Government Employees Ins. Co. v. Campbell

• Decision Date: 20 November 1973
• Docket Number: No. R-48,R-48
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Appellant, v. Harvey CAMPBELL, Appellee.
• Court: Florida District Court of Appeals

Page 513

288 So.2d 513

GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation, Appellant, v. Harvey CAMPBELL, Appellee.

No. R-48.

District Court of Appeal of Florida, First District.

Nov. 20, 1973.

On Rehearing Feb. 7, 1974.

Rehearing Denied Feb. 7, 1974.

On Rehearing

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

Lefferts L. Mabie, Jr., Levin, Warfield, Graff, Mabie & Rosenbloum, Pensacola, for appellee.

CARROLL, DONALD K., Judge.

The defendant in an action for damages has appealed from an adverse final judgment, based upon a jury verdict, entered by the Circuit Court for Escambia County.

This action was based upon an earlier action arising out of a collision between an automobile driven by the appellee's son and one driven by one Larry Washington, a minor. A jury trial resulted in a judgment against the appellee in the amount of $18,500 plus costs. On appeal we affirmed this judgment, as reported in Campbell v. Washington, 240 So.2d 340 (Fla.App.1970).

At the time of the said collision the appellee was covered by a public liability insurance policy issued by the appellant with the policy limits of $10,000. In the final settlement after judgment the appellant paid this limit and the appellee paid the excess.

The present action was then filed by the appellee-plaintiff alleging that the defendant-insurer acted in bad faith in failing to settle the Washington case within the policy limits, claiming both compensatory and punitive damages. At the trial the jury returned a verdict against the defendant of $9,384 compensatory damages and $25,000 punitive damages. The court entered a judgment for $34,384 and assessed costs and attorney's fees in the amount of $9,500.

At the trial witnesses testified that Washington prior to his trial had offered to settle for $3,500 and the insurer came back with $2,000. Washington then demanded $5,000 and the insurer restated its $2,000 offer. Later Washington demanded $7,500 and the insurer raised its offer to $2,500 and also set up a reserve of $4,200.50.

In view of the evidence available concerning Washington's injuries and medical expenses, we cannot say that the mere fact that the insurer failed to settle the Washington case within the policy limits was evidence of bad faith on its part. Nevertheless, we adhere strongly to the rule that a public liability insurer must exercise good faith in the settlement of claims against its insureds in order to protect them against excess liability.

In the recent case of Welborn v. American Liberty Insurance Company, 260 So.2d 229 (Fla.App.1972), this Court had occasion to review the established rules concerning a public liability insurer's duties to settle within policy limits, saying:

'It has long been the law of this state that a liability insurance carrier owes an obligation to honestly and fairly negotiate the settlement of claims against its insured within the financial limits of the policy issued by it. As pronounced by our Supreme Court in Auto Mutual Indemnity Company v. Shaw (, 134 Fla. 815, 184 So. 852):

'* * * The prevailing rule seems to be, however, that the insurer must act in good faith toward the assured in its effort to negotiate a settlement. This the defendant concedes, in complete accord with the holding in the Cooper Case, (American Mut. Liability Ins. Co. v. Cooper, 5 Cir., 61 F.2d 446) supra, that 'the insurer cannot escape liability by acting upon what it considers to be for its own interest alone, but it must also appear that it acted in good faith and dealt fairly with the insured. * * * This relationship imposes upon the insurer the duty, not under the terms of the contract strictly speaking, but because of and flowing from it, to act honestly and in good faith toward the insured' considering that the action below cannot be sustained either upon the theory of negligence or of implied contract, but that it may be supported upon the allegations of bad faith exercised in the settlement negotiations by the defendant to the plaintiff. * * *"

In other words, we feel and we find that a public liability insurer owes a high degree of good faith toward an insured in the settlement of a claim against the insured within the policy limits in order to protect the insured from having to pay the overage above the policy limits if the judgment should be in an amount above those limits. This does not mean, of course, that the insurer must immediately accept any offer of a claimant within the policy limits if the insurer's good faith and reasonable investigation of the facts and injuries shows that the offer is substantially excessive.

We hold, therefore, than the evidence at the trial of the case at bar was insufficient to support the jury's finding that the appellant-insurer was guilty of bad faith in refusing to settle the Washington claim within the policy limits.

Therefore, there was no basis for the jury to find compensatory damages in the amount of $9,384. This being so, there could be no basis for the punitive damages, for there was no evidence that the insurer's refusal to settle within the policy limits was malicious or otherwise so severe a breach of duty as to justify the award of punitive damages.

Finally, we think that the assessment of attorney's fees against the insurer of $9,500 was excessive in the light of the circumstances of this case.

For the foregoing reasons the judgment appealed from must be, and it is, reversed, and the cause is remanded with directions to set aside the judgment and dismiss the action.

Reversed and remanded with directions.

Opinion prepared by Judge DONALD K. CARROLL prior to his retirement.

RAWLS, C. J., and WIGGINTON, J., concur.

ON REHEARING

PER CURIAM.

By his petition for rehearing, appellee-insured has reiterated the facts and restated the arguments contained in his appellate brief on which he relied for affirmance of the judgment appealed. He again recounts the evidence which he contends overwhelmingly establishes appellant-insurer's...