Campbell v. Government Employees Ins. Co.

• Decision Date: 18 December 1974
• Docket Number: No. 45167,45167
• Citation: 85 A.L.R.3d 1200,306 So.2d 525
• Parties: Harvey CAMPBELL, Petitioner, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Respondent.
• Court: Florida Supreme Court

Page 525

306 So.2d 525

85 A.L.R.3d 1200

Harvey CAMPBELL, Petitioner, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Respondent.

No. 45167.

Supreme Court of Florida.

Dec. 18, 1974.

Rehearing Denied Feb. 13, 1975.

Lefferts L. Mabie, Jr., Levin, Warfield, Middlebrooks, Graff, Mabie, Rosenbloum & Magie, Pensacola, and Robert Orseck, of Podhurst, Orseck & Parks, Miami, for petitioner.

Benjamin W. Redding, Barron, Redding, Boggs & Hughes, Panama City, and Leon Handley, Gurney, Gurney & Handley, Orlando, for respondent.

ERVIN, Justice.

We review through writ of conflict certiorari the decision of the District Court of Appeal, First District, in Government Employees Insurance Co. v. Campbell, 288 So.2d 513.

The principal question involved in this review is whether from the factual situation appearing in the majority and dissenting opinions of the District Court it was proper for the District Court to reverse as a matter of law the trial court's judgment awarding compensatory and punitive damages to plaintiff, the insured, entered pursuant to a jury's verdict finding that the defendant, a public liability automobile insurer, had failed to exercise good failth in protecting its insured by a timely settlement of a claim of an injured child against insured as tort-feasor within policy limits of insurer's coverage, resulting in insured having to pay several thousand dollars excess above policy limits.

We first set forth portions of the District Court opinions in this cause appearing in 288 So.2d 513, et seq., including the majority opinions originally and on rehearing, and the dissenting opinion of Judge Boyer, in order to demonstrate conflict.

From the original majority opinion written by Judge Carroll for the District Court, it appears:

'This action was based upon an earlier action arising out of a collision between an automobile driven by the appellee's son and one driven by one Larry Washington, a minor.* A jury trial resulted in a judgment against the appellee in the amount of $18,500 plus costs. On appeal we affirmed this judgment, as reported in Campbell v. Washington, 240 So.2d 340 (Fla.App.1970).

'At the time of the said collision the appellee was covered by a public liability insurance policy issued by the appellant with the policy limits of $10,000. In the final settlement after judgment the appellant paid this limit and the appellee paid the excess.

'The present action was then filed by the appellee-plaintiff alleging that the defendant-insurer acted in bad faith in failing to settle the Washington case within the policy limits, claiming both compensatory and punitive damages. At the trial the jury returned a verdict against the defendant of $9,384 compensatory damages and $25,000 punitive damages. The court entered a judgment for $34,384 and assessed costs and attorney's fees in the amount of $9,500.

'At the trial witnesses testified that Washington prior to his trial had offered to settle for $3,500 and the insurer came back with $2,000. Washington then demanded $5,000 and the insurer restated its $2,000 offer. Later Washington demanded $7,500 and the insurer raised its offer to $2,500 and also set up a reserve of $4,200.50 (Actually, $4,250.00.)

'In view of the evidence available concerning Washington's injuries and medical expenses, we cannot say that the mere fact that the insurer failed to settle the Washington case within the policy limits was evidence of bad faith on its part. . .

'(2) We hold, therefore, that the evidence at the trial of the case at bar was insufficient to support the jury's finding that the appellant-insurer was guilty of bad faith in refusing to settle the Washington claim within the policy limits.

'Therefore, there was no basis for the jury to find compensatory damages in the amount of $9,384. This being so, there could be no basis for the punitive damages, for there was no evidence that the insurer's refusal to settle within the policy limits was malicious or otherwise so severe a breach of duty as to justify the award of punitive damages.

'(3) Finally, we think that the assessment of attorney's fees against the insurer of $9,500 was excessive in the light of the circumstances of this case.' (288 So.2d at 514--515.)

On rehearing the majority of the District Court, Judges Rawls and Wigginton, adhered to the opinion written by Judge Carroll. Judge Boyer dissented. The majority said:

'. . . The evidence reveals that the highest value placed by appellant (insurer) on the injured party's claim was the sum of $2,500.00. The highest value placed by plaintiff (Washington) on his own claim was the sum of $7,500.00, the acceptance of which his attorney was willing to recommend in settlement. Even so, by his proposal for settlement, he indicated a willingness to negotiate for less. After trial, the jury returned a verdict in favor of the injured plaintiff in the sum of $18,500.00. From the foregoing, it is self-evident that both parties were either guilty of a gross error of judgment in their evaluation of the injured party's claim prior to trial or the jury was excessively generous in its award of damages. In either event, it does not follow that such error in judgment by appellant in evaluating the claim against it constituted bad faith as a matter of law. Had appellant accepted the offer of the injured plaintiff to settle his claim for $7,500.00 before trial and settlement was made on that basis, could that plaintiff later have maintained a malpractice suit for damages against his own attorney for bad faith in having recommended settlement of his claim for less than one-half of what it was worth? We think such a position would be untenable and could not be sustained.' (288 So.2d at 516.)

Judge Boyer pointed out in his dissenting opinion:

'The defendant-appellant (insurer) was fully aware that it had only $10,000 policy exposure.

'The injured party's initial demand for settlement of $3,500 was countered with the insurer's offer of $2,000. Although the insurer never offered the claimant more than $2,500 as settlement, it set up a reserve of $4,250.

'On the liability side, the insurer's trial attorney in the initial personal injury action testified at the trial of the case sub judice that his feeling toward the case was such that he would have a 20 to 30 percent chance of winning. Less than a 50--50 chance on liability, I observe. An expert witness called by the defendant in the case sub judice testified that based upon a review of the file, in his opinion there was only a 50--50 chance of winning the case on liability.

'By letter dated April 1, 1969, the injured party's attorney quoted to the insurer's attorney the applicable Alabama law relative to minors and contributory negligence and in the same letter concluded by saying:

"I believe the case has a settlement value of $7,500.00. Certainly, its value is considerably more than $2,500.00. If you have a counteroffer in mind, please let me have it.'

'The above offer of settlement was transmitted to the insurer's claim examiner by letter dated April 4, 1969, but the suggestion by the injured party's attorney for a counter offer was ignored. Other settlement offers within the policy limits were repeatedly rejected by the insurer.

'By letter dated April 16, 1969, the claim examiner was informed that the injured child was only eight years of age and that 'he is not the brightest 8 year old that I have ever seen and a jury may very well conclude that he is not capable under Alabama law of contributory negligence. He also has an appealing appearance.'

'On June 3, 1969, the injured party's attorney for a second time informed the insurer's attorney that the injured child had sustained a permanent injury to his leg which would result in his left leg being shorter than his right leg for the remainder of his natural life and that he would be required to wear an orthopedic shoe or a shoe with a lift built under the shoe in order to compensate for the difference in leg lengths. He reiterated:

"I am confident that the law of Alabama means exactly what it says, that is, that contributory negligence is not a defense in this action unless the defendant establishes that Larry Washington had the maturity and discretion which is possessed by a child 14 years of age. I am confident that there will be no such evidence to establish that Larry had such discretion and prudence.'

'As I understand the law it is not the office of an appellate court to determine what verdict it would have rendered had it been the jury, but rather whether or not there was substantial credible evidence before the jury to sustain the verdict which it did in fact enter. In my opinion the jury could have found from the evidence in this case, and apparently it did find, that the insurer did not act in good faith in refusing to settle the injured party's claim in the suit giving rise to the case sub judice within the policy limits. In view of the evidence that the defense attorney thought he had only a 20 or 30 percent chance of winning, and knowledge that the child's injury was permanent resulting in one leg being one and one-half inches shorter than another I do not agree that we can say, as a matter of law, that the jury erred.' (288 So.2d at 517.)

It appeared to us that conflict of decisions existed due to the nature of the several District Court opinions and we issued writ of certiorari. As for the dissenting opinion being a predicate for conflict certiorari, see Commerce National Bank in Lake Worth v. Safeco Ins. Co. (Fla.1973), 24 So.2d 205. Having ascertained conflict existed we then examined the transcript of record, which bolstered our view of decisional conflict.

Conflict appeals between the instant District Court decision and Auto Mutual Indemnity Company v. Shaw, 134 Fla. 815, 184 So. 852. In the latter case it was held an insurance company owed an obligation to its insured by virtue of its contract to negotiate with claimant in good faith, and that...