Baxter v. Royal Indem. Co., 44842

• Decision Date: 28 May 1975
• Docket Number: No. 44842,44842
• Parties: Foy BAXTER and Annie Smith Baxter, Petitioners, v. ROYAL INDEMNITY COMPANY, Respondent.
• Court: Florida Supreme Court

Page 725

317 So.2d 725

Foy BAXTER and Annie Smith Baxter, Petitioners, v. ROYAL INDEMNITY COMPANY, Respondent.

No. 44842.

Supreme Court of Florida.

May 28, 1975.

Rehearing Denied Sept. 25, 1975.

J. Ben Watkins, of Watkins, & Hill, Miami, for petitioners.

J. Lewis Hall, Tallahassee, for respondent.

J. B. Spence of Spence, Payne & Masington, and Robert Orseck of Podhurst, Orseck & Parks, Miami for The Academy of Florida Trial Lawyers, amicus curiae.

ENGLAND, Justice.

This case is here on a petition for certiorari to the First District Court of Appeal, asking us to review an opinion reported at 285 So.2d 652. A majority of the Court tentatively accepted jurisdiction based on a conflict with other Florida appellate decisions, ¹ and we considered the merits and reconsidered jurisdiction after both parties had waived oral argument. Our review of the full record and the briefs of counsel persuade us that the decision below is not in conflict with any Florida appellate case, and that we do not have jurisdiction to consider the merits.

Petitioners brought an action against their automobile insurance carrier after they had received the full amount payable under the uninsured motorist clause contained in their policy, seeking compensatory and punitive damages in excess of the policy's limits. Their second amended complaint was dismissed for failure to state a cause of action, and the First District Court of Appeal affirmed the dismissal. ² A complete recital of the basis for petitioners' suit is set forth in the opinion below.

In denying petitioners the legal opportunity to recover more than the policy limits from respondent, the district court held that there is no fiduciary relationship between the insureds and their insurer with respect to the carrier's liability under the uninsured motorist clause of an insurance contract, and that the parties occupy a debtor-creditor type relationship for purposes of this class of insurance protection. ³ In so deciding the district court recognized as valid, but distinguished, the body of law which has developed in this state to the effect that a fiduciary obligation does exist between insured and insurer under the bodily injury and property damage liability provisions of an automobile insurance contract.

Our review of the authorities alleged to establish the jurisdiction of this Court fails to reveal any conflict in appellate decisions which would authorize our review.

(1) Petitioners allege conflict with the decision of this Court ⁴ which holds that an insurance company must exercise good faith in order to invoke a contract appraisal (arbitration) clause as a defense to the claim of its insured. The Court in that case, however, merely held that an insured was privileged to come into court to enforce its insurance policy where the carrier invoked a damage-setting arbitration clause in bad faith, I.e., for the purpose of resolving both damages (which was proper under the contract clause) and liability (which was not). Nothing in that case conflicts with the district court's determination that no 'excess' cause of action arises from a carrier's bad faith invocation of an arbitration clause expressly designed to fix both damages and liability, prior to paying the policy limits demanded.

(2) Petitioners allege conflict with the line of decisions which hold that insurance companies have a fiduciary obligation to their insureds ⁵ and to persons who stand in the legal shoes of their insureds. ⁶ All of those cases involve the carrier's liability for bodily injury or property damage, however, which are precisely the cases which the court below distinguished on policy grounds and did not disturb. Obviously those cases cannot be in conflict with the case now brought here for certiorari review.

(3) Petitioners allege conflict with the case law of Florida which authorizes the imposition of punitive damages in a common law action for fraud or malice, ⁷ and in tort for malice or an intentional wrong. ⁸ There is no direct conflict between these non-insurance cases and the district court's determination that no cause of action for punitive damages can be predicated on a carrier's insistence on contract arbitration.

(4) Finally, petitioners allege conflict with Government Employees Insurance Co. v. Whitaker, 218 So.2d 198 (1st Dist.Ct.Ct.App.1969), a case which did involve an interpretation of the uninsured motorist clause of an insurance contract. In that case the court held that the carrier could not resort to arbitration after it had refused to deal in good faith to resolve its insured's claim for compensation, and that the insured could proceed in the courts of this state to determine, within policy limits the amount of his claim. The court held that the carrier, by its conduct, had waived its right to invoke arbitration. Government Employees is the antithesis of the case now before us. Whereas in Government Employees the carrier had refused arbitration until a lawsuit under the policy was commenced, in this case the carrier went to arbitration and tendered the full amount awarded before petitioners sued for excess amounts. Whereas in Government Employees the insured claimed compensation within the policy limits, in this case the insured has collected the full policy limits and now demands damages in excess of the contract terms. Whereas in Government Employees the court held that a contract right to arbitration can be waived by misconduct, in this case we are asked to hold that a contract right to arbitration cannot be invoked by reason of misconduct. We find nothing in Government Employees which conflicts with the decision below.

There being no 'direct conflict with a decision of any district court of appeal or of the supreme court on the same question of law', ⁹ we are without jurisdiction to consider the merits of petitioners' case. The writ of certiorari to the First District Court of Appeal is discharged.

ROBERTS, BOYD and OVERTON, JJ., concur.

DEKLE (Retired), J., dissents with opinion with which ADKINS, C.J., and McCAIN, J., concur.

DEKLE, Justice, Ret. (dissenting):

Can an insurer be held liable to its own insured for a bad faith refusal to settle a claim under an Uninsured motorist provision of its policy?

That is the question presented here on conflict certiorari from the First District Court of Appeal opinion reported at 285 So.2d 652 (1973) which held that a complaint based on such a theory did not state a cause of action. Oral argument was waived after issuance of our writ granting the petition and setting the cause for oral argument.

Since the cause comes to us in the posture of a dismissal of the complaint for failure to state a cause of action, it must be determined whether the facts alleged in the complaint are sufficient to support recovery of the money judgment sought under any theory of law, without being concerned at this point with the question of the factual correctness of these allegations, but merely their sufficiency to support a cause of action. On this basis, the facts are as follows: The vehicle owned by petitioners, and insured under the policy in question, was struck by another vehicle negligently operated by an uninsured motorist who was solely at fault, resulting in the death of petitioners' minor son and serious permanent injury to petitioners' minor daughter. Petitioners made demand on the insurer (respondent herein) for payment to them of the full amount of uninsured motorist coverage provided by the policy they held, which demand was refused by the insurer until the existence and amount of liability imposed upon it were fixed by arbitration as provided by the policy, ¹ despite only minimum coverage of $20,000.00 under uninsured motorist coverage, and in the face of one death and a serious injury, and an investigation showing the uninsured motorist to be at fault for the accident. Arbitration proceedings, nevertheless, were conducted at respondent's insistence and not surprisingly resulted in an order in favor of petitioners, awarding them the full amount of coverage provided by the policy for the death and injuries of the children, just as they had offered to accept at the outset. The amount awarded by the arbitrators was thereupon paid by the insurer, following which the action Sub judice was instituted.

In a two-count complaint petitioners allege that the insurer was guilty of bad faith in negotiating, evaluating and paying the benefits due them under circumstances where the insurer owed a legal duty to act in good faith; that because of such bad faith, petitioners seek judgment for the full amount of damages suffered by them as a result of the death and injuries sustained by their children (in excess of policy limits). Secondarily, they allege that as a result of the bad faith negotiations of the insurer, they were caused to incur additional expenses in the collection of benefits due them under the policy and further suffered great mental stress and physical pain as a result of such conduct. Whether the last asserted item of damage is recoverable in such a cause of action is not considered here. The complaint also alleges that the insurer's bad faith and wanton handling of petitioners' claim were motivated by malice sufficient to warrant the imposition of punitive damages.

The trial court held that the complaint failed to state a cause of action upon which any relief could be granted and accordingly entered a judgment of dismissal. ² The First District Court of Appeal affirmed, holding that under such circumstances the insurer was entitled to invoke the arbitration clause for Whatever reason it desired and that there was no fiduciary relationship between insurer and insured under the circumstances. Petition for certiorari was filed, and we tentatively accepted jurisdiction on the basis of conflict of decisions. Art. V, § 3(b)(3), Fla.Const.

The question presented, as the district court aptly summarized it at 285 So.2d...