Cunningham v. Standard Guar. Ins. Co.
| Decision Date | 06 January 1994 |
| Docket Number | No. 81056,81056 |
| Citation | 630 So.2d 179 |
| Parties | 19 Fla. L. Weekly S18 Kenneth Dale CUNNINGHAM and Teresa Marie Cunningham, Petitioners, v. STANDARD GUARANTY INSURANCE COMPANY, Respondent. |
| Court | Florida Supreme Court |
Louis K. Rosenbloum, Lefferts L. Mabie, Jr. and James A. Hightower of Levin, Middlebrooks Mabie, Thomas, Mayes & Mitchell, P.A., Pensacola, for petitioners.
David H. Burns of the Law Offices of David H. Burns, and Michael D. West and Joseph E. Brooks of Huey, Guilday, Kuersteiner & Tucker, P.A., Tallahassee, for respondent.
We review Standard Guaranty Insurance Co. v. Cunningham, 610 So.2d 458 (Fla. 1st DCA 1992), in which the court certified the following question of great public importance:
DOES THE TRIAL COURT HAVE JURISDICTION TO DECIDE AN INSURER'S LIABILITY FOR BAD-FAITH HANDLING OF A CLAIM PRIOR TO FINAL DETERMINATION OF THE UNDERLYING TORT ACTION FOR DAMAGES BROUGHT BY THE INJURED PARTY AGAINST THE INSURED WHERE THE PARTIES STIPULATE THAT THE BAD-FAITH ACTION MAY BE TRIED BEFORE THE UNDERLYING NEGLIGENCE CLAIM?
Id. at 460. We have jurisdiction under article V, section 3(b)(4) of the Florida Constitution.
Kenneth Dale Cunningham and Teresa Marie Cunningham sustained injuries and property damage as a result of an automobile collision with Joseph Grant James. The Cunninghams filed a complaint for damages against James alleging that the accident was caused by James' negligent operation of a motor vehicle. James' automobile insurance policy with Standard Guaranty Insurance Company had a bodily injury liability limit of $10,000 and a property damage liability limit of $10,000. After the action had been pending for several months without settlement, the Cunninghams added Standard Guaranty as a party to the lawsuit alleging that Standard Guaranty had acted in bad faith by failing to settle the claim. Standard Guaranty and the Cunninghams then entered into an agreement to try the bad-faith action before trying the underlying negligence claim. The parties further stipulated that if no bad faith was found, the Cunninghams' claims would be settled for the policy limits, and James would not be exposed to an excess judgment.
A jury found Standard Guaranty guilty of bad faith in handling the claim. Standard Guaranty then filed motions for a directed verdict and for a new trial. At the hearing on these motions, Standard Guaranty made an ore tenus motion to dismiss for lack of subject-matter jurisdiction based upon the recently decided case of Dixie Insurance Co. v. Gaffney, 582 So.2d 64 (Fla. 1st DCA 1991). The trial court denied all of the motions. Standard Guaranty and James then filed an admission of liability on the part of James for causing the accident and moved for the entry of a judgment against Standard Guaranty on the issue of bad faith and liability in order to position Standard Guaranty for an appeal. The court then entered a final judgment finding that Standard Guaranty had acted in bad faith and that James' negligence was the sole legal cause of the Cunninghams' damages. The judgment provided for the issue of damages to be tried at a later date. Relying upon its decision in Dixie and this Court's holding in Fidelity & Casualty Co. v. Cope, 462 So.2d 459 (Fla.1985), the district court of appeal vacated the judgment on the basis that the trial court had no jurisdiction to determine the bad faith of Standard Guaranty prior to the entry of a judgment against James in excess of the policy limits on the underlying tort claim.
In Dixie, during the pendency of the underlying tort action against its insured, an insurance company sought a declaratory judgment that it was not guilty of bad faith in the handling of its insured's claim. The parties, by stipulation, agreed to stay the negligence action until the declaratory judgment issue was resolved. The trial court held that it lacked jurisdiction because there was no bona fide, actual, present, and practical need for the declaration sought before the underlying tort claim was resolved, and the appellate court affirmed. More recently, the Fifth District Court of Appeal reached a similar conclusion. State Farm Mut. Auto. Ins. Co. v. Marshall, 618 So.2d 1377 (Fla. 5th DCA 1993).
Cope involved a bad-faith action brought by an injured party against an insurance company after the injured party had released the insured tortfeasor from all liability. In that case we acknowledged that the essence of a third-party bad-faith cause of action is to remedy a situation in which an insured is exposed to an excess judgment because of the insurer's failure to properly or promptly defend the claim. Cope, 462 So.2d at 460. We held that when an injured party releases an insured from liability, or when the underlying judgment has been satisfied, a cause of action for bad faith against the insurer no longer exists. Id. at 461. Significantly, however, in that case the underlying claim no longer existed, whereas in the instant case there was a stipulation which preserved the underlying claim.
We acknowledge that the parties cannot stipulate to jurisdiction over the subject matter where none exists, see, e.g., Lovett v. Lovett, 93 Fla. 611, 112 So. 768 (1927), and that the defense of subject-matter jurisdiction can be raised at any time. Fla.R.Civ.P. 1.140(h)(2). However, we cannot accept the proposition that the trial court in the instant case lacked subject-matter jurisdiction. Although an excess judgment is an element of a bad-faith claim, we agree with Judge Wolf who stated in his concurring opinion, "I do not believe that the failure to allege and prove this element rises to the level of a jurisdictional defect which cannot be waived." Standard Guaranty, 610 So.2d at 460 (Wolf, J., concurring).
In Lovett, this Court explained that subject-matter jurisdiction concerns the power of the trial court to deal with a class of cases to which a particular case...
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