Whiteside v. GEICO Indem. Co.

• Decision Date: 13 November 2018
• Docket Number: CASE NO. 4:16-CV-313 (CDL)
• Citation: 352 F.Supp.3d 1257
• Parties: Fife M. WHITESIDE, Plaintiff, v. GEICO INDEMNITY COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Georgia

352 F.Supp.3d 1257

Fife M. WHITESIDE, Plaintiff,

v.GEICO INDEMNITY COMPANY, Defendant.

CASE NO. 4:16-CV-313 (CDL)

United States District Court, M.D. Georgia, Columbus Division.

Signed November 13, 2018

Frank M. Lowrey, IV, Michael Brian Terry, Atlanta, GA, Miranda J. Brash, Charles Austin Gower, Shaun P. O'Hara, Charles A. Gower, P.C., Columbus, GA, for Plaintiff.

Joseph Robb Cruser, Kathleen M. Hurley, Cruser & Mitchell, LLP, Norcross, GA, Wallace Miller, III, Macon, GA, Edward H. Wasmuth, Jr., Leah Ward Sears, Atlanta, GA, for Defendant.

ORDER

CLAY D. LAND, CHIEF U.S. DISTRICT JUDGE

Defendant renewed its motion for judgment as a matter of law that it made during the trial. In the alternative, Defendant seeks a new trial. Defendant also asks the Court to certify three questions to the Georgia Supreme Court. For the reasons explained in the remainder of this Order, the motions (ECF Nos. 137 & 138) are denied.

THE TRIAL

As recounted in more detail below, Defendant rejected a time-limited offer to settle a liability claim for its insured's policy limits of $30,000. At that time, coverage existed under the insurance policy. After the time-limited demand expired without acceptance, Terry Guthrie, the injured person, filed an action against the driver of the vehicle, Bonnie Winslett. When that action was filed, Winslett would have been a covered insured under the policy. Winslett allowed the case to go into default, and a default judgment was entered against her in the amount of $2,916,204.00. Guthrie filed an involuntary bankruptcy petition against Winslett, and the bankruptcy trustee ("Plaintiff") filed this action against Defendant to recover for bad faith or negligent failure to settle the underlying personal injury claim.

The jury returned a verdict in favor of Plaintiff, finding as follows: (1) Defendant failed to exercise the degree of care a reasonably prudent insurance company should exercise when it did not accept the policy limits demand of $30,000; (2) Defendant's failure to accept the demand was a proximate cause of the default judgment that was later entered against Winslett; (3) Winslett's contributory negligence was also a proximate cause of the default judgment; and (4) Winslett was 30% at fault and Defendant was 70% at fault for the default judgment. Verdict 1-2, ECF No. 117. Based on these findings, the jury awarded damages to Plaintiff for the amount that the default judgment exceeded the liability limits of $30,000, to be reduced by 30%. Based on the parties' stipulation as to accrued interest on the judgment and after reduction for Winslett's fault, the Court entered judgment in favor of Plaintiff in the amount of $2,763,742.00. Am. J., ECF No. 124.

DEFENDANT'S ARGUMENTS

Defendant makes three basic arguments in support of its motion for judgment as a matter of law: (1) the evidence introduced at trial established as a matter of law that Winslett's failure to notify Defendant of the lawsuit when it was served upon her was the sole proximate cause of the default judgment; (2) O.C.G.A. § 33-7-15(c) and the insurance policy excuse Defendant of any liability for its failure to accept the policy limits demand because its insured failed to notify Defendant of the lawsuit when it was served upon her; and (3) the Court's ruling that Defendant could not contest the amount of the default judgment violates Defendant's constitutional due process rights. The Court addresses each of these arguments in turn.

DISCUSSION

I. Proximate Cause

This case presented classic issues related to legal causation. Guthrie, who was riding his bicycle, was struck by Winslett, who was operating a motor vehicle. Guthrie was taken to the hospital by ambulance where he received treatment and diagnostic tests. His medical expenses for two hospital visits slightly exceeded $9,000. At the time of the wreck, Winslett was operating a vehicle she had borrowed from a friend. Winslett did not have a driver's license and was cited for operating the vehicle without a license. Defendant nevertheless treated her as a permissive driver and accepted her as an insured under its policy that covered the vehicle. It never questioned coverage for the accident prior to the entry of the default judgment against Winslett, its insured, and it never disputed that Winslett was liable.

Shortly after the wreck, Guthrie's counsel made a time-limited demand for the policy's $30,000 liability limits. Defendant made a counteroffer of $12,000. Defendant did not ask for additional time or information before it rejected the policy limits demand with its counteroffer. Guthrie's counsel ignored the counteroffer and filed suit on behalf of Guthrie against Winslett. Winslett was served with the lawsuit, but neither she nor Guthrie's counsel notified Defendant of the lawsuit. The lawsuit went into default, and Guthrie's counsel subsequently obtained a default judgment against Winslett in the amount of $2,916,204.00. Defendant had no notice of the default judgment until after it was entered. Defendant sought to have the default judgment set aside, but that motion was denied and the denial was affirmed by the Georgia Court of Appeals. Accordingly, Winslett has a final and enforceable judgment against her in the amount of $2,916,204.00.

Winslett was forced into bankruptcy, and the trustee of her bankruptcy estate filed this action against Defendant on behalf of her creditors, including Guthrie. Plaintiff claimed in this action that Defendant's bad faith failure to accept the policy limits demand proximately caused the judgment to be rendered against Winslett in excess of the policy limits. Defendant maintains that it cannot be liable for the excess judgment, even if it should have paid the policy limits demand, because it was never notified of the lawsuit before it went into default.

The Court concluded that genuine factual disputes existed as to proximate cause, intervening cause, and contributory negligence. Without objection, the Court instructed the jury on these issues as follows:

If you find that GEICO failed to exercise that degree of care that a reasonably prudent insurance company would exercise under the circumstances in this case, then the second issue you must decide is whether the Plaintiff has proved by a preponderance of the evidence that the default judgment against Bonnie Winslett was caused by GEICO's failure to exercise this degree of care.

When considering whether GEICO's conduct "caused" the default judgment, you must use the legal meaning of "causation." Under the law, there are two aspects of legal causation. First, for the default judgment to have been caused by GEICO's failure to exercise the degree of care that a reasonable insurance company would have exercised under the circumstances, Plaintiff must prove that the default judgment would not have occurred if GEICO had acted in a reasonably prudent manner. So that is the first step in the causation analysis. The second aspect of legal causation is known as "proximate cause." Proximate cause under the law places some boundaries on what can be considered the legal cause of an injury and damages.

For example, if on your way to court this morning, you ran a red light and collided with someone in the intersection who had a green light, what caused you to collide with the other vehicle? Someone might say that if you had stayed in bed this morning and had not come to court, the wreck would have never have happened. So you coming to court this morning caused you to be in that intersection and caused the wreck. But under the law you coming to court would not be the proximate cause of the wreck. The connection between you coming to court and the wreck is not sufficiently close to be the proximate cause of the collision. The proximate cause of the wreck would be your failure to stop when the light was red.

Under the law, "proximate cause" means that cause which, in a natural and continuous sequence, produces an event, and without which cause such event would not have occurred. So, when I use the expression "proximate cause," I mean a cause that, in the natural or ordinary course of events, produced the event. In order to be a proximate cause, the act or omission complained of must be such that a person using ordinary care would have foreseen that the event, or some similar event, might reasonably result from it. There may be more than one proximate cause of an event.

The mere fact that one event chronologically follows another is not enough, on its own, to establish a causal connection between them. In some cases, an intervening act may "cut off" causation for an event that occurred after that intervening act. But an intervening act does not break the causal connection between a defendant's conduct and an event if the intervening act was triggered by the defendant's conduct and could have reasonably been anticipated or foreseen by the defendant. So, a defendant may be held liable for an injury or damages when that defendant's failure to exercise reasonable care puts other forces in motion or operation resulting in the injury or damages when such other forces are the natural and probable result of the act that the defendant committed and that reasonably should have been foreseen by the defendant. When the injuries or damages could not reasonably have been foreseen as the natural, reasonable, and probable result of the original failure by the defendant to exercise reasonable care, then the defendant's original failure to exercise reasonable care is not a proximate cause of the injury or damages, and there can be no recovery. If the chain reaction that resulted from the defendant's alleged failure to exercise reasonable care could reasonably have been foreseen as the natural, reasonable, and probable result of the defendant's original failure by the defendant to exercise reasonable care, then the defendant's original failure to exercise reasonable care can be a proximate cause of plaintiff's injuries or damages, and plaintiff

...