Government Employees Ins. Co. v. Grounds

• Decision Date: 16 April 1975
• Docket Number: No. S--441,S--441
• Citation: 311 So.2d 164
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant, v. A. C. GROUNDS, Appellee.
• Court: Florida District Court of Appeals

Page 164

311 So.2d 164

GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant, v. A. C. GROUNDS, Appellee.

No. S--441.

District Court of Appeal of Florida, First District.

April 16, 1975.

Rehearing Denied June 4, 1975.

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

Lefferts L. Mabie, Jr., and James F. McKenzie, Levin, Warfield, Graff, Mabie & Rosenbloum, Pensacola, for appellee.

McCORD, Judge.

This is an appeal from final judgment in a suit brought by appellee (appellant's insured) against appellant to recover the excess above appellee's insurance policy limits of a judgment entered against appellee and in favor of one Geoffrey Nevils. The final judgment here appealed is in the amount of $55,019.63 compensatory damages awarded by the jury's verdict (the amount of the excess judgment plus interest) plus an attorney's fee in the amount of $10,000 awarded to appellee's attorney by the court after hearing and testimony.

Among other points raised, appellant contends that the evidence presented in this cause was insufficient to support a finding of bad faith on its part in its failure to make timely settlements of the claims against appellee within the policy limits of his insurance coverage.

The accident which gave rise to this suit occurred on July 5, 1969, and involved an automobile owned and operated by Geoffrey Nevils. Nevils sustained an injury for which he asserted a claim against appellee and appellant (appellee's insurer). From the evidence, it is apparent that there was never any basis for contention that appellee was not liable for Nevils' injury and damage. The accident was investigated for appellant by an independent adjusting firm whose first report to appellant was to the effect that 'it looks bad because our driver was charged with DWI.' The letter referred to the claim as a 'heavy bodily injury case' and warned the company (in August, 1969) that the attorney for the claimant would demand the policy limits.

Appellant was informed on September 15, 1969, that the government was asserting a claim under the Care Medical Recovery Act, 42 U.S.C. §§ 2651--2653 for medical expenses amounting to $2,985 as of September 4, 1969, and that medical treatment of Nevils was continuing. At the time of the accident, Nevils was a helicopter pilot student in Cadet training. In addition to the physical injuries, the accident put in jepordy Nevils flying career and commission.

On December 5, 1969, five months after the accident, William Stafford, the attorney for the claimant, wrote a demand letter to appellant's adjuster, pointing out the injuries and damages suffered by Nevils and attaching all of the medical information that he had as of that date. The factual statements of the letter are supported by the record. It states in part as follows:

'This case appears to be one which certainly should be settled easily and promptly, inasmuch as the liability is so clear and your insured so obviously responsible for the accident, plus the fact that Mr. Nevils' injuries were so great.

As you know, your insured driver was charged with driving while intoxicated and had crossed all the way over to the other side of the wrong lane and struck my client head-on, after he had gotten all the way off the road to his right in an attempt to avoid the head-on collision.

Mr. Nevils suffered multiple lacerations of his face, forehead, neck, and mouth, contusions of his chest and abdomen, and fractures of both legs. There was a compound fracture of both the tibia and the fibula of his right leg and a transverse fracture of his left femur. An intramedullary rod was placed into his left femur through his hip and he advised that this will be removed approximately next July, eight months from now. The metal plate which is screwed into his right shinbone is permanent, but is causing trouble and becoming loosened. He has his right leg in a cast which enables him to bear all of his weight on his right thigh and knee as he is unable to bear weight on his left leg. This necessarily makes ambulation difficult but he is able to get around on crutches at this time.

Following the accident he remained at Pensacola Naval Air Station hospital for two and one-half months and then was sent to Martin Army Hospital in Ft. Benning, Georgia where he has remained hospitalized until now.

Mr. Nevils was in the flight program, completing his training as a helicopter pilot. He has been terminated or washed out completely as a helicopter pilot although he almost completed his training.

It is obvious that the Government's claim for remedial medical care and treatment will amount to many thousands of dollars, although we do not have the figure at this time. In addition to the substantial medical expense, Mr. Nevils has been deprived of all his flight pay, which is an additional fifty percent of his base pay, as well as being deprived of promotion and commission upon completion of his flight training.

While it will be several more months before the estimate or extent of his permanent disability is determined, it is probable at this time that he may have some functional impairment.

The value of this case at the hands of a jury would be many thousands of dollars, far in excess of a minimum insurance policy. However, in order to settle the case at this time, so Mr. Nevils can get the benefit of an early settlement without the necessity of referring this matter to another lawyer for the filing of suit, we hereby offer to accept the full policy limits of the liability insurance policy applicable to the automobile and driver in full settlement of this claim. This would include also the claim of the Government, with whom we will settle directly.

In view of the fact that more than five months have passed since the accident and we have had ample opportunity to investigage the same, we would like to have an early reply to this offer and will hold this open for a period of two weeks from this date or until December 19. I am enclosing copies of the clinical record and radiographic reports which support our statements as to the injuries, fractures, et cetera.'

As a predicate to the two-week offer to settle for the policy limits, Mr. Stafford mentioned that he had been appointed U.S. Attorney and had been diligently attempting to conclude for his private clients those cases which he could settle for them and was arranging to refer to other counsel those which could not be concluded; that, if the case could not be settled for the full policy limits within the two week period, it would be necessary to refer it to other counsel. The adjuster forwarded Mr. Stafford's letter to appellant and appellant made no response to the offer until January 20, 1970, more than a month after the two-week period for acceptance had terminated. Appellant did not advise its insured, appellee, of the settlement offer.

Mr. Stafford testified that he called the adjuster on several occasions (in the interim from the time of the offer until he finally heard from appellant) trying to get a response and asked the adjuster to at least find out what the policy limits were. The adjuster ultimately called him on January 20, 1970, and told him that he had heard from the company, and they would pay $10,000. He did not reveal the policy limits ($20,000). Mr. Stafford asked him to write him a letter on it, and Stafford then submitted the letter to Nevils. Stafford received a reply from Lefferts L. Mabie, Jr., who, on Stafford's reference, had taken over representation of Nevils when the time limit of the offer had expired. Mabie's letter to Stafford indicating that he was declining the $10,000 offer, pointed out that appellant had not divulged its policy limits and that there might be more coverage available; that in such case, appellant had 'evaded your offer to settle for the limits and has waived their chance to settle for a low figure, if the limits are low, such as twenty thousand dollars ($20,000) or twenty-five thousand dollars ($25,000) per person.' Mabie stated that he agreed with Nevils that he had been patient and waited long enough and should try to get what the case was worth; that he had filed suit the previous week.

Appellant contends that it could not adequately investigate the case to determine the extent of damages for which it would be liable until suit was filed and discovery was available to it. This would be a valid contention if appellant had sought authority from appellee to communicate directly with the doctors and hospitals and to obtain their records and had been refused such request. It does not appear, however, that it ever sought such authority or did anything during the five and a half month interim between the accident and the expiration of the settlement offer to diligently investigate the claim toward a possible settlement. The jury could properly weigh this evidence and conclude that had appellant properly investigated the case it would have known it was unquestionably liable and that the damages obviously exceeded the policy limits; that such failure by the insurer constituted bad faith toward its insured who as a result thereof was subjected to personal liability greatly in excess of the limits for which he was covered by the policy. Ultimately, after suit was filed and appellant belatedly completed its investigation of the case through discovery procedures, it did on June 12, 1970, (over 11 months from the date of the accident) offer to settle for the policy limits, but the offer was then declined.

Appellant also contends that Stafford's offer was necessarily contingent upon the government's claim being settled. But Stafford's offer stated, 'This would include also the claim of the Government with whom we will settle directly.' Appellant did not raise that question at the time. Had it agreed to settle for the policy limits, it could have done so subject to the government claim being settled and thus...