Shook v. Allstate Ins. Co.

• Decision Date: 12 November 1986
• Docket Number: No. 85-1943,85-1943
• Citation: 11 Fla. L. Weekly 2356,498 So.2d 498
• Parties: 11 Fla. L. Weekly 2356 Bobbie SHOOK, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 498

498 So.2d 498

11 Fla. L. Weekly 2356

Bobbie SHOOK, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.

No. 85-1943.

District Court of Appeal of Florida,

Fourth District.

Nov. 12, 1986.

Rehearing and Rehearing En banc Denied Dec. 24, 1986.

Marcia E. Levine of Fazio, Dawson & DiSalvo, Fort Lauderdale, for appellant.

John R. Hargrove of Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, Fort Lauderdale, for appellee.

DELL, Judge.

Appellant seeks reversal of an amended final judgment that denied her claim for damages arising out of appellee's alleged breach of contract and bad faith.

Appellant suffered personal injuries in an automobile accident caused by the negligence of Cathy Stout. Appellee had issued an automobile insurance policy with bodily injury limits of $10,000 per person to Stout. Appellant made demand for payment of the $10,000 policy limit, but appellee denied coverage, claiming Stout's policy had lapsed for nonpayment of premiums. Appellant filed suit against Stout seeking compensatory and punitive damages for her personal injuries. Appellee continued to deny coverage. Stout retained her own counsel, and thereafter Stout and appellant, upon advice of counsel, entered into a settlement agreement. In the settlement agreement, Stout acknowledged her liability to appellant, and agreed that appellant was entitled to compensatory damages in the amount of $350,000. Appellant agreed:

[T]o forego payment by defendant, Cathy Stout, of the settlement sum of $350,000 and agrees not to execute against defendant or otherwise attempt to obtain payment from defendant, personally, for the amount owing. If plaintiff is unsuccessful in her attempt to collect this settlement from Allstate Insurance Company, then defendant shall be in no way obligated to pay this settlement figure.

In exchange for appellant's promise not to execute against her, Stout assigned her right of action against appellee. Following the execution of the agreement, appellant offered to settle with appellee for its policy limits of $10,000 conditioned upon appellee's agreement to do so within thirty days. Appellee rejected the offer. Appellant filed suit alleging breach of contract and bad faith. She sought to recover the agreed settlement amount of $350,000, her own attorney's fees and costs, Stout's attorney's fees and costs in defending the prior personal injury action, and Stout's collision loss. The trial court entered a final judgment that awarded appellant the attorney's fees and costs incurred by Stout, the amount of Stout's collision claim, and appellant's attorney's fees and costs. The trial court ruled as a matter of law that appellant could not recover any portion of the $350,000 settlement from appellee because Stout was not liable to appellant for the agreed amount of the settlement.

Appellant contends that where an insured obtains her own release from an injured party, after the insured has been abandoned by her insurer, the release does not relieve the insurer of liability for the amount of the settlement. She also contends that the liability of an insurer who wrongfully refuses to defend and acts in bad faith is not restricted to its policy limits.

Appellee claims that Fidelity and Casualty Co. of New York v. Cope, 462 So.2d 459 (Fla.1985) and Kelly v. Williams, 411 So.2d 902 (Fla. 5th DCA 1982) control this case. In Kelly, the injured plaintiff attempted to enter into a stipulation that provided the plaintiff with a recovery of $50,000 from Allstate Insurance Company and at the same time preserved the plaintiff's right to pursue a bad faith action against Allstate. Allstate joined in the agreement and paid the sum of $50,000. The plaintiff agreed to execute and to deliver a satisfaction of judgment to Allstate's insured, regardless of the outcome of any bad faith action against Allstate. The trial court dismissed the plaintiff's suit against Allstate for bad faith, and the Fifth District Court of Appeal affirmed, concluding that the stipulation completely safeguarded the insured and therefore completely discharged the insurer's duty to its insured.

In Cope, Fidelity and Casualty Co. of New York had applicable policy limits of $20,000 and Hartford Insurance Company had applicable limits of $10,000. Fidelity offered to tender its limits of $20,000 if Cope and counsel for the insureds could work out a settlement satisfactory to all parties concerned. They did not and Cope filed suit. A jury awarded Cope's estate $100,000. Fidelity and Hartford each paid $10,000 to the estate. Cope then brought a bad faith claim against Hartford, and Hartford settled for $50,000 in return for Cope's execution of a release and satisfaction of judgment in favor of Hartford and the insureds. Fidelity was not named in the release, and Cope did not intend to release Fidelity from an excess claim. Cope filed suit against Fidelity for the $30,000 remaining on the final judgment. The district court affirmed the trial court's award of damages for Fidelity's bad faith. The supreme court reversed and held that if an excess judgment has been satisfied, absent an assignment of that cause of action prior to the satisfaction, a third party cannot maintain an action for a breach of duty between an insurer and its insured.

We find the facts of the case before us distinguishable from those in Cope and Kelly. In both Cope and Kelly the insurance carriers fulfilled their duty to defend, tendered their insurance limits, and the plaintiffs executed stipulations exonerating the...