Macola v. Government Employees Ins. Co.

• Decision Date: 06 June 2005
• Docket Number: No. 04-10436.,04-10436.
• Citation: 410 F.3d 1359
• Parties: Michelle MACOLA, Plaintiff-Appellant, Inge Quigley, Consolidated Plaintiff-Appellant, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

410 F.3d 1359

Michelle MACOLA, Plaintiff-Appellant, Inge Quigley, Consolidated Plaintiff-Appellant, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellee.

No. 04-10436.

United States Court of Appeals, Eleventh Circuit.

June 6, 2005.

Shea T. Moxon, Swope, Rondante P.A., Paul T. Cardillo, Law Firm of Paul Cardillo, P.A., Tampa, FL, Roy D. Wasson, Miami, FL, for Plaintiffs-Appellants.

B. Richard Young, Stephen Dennis Gill, Young, Bill, Fugett & Roumbos, P.A., Pensacola, FL, Rebecca O'Dell Townsend, Tampa, FL, for Defendant-Appellee.

Philip M. Burlington, Phillip M. Burlington, P.A., Janis Brustares Keyser, Cochran, Heath, Lyles & Mauro, P.A., West Palm Beach, FL, for Amici Curiae.

Appeals from the United States District Court for the Middle District of Florida.

Before ANDERSON and WILSON, Circuit Judges, and OWENS^*, District Judge.

PER CURIAM:

This appeal arises out of a state law bad faith claim against Government Employees Insurance Company ("GEICO") and is before this court under diversity jurisdiction. After one of its insureds, Mr. Frances Quigley,¹ caused a car wreck, GEICO failed to reach a settlement with Michelle Macola, an injured third party. Macola subsequently filed suit against Quigley and eventually won a judgment in excess of the GEICO policy limits. After Macola filed suit against Quigley, but before the verdict was returned, Quigley filed a statutory Civil Remedy Notice ("CRN") with the Florida Department of Insurance alleging that GEICO had acted in bad faith in failing to settle with Macola for the policy limits when it had the opportunity to do so. After the verdict was returned, Macola and Quigley filed similar common law bad faith actions against GEICO.

Florida law allows an insurer to "cure" alleged bad faith by paying the damages or correcting the circumstances giving rise to the violation within sixty days of the filing of a CRN. Fla. Stat. § 624.155(3)(d) (2004). During that sixty day period (and before the verdict in the underlying case), GEICO attempted to cure its alleged bad faith by tendering the personal injury policy limits to Quigley. The district court held that this tender cured any bad faith on the part of GEICO and granted GEICO's motion for summary judgment on Quigley's and Macola's claims. Quigley and Macola appealed, arguing that (1) GEICO's tender of the policy limits did not constitute an adequate cure under the circumstances of this case and (2) even if GEICO's tender did cure the statutory bad faith claim, it did not bar a common law bad faith action.

I. Background

On May 18, 1999, Quigley negligently caused a car wreck in which Macola was injured. At the time of the accident, Quigley was insured under a policy issued by GEICO with a bodily injury liability limit of $300,000 and a property damage liability limit of $100,000. The day after the accident, Quigley's wife notified GEICO of the accident and of the fact that Quigley and Macola had suffered serious injuries. GEICO assigned Dale Junco to manage the claim.

On May 24, 1999, GEICO received a fax notifying it that Macola had retained an attorney, Michael Roe, and requesting Quigley's insurance information. Junco mailed the requested information to Roe on June 7, 1999.

On September 2, 1999, Junco talked to Roe, who told her that Macola had already undergone multiple surgeries, would require more, and was still out of work. Roe promised to send Junco whatever medical information he had in the hopes of entering a settlement negotiation. He also told Junco that he believed this was a "policy limits" case.

On October 19, 1999, Roe sent GEICO a settlement offer seeking payment of the full personal injury policy limit as well as numerous items of property damages totaling $1,377.81. The letter included a traffic crash report and numerous medical records, and it stated that the settlement offer would expire in 21 days. In order to comply with its terms, the letter stated, GEICO would have to tender the requested sums at Roe's office and provide a copy of Quigley's insurance policy and an affidavit stating that no other insurance coverage was available.

On November 8, 1999, within the 21 day period laid out in the settlement offer, GEICO tendered the $300,000 bodily injury policy limit at Roe's office. In addition to the $300,000, GEICO sent a note requesting further clarification of the property damage claims as well as a release that was explicitly inapplicable to any claims for property damage. Roe did not respond for 120 days despite GEICO's repeated attempts to contact him during that time. He also never deposited the $300,000 draft that GEICO tendered.

On February 15, 2000, Macola returned GEICO's $300,000 check (along with a letter rejecting GEICO's "counteroffer" of November 8) and filed suit against Quigley in Florida state court. In that suit, Macola asserted a claim for personal injuries, but no claim for property damages.² Prior to filing an answer in that case, Quigley offered to pay all of Macola's claimed property damages and tendered payment in the amount of $1,377.81. Macola rejected that tender and proceeded with the underlying litigation.³

In July 2000, five months after Macola filed the underlying action against Quigley and two years before the entry of judgment, Quigley, through her personal counsel ("Cardillo"), served GEICO with a statutory CRN. Therein, she alleged that GEICO violated § 624.155(1)(b)(1), Florida Statutes (2004), by failing to settle with Macola for the policy limits when it had the opportunity to do so. Under that statute "no action shall lie" if the violator cures its bad faith by paying "the damages" or correcting "the circumstances giving rise to the violation" within 60 days of receiving the CRN. See Fla. Stat. § 624.155(3)(d); Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So.2d 1278, 1281-84 (Fla.2000).

On August 25, 2000, within 60 days of the CRN, GEICO sent Cardillo a check for $300,000, the limit of Quigley's personal injury policy. Cardillo acknowledged receipt of the check but never deposited it. GEICO did not tender a check for the property damages that Macola claimed in the original settlement negotiations (but abandoned in the underlying action).

On July 9, 2002, the trial court entered a final judgment against Quigley in the amount of $1,541,941.61. On August 23, 2002, Macola filed a common law bad faith suit against GEICO. Macola's suit alleged that GEICO breached its duty of good faith to Quigley by failing to settle with Macola when the opportunity arose, by failing to timely inform Quigley of Macola's settlement offer, and by failing to timely advise Quigley of the likelihood of an excess judgment and how to avoid it. GEICO removed Macola's suit to federal court and filed an answer denying liability.

On June 27, 2003, Quigley filed a separate common law bad faith action against GEICO in federal district court. Because this suit was based on the same underlying facts as Macola's, the district court consolidated the two cases. As its fifth affirmative defense to Macola's and Quigley's claims, GEICO argued that it had cured any bad faith by tendering the personal injury policy limits to Quigley within the 60 day post-CRN cure period provided for in § 624.155.

On December 15, 2003, both Macola and Quigley filed motions for partial summary judgment alleging that GEICO's cure theory was legally insufficient. That same day, GEICO filed a consolidated motion for summary judgment against Macola and Quigley, citing its cure theory as legally controlling. The district court denied Macola's and Quigley's motions for partial summary judgment and granted GEICO's motion for summary judgment based on the cure theory.

II. Discussion

It is clear that Florida law controls all issues in this appeal, and none of the relevant facts are disputed. The only questions before this court involve the interpretation and application of § 624.155, which provides as follows:

(1)(b) Any person may bring a civil action against an insurer when such person is damaged ... [b]y the commission of any of the following acts by the insurer:

1. Not attempting 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 her or his interests.

(3)(a) As a condition precedent to bringing an action under this section, the department and the authorized insurer must have been given 60 days' written notice of the violation. If the department returns a notice for lack of specificity, the 60-day time period shall not begin until a proper notice is filed.

(d) No action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.

GEICO urges this court to hold that, under § 624.155, its post-CRN tender of the policy limits cured any bad faith and absolved it of any liability for the subsequent excess judgment. Macola and Quigley take the opposite position and alternatively argue that Florida law allows them to pursue a common law bad faith claim even if GEICO's tender did effect a cure of the statutory claim.

A. The Cure Issue

In Talat, this Court asked the Florida Supreme Court to determine whether payment of all contractual damages within 60 days of a CRN precluded a statutory first party bad faith claim for extra-contractual damages suffered prior to the CRN. 753 So.2d at 1280. The Florida Supreme Court held that "an insurer need not immediately pay 100% of the damages claimed to flow from bad faith conduct" in order to effect a cure under § 624.155. Id. at 1282. However, Talat is distinguishable from the present case because it involved a first party bad faith claim in which there was no danger of an excess judgment. This distinction is suggested by the Talat court's statement that "[t]o cure an alleged violation and to avoid a civil action, an insurer must pay the claim ...