American Fire & Cas. Co. v. Davis, D-180
| Decision Date | 15 November 1962 |
| Docket Number | No. D-180,D-180 |
| Citation | 146 So.2d 615 |
| Parties | AMERICAN FIRE AND CASUALTY COMPANY, a corporation organized and existing under the laws of the State of Florida, Appellant, v. J. T. DAVIS, Appellee. |
| Court | Florida District Court of Appeals |
Keen, O'Kelley & Spitz, Tallahassee, for appellant.
Ausley, Ausley, McMullen, O'Bryan, Michaels & McGehee, Tallahassee, for appellee.
This is a 'negligent and bad faith refusal to settle' case, the complaint having been brought by the insured J. T. Davis against his insurer, American Fire & Casualty Company. Davis recovered a jury verdict in the sum of $13,232.23, from which American Fire has appealed.
There is no real dispute as to the facts. On October 15, 1959, Patricia Ann Davis, 19, while driving her father's automobile from Tallahassee to Quincy, attempted to pass a line of automobiles moving in the same direction and collided head-on with an automobile driven by one Weintraub. Both drivers suffered personal injuries. The Davis automobile was insured by American Fire against liability with maximum limits of $10,000 to each person and $5,000 property damage. 1 American Fire's records reveal that from the time it was apprised of the accident (which was immediately after the occurrence) no serious question of liability on its part existed 2--the question being the amount of damages that Weintraub was entitled to recover.
Weintraub was a traveling salesman who earned in excess of $20,000 while working approximately five months out of a year. The accident occurred during his peak season. He was hospitalized for a few days and later showed some permanent back injury. On October 21, 1959, American Fire was furnished a report by its adjuster which outlined Weintraub's immediate claim to 'total out' his 1959 Electra Buick for $4,000 to enable him to get back on the road in order to alleviate a huge loss of use and wage claim. This report reflected that Weintraub's offer had been refused by telephone authorization from the company. The report further recommended that a $2,000 property damage reserve for Weintraub's automobile and $5,000 personal injury damage reserve to Weintraub be established by American Fire. From this point on, it is apparent in reviewing American Fire's records pertaining to this claim, that its officials assumed the position that Weintraub was trying to 'gouge' them, and that they were not going to attempt to negotiate any settlement until Weintraub made an offer of settlement that they considered to be within a negotiable range.
Weintraub settled his property damage claim with his collision carrier save for $545.00, and on March 16, 1960, his attorney offered to settle his personal injuries claim with American Fire for the sum of $9,950, plus the property damage claim for the sum of $545.00. When contacted by American Fire's adjuster, Davis agreed that the settlement offer was excessive; however, he urged that American Fire settle with Weintraub. Weintraub filed suit on April 6, 1960, in the U. S. District Court. On April 14, 1960, Davis wrote to American Fire urging it to settle within the policy limits.
After suit was filed by Weintraub, American Fire retained Tallahassee counsel who consistently recommended that the company settle with Weintraub prior to trial, since the company had no reasonable defense to the action. No offer of settlement or offer to negotiate was made by American Fire prior to trial or during trial. On September 7, 1960, at a pre-trial conference, the U. S. District Trial Judge indicated he would direct a verdict on the question of liability in favor of Weintraub. Trial was had on September 27, 1960. After plaintiff Weintraub had presented his case and rested, American Fire offered no affirmative defense on behalf of defendant Davis. The trial judge directed a virdict on the question of liability, and the jury returned its verdict against Davis in the sum of $23,000. Subsequently, American Fire paid Weintraub the amount of its policy limits, plus interest, leaving an excess judgment in favor of Weintraub and against Davis in the sum of $12,656.35. Weintraub obtained a writ of execution, placed same in the hands of a Federal Marshal, and levy was attempted against Davis.
Davis, being unable to satisfy the excess judgment, brought this action against his insurer on the theory of negligence and bad faith in failing to settle the claim within the policy limits. From a verdict and judgment in favor of Davis, American Fire appealed, posing the following three points:
1. There is no evidence that the insurer acted in bad faith.
2. A judgment debtor, who has made no payment on the judgment against him, does not have a right of action against his liability insurer for the excess of the judgment over the coverage provided by the insurance policy on the theory that the insurer exercised bad faith in failing to settle the claim against him for an amount within the coverage.
3. F.S.A. § 627.0127 does not authorize the assessment against the insurer of a fee for the attorney for an insured in an action against the insurer for the excess of a judgment over the coverage provided by the policy.
First, we will dispose of appellant's assertion that there is no evidence of bad faith on the part of the insurer. In Auto Mutual Indemnity Company v. Shaw, 3 the Supreme Court in a case of first impression on this subject, laid down the rule applicable to the instant point, when it stated on page 859:
* * *.'
The record in this case is replete with evidence of bad faith on the part of the insurance company. Unfortunately, limitations of space prohibit publishing the entire working file of the company in handling this claim, for in our opinion, it discloses a callous, stubborn, inflexible attitude upon the part of the insurer who determined in the face of uncontroverted proof of a valid claim against their insured, that the insurance company had no responsibility to attempt to effectuate a settlement. The insurance company, in complete control of the case, adopted this attitude notwithstanding their insured's continuous request to settle, without regard to their own attorney's advice that 'this is a case that should be settled', in spite of the trial judge's announced decision two weeks prior to trial that he would direct a verdict on the question of liability, and contrary to the decision of their own officials at the home office who a few days prior to trial concluded, 'We will have to make up our mind as to some offer in connection with this case.' Irrespective of the foregoing facts, the company never evaluated the claim, or made an offer of any settlement. From the outset, the matter of liability was known to every person handling Weintraub's claim against Davis and American Fire; notwithstanding this knowledge, the company made no good faith offer to even negotiate with Weintraub--much less settle. Such procrastination, inaction and attitude constitutes bad faith on the part of American Fire.
We now go to American Fire's contention that Davis, having paid no part of the excess judgment, and being a salaried employee without assets subject to levy, has not proven any damages, and that the trial judge erred by instructing the jury as to the specific amount of money (this being the sum of the excess judgment) to include in its verdict if it found in favor of plaintiff Davis. The insurance company insists and we agree that this question has not heretofore been specifically decided in this jurisdiction. However, it has been touched upon in two decisions. In Canal Insurance Company v. Sturgis, 4 this Court considered the primary question of the right of a third party, such as Weintraub in the instant case, to institute suit for the amount of the excess judgment against the insurance company. The Court analyzed the specific terms of the policy and concluded that such terms would not permit the third party to sue the insurance company. It further found that: 'No one can today question the legal right of the insured to sue the insurer for negligence or bad faith in failing to settle a claim within the policy limits for, if he has had to pay a part of the judgment, he has indeed suffered damages because of such failure of the insurer * * *.'
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