Imhof v. Nationwide Mut. Ins. Co.
| Decision Date | 12 May 1994 |
| Docket Number | No. 81688,81688 |
| Citation | 643 So.2d 617 |
| Parties | 19 Fla. L. Weekly S257, 19 Fla. L. Weekly S441 Patrick Joseph IMHOF, Jr., Petitioner, v. NATIONWIDE MUTUAL INSURANCE CO., Respondent. |
| Court | Florida Supreme Court |
Thomas R. Jenkins, Bozeman, Jenkins & Matthews, Pensacola, for petitioner.
George A. Vaka, Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, and Jeffrey A. Cramer, Law Offices of Jeffrey A. Cramer, P.A., Pensacola, for respondent.
We have for review Imhof v. Nationwide Mutual Insurance Co., 614 So.2d 622 (Fla. 1st DCA 1993), where the district court certified this question of great public importance:
IS AN ACTION FOR BAD-FAITH DAMAGES PURSUANT TO SECTION 624.155(1)(B)(1), FLORIDA STATUTES, BARRED BY BLANCHARD v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, 575 So.2d 1289 (Fla.1991), WHERE THE COMPLAINT FAILS TO ALLEGE THAT THERE HAD BEEN A DETERMINATION OF THE EXTENT OF APPELLANT'S DAMAGES AS A RESULT OF THE UNINSURED TORTFEASOR'S NEGLIGENCE?
We have jurisdiction pursuant to article V, section 3(b)(4) of the Florida Constitution. We answer the certified question in the affirmative. We approve the First District Court's opinion to the extent that it requires a complaint for bad faith to allege that there had been a determination of damages. 1
Patrick Joseph Imhof, Jr. was injured in an automobile accident with an underinsured motorist on July 26, 1987. Imhof, with the approval of his insurer, Nationwide Mutual Insurance Company, settled with the tortfeasor for the tortfeasor's policy limits of $10,000. On January 25, 1989, Imhof made a claim against Nationwide's underinsured/uninsured coverage and tried to settle. He alleges in his complaint that Nationwide failed to respond. On March 10, 1989, Imhof filed a notice of insurer violation under section 624.155, Florida Statutes (Supp.1988). 2 In the notice Imhof said that he had offered to settle for the policy limits of $200,000 and had been ignored, that he had later renewed the offer on February 21, 1989, and that Nationwide had failed to acknowledge the arbitration provisions of the policy. 3 Imhof's counsel said during oral argument that Nationwide did not respond to the notice of violation during the sixty-day period provided by section 624.155(2)(a). 4 Imhof filed a complaint on June 7, 1990, alleging bad faith on the part of Nationwide. The complaint did not allege that there had been a determination of the extent of Imhof's damages. 5 The trial court dismissed the complaint with prejudice on December 11, 1990, for failure to state a cause of action.
On appeal, the First District Court affirmed, finding that the complaint did not state a cause of action because it did not allege that there had been a determination of the extent of Imhof's damages. The court found that this was a requirement under Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So.2d 1289 (Fla.1991), to bring an action for insurer bad faith. Imhof, 614 So.2d at 624. However, the court certified the question of whether a failure to allege that there has been a determination of damages barred an action for bad-faith damages under section 624.155(1)(b)1. Id. at 624-25. We find that we answered the question presented in Blanchard and again answer in the affirmative.
In Blanchard we held that "[a]bsent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff's damages, a cause of action cannot exist for a bad faith failure to settle." 575 So.2d at 1291. In the instant case, Imhof failed to allege in his complaint that a determination of his damages had been made. Thus, the trial court correctly dismissed the complaint for failure to state a cause of action.
Neither Blanchard nor section 624.155(2)(b) requires the allegation of a specific amount of damages. Thus, if the First District Court's certified question asked whether a complaint must allege the specific amount of damages determined, we would answer that question in the negative. It follows that there is no need to allege an award exceeding the policy limits to bring an action for insurer bad faith.
What the statute does require is that the insurer make a good-faith effort to settle claims. Section 624.155(1)(b)1 allows a person to bring a civil action when the insurer does not attempt "in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his interests." Id.
The law favors settlement of disputes and the avoidance of litigation. See, e.g., DeWitt v. Miami Transit Co., 95 So.2d 898, 901 (Fla.1957). The pretrial settlement of a lawsuit is generally favored because it saves scarce judicial resources. In re Smith, 926 F.2d 1027, 1029 (11th Cir.1991). Section 624.155 follows longstanding public policy and promotes quick resolution of insurance claims.
In the instant case, the amount of the arbitration award shows that Imhof had a valid claim. Imhof thus had a legitimate interest in a speedy resolution of his claim. Because this case arose from the dismissal of a complaint, the record before us is necessarily sparse. Imhof alleges that when Nationwide did not respond to Imhof's attempts in early 1989 to settle the claim, Imhof filed a notice of insurer violation under section 624.155 on March 10, 1989. Imhof's complaint alleges that after he filed the notice, Nationwide "failed to pay the damages or correct the circumstances giving rise to the violation." The record does not reflect whether Nationwide responded in any way within the sixty-day period following the notice of violation. We note that when an insurer does not respond within sixty days, the insurer flouts the very purposes of section 624.155.
Although this Court held in Blanchard that a determination of damages is necessary to state an insurer bad-faith claim, section 624.155 also requires an insurer to respond within the sixty-day period to the notice of bad faith. 6 An insurer's failure to respond within the sixty-day period will create a presumption of bad faith sufficient to shift the burden to the insurer to show why it did not respond. An insurer may have good reason for not wanting to settle for the amount demanded, but we find it difficult to articulate a possible reason not to respond within sixty days.
To preclude a claim for bad faith when the insurer has failed to respond within sixty days would undermine the purpose of section 624.155 and allow insurers to escape liability simply by refusing to respond to a notice of violation. By not responding, an insurance company could insulate itself from a bad-faith claim, a result the Legislature surely did not intend. It must be emphasized that an insurer's mere act of responding does not necessarily bar a bad-faith claim.
An insurer has been found to have acted in bad faith when the disputed claim is determined not to be "fairly debatable." Reliance Ins. Co. v. Barile Excavating & Pipeline Co., 685 F.Supp. 839, 840 (M.D.Fla.1988). Under Reliance, a claim is not "fairly debatable" only when there is no reasonable basis to deny policy benefits.
The damages recoverable by the insured in a first-party bad-faith action are those amounts that are the consequence of the insurer's bad faith. McLeod v. Continental Ins. Co., 591 So.2d 621, 626 (Fla.1992). Those damages may include, but are not limited to, interest, court costs, and reasonable attorney's fees. Id.
Accordingly, we answer the certified question in the affirmative, and we approve the decision of the First District to the extent that a complaint for a bad-faith claim requires an allegation that there has been a determination of damages. We remand to allow Imhof to file an amended complaint, for a determination of whether Nationwide filed a response within sixty days following the notice of violation, and for further proceedings consistent with this opinion.
It is so ordered.
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