Case: 13-15788       Date Filed: 08/19/2015       Page: 1 of 14


                                                                                  [PUBLISH]



                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                              ________________________

                                    No. 13-15788
                              ________________________

                         D.C. Docket No. 1:07-cv-23044-CMA



ESPERANZA GARCIA,
as Personal Representative of the Estate of Paola Penafiel,

                                                         Plaintiff - Appellee,

versus

GEICO GENERAL INSURANCE COMPANY,

                                                         Defendant - Appellant.

                              ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            ________________________

                                     (August 19, 2015)

Before WILSON and MARTIN, Circuit Judges, and HODGES, * District Judge.

WILSON, Circuit Judge:

         *
          Honorable Wm. Terrell Hodges, United States District Judge for the Middle District of
Florida, sitting by designation.
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       GEICO General Insurance Company (GEICO) appeals from a final

judgment entered in favor of Esperanza Garcia, personal representative of the

estate of Paola Penafiel, on Garcia’s Coblentz bad faith claim against GEICO. 1

GEICO contends that the district court erred in denying the admission of evidence

of the development of Florida law as it pertained to whether an insurance policy

GEICO issued to Edgar Baena (Edgar) covered a vehicle collision involving Edgar

and Penafiel. GEICO also argues that the district court improperly excluded

evidence of earlier decisions of the district court rejecting the theory on which

Garcia based her argument that coverage existed. After careful consideration of

the parties’ briefs and the records, we agree with GEICO and vacate the final

judgment and remand.

                                                 I.

       Miguel Baena (Miguel) rented a car from Enterprise Rent-a-Car (Enterprise)

on December 14, 2006. The rental agreement between Miguel and Enterprise

expressly denied permission to anyone other than Miguel to drive the car. Under

the agreement, if Miguel violated the provision, the agreement would terminate,

and Enterprise would be entitled to seize the vehicle and/or report it as stolen to the


       1
         Coblentz v. Am. Sur. Co. of N.Y., 

(5th Cir. 1969). Coblentz agreements
permit an insured to “enter into a reasonable settlement agreement with the [plaintiff] and
consent to an adverse judgment for the policy limits that is collectable only against the insurer.”
Perera v. U.S. Fid. & Guar. Co., 

, 900 (Fla. 2010). If a plaintiff wishes to recover
in excess of the policy limits, the plaintiff must establish that the insurer acted in bad faith in
wrongfully denying coverage. 

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police. When he rented the car, Miguel also purchased a collision damage waiver

that would likewise terminate should anyone besides Miguel operate the vehicle.

      Miguel and his brother, Edgar, went out for a night on the town. Edgar

drove the rental vehicle when the two decided to head home, despite the rental

agreement’s and collision damage waiver’s provisions. Edgar rear-ended

Penafiel’s vehicle, killing her.

      Edgar had an automobile insurance policy (Policy) with GEICO at the time

of the accident. Speaking in general terms, the Policy covered Edgar for vehicle

collisions wherein he was a driver so long as he drove his own vehicle or the

vehicle of another with that person’s consent. Specifically, and as is relevant to

this appeal, Edgar was entitled to coverage while driving another’s vehicle where

the “use [was] with the permission, or reasonably believed to be with the

permission, of the owner and within the scope of that permission.”

      Enterprise informed GEICO that Edgar did not have permission to use the

rental car and of the express limitation on permission contained in the rental

agreement. Edgar never responded to GEICO’s inquiries regarding whether he

reasonably believed he had the owner’s permission to use the vehicle. GEICO

concluded that it did not owe coverage on the accident because Edgar did not have

Enterprise’s permission to use the car, and there was no basis for suggesting that

Edgar reasonably believed he had such permission. GEICO conveyed its decision


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to Edgar, Edgar’s attorney, and counsel for the accident claimants by a certified

return-receipt letter.

       Garcia filed a complaint for wrongful death against Edgar in Florida state

court. Rather than defending the action, Edgar entered into a Coblentz agreement

with Garcia, stipulating to a $5 million judgment. The agreement provided that

Garcia would not execute against Edgar. Garcia then filed a complaint against

GEICO, alleging that GEICO acted in bad faith in denying coverage. GEICO

removed to the United States District Court for the Southern District of Florida and

filed a declaratory action in that court. GEICO sought a declaration that the policy

did not cover the accident. The actions were consolidated and the bad faith action

was stayed pending the outcome of a trial on the coverage issue. Garcia’s theory at

trial was that, under Florida law, a vehicle owner’s permission to use a vehicle

could be imputed to an insured third party where the initial permittee grants

permission to the third party to use the vehicle. In other words, by permitting

Miguel to drive the car, Enterprise implicitly extended permission to anyone else

Miguel permitted to drive the car, including Edgar. In denying motions for

summary judgment by both parties, the district court rejected this “implied

consent” argument.

       The first two trials resulted in mistrials. After the first, the district court

directed a partial verdict for GEICO on the issue of whether Enterprise gave Edgar


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permission to drive the car, “find[ing] as a matter of law that Enterprise did not

consent to [Edgar’s] use” of the rental car.2 The subsequent trials, then, considered

only whether Edgar reasonably believed he had permission to drive the car. After

the third trial, the jury returned a verdict in GEICO’s favor on that issue. Garcia

moved for judgment notwithstanding the verdict, which the district court denied.

The district court relied in part on Geico Indem. Co. v. Shazier, 

(Fla.

Dist. Ct. App. 2010), quashed sub nom. Chandler v. Geico Indem. Co., 

(Fla. 2011),3 which rejected the implied consent doctrine as a matter of law.

Accordingly, the verdict established that Edgar did not reasonably believe that he

had permission to drive the car, and the district court entered judgment in GEICO’s

favor on the coverage issue, rendering the bad faith question moot.

       Garcia appealed the judgment to this court. During the pendency of the

appeal, the Florida Supreme Court decided Chandler, which adopted the implied

consent doctrine and quashed Shazier. See 

–1302.

Accordingly, we reversed the district court and remanded for proceedings applying

the law as set out in Chandler. See Garcia v. Geico Gen. Ins. Co., 450 F. App’x

870, 873 (11th Cir. 2012) (per curiam).



       2
         The district court also denied Garcia’s motion for summary judgment, distinguishing
Florida precedent that Garcia argued supported the implied consent doctrine.
       3
         The order denying the motion for judgment notwithstanding the verdict was issued
while Shazier was still good law.
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       On remand, the district court entered judgment on the coverage issue in

Garcia’s favor. 4 The bad faith question was scheduled for a jury trial. In his report

and deposition, GEICO’s expert witness addressed the nature of Florida law on

implied consent at the time GEICO denied coverage, including the district court’s

orders rejecting implied consent prior to the appeal as well as the Shazier and

Chandler decisions. Garcia sought to exclude discussion of those decisions.

Initially, the district court sided with GEICO. Before trial, Garcia again raised her

objection to the evidence. She cited Harbison v. American Motorists Insurance

Co., 

(E.D. Cal. 2009), to support the proposition that,

because those decisions were issued after GEICO’s coverage determination, they

could not have affected the substance of the coverage dispute and GEICO’s

rationale for denying coverage, see Robinson v. State Farm Fire & Cas. Co., 

, 1068 (Fla. Dist. Ct. App. 1991) (listing “the substance of the coverage

dispute or the weight of legal authority on the coverage issue” and

“reasonable[ness] and legitima[cy]” as factors in considering bad faith (internal

quotation marks omitted)). Garcia also argued that admitting the evidence would

constitute improper “bolstering” of the expert’s testimony. This time, the district

court accepted Garcia’s argument, ordering that GEICO’s expert could not discuss

any of the decisions.

       4
         Because the district judge who had presided over the controversy prior to the appeal had
been elevated to this court, a different judge handled the case on remand.
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       At trial, Garcia argued that, at the time GEICO denied coverage, Florida law

had recognized the implied consent doctrine, that such law was well-settled, and

that GEICO ignored that well-settled law when it denied coverage. After Garcia’s

expert testified on the subject, GEICO objected, asserting that Garcia had opened

the door to evidence of the excluded decisions. The district court overruled the

objection. Garcia later elicited testimony on cross-examination from GEICO’s

expert that the district court had, prior to the jury trial, determined coverage in

Edgar’s favor. The expert was not permitted to explain that that decision came

only after Chandler was issued.

       The jury found in Garcia’s favor, and the district court entered judgment for

Garcia. GEICO moved for a new trial, relying on the purportedly improper

evidentiary exclusion. The district court denied that motion. This appeal

followed.5 For the reasons stated herein, we vacate the final judgment of the

district court and remand for a new trial consistent with this opinion.

                                                II.

       In diversity cases, “the admissibility of evidence in federal courts is

governed by federal law.” Borden, Inc. v. Fla. E. Coast. Ry. Co., 

,

754 (11th Cir. 1985). We review the exclusion of evidence for an abuse of

discretion. City of Tuscaloosa v. Harcros Chems., Inc., 

, 556 (11th

       5
        There was also a Coblentz issue for the jury that resulted in an additional trial
subsequent to the jury verdict on bad faith. The issue is not before us.
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Cir. 1998). A district court abuses its discretion when it makes a legal error, and

we review legal errors de novo. 

court’s evidentiary ruling here

was oral, and the record does not contain much detail of the district court’s

consideration of the issue. Based on the district court’s use of the term

“bolstering” in its order and the switch on the ultimate admissibility question after

Garcia’s citation to Harbison, it seems that improper bolstering and/or Harbison

were the reasons for the ruling. Both were legal errors, and the district court’s

ruling was thus an abuse of discretion.

                                          A.

      We begin with the threshold for admissibility: relevance. See Fed. R. Evid.

402. GEICO argued that its legal conclusion that coverage did not apply here was

a reasonable one based on existing Florida law, or at least that the issue was

unclear. It is clear that it is relevant to the reasonableness of GEICO’s decision

and the substance of the coverage dispute that the district court agreed with GEICO

before the Florida Supreme Court reached the opposite conclusion. See 

(stating that the insurer having a “reasonable and legitimate

basis to deny coverage would be relevant” to bad faith where that reasonableness

was based in part on an earlier order in the same litigation denying summary

judgment to the insured on the coverage issue before a jury found in the insured’s

favor (internal quotation marks omitted)); accord Allan D. Windt, 2 Insurance


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Claims and Disputes § 9:26A (6th ed. 2014) (“Case law can, in many

circumstances, constitute evidence that the insurer’s policy interpretation or

understanding of its rights/obligations was reasonable. Even if the insurer was

unaware of the case law, or the case law post-dated the insurer’s claim handling,

the very existence of the case law (or simply the existence of a reasoned dissenting

opinion) can constitute evidence that the insurer’s analysis was at least

reasonable—since an independent judge utilized the same analysis.”).

       Shazier also supports GEICO’s contention that Florida courts did not clearly

recognize the implied consent doctrine prior to Chandler, or that there was at least

a reasonable basis for concluding that they did not. And Chandler is relevant for

the purpose of establishing at what point Florida law definitively recognized the

implied consent doctrine and what caused this court to reverse the first judgment in

GEICO’s favor.6

                                                B.



       6
          Chandler described the implied consent doctrine as “long-established” and declared
Shazier to be in conflict with previous decisions of the Florida Supreme Court. See 

. Though the dissent persuasively maintained that rejection of implied consent did
not conflict with previous Florida Supreme Court decisions, see 

(Canady, J.,
dissenting) (recognizing that the previous Florida Supreme Court decisions imposed vicarious
liability on rental car owners through Florida’s dangerous instrumentality doctrine and did not
establish or apply the implied consent doctrine), we must credit the Florida Supreme Court’s
legal conclusions regarding the law of that state, see Towne Realty, Inc. v. Safeco Ins. Co. of Am.,

, 1269 n.5 (11th Cir. 1988). Nonetheless, Chandler at the very least clarified the
doctrine, and it, in conjunction with Shazier, is indubitably probative of the reasonableness of
GEICO’s coverage denial.
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       Now that we have established the threshold requirement of relevance, we

address the district court’s bases for ordering exclusion. Contrary to the district

court’s implicit conclusion, Harbison does not hold that previous decisions in a

given litigation are irrelevant to the bad faith question or that such decisions cannot

otherwise be admitted as evidence on that issue. 

.

First, that order, in denying the insurer’s motion for summary judgment, merely

stated that a “prior decision in favor of [the insurer’s] motion for summary

judgment does not preclude a finding of bad faith.” 

words, the court

only refused to give the prior decision there dispositive effect; it did not exclude

evidence of those rulings from trial. 7 Second, the court refused to give such

dispositive effect only after concluding that California law clearly provided for

coverage under the circumstances, while Florida law here was, as discussed in this

opinion, unclear prior to Chandler. See 

opinion permitting

admission of decisions coming after the insurer’s coverage decision “because

there, the court was deciding the reasonableness of an insurer’s coverage decision

in light of conflicting case law”). Finally, and relatedly, there was no indication, as

there is here, that the prior decision in that case relied on precedent that was later

abrogated, overruled, or clarified by intervening state court decisions. See 

court did state that the prior decision was not “admissible evidence supporting the
reasonableness of defendant’s denial of coverage.” 

.
However, that was merely dicta, as the order only disposed of a motion for summary judgment.
See 

1045. Even if the statement were part of the decision’s holding, it is not
binding, and we do not find it persuasive.
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      The decision in Harbison and Garcia’s argument partially depend on the

proposition that an insurer cannot rely on court decisions coming into existence

only after the conclusion that coverage does not exist. We could not agree more.

It is quite obvious that it is temporally impossible to rely on then-non-existent

decisions to reach a legal conclusion. However, GEICO does not quibble with that

proposition. GEICO proffered the evidence because the agreement of a federal

judge and three Florida appellate judges with GEICO’s conclusion indicates, from

an objective standpoint, that the conclusion was reasonable, considered existing

law, and was reached in good faith.

      The district court also seemed to indicate, and Garcia contends, that allowing

the evidence would constitute improper bolstering. A court may exclude evidence

as improper bolstering when the purpose of the evidence is to vouch for a witness’s

credibility. See United States v. Bernal-Benitez, 

, 1313–14 (11th

Cir. 2010) (explaining improper bolstering in the context of an appeal of a criminal

conviction). To begin with, bolstering typically comes up in criminal cases.

Moreover, the evidence GEICO sought to admit said nothing about the expert

witness’s credibility. Instead, it went to the heart of the issue: whether GEICO’s

denial of coverage was reasonable and supported by Florida law, or at least not in

direct conflict with it. The mere fact that it would have corroborated the expert’s

opinion does not mean that “the prestige of the government [was placed] behind


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the witness, or . . . [that counsel for GEICO would have] indicat[ed] that

information not before the jury support[ed] the witness’s credibility.” 8 See 

offers two alternative arguments for affirming the district court: (1)

the exclusion was harmless, see Hearn v. McKay, 

, 904 n.11 (11th

Cir. 2010) (per curiam); and (2) the exclusion did not result in substantial prejudice

to GEICO, see Cynergy, LLC v. First Am. Title Ins. Co., 

, 1326 (11th

Cir. 2013). As to the first argument, Garcia contends that the exclusion was

harmless because the jury found GEICO liable under the alternative theory of bad

faith in handling the investigation of the claim, notifying of potential excess

liability, taking steps to reduce potential excess liability, and attempting to settle.

GEICO responds that these are not alternative theories of bad faith under Florida

law; rather, they are only factors to be considered in reaching the ultimate

determination of bad faith. Assuming arguendo that Garcia is correct, we still

doubt that the exclusion was harmless. Whether GEICO was under any duty to

investigate, notify, take steps to reduce potential excess liability, or attempt to


       8
          In fact, the Federal Rules of Evidence specifically contemplate the admission of this
type of evidence when an expert testifies, even in cases where it might otherwise be
inadmissible. See Fed. R. Evid. 703 (“[I]f the facts or data [on which the expert relied] would
otherwise be inadmissible, the [expert] may disclose them to the jury only if their probative value
in helping the jury evaluate the opinion substantially outweighs their prejudicial effect.”); Fed. R.
Evid. 705 (“[A]n expert may state an opinion—and give the reasons for it—without first
testifying to the underlying facts or data. But the expert may be required to disclose those facts
or data on cross-examination.”).
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settle depends on whether any coverage existed. Cf. Fed. Ins. Co. v. Applestein,

, 231 (Fla. Dist. Ct. App. 1979) (“No obligation to defend the

action, much less to pay any resulting judgment, arises when the pleading in

question shows either the non-existence of coverage or the applicability of a policy

exclusion.”). If the jury concluded that GEICO did not act in bad faith in denying

coverage, that finding would heavily influence its verdict on the alternative charge.

      Similarly, the exclusion substantially prejudiced GEICO. A jury would no

doubt find it exceedingly relevant that Florida law on implied consent was in a

state of flux, or that a panel of Florida’s First District Court of Appeal and a United

States District Judge for the Southern District of Florida supported GEICO’s

conclusion regarding implied consent. And the Florida Supreme Court’s decision

in Chandler would allow GEICO and its expert to explain to the jury how Florida

law on implied consent became clear only after GEICO’s coverage determination.

The exclusion, then, certainly “substantial[ly] influence[d] . . . the outcome of the

case.” See 

n.11 (internal quotation marks omitted).

                                         III.

      Ultimately, where the “weight of legal authority on the coverage issue” and

the reasonableness of the coverage decision are at issue, see 

, we would expect opinions considering, applying, and clarifying such legal

authority to be relevant. Because the evidence was relevant, and because any other


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basis for exclusion raised by the district court or by Garcia is insufficient as a

matter of law, the exclusion was an abuse of discretion. We therefore vacate the

final judgment and remand for a new trial consistent with this opinion.

      VACATED and REMANDED.




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