Florida Farm Bureau Mut. Ins. Co. v. Rice, MM-237
| Citation | 393 So.2d 552 |
| Decision Date | 27 October 1980 |
| Docket Number | No. MM-237,MM-237 |
| Parties | FLORIDA FARM BUREAU MUTUAL INSURANCE COMPANY, Appellant, v. Gene W. RICE, Appellee. |
| Court | Court of Appeal of Florida (US) |
Luke G. Galant, of Dawson, Galant, Maddox, Sulik & Nichols, Jacksonville, for appellant.
David R. Lewis and Fred C. Isaac, of Lewis, Paul, Isaac & Castillo, Jacksonville, for appellee.
This cause is before us on appeal from a final judgment awarding damages in excess of policy limits against appellant, Florida Farm Bureau, based on its failure to defend its insured in a personal injury action brought by appellee, Rice. The instant case is predicated on the earlier personal injury action, wherein Gene Rice, as plaintiff, recovered a consent judgment of $75,000 plus costs against Wayne Eichholz, driver of the car which struck the motorcycle ridden by Rice. Eichholz was the insured under an automobile liability policy issued by Farm Bureau, but the insurer denied coverage for the accident and refused to defend Eichholz in the suit. The trial court appointed an attorney to represent Eichholz under the provisions of the Soldiers Civil Liberty Act, 1 and judgment was subsequently entered based on the consent agreement of attorneys for Eichholz and Rice. Thereafter, Rice brought suit as a third party beneficiary under Eichholz's policy against Farm Bureau for the full amount of the judgment obtained. The cause was tried by the court without a jury and resulted in the final judgment herein sought to be reviewed on the full amount of the personal injury judgment plus interest and costs.
The accident resulting in serious injury to Rice occurred on April 29, 1977. Rice was riding as a passenger on a motorcycle when struck by a Pontiac automobile driven by Wayne Eichholz and owned by Eichholz's mother-in-law, Evelyn Larsen. At the time of the accident, there was in effect a policy of automobile liability insurance issued to Eichholz, under which a pickup truck owned by Eichholz was the described vehicle. Mrs. Larsen had no insurance policy on her automobile.
Eichholz reported the collision to Farm Bureau through his agent, a file was opened on the claim and the agent took a recorded statement from Eichholz concerning the details of the collision and his possession and use of the Larsen automobile. A few weeks later, another Farm Bureau agent, Richard McCulloch, took over the claim file and advised both his principal, Farm Bureau, and the attorney for the plaintiff that there was no coverage under the policy because Mrs. Larsen was a member of the household and, also, because the automobile involved in the accident was regularly available for the use of her son-in-law.
After the foregoing determination was made by agent McCulloch, he took a second recorded statement from Eichholz, which indicated the incorrectness of the factual basis for denying coverage. This second interview revealed that, in fact, the mother-in-law was not a member of the Eichholz household and that the vehicle had been in a state of disrepair and non-operable until the day prior to the accident. Agent McCulloch, however, remained silent with regard to the second statement and did not reveal the facts indicating there was coverage. Finally, the agent sent Farm Bureau's attorney a copy of a Farm Bureau policy other than the one issued to Eichholz and which contained exclusionary provisions materially different from the correct policy. 2 The trial court found that Farm Bureau's attorney relied on the incorrect policy furnished by the Farm Bureau agent and sent a copy of this policy to plaintiff's attorney, with the result that Farm Bureau was dropped as a party to the lawsuit.
At this point, Eichholz was without defense or coverage in the suit. He was in the Naval service and, therefore, able to apply to the court for an appointment of an attorney ad litem to represent him. The attorney appointed consulted with his client and met with the attorneys for the plaintiff. A consent settlement was negotiated in the personal injury action, which was submitted to the circuit court and judgment entered therein against Eichholz.
After the consent judgment was entered, the difference in the Farm Bureau policy issued to Eichholz and the one submitted by Farm Bureau's agent, McCulloch, to Farm Bureau's attorney, and in turn to Rice's attorney, was revealed for the first time. Also revealed were statements given by Eichholz to Farm Bureau which made apparent the lack of basis for Farm Bureau's decision to deny coverage and defense to Eichholz.
At trial, all of the foregoing matters, as well as the deposition of Evelyn Larsen and of Rice's treating physician, were received in evidence. The trial court also heard the testimony of all parties and of two practicing attorneys who testified with respect to the reasonableness of the consent settlement in the earlier case.
On appeal to this court, appellant contends that the trial court erred in: (1) holding that there was coverage under the insurance policy; (2) finding Farm Bureau was guilty of bad faith; and (3) approving the consent judgment entered in the personal injury action.
Farm Bureau contends that the Pontiac automobile owned by Eichholz's mother-in-law was at the Eichholz residence from January 11, 1977, to the date of the accident, April 29, 1977, and was available for Eichholz's use, within the terms of the policy exclusion. The policy in question provides that Eichholz has liability coverage while driving "any auto" with the following pertinent exclusions:
We do not provide Liability Coverage:
9. For the ownership, maintenance or use of any vehicle, other than your covered auto, which is owned by you or furnished or available for your regular use.
10. For the ownership, maintenance or use of any vehicle, other than your covered auto, which is owned by or furnished or available for the regular use of any family member. However, this exclusion does not apply to you.
The policy defines "family member" as "a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child."
The trial court found that, in February of 1977, Mrs. Larsen left her vehicle at the Eichholz house and went to Richmond, Virginia, where she remained for some 16 months. At the time Mrs. Larsen left, some months before the accident, the vehicle was inoperable, needing a major tuneup and repairs. The day prior to the accident, Eichholz surrendered his pickup truck to the dealer who sold it to him and received a rebate due to the dealer's inability to furnish a title certificate on the vehicle. On the same day that he returned his own vehicle to the dealer, Eichholz partially repaired the Pontiac so that it became operable, and he was able to drive it to work on the following day, the day of the accident. The accident occurred after work while Eichholz was on route to purchase additional parts for the car and to buy a current license tag. The trial court found that the vehicle was operated on the highways for the first time on the day of the...
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