Contreras v. U.S. Sec. Ins. Co.

• Decision Date: 22 March 2006
• Docket Number: No. 4D04-1427.,No. 4D04-4175.,4D04-1427.,4D04-4175.
• Citation: 927 So.2d 16
• Parties: Carmen Maria CONTRERAS, as Administrator and Personal Representative of the Estate of Flor Torres Osterman and Guardian for and on behalf of Carmen Lorena Duarte, a minor child, as assignee of Kenneth A. Welt, Trustee, Appellant, v. U.S. SECURITY INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

927 So.2d 16

Carmen Maria CONTRERAS, as Administrator and Personal Representative of the Estate of Flor Torres Osterman and Guardian for and on behalf of Carmen Lorena Duarte, a minor child, as assignee of Kenneth A. Welt, Trustee, Appellant, v. U.S. SECURITY INSURANCE COMPANY, Appellee.

No. 4D04-1427.

No. 4D04-4175.

District Court of Appeal of Florida, Fourth District.

March 22, 2006.

Rehearing Denied May 23, 2006.

Marjorie Gadarian Graham of Marjorie Gadarian Graham, P.A., Palm Beach Gardens, Joseph S. Kashi of Sperry Shapiro & Kashi, P.A., Plantation, and Diego C. Asencio of Diego C. Asencio, P.A., North Palm Beach, for appellant.

David B. Pakula of David B. Pakula, P.A., Pembroke Pines, for appellee.

HAZOURI, J.

Carmen Maria Contreras, as personal representative of the estate of her daughter, Flor Torres Osterman, as guardian of Flor's daughter, and as assignee of the claim of Deana Dessanti, the owner of the vehicle which struck and killed Flor, appeals the final judgment directing a verdict in favor of U.S. Security Insurance Company, Dessanti's insurance carrier, on a claim of bad faith. Contreras also appeals a final cost judgment which was entered against her. We reverse.

This bad faith lawsuit arose out of a tragic automobile accident that occurred on July 17, 1992, when the decedent, Flor Torres Osterman, was walking on the side of a road in a residential area in Broward County when she was hit and killed by a car owned by Deana Dessanti and driven by Arnold Blair Dale. Dale was driving Dessanti's car with her knowledge and permission. At the time of the automobile accident, Dale was driving at a high rate of speed and had consumed alcoholic beverages. He was charged with DUI manslaughter and leaving the scene of an accident with injuries.

Dessanti's vehicle was insured under an automobile liability insurance policy with U.S. Security which provided bodily injury coverage. Dale, although not a named insured, was an additional insured by virtue of being a permissive user of Dessanti's vehicle.

Dessanti reported the accident to U.S. Security on July 21, 1992, and three days later claims adjuster, Marlene Plasencia, was assigned to investigate and handle the claim. On July 28, 1992, Plasencia received a letter from Contreras's attorney, Carlos Velasquez, notifying her of his representation of the decedent's estate.

On August 5, 1992, Velasquez sent a letter to Plasencia in which he made the following demand:

Our investigation to date reveals that Deana Dessanti had given permission to Arnold Blair Dale to drive her vehicle and that at the time of this incident your insured had coverage up to $10,000 per person and $20,000 per accident. If such is the case, I am hereby demanding as counsel for the estate of Flora Torres your tender of the policy limits within fifteen (15) days from the receipt of this correspondence.

On August 13, 1992, Plasencia sent Velasquez a letter tendering the policy limits along with a general release form discharging both Dessanti and Dale and all others who might have claims against them as a result of this accident. On September 23, 1992, Velasquez responded to Plasencia's letter of August 13, rejecting Plasencia's offer of the policy limits due to the inclusion of Dale and all others on the release. Velasquez offered to accept the policy limits in exchange for a release of Dessanti and U.S. Security, but not Dale. The offer was good until October 15, 1992. Velasquez enclosed with the letter a general release form for execution which would release both Dessanti and U.S. Security. Velasquez advised U.S. Security that because of the gravity of Dale's misconduct, the personal representative of the decedent's estate was not willing to settle the claim against Dale and was unwilling to give him a release.

On September 28, 1992, attorney Mike Nuzzo, who had been hired by U.S. Security, wrote a letter to Velasquez at Plasencia's request. The letter stated as follows:

Please be advised that I have been requested by Marlene Plasencia from U.S. Security Insurance Company to respond to your letter dated Sept. 23, 1992. First, please be advised that your aforementioned letter does not acknowledge that the driver Arnold Blair Dale is also an insured (covered person) under the policy of insurance issued by U.S. Security Insurance Company to the named insured — owner Deana A. Dessanti. Of course, you understand that under Florida law Mr. Dale became an insured under the U.S. [sic] Insurance Company policy because at the time of the accident he was operating Ms. Dessanti's 1984 Chevrolet with Ms. Dessanti's consent and permission.

Consequently, pursuant to Florida law U.S. Security Insurance Company is obligated to act in good faith to the named insured/owner Deana Dessanti and to the insured/driver Mr. Arnold Blair Dale. That is the reason that the release provided to you by Ms. Plasencia in her letter dated Aug. 13, 1992 included Mr. Dale.

Please note that U.S. Security agrees that this case is serious, however, U.S. Security must act in good faith to all of its insureds. Therefore you can understand why U.S. Security cannot enter into a release which operates to fully exonerate one insured while not releasing the second insured.¹

In closing, if you have any additional suggestions as to how this matter can be settled without U.S. Security standing in a position of bad faith to one of its insureds I and U.S. Security would be more than happy to hear your suggestions.

(Emphasis added).

U.S. Security's insurance policy specified as follows with regard to its duty to defend and indemnify:

We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an automobile accident. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted.

(Emphasis added).

After the deadline set by Velasquez in his letter of September 23, 1992 expired, Contreras filed a wrongful death suit against Dale and Dessanti which ultimately was tried by a jury in December 1994, resulting in a judgment for compensatory damages against Dessanti and Dale for $1,000,000, as well as a punitive damage judgment against Dale in the amount of $110,000 which was later remitted to $5,000. In addition to the final judgment of $1,000,000 entered against Dessanti and Dale, a cost judgment in the amount of $13,143.05 was also entered against Dessanti. This judgment was affirmed by this court in Dessanti v. Contreras, 695 So.2d 845 (Fla. 4th DCA 1997).

Dessanti had filed for bankruptcy prior to the final judgment. After the entry of the final judgment in the wrongful death case, Dessanti's trustee in bankruptcy, Kenneth A. Welt, executed an assignment to Contreras of Dessanti's cause of action for bad faith against U.S. Security. After obtaining the assignment, Contreras filed the bad faith claim and proceeded to trial.

At the close of Contreras's presentation of her evidence in this case, U.S. Security moved for and was granted a directed verdict. In granting U.S. Security's motion for a directed verdict, the trial court was persuaded by Nuzzo's argument that U.S. Security was obligated to act in good faith to both Dessanti and Dale as covered insureds, and therefore, U.S. Security could not enter into a settlement and release which operated to totally exonerate Dessanti without releasing Dale. In arriving at the conclusion that U.S. Security was entitled to a directed verdict, the trial judge stated:

It [the offer to settle with Dessanti but not Dale] immediately places the insurance company then in the Hobson's choice. If they don't agree to that, they're sued for bad faith, and if they do agree to it, they're sued for bad faith.

If they agree to it and cut Dale loose, the Plaintiff simply takes an assignment from Dale. If they don't agree to it and leave Dessanti in, the Plaintiff simply takes an assignment from Dessanti. The Plaintiff's protected either way and the insurance company loses either way, and I don't think that's the state of the law. By creating it that way, what, in essence, the Court is permitting is it's letting the Plaintiff dictate whether a bad faith claim arises as opposed to looking at the conduct of the insurance company. It creates an automatic bad faith. Either Dessanti should have been protected and wasn't, in which case she has a bad faith claim, or Dale is cut loose and the insurance company had a duty to defend him, in which case he has a bad faith claim, and the insurance company is sitting squarely in the middle with no way to turn.

The standard of review on appeal of the trial court's ruling on a motion for directed verdict is de novo. Flagstar Cos. v. Cole-Ehlinger, 909 So.2d 320 (Fla. 4th DCA 2005). In reviewing the granting of a directed verdict, an appellate court must view the evidence and all inferences of fact in the light most favorable to the nonmoving party, and can affirm a directed verdict only when no proper view of the evidence could sustain a verdict in favor of the nonmoving party. See Decarlo v. Griffin, 827 So.2d 348, 350 (Fla. 4th DCA 2002).

Contreras argues that the trial court erred in concluding that the issue in this case is whether an insurer which owes a duty of good faith to two covered insureds, can be held in bad faith for offering its policy limits and requiring a release of both of its insureds where the claimant is unwilling to settle with one of the insureds. Contreras asserts that is not the issue. She asserts that the issue is, whether an insurer acts in bad faith in refusing to pay a reasonable settlement demand in order to obtain a release of one of its two insureds, where the claimant refuses to settle with the other insured. We agree with Contreras's formulation of the issue at hand because under our case law the gravamen of what...