Berges v. Infinity Ins. Co.

Decision Date18 November 2004
Docket NumberNo. SC01-2846.,SC01-2846.
Citation896 So.2d 665
PartiesBarry BERGES, Petitioner, v. INFINITY INSURANCE COMPANY, Respondent.
CourtFlorida Supreme Court

Louis K. Rosenbloum, Pensacola, FL, Robert J. Mayes, Gulf Breeze, FL, Michael S. Rywant of Rywant, Alvarez, Jones, Russo and Guyton, P.A., and Lefferts L. Mabie, III, Tampa, FL, for Petitioner.

Tracy Raffles Gunn, of Fowler, White, Boggs and Banker, P.A., Tampa, FL, for Respondent.

Philip M. Burlington of Caruso, Burlington, Bohn and Campiani, P.A., West Palm Beach on behalf of Academy of Florida Trial Lawyers; Stephen E. Day and Rhonda B. Boggess, of Taylor, Day and Currie Attorneys at Law, Jacksonville, Florida on behalf of Florida Defense Lawyers' Association; and James Kaplan, Miami, Florida, and David M. Homes and Jeremy A. Stephenson, Chicago, Illinois of Wilson, Elser, Moskowitz, Edelman and Dicker, LLP on behalf of National Association of Independent Insurers, As Amici Curiae.

PARIENTE, C.J.

We have for review Infinity Insurance Co. v. Berges, 806 So.2d 504 (Fla. 2d DCA 2001), which expressly and directly conflicts with Government Employees Insurance Co. v. Grounds, 311 So.2d 164 (Fla. 1st DCA 1975). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.

This case concerns an insurer's fiduciary obligation to protect its insured from a judgment exceeding the limits of the insurance policy. An insurer's duty toward its insured was best summarized by this Court in 1980 in Boston Old Colony Insurance Co. v. Gutierrez, 386 So.2d 783 (Fla.1980):

An insurer, in handling the defense of claims against its insured, has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business. For when the insured has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement, then the insurer must assume a duty to exercise such control and make such decisions in good faith and with due regard for the interests of the insured.... 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. Because 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. at 785 (citations omitted).

The jury in this case found that the insurer, Infinity Insurance Company, acted in bad faith toward its insured, Barry Berges. The conflict issue presented is whether an offer to settle a claim on behalf of a minor prior to court approval is invalid as a matter of law. We conclude that court approval is not a prerequisite to a valid settlement offer for a minor.

We also conclude that the jury's finding of bad faith was supported by competent, substantial evidence. In reaching this conclusion, we apply well-established and long-standing jurisprudence in this State, and focus on the insurer's fiduciary obligation to its insured. Accordingly, we quash the Second District Court of Appeal's decision in Berges and remand for reinstatement of the final judgment.

I. FACTS AND PROCEDURAL HISTORY

In Berges, the Second District summarized the facts as follows:

On March 29, 1990, a vehicle driven by Marion Taylor collided with a vehicle owned by Berges but driven by a friend. The collision killed Marion Taylor and seriously injured her minor daughter, who was a passenger in the car. Berges was covered by an Infinity automobile insurance policy that had bodily injury limits of $10,000 per person and $20,000 per accident.

806 So.2d at 506. By April 30, 1990, Infinity had conducted an independent investigation of the accident. The investigator concluded that the driver of Berges' car had been intoxicated when crossing the center line and was "100%" at fault. The investigator also confirmed that Mrs. Taylor died as a result of the accident and her minor daughter sustained severe injuries generating more than $30,000 in medical bills.

[O]n May 2, 1990.... [Mr.] Taylor personally delivered to Infinity a hand-written letter offering to settle his wife's estate's death claim for the $10,000 policy limits and his daughter's personal injury claim for the $10,000 policy limits. He advised that his attorney had filed a petition seeking Taylor's appointment as personal representative of his wife's estate. However, he conditioned the settlement offer on the requirement that Infinity pay the estate's settlement amount within twenty-five days (by May 27, 1990), and the minor's claim by June 1, 1990. He agreed that the estate's funds could be paid to him personally or as personal representative. As an alternative, Taylor suggested that Infinity place the settlement funds in separate interest bearing accounts. Finally, he acknowledged that while it may take "special papers to be filed in court" to settle the minor's claim, he promised to work with the insurance company's lawyers to accomplish this.

Id.

Taylor advised Infinity that he needed the money paid on the claims within the time frames because he had missed a great deal of work due to the accident and was "getting doctor bills almost every day" for the injuries to his daughter, who was "hurt very bad" in the accident. Taylor stapled some of the medical bills to the letter and told Infinity that he anticipated many more, especially because his daughter had scarring from the surgery and the accident. Infinity did not send Berges a copy of Taylor's written offer to settle or otherwise inform Berges that a settlement offer had been submitted.

After obtaining authority from his supervisor, Infinity's claims adjuster, Robert Fryer, telephoned Taylor on May 11, 1990. Although the exact details of the telephone conversation were a source of conflict at trial, it is undisputed that at some point Fryer informed Taylor that Infinity was willing to pay the policy limits to settle the wrongful death and bodily injury claims. Fryer's handwritten notes of the conversation reflect that he informed Taylor that court approval would be necessary, that Infinity would pay and arrange for the paperwork and the court approval, and that Fryer would meet with Infinity's attorney on May 14, 1990, to discuss the details of the settlement.

What was disputed at trial is whether Taylor agreed to an extension of the time limits for the payment of the money as set forth in his May 2 demand letter. Infinity took the position at trial that the agreement reached during the May 11 conversation did not include paying the policy limits within Taylor's time deadlines. However, in contrast to Infinity's position, Taylor testified that Fryer had not requested that the deadline be extended or suspended and that he, Taylor, had not agreed to a change in the time limits.

The May 11 telephone conversation was the only contact between Taylor and Infinity subsequent to Taylor's May 2 delivery of his written offer to settle. The scheduled May 14 meeting between Fryer and Infinity's attorney regarding the details of the settlement never took place. Fryer did not inform Taylor that the meeting had not occurred.

On May 16, 1990, Infinity retained the services of an attorney, Kevin Korth, to seek the court's approval of the settlement claims involving Taylor's minor daughter. Contrary to Infinity's position at trial that the payment deadlines imposed by Taylor had been suspended after the May 11 conversation, Fryer told Korth in the May 16 retainer letter that Infinity was operating under a "time demand" as outlined by Taylor's May 2 letter, which Fryer enclosed for Korth's review. In fact, consistent with the understanding that Infinity was operating under a "time demand," Korth phoned Fryer on May 23 and informed him that there was a problem with obtaining the necessary court approvals and completing the settlement within the time period. An interoffice memorandum dated May 23, 1990, from Korth to his legal assistant also confirms that Korth was operating under the belief that the settlement should be completed "fairly quickly [because Taylor] lost his wife and his daughter was hurt very seriously and they are very intent on getting their money as quickly as possible."

Korth finally wrote to Taylor on May 24, 1990, thirteen days after the May 11 telephone conversation with Infinity, and only three days before the time limit to pay the wrongful death claim expired and seven days before the time limit to pay the minor's claim expired. In this letter, Korth advised Taylor only that Infinity was agreeing to pay the policy limits and that Korth was preparing the guardianship papers. Due to an incorrect zip code, the letter did not reach Taylor until June 20, 1990, after the settlement deadlines had expired. Thus, despite Fryer's assurances to Taylor on May 11, 1990, that Infinity would be in contact, Taylor did not hear from Infinity again until after the deadlines for settlement, when the letter was finally received.

On June 11, 1990, Taylor's attorney, Dale Swope, wrote to Infinity to advise Infinity that Taylor's May 2 written offer to settle was revoked due to Infinity's failure to pay the claims within the time prescribed in the letter. Swope then filed a wrongful death action against Berges on behalf of the estate as well as a personal injury claim on behalf of the minor.

Almost one month after the settlement deadlines expired, Infinity advised its insured, Berges, for the first time about the possibility of an excess judgment and his right to retain independent counsel. In a postscript, Infinity told Berges "that we have offered to pay your policy limits of $20,000 for the above claim, but Mr. Taylor refused to settle for that amount." The postscript did not mention the settlement deadlines...

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