNamara v. Government Employees Insurance Company

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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 20-13251
____________________
ERIKA L. MCNAMARA,
WILLARD F. WARREN
Plaintiffs-Appellants,
KENNETH BENNETT,
non-party,
Intervenor-Appellant,
versus
GOVERNMENT EMPLOYEES INSURANCE COMPANY,
Defendant-Appellee.
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2 Opinion of the Court 20-13251
____________________
Appeals from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:17-cv-03060-SDM-CPT
____________________
Before NEWSOM, BRANCH, and BRASHER, Circuit Judges.
NEWSOM, Circuit Judge:
Under Florida law, a plaintiff who brings a bad-faith claim
against an insurer for failing to settle a lawsuit against one of its
insureds must prove, among other things, that the insurer’s con-
duct caused his loss. And as one means of demonstrating the req-
uisite causation, the plaintiff may show that the insured suffered an
“excess judgment” as a result of the insurer’s actions. In this case,
we must decide whether a qualifying “excess judgment” must be
based on a verdict following a trial or, instead, may be predicated
on a consent judgment that memorializes a private settlement
agreement.
In Cawthorn v. Auto-Owners Insurance Co., this Court
held—in an unpublished opinion—that only a judgment that fol-
lows a trial and results from a verdict qualifies as an “excess judg-
ment” for bad-faith purposes under Florida law. 791 F. App’x 60,
65 (11th Cir. 2019). The district court in our case relied on Caw-
thorn to conclude that a consent judgment formalizing a settle-
ment between an insured and a third party didn’t qualify. We now
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20-13251 Opinion of the Court 3
hold that Cawthorn misinterpreted Florida law and that a consent
judgment can qualify for “excess judgment” status. Accordingly,
we reverse the district court’s decision and remand for further pro-
ceedings.
I
While driving Willard Warren’s vehicle, Erika McNamara
negligently changed lanes and caused a collision that seriously in-
jured Deborah Bennett. 1 At the time of the accident, Warren had
a GEICO insurance policy that provided bodily-injury coverage up
to $100,000 per person. Both Bennett and GEICO assert that they
made offers to settle within policy limits, but the parties never
reached a deal. Eventually, Bennett sued Warren and McNamara
in Florida state court. Pursuant to its policy contract, GEICO pro-
vided Warren and McNamara with a lawyer.
Bennett later served both Warren and McNamara with pro-
posals for settlement pursuant to Fla. Stat. § 768.79, which, as rele-
vant here, permits a plaintiff to make “a demand for judgment” as
a means of settling a tort action against an insured defendant. Ben-
nett proposed to settle her claims against Warren and McNamara
for $474,000 and $4,740,000, respectively. The proposals were con-
ditioned on two factors: (1) Warren and McNamara had to consent
to the entry of final judgments against them in the amounts of the
proposals; and (2) GEICO had to confirm that it wouldn’t assert
1 Intervenor-Appellant Kenneth Bennett is Deborah Bennett’s spouse and
court-appointed guardian.
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4 Opinion of the Court 20-13251
that Warren and McNamara had breached the policy by accepting
the proposals.
Warren and McNamara’s attorney informed GEICO about
the proposals and advised that they were “far below what a jury
would award in this case.” Given that assessment, he informed
GEICO that “[m]y clients are inclined to accept, but cannot do so
without assurance from GEICO that [accepting the proposals will]
not violate the terms and conditions of their policy.” GEICO re-
plied: “Although it should be understood GEICO is not agreeing
to be a party to this settlement, we will not assert that your clients
have breached their policy contract with us if they wish to accept
the Proposals for Settlement as currently written.” Both Warren
and McNamara accepted the proposals, and “Pursuant to Stipula-
tion,” the state court entered final judgments against them.
After the conclusion of Bennett’s lawsuit, Warren and
McNamara sued GEICO for bad faith, seeking to recover the
amounts of the final judgments entered against them that exceeded
the $100,000 policy limit. They contended that GEICO had
breached its fiduciary duty to them by failing to settle Bennett’s
case within the policy limit when it had the opportunity to do so.
GEICO removed the case to federal court and sought summary
judgment.
The district court granted summary judgment to GEICO
based on our unpublished Cawthorn decision. In that case, a panel
of this Court held (1) that to prove causation in an insurer-bad-faith
case, a plaintiff must show that the insured suffered an “excess
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20-13251 Opinion of the Court 5
judgment,” i.e., a final judgment that exceeds all available insur-
ance coverage, and (2) that the excess judgment must result from
“a verdict.” 791 F. App’x at 64–65. Thus, the panel concluded, be-
cause a “consent judgment” is not preceded by a verdict but, rather,
is premised on a voluntary settlement, it cannot, as a matter of law,
constitute an “excess judgment.” Id. at 65. And accordingly, the
panel held, causation can’t be established in an insurer-bad-faith ac-
tion, as a matter of law, when the insured is subject only to a con-
sent judgment. Id. Following Cawthorn, the district court here
held that the consent judgments entered against Warren and
McNamara weren’t qualifying “excess judgments” and, therefore,
that they couldn’t prove causation in their bad-faith action. War-
ren and McNamara appealed. 2
Before us, Warren and McNamara challenge Cawthorn’s
reasoning, arguing that Florida law doesn’t require that a verdict
precede an excess judgment as a prerequisite to proving the causa-
tion element of an insurer-bad-faith claim. Because the outcome
of this case must turn on Florida bad-faith law—not on what this
Court might have said in unpublished opinions—we begin by con-
sidering whether a consent judgment can constitute an excess
2We review a district court’s grant of summary judgment de novo. LeBlanc
v. Unifund CCR Partners, 601 F.3d 1185, 1189 (11th Cir. 2010) (per curiam).
Summary judgment is proper if “the movant shows that 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).
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judgment under Florida law. We then turn to Cawthorn to deter-
mine whether it should affect our analysis.
II
A
A bad-faith claim arises when, as a result of the alleged mis-
conduct of his insurer, an insured incurs a liability that is covered
by an insurance policy but exceeds the policy’s coverage limit. A
bad-faith claim is rooted in the same logic that underlies an ordi-
nary negligence claim, and it comprises four familiar elements:
The plaintiff must show (1) that the insurer owed the insured a
duty of care, (2) that the insurer breached its duty, and (3) that the
breach caused the plaintiff to suffer (4) an injury. See Boston Old
Colony Ins. Co. v. Gutierrez, 386 So.2d 783, 785 (Fla. 1980) (per
curiam).
An insurer owes its insureds a duty of good faith. Id. For
lawsuits brought against an insured, that duty includes giving “fair
consideration to a settlement offer that is not unreasonable under
the facts, and settl[ing], if possible, where a reasonably prudent per-
son, faced with the prospect of paying the total recovery, would do
so.” Id. The insurer breaches its duty by acting in bad faith, and
the insured suffers an injury if he incurs a liability that exceeds his
insurance coverage.
Importantly, a bad-faith plaintiff must link the insurer’s con-
duct to the insured’s injury by proving causation. In Perera v.
United States Fidelity & Guaranty Co., 35 So.3d 893 (Fla. 2010), the
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Florida Supreme Court answered several certified questions about
causation in third-party bad-faith claims. 3 The court explained that
“the existence of a causal connection is a prerequisite [to a bad-faith
claim]—in other words, the claimed damages must be caused by
the [insurer’s] bad faith.” Id. at 901. But, it clarified, there is no
single way of proving causation. See id.; see also id. at 898 n.7.
Importantly for our purposes, the court concluded that showing
the existence of an “excess judgment” is generally the most
straightforward way to prove causation. Id. at 899. 4
3 To be clear, a third-party bad-faith claim arises when an insurer is charged
with defending its insured against an injured party’s lawsuit, and the insurer
fails to reasonably settle within policy limits. By contrast, a first-party bad-
faith claim arises when an insured alleges that his insurer wrongfully denied
his claim. See Fridman v. Safeco Ins. Co., 185 So.3d 1214, 1220 (Fla. 2016)
(explaining the difference between common-law third-party bad-faith claims
and the statutory first-party bad-faith claims).
4 The court also noted three “functional equivalent[s]” of an excess judgment:
• A “Cunningham” agreement, in which the insurer and the injured
party agree to try the bad-faith issues first; if no bad faith is found, the
injured party agrees to settle for policy limits, thereby preventing the
insured from facing an excess judgment;
• A “Coblentz” agreement, in which the insured, forced to defend
against the injured party’s claims on his own, agrees to settle with the
injured party for policy limits; the injured party can then sue the insur-
ance company on a bad-faith theory; and
• An “equitable subrogation” situation, in which an excess carrier can
bring a bad-faith claim against a primary carrier if the excess carrier
incurs damages because the primary carrier acted in bad faith.
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In Perera, the Florida Supreme Court referenced its earlier
decision in United Services Automobile Association v. Jennings,
which had defined an excess judgment as “‘the difference between
all available insurance coverage and the amount of the verdict re-
covered by the injured party.’” Perera, 35 So.3d at 902 (quoting
Jennings, 731 So.2d 1258, 1259 n.2 (Fla. 1999)). Notably, though, in
Perera there was no “verdict.” By contrast, Perera and several in-
surance companies had entered a “Stipulation to Settle,” pursuant
to which a state court had entered the final judgment that formed
the basis for Perera’s bad-faith lawsuit. Id. at 896. Ultimately, the
Florida Supreme Court found no causation in Perera because the
final judgment didn’t exceed all available insurance coverage and
there was no other evidence of causation. Id. at 902–04. Notably,
though, the court never cast doubt on the idea that a final judgment
based on a settlement agreement could constitute proof of causa-
tion in a third-party bad-faith action.
More recently—and perhaps more to the point—in Fridman
v. Safeco Insurance Co., the Florida Supreme Court expressly held,
in the context of a statutory first-party bad-faith action, that “the
insured is not obligated to obtain the determination of liability and
the full extent of his or her damages through a trial and may utilize
other means of doing so, such as an agreed settlement, arbitration,
Perera, 35 So.3d at 899–901. None of these functional equivalents applies here
because there was no agreement between GEICO and Bennett, GEICO pro-
vided Warren and McNamara with a lawyer at all times, and there is only one
insurance carrier in this case.
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or stipulation before initiating a bad faith cause of action.” 185
So.3d 1214, 1224 (Fla. 2016) (emphasis omitted). And significantly,
the court further confirmed that “first-party bad faith claims . . .
should be treated in the same manner as third-party bad faith
claims.” Id. at 1221. 5 Accordingly, both Perera and Fridman indi-
cate that a jury verdict is not a prerequisite to an excess judgment
in a bad-faith action and that, instead, a plaintiff can base a bad-faith
claim on a consent judgment that exceeds available insurance cov-
erage.
Here, Warren and McNamara’s available coverage was
$100,000. The final judgments entered against them in the
amounts of $474,000 and $4,740,000, respectively, constituted ex-
cess judgments because they exceeded that coverage. Under Flor-
ida law, it doesn't matter that these judgments resulted from stipu-
lated settlements instead of verdicts. Because Warren and
McNamara were subject to excess judgments, they could prove
causation in their bad-faith case.
B
Having concluded that Warren and McNamara’s bad-faith
lawsuit against GEICO can proceed under Florida law, we turn to
our unpublished decision in Cawthorn—on which the district
court expressly relied—to determine whether it should change our
conclusion. It should not and does not.
5 See supra note 3.
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As a preliminary matter, we pause to reiterate an elemental
point: While our unpublished opinions “may be cited as persuasive
authority,” they “are not considered binding precedent.” 11th Cir.
R. 36-2. We have said so again and again, but it bears repeating.
See United States v. Izurieta, 710 F.3d 1176, 1179 (11th Cir. 2013)
(“Unpublished opinions are not binding precedent.”); Ray v.
McCullough Payne & Haan, LLC, 838 F.3d 1107, 1109 (11th Cir.
2016) (“In this Court, unpublished decisions . . . are not preceden-
tial and they bind no one.”). Accordingly, a district court shouldn’t
simply cite to one of our unpublished opinions as the basis for its
decision without separately determining that it is persuasive. 6
Here, the district court did just that—it treated Cawthorn as bind-
ing authority and failed to determine whether that decision cor-
rectly analyzed Florida law. See McNamara v. GEICO, 2020 WL
5223634, at *1, *3–4 (M.D. Fla. July 29, 2020) (agreeing that Caw-
thorn was “an intervening change of controlling law” and reflex-
ively applying it to decide this case). For reasons we’ll explain,
Cawthorn didn’t properly analyze Florida law, and the district
court shouldn’t have followed it.
In Cawthorn, an automobile passenger was injured when
his friend, the driver, fell asleep at the wheel and crashed into a
6 That is perhaps particularly true in a case that turns on an issue of state law.
Cf. United States v. Chubbuck, 252 F.3d 1300, 1305 n.7 (11th Cir. 2001) (noting
that even a published opinion of this Court interpreting and applying state law
is not binding in the event that an intervening state-court decision contradicts
it).
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concrete barrier. See 791 F. App’x at 61. Subsequently, the passen-
ger and the driver entered into a settlement agreement. Id. at 62–
63. The insurer paid up to the policy limit but refused to pay the
rest, so the passenger brought a bad-faith action. Id. at 63. This
Court held for the insurer, reasoning that a “judgment” means “a
final decision—a verdict—reached by a factfinder,” and that an “ex-
cess judgment” therefore occurs when a verdict exceeds all availa-
ble insurance coverage. Id. at 65. So, it said, a consent judgment
like the one entered against the driver there, which didn’t result
from a verdict, couldn’t constitute a qualifying excess judgment.
Id.The Cawthorn panel based its reasoning on Jennings’s foot-
noted explanation of the term “excess judgment”—again, that it
constitutes “the difference between all available insurance cover-
age and the amount of the verdict recovered by the injured party.”
731 So.2d at 1259 n.2 (emphasis added). Properly understood,
though, Florida law doesn’t require that a verdict underlie an ex-
cess judgment. First, Jennings’s references to “verdict[s]” are ex-
plained by the fact that, for the general rule, the court there cited
McLeod v. Continental Insurance Co., 591 So.2d 621 (Fla. 1992),
which happened to involve a jury verdict. Notably, though, in Jen-
nings itself there was no verdict; rather, there was only a stipulated
Cunningham agreement. See supra note 4; Jennings, 731 So.2d at
1259. And indeed, the Jennings court went on to observe that a
stipulated judgment for more than the policy limit “is to be given
the same effect in the bad-faith litigation as a final judgment
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reached upon a determination at trial.” 731 So.2d at 1260. Second,
as already explained, Perera didn’t involve a verdict either, but ra-
ther a “Stipulation to Settle,” and although the court there ulti-
mately held that causation hadn’t been proven, it never suggested
that a judgment predicated on a settlement agreement couldn’t, in
appropriate circumstances, satisfy the causation element of a bad-
faith claim. And finally, to repeat, the Florida Supreme Court ex-
pressly held in Fridman that an insured “is not obligated to obtain
the determination of liability and the full extent of his or her dam-
ages through a trial,” but rather “may utilize other means of doing
so, such as an agreed settlement . . . or stipulation before initiating
a bad faith cause of action.” 185 So. 3d at 1224. Given that back-
drop, it is altogether unsurprising that this Court has recognized—
in a post-Cawthorn published opinion—that under Florida law, “[a]
stipulated judgment . . . would be a way to obtain an excess judg-
ment that could be used in a bad faith lawsuit” against an insurer.
Pelaez v. GEICO, 13 F.4th 1243, 1248 (11th Cir. 2021).
To the extent that Florida (and our own) case law leaves any
doubt, common sense resolves it. First, and this much may be ob-
vious, a “verdict” and a “judgment” are different things. See Perez
v. Cir. City Stores, Inc., 721 So.2d 409, 411 (Fla. 3d DCA 1998) (ex-
plaining that the terms “verdict” and “judgment” shouldn’t be con-
fused or equated). A “verdict” is merely “[a] jury’s finding or deci-
sion on the factual issues of a case.” Verdict, Black’s Law Diction-
ary (11th ed. 2019). A “judgment,” by contrast, is a more robust
instrument—namely, “[a] court’s final determination of the rights
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and obligations of the parties in a case.” Judgment, Black’s Law
Dictionary (emphasis added). And to be clear, and again to state
the obvious, a “consent judgment” is indeed a “judgment”—it is,
in particular, “[a] settlement that becomes a court judgment when
the judge sanctions it.” Id. (defining “consent judgment” as an as-
pect of “judgment” and by reference to the term “agreed judg-
ment”). Accordingly, when the insured is subject to a consent judg-
ment that exceeds the policy limit, he is legally obligated to pay
that amount and incurs an enforceable legal liability. See Am. Fire
& Cas. Co. v. Davis, 146 So.2d 615, 619 (Fla. 1st DCA 1962).
Another dose of common sense demonstrates that not only
are the terms “verdict” and “judgment” not synonymous, but the
latter needn’t necessarily follow from the former. If, on Caw-
thorn’s reasoning, an excess judgment must always result from a
factfinder’s verdict, what of pre-trial summary “judgments” en-
tered against policyholders? Are they, too, deprived of excess-judg-
ment status simply because they don’t follow a full-blown trial and
result in a verdict? That can’t possibly be the law.
In addition to the Jennings footnote, the Cawthorn decision
appealed to policy considerations—reasoning, for instance, that if
consent judgments could satisfy the causation element of a bad-
faith claim, insurance companies would be vulnerable to large pay-
outs: “Insurers would not know whether an insured party and an
injured party entered into a consent judgment as adversaries, at
arm’s length and in good faith, or as friends, making a strategic de-
cision to undermine the insurance company’s policy.” Cawthorn,
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791 F. App’x at 65. But even if we were free to privilege those sorts
of policy concerns over a proper understanding of Florida law, we
wouldn’t be moved by them. Holding, in accordance with Florida
law, that a verdict needn’t necessarily precede a qualifying “judg-
ment” will not leave insurance companies unprotected. For start-
ers, the plaintiff must still prove the other elements of his claim—
perhaps most notably, that the insurance company breached its
duty by acting in bad faith. Moreover, a consent judgment will be
enforced against an insurer only to the extent that the judgment
itself is reasonable in amount and untainted by bad faith on the part
of the insured. See Steil v. Fla. Physicians’ Ins. Reciprocal, 448
So.2d 589, 592 (Fla. 2d DCA 1984). Finally, to the extent that they
matter, there are policy considerations—embedded in Florida
law—that point clearly in the other direction. Namely, were we to
embrace a rule requiring a verdict as a prerequisite to an “excess
judgment,” we would only incentivize litigation, in direct contra-
vention of Florida’s public policy favoring settlement. See Fla. Stat.
§ 768.79; Sun Microsystems of Cal., Inc. v. Eng’g & Mfg. Sys., C.A.,
682 So.2d 219, 220 (Fla. 3d DCA 1996) (“The public policy of the
State of Florida, as articulated in numerous court decisions, highly
favors settlement agreements among parties and will seek to en-
force them whenever possible.”).
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Because Cawthorn incorrectly analyzed Florida bad-faith
law and is unpersuasive, we decline to follow it. 7
III
A final judgment that exceeds all available insurance cover-
age—regardless of whether it results from a consensual settlement
or a jury verdict—constitutes an “excess judgment” that can satisfy
the causation element of an insurer-bad-faith claim under Florida
law. Because such a judgment existed here, we REVERSE the dis-
trict court’s decision and REMAND for further proceedings.
7 One final thing: In their briefs to us, the parties squabble over whether
GEICO agreed to be bound by the consent judgments entered in favor of Ben-
nett in her suit against Warren and McNamara. That is irrelevant. GEICO
wasn’t a party to that lawsuit, so naturally it wasn’t a party to its settlement.
A bad-faith claim accrues upon entry of an excess judgment against the in-
sured, regardless of the insurer’s agreement to the entry of such judgment.
Indisputably, GEICO authorized Warren and McNamara to accept the settle-
ments by agreeing not to assert that they had violated any policy provision by
doing so. Nothing more was needed for a bad-faith claim to ensue. See Steil,
448 So.2d at 592 (holding that in a case involving a consent judgment, a settle-
ment can be enforced against the insurer so long as it is not “unreasonable in
amount or tainted by bad faith”).