Hollar v. International Bankers Ins. Co.

Decision Date27 November 1990
Docket NumberNo. 89-1951,89-1951
Citation572 So.2d 937
Parties15 Fla. L. Weekly D2888 Carol HOLLAR and Lewis Edwin Hollar, Jr., Appellants, v. INTERNATIONAL BANKERS INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company, Appellees.
CourtFlorida District Court of Appeals

Levin, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, Robert Mayes and Robert M. Loehr, Pensacola, for appellants.

Walton, Lantaff, Schroeder & Carson, John Patrick Joy, Geoffrey B. Marks, Kimbrell & Hamann, Sam Holland and Andrew H. Bate, Miami, for appellees.

Before NESBITT, BASKIN and GODERICH, JJ.

NESBITT, Judge.

The question we are required to decide in this appeal is whether the statutory measure of damages under section 624.155, Florida Statutes (1989) limits the measure of damages, established by the Florida supreme court, for failure to settle a claim in good faith. We hold that there is no such limitation and we reverse the summary judgment below which held to the contrary.

In compliance with section 624.155, Florida Statutes (1989), the civil remedy section of the Florida Insurance Code, the Hollars furnished their insurers with notice of a claim of bad-faith insurer action. The Hollars sought recovery alleging that while their insurers knew the Hollars' liability for the injury of a third party in an automobile accident was clear and damages were in excess of their policy limits, insurers, in bad faith, failed to accept the injured party's offer to settle her claim within those limits. Additionally, they alleged insurers failed to advise of the conflict of interest between themselves and the Hollars, and failed to advise of the likelihood of the judgment in excess of policy limits which was thereafter entered.

Insurers, relying on their interpretation of section 624.155(2)(d), within the sixty-day notice period of that section, tendered to the Hollars their policy limits. Summary judgment was thereafter entered in the insurers' favor. We disagree with the trial court's conclusion that the insurers' actions in tendering only their policy limits satisfied section 624.155(2)(d) and we reverse and remand on that basis.

Section 624.155 provides in part:

(1) Any person may bring a civil action against an insurer when such person is damaged:

....

(b) By the commission of any of the following acts by the insurer:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his interests.

Section 624.155(2)(d) states:

No action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected. (emphasis added)

Under the decisional law, when an insured has surrendered to his insurer all control over the handling of a third-party claim, including all decisions with regard to litigation and settlement, the insurer must assume a duty to exercise such control to make such decisions in good faith and with due regard for the interest of the insured. Boston Old Colony Ins. Co. v. Gutierrez, 386 So.2d 783 (Fla.1980), cert. denied, 450 U.S. 922, 101 S.Ct. 1372, 67 L.Ed.2d 350 (1981). This good-faith duty obligates the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of excess judgment, and to advise the insured of any steps he might take to avoid same. Boston Old Colony Ins. Co., 386 So.2d at 786, citing Ging v. American Liberty Ins. Co., 423 F.2d 115 (5th Cir.1970).

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. Boston Old Colony Ins. Co., 386 So.2d at 785, citing Government Employees Ins. Co. v. Grounds, 311 So.2d 164 (Fla. 1st DCA 1975), cert. discharged, 332 So.2d 13 (Fla.1976). The insurer is subject to liability in excess of policy limits if it acts in bad faith or through fraud. Baxter v. Royal Indem. Co., 285 So.2d 652, 656 (Fla. 1st DCA 1973), cert. discharged, 317 So.2d 725 (Fla.1975).

Section 624.155 changes neither the case law obligation of good faith nor the measure of the damages due an insured once bad faith is proven. Rather than changing the decisional law, section 624.155 simply expands the cause of action to first-party claims, see Cardenas v. Miami-Dade Yellow Cab Co., 538 So.2d 491 (Fla. 3d DCA), review dismissed, 549 So.2d 1013 (Fla.1989); Opperman v. Nationwide Mut. Fire Ins. Co., 515 So.2d 263 (Fla. 5th DCA 1987); review denied, 523 So.2d 578 (Fla.1988); Rowland v. Safeco Ins. Co. of America, 634 F.Supp. 613 (M.D.Fla.1986); see Vega v. Travelers Indem. Co., 520 So.2d 73 (Fla. 3d DCA), review denied, 531 So.2d 169 (Fla.1988), and adds a procedural first step that requires insureds to notify the insurer of a bad-faith claim. See § 624.155(2)(a), Fla.Stat. (1989). Thus, it provides a cumulative and supplemental remedy.

Statutes should be construed to harmonize with existing law. Statutes intending to alter the established case law must show that intention in unequivocal terms. Law Offices of Harold Silver, P.A. v. Farmers Bank & Trust Co., 498 So.2d 984 (Fla. 1st DCA 1986). The legislature is presumed to know the existing law at the time it enacts a statute. Ford v. Wainwright, 451 So.2d 471, 475 (Fla.1984); Adler-Built Indus., Inc. v. Metropolitan Dade County, 231 So.2d 197, 199 (Fla.1970). We agree with the fifth district's observation in Opperman that there is nothing in section 624.155 which indicates an intent to limit a remedy existing under the decisions of the supreme court. Opperman, 515 So.2d at 266. On the contrary, the statute clearly indicates the legislature's intent to expand that remedy. Id.

Appellants incorrectly rely on Clauss v. Fortune Ins. Co., 523 So.2d 1177 (Fla. 5th DCA 1988) as authority for the proposition that the payment of "damages" under section 624.155(2)(d) can be satisfied merely by the payment of an insured's policy limits. However, in...

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14 cases
  • Dunn v. National Sec. Fire and Cas. Co.
    • United States
    • Florida District Court of Appeals
    • December 23, 1993
    ...beyond the rule enunciated for common law bad faith cases. McLeod v. Continental Insurance Co.; Hollar v. International Bankers Insurance Co., 572 So.2d 937 (Fla. 3d DCA 1990), rev. denied, 582 So.2d 624 (Fla.1991). The statute allows first party bad faith suits by insureds against their in......
  • Galen Health Care v. Am. Cas. Co. of Reading, Pa.
    • United States
    • U.S. District Court — Middle District of Florida
    • January 25, 1996
    ...liability, evidence, and damages would lead a reasonable insurer to settle under such circumstances. See Hollar v. International Bankers Ins. Co., 572 So.2d 937 (Fla. 3d DCA 1990), rev. dismissed 582 So.2d 624 (1991). Otherwise the primary insurer is allowed to gamble with the insured's or ......
  • State Farm Mut. Auto. Ins. Co. v. Laforet
    • United States
    • Florida Supreme Court
    • April 20, 1995
    ...(insurer must investigate the facts), cert. denied, 450 U.S. 922, 101 S.Ct. 1372, 67 L.Ed.2d 350 (1981); Hollar v. International Bankers Ins. Co., 572 So.2d 937 (Fla. 3d DCA 1990) (same), review dismissed, 582 So.2d 624 Finally, State Farm argues that, if the trial judge's final judgment is......
  • Talat Enterprises, Inc. v. Aetna Cas. & Sur. Co.
    • United States
    • U.S. District Court — Middle District of Florida
    • June 14, 1996
    ...protection where its refusal to settle with a third party exposed its insured to an excess judgment. Hollar v. International Bankers Ins. Co., 572 So.2d 937, 939-40 (3rd DCA 1990). Nevertheless, none of the cases support Talat's claim that the insurer has not corrected the circumstances giv......
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1 books & journal articles
  • Recovery of mental distress damages in bad faith claims in Florida.
    • United States
    • Florida Bar Journal Vol. 75 No. 10, November 2001
    • November 1, 2001
    ...function of the bad faith claim is to provide the insured with an extracontractual remedy." Hollar v. International Bankers Ins. Co., 572 So. 2d 937, 939 (Fla. 3d DCA Pursuant to [section] 624.155(1)(a)1, consumers were empowered to bring civil actions for damages resulting from unfair meth......

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