Clauss v. Fortune Ins. Co., 87-1320

• Decision Date: 10 March 1988
• Docket Number: No. 87-1320,87-1320
• Parties: 13 Fla. L. Weekly 666 Kevin Patrick CLAUSS, Appellant, v. FORTUNE INSURANCE COMPANY, etc., Appellee.
• Court: Florida District Court of Appeals

Page 1177

523 So.2d 1177

13 Fla. L. Weekly 666

Kevin Patrick CLAUSS, Appellant, v. FORTUNE INSURANCE COMPANY, etc., Appellee.

No. 87-1320.

District Court of Appeal of Florida Fifth District.

March 10, 1988.

Rehearing Denied April 25, 1988.

Gregory E. Tucci of Berk & Tucci, P.A., Ocala, for appellant.

Jerri A. Blair of Austin, Lawrence & Landis, Leesburg, for appellee.

Wayne C. McCall of Ayres, Cluster, Curry, McCall & Briggs, P.A., Ocala, for amicus curiae The Academy of Florida Trial Lawyers.

DANIEL, Judge.

The issue in this case is whether the trial court properly determined that Fortune Insurance Company was not liable to the appellant, Kevin Clauss, for bad faith in settling a personal injury claim. We affirm.

Fortune issued a one-year insurance policy to Dennis Forrester, providing bodily injury and property damage liability coverage. Forrester and appellant, Kevin Patrick Clauss, were involved in a traffic accident on June 22, 1985. Clauss's attorney sent a letter to Robert Hanke, an insurance adjuster working for Fortune, on July 15, 1985, demanding that Fortune tender the limits of Forrester's bodily injury liability coverage within 20 days. On August 5, 1985, Clauss's attorney wrote another letter to Hanke, demanding that Fortune tender the limits of Forrester's policy within five days, otherwise the offer would be revoked. ¹ On August 7, 1985, Fortune requested medical reports from Clauss's attorney to verify the extent of Clauss's injury and expressed its desire to tender the policy limits after verification. By letter dated August 9, 1985, Clauss's attorney enclosed a medical report regarding Clauss's injuries, and Fortune was given five additional days to tender the policy limits. Clauss's attorney sent a letter to Fortune dated August 15, 1985, revoking the offer to settle the suit for the policy limits, and stating that suit had been filed against Forrester ² and would be filed against Fortune for bad faith failure to settle; a copy of that letter was sent to the Department of Insurance. On August 16, 1985, Fortune sent a letter to Clauss's attorney, in which the policy limits were tendered as well as a release form. By letter dated August 21, 1985, Clauss's attorney acknowledged receiving Fortune's August 16, 1985, letter (allegedly postmarked August 19, 1985), but refused to accept the prior settlement offer. ³ Fortune filed a complaint seeking declaratory relief as to its liability to Clauss for a lack of good faith to settle the claim and as to whether section 624.155, Florida Statutes (1985), had preempted any other remedy for a lack of good faith of an insurer to settle claims when it should have done so.

Clauss filed an answer and a counterclaim seeking damages (1) for Fortune's alleged breach of its fiduciary duty to act fairly and honestly towards its insured, Forrester, in settling the personal injury claim; and (2) under section 624.155 for bad faith in settling the personal injury claim.

The trial court entered a final judgment, determining that section 624.155 had preempted the common law bad faith cause of action; that Fortune tendered its policy limits within 60 days of the date of the accident and was therefore in compliance with section 624.155; and that Fortune was entitled to a summary judgment as a matter of law as to all issues raised in Clauss's counterclaim. ⁴

Under Florida common law, it was recognized that the existence of the fiduciary relationship between the parties under the liability provisions of a policy imposed upon the insurer the obligation of exercising good faith in negotiating for and in effecting a settlement of the claim against an insured. The insurer was subject to excess liability if it acted in bad faith or through fraud. Baxter v. Royal Indemnity Company, 285 So.2d 652, 656 (Fla. 1st DCA 1973), cert. discharged, 317 So.2d 725 (Fla.1975). An insurer in defending claims against an insured had a duty to use the same degree of care and diligence that a person of ordinary care and prudence should exercise in the management of his own business. Boston Old Colony Insurance Company v. Gutierrez, 386 So.2d 783, 785 (Fla.1980). The insurer was required to investigate the facts, give fair consideration to a settlement offer that was not unreasonable under the facts, and settle, if possible, when a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Id. at 785. Thus, an insured could file a claim against his insurer for failing in good faith to settle a third party's claim, since he would be exposed to liability in excess of his insurance coverage. Moreover, it was also well established in Florida that a judgment creditor could maintain suit directly against the tortfeasor's liability insurer for recovery of the judgment in excess of the policy limits, based on the alleged bad faith of the insurer in the conduct or the handling of the suit. See, e.g.,...