SUSAN C. BUCKLEW, District Judge.
This cause comes before the Court on Defendant's Motion for Summary Judgment. (Doc. No. 27). Plaintiffs oppose the motion. (Doc. No. 31). Defendant has filed a reply brief. (Doc. No. 34). As explained below, Defendant's motion is granted.
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor.
Plaintiffs contend that Defendant Nationwide Insurance Company acted in bad faith in the handling of the insurance claims relating to the injuries sustained by Kimberly Miller ("Ms. Miller") in an auto accident. At the time of the accident, Defendant's insured, Paul E. Torrey, II, had an auto insurance policy with Nationwide that had bodily injury limits of $25,000 per person and $50,000 per accident, as well as a property damage limit of $10,000.
On April 25, 2008, Torrey was driving while intoxicated and struck a motorcycle operated by William Swails and occupied by Ms. Miller. As a result of the accident, Swails died and Ms. Miller suffered significant brain injury.
On May 8, 2008, Nationwide received notice of the accident. On May 9, 2008, Nationwide was advised that Kevin Gallagher would be representing Ms. Miller for her claims arising from the accident. The same day, Nationwide sent a letter to Torrey advising him that: (1) Nationwide believed that the two bodily injury claims would likely exceed his policy limits; (2) Nationwide would attempt to settle the claims within his policy limits, but if it could not and the claims went to trial and resulted in a verdict for more than the policy limits, he would be responsible for paying the excess amount; and (3) it may be advisable for Torrey to consult an attorney. (Doc. No. 27-4).
On May 12, 2008, Nationwide sent a letter to Gallagher stating that it was prepared to tender the $25,000 policy limit to Ms. Miller at Gallagher's direction. (Doc. No. 27-5). Prior to the May 12, 2008 letter, Gallagher was representing Ms. Miller's interests by helping Plaintiff Sharon McGuire, Ms. Miller's mother, pursue Ms. Miller's claim against Torrey. (McGuire depo,
Thereafter, on May 14, 2008, McGuire called Nationwide and offered to settle Ms. Miller's claim for the $25,000 policy limit, plus Nationwide's payment of the cost of setting up a guardianship for Ms. Miller. (McGuire depo, p. 15). McGuire contends that Nationwide refused to pay for the cost of setting up a guardianship for Ms. Miller.
During the May 14, 2008 phone conversation, Nationwide learned that Ms. Miller had a seventeen year old son, Justin Miller ("Mr. Miller"). Pursuant to Florida Statute § 768.0415, an unmarried dependent can assert a claim for damages against a person who, through negligence, causes significant permanent injury to the dependent's parent. Thus, Mr. Miller could assert a claim against Torrey for his mother's injuries.
On May 15, 2008, McGuire informed Nationwide that Gallagher "may" decide to represent Ms. Miller's interests. That same day, Nationwide wrote to Gallagher and reasserted its request that Gallagher provide Nationwide with direction as to how Nationwide should proceed to tender the $25,000 policy limit. (Doc. No. 27-6). On May 16, 2008, Nationwide wrote to McGuire (due to its uncertainty regarding whether Gallagher was representing Ms. Miller) and reasserted its intention to tender the $25,000 policy limit in exchange for a release of all claims against Torrey. (Doc. No. 27-7).
On May 20, 2008, Gallagher wrote to Nationwide and stated that he represented McGuire. (Doc. No. 27-8). In the letter, Gallagher informed Nationwide that he understood that McGuire had asked Nationwide to pay for some or all of the cost of setting up Ms. Miller's guardianship during the May 14, 2008 phone call, but Nationwide declined her request. (Doc. No. 27-8).
On May 21, 2008, Nationwide responded to Gallagher's letter by stating that had McGuire asked Nationwide to assist her financially to set up the guardianship, Nationwide would have done so. (Doc. No. 27-9). Additionally, Nationwide reiterated that it remained prepared to tender the $25,000 policy limit. (Doc. No. 27-9). Nationwide also pointed out the trouble it was having communicating directly with Gallagher on the phone and asked that Gallagher call as soon as possible. (Doc. No. 27-9).
The next day, on May 22, 2008, Nationwide sent Gallagher a letter with two enclosures—(1) a $25,000 settlement check payable to Gallagher's trust account for the benefit of Ms. Miller once the guardianship was established, and (2) a proposed release of claims against Torrey. (Doc. No. 27-10). In the letter, Nationwide explained that it was open to any changes to the release that Gallagher might suggest and to contact Nationwide immediately with any proposed changes. (Doc. No. 27-10).
Two weeks later, on June 5, 2008, Gallagher wrote to Nationwide and responded that "[t]he release and check submitted are unacceptable." (Doc. No. 27-11). Specifically, Gallagher stated that McGuire would not agree to the release due to the following four alleged defects: (1) he objected to a release that "require[d] indemnity, hold harmless or similar terms in favor of [Torrey];" (2) he stated that "[t]he release must not be assignable by [Torrey];" (3) he stated that the release "must not contain any statements indicating that liability is not accepted or is doubtful;" and (4) he stated that McGuire would not agree to release Torrey from punitive or exemplary damages. (Doc. No. 27-11).
In the June 5, 2008 letter, Gallagher proposed the settlement of Ms. Miller's claims if Nationwide met certain conditions. (Doc. No. 27-11). Specifically, Gallagher stated that McGuire needed financial assistance in setting up the guardianship and that based on Nationwide's prior letter, he assumed that Nationwide would provide such assistance. (Doc. No. 27-11). As such, Gallagher requested a letter from Nationwide agreeing to pay for the cost of setting up Ms. Miller's guardianship. (Doc. No. 27-11). Additionally, Gallagher stated that Ms.
Miller had lost certain articles of clothing, valued at $100, due to the accident and asked for reimbursement in addition to the payment for her bodily injury claim.
Gallagher closed the June 5, 2008 letter by stating the following:
(Doc. No. 27-11). Thus, Gallagher's June 5, 2008 settlement demand expired on June 25, 2008.
On June 9, 2008, Nationwide wrote Torrey and reiterated its belief that the value of the claims related to the accident exceeded his policy limits. (Doc. No. 27-12). Additionally, Nationwide informed Torrey that it had received a settlement demand from Gallagher and enclosed Gallagher's June 5, 2008 letter. (Doc. No. 27-12). Nationwide also informed Torrey that it had hired an attorney to represent him if the claims related to the accident could not be settled and went to trial. (Doc. No. 27-12).
On June 10, 2008, Nationwide sent Gallagher the requested letter stating that Nationwide agreed to pay the cost of setting up a guardianship for Ms. Miller. (Doc. No. 27-13).
On June 16, 2008, Nationwide's attorney, John Russell, wrote to Gallagher seeking clarification regarding Gallagher's June 5, 2008 demand letter. (Doc. No. 27-14). Specifically, Russell asked what Gallagher meant when he stated that the release must not be assignable by Torrey, because it was not clear where in the proposed release such right to assign had been set forth. (Doc. No. 27-14). Additionally, Russell asked what amount he was seeking as reimbursement for Ms. Miller's property damages—Gallagher's letter stated that her clothes were worth $100, but his letter closed with the request that Nationwide tender "all available limits of liability and excess coverage." (Doc. No. 27-14). Thus, Russell was unsure whether Gallagher was seeking $100 or the $10,000 property damage policy limit when asking for reimbursement for Ms. Miller's clothing/property damages. (Doc. No. 27-14). Russell closed his June 16, 2008 letter by stating that Nationwide would like to comply with all of the conditions set forth in Gallagher's settlement demand and requested that the June 25, 2008 deadline be extended to July 15, 2008. (Doc. No. 27-14).
On June 16, 2008, Russell wrote a letter to Torrey that explained all of the conditions set forth in Gallagher's June 5, 2008 settlement demand. (Doc. No. 27-15). Russell also stated that Nationwide intended to accept Gallagher's settlement demand. (Doc. No. 27-15). Additionally, Russell reiterated that Nationwide had hired an attorney to defend him if any claims related to the accident could not be settled and went to trial. (Doc. No. 27-15).
Torrey's criminal attorney, Terrence Matthews, wrote a letter in response to Gallagher's settlement demand, which was sent to Nationwide on June 16, 2008. (Doc. No. 27-16). Matthews stated that Torrey had no objection to settling Ms. Miller's claims for the policy limit, but Torrey would not authorize a statement accepting liability for the accident. (Doc. No. 27-16). Specifically, Matthews stated:
(Doc. No. 27-16).
On June 19, 2008, Russell wrote to Gallagher again, this time seeking clarification of the condition in the settlement demand that Torrey or a Nationwide claims manager provide a sworn statement accepting all liability for causing the accident. (Doc. No. 27-17). Specifically, Russell asked Gallagher to clarify what he meant by a "statement accepting all liability for causing this accident" if the statement was made by a Nationwide claims manager; Russell asked:
(Doc. No. 27-17). Additionally, Russell pointed out that he had not received a response to his June 16, 2008 letter in which he requested clarification of other conditions in the settlement demand, as well as an extension to the deadline for complying with the settlement demand. (Doc. No. 27-17).
On June 23, 2008, Gallagher wrote a letter to Russell in response to Russell's June 16th and 19th letters. (Doc. No. 27-18). In the letter, Gallagher gave a cryptic explanation regarding what he meant in his June 5, 2008 letter when he stated that the release must not be assignable by Torrey. (Doc. No. 27-18). Gallagher failed to address Russell's request for clarification regarding the amount being sought for Ms. Miller's clothing/property damage claim. (Doc. No. 27-18). Furthermore, it is not clear if Gallagher even acknowledged Russell's request for clarification regarding the condition that a Nationwide claims manager provide a sworn statement accepting all liability for causing the accident, because the only statements in Gallagher's letter that may purport to address this issue is the following:
(Doc. No. 27-18). Regardless, these statements do not provide any insight regarding what Gallagher is seeking when he requested a statement by a Nationwide claims manager accepting all liability for causing the accident. Finally, Gallagher closes the letter by stating:
(Doc. No. 27-18).
On June 23, 2008, Nationwide sent Gallagher a letter containing a $100 check payable to Gallagher's trust account for Ms. Miller's clothing. (Doc. No. 27-19). Additionally, Nationwide enclosed a sworn statement from a Nationwide claims manager stating that Nationwide "accept[ed] liability under the Nationwide policy for damages for bodily injury and property damage arising out of the April 25, 2008 accident, subject to all terms and provisions of the Nationwide policy." (Doc. No. 27-19).
On June 24, 2008, Russell wrote to Gallagher, stating that Gallagher's June 23, 2008 letter did not provide the clarification that he had requested and pointing out that Gallagher would not take or return his phone calls over the last week. (Doc. No. 27-20). However, Russell enclosed releases for Ms. Miller's bodily injury and property damage claims and stated that he believed that Nationwide had diligently complied with all of the conditions set forth in Gallagher's June 5, 2008 settlement demand. (Doc. No. 27-20).
On July 17, 2008, Gallagher wrote to Nationwide to inform it that a settlement had not been reached. (Doc. No. 27-21). Specifically, Gallagher stated:
[Nationwide] failed to comply with the terms and conditions of our client's settlement offer. Specifically, the release is unacceptable and seeks to resolve claims which were outside of my client's offer. It is unfortunate that Nationwide has attempted to extract a resolution of claims which were not offered by my client. As such, my client will be seeking a full recovery for damages through the court system.
(Doc. No. 27-21).
Though not fully explained in his July 17, 2008 letter, Gallagher found the release to be unacceptable because he believed Nationwide worded it to release not only Ms. Miller's own claims, but also her son's derivative claim. The Bodily Injury Release provided the following, in relevant part:
(Doc. No. 27-20)(emphasis added).
Thereafter, on August 13, 2008, McGuire and Mr. Miller (Ms. Miller's son) filed suit against Torrey in state court. On February 7, 2011, Torrey assigned his bad faith claim against Nationwide to McGuire and Mr. Miller. (Doc. No. 1-2). On February 23, 2011, the state court entered judgment against Torrey for $6.5 million for McGuire, as guardian for Ms. Miller, and $500,000 for Mr. Miller. (Doc. No. 27-25).
On March 16, 2011, Plaintiffs McGuire, as guardian for Ms. Miller, and Mr. Miller filed the instant bad faith lawsuit against Nationwide. Currently pending before the Court is Nationwide's motion for summary judgment.
Nationwide argues that it is entitled to summary judgment, because it did not act in bad faith. Nationwide's motion focuses primarily on its arguments that: (1) Gallagher's June 5, 2008 settlement demand did not provide a realistic opportunity to settle; and (2) Nationwide acted reasonably when it tendered the Bodily Injury Release, because the execution of that release would have had no effect on Mr. Miller's claim against Torrey.
In response, Plaintiffs fail to address Nationwide's arguments, and instead, Plaintiffs argue that Nationwide acted in bad faith by: (1) refusing to accept McGuire's May 14, 2008 telephonic offer to settle for $25,000, plus payment of the cost of setting up Ms. Miller's guardianship, and (2) failing to communicate McGuire's May 14, 2008 offer to Torrey and advise him of what he could do to accept the offer. Thereafter, Nationwide was permitted to file a reply brief in order to address the arguments asserted in Plaintiffs' response. Accordingly, the Court will address Nationwide's argument that it did not act in bad faith by analyzing Nationwide's conduct regarding: (1) Nationwide's refusal to accept McGuire's May 14, 2008 telephonic offer to settle; (2) Nationwide's failure to communicate McGuire's May 14, 2008 telephonic offer to settle to Torrey and advise him what he could do to accept the offer; (3) Nationwide's ability to meet the conditions set forth in Gallagher's June 5, 2008 settlement demand (and thus, whether such demand presented a realistic opportunity for settlement); and (4) Nationwide's communication with Torrey regarding Gallagher's June 5, 2008 settlement demand. As explained below, it is clear that Nationwide did not act in bad in the handling of the claims against Torrey, and as such, Nationwide is entitled to summary judgment.
In
896 So.2d 665, 682-83 (Fla. 2005).
Twenty-five years earlier, the Florida Supreme Court set forth the standard to be applied in bad faith litigation:
In determining whether an insurer has acted in bad faith in handling a claim, the totality of the circumstances standard is applied.
Plaintiffs contend that Nationwide acted in bad faith when it refused to accept McGuire's May 14, 2008 telephonic offer to settle in return for the $25,000 bodily injury limit, plus the cost of setting up Ms. Miller's guardianship. Nationwide responds that it could not have acted in bad faith, because it offered to pay the $25,000 policy limit, and that was all that it was required to pay under the policy.
Plaintiffs argue, without citing the specific section of the policy, that Nationwide was required to pay the cost of setting up Ms. Miller's guardianship. It appears that Plaintiffs are relying on the "Additional Payments" provision in the policy, which states that Nationwide "will pay, in addition to our limit of liability: (1) All costs we incur in the settlement of any claim or defense of any suit."
Plaintiffs cite no case law to support their contention that the "Additional Payments" provision obligates Nationwide to pay the cost of setting up Ms. Miller's guardianship. Furthermore, the Court finds the "Additional Payments" provision to be unambiguous, and it clearly does not impose a duty on Nationwide to pay the cost of setting up a guardianship in addition to paying the $25,000 bodily injury policy limit.
Next, Plaintiffs contend that Nationwide acted in bad faith when it failed to communicate McGuire's May 14, 2008 telephonic offer to settle to Torrey and advise him what he could do to accept the offer. Nationwide does not dispute that it did not inform Torrey of McGuire's May 14, 2008 telephonic offer to settle and advise him what he could do to accept the offer. However, Nationwide argues that its failure to communicate with Torrey about the May 14th offer did not cause Torrey to be exposed to the excess judgment, because Torrey would not have contributed the money necessary to set up the guardianship (and thus, there was no realistic opportunity to settle based on McGuire's offer).
The Florida Supreme Court has explained that the failure to inform an insured of a settlement opportunity can be evidence of bad faith:
In the instant case, Nationwide has shown that there was no realistic possibility of settling within the $25,000 bodily injury limit, because Nationwide offered the $25,000 bodily injury limit, but McGuire was also asking for payment of the cost of setting up Ms. Miller's guardianship. Furthermore, as explained below, Nationwide has shown that Torrey would not have paid the cost of setting up Ms. Miller's guardianship.
McGuire stated that when she was looking into the cost of setting up the guardianship, she thought she was quoted $6,000 or $7,000. (McGuire depo, p. 33). Nationwide, however, contends that Torrey was unable or unwilling to contribute such funds. Nationwide supports this contention by pointing out that when it was considering Ms. Miller's property damage claim (and the fact that she may have been seeking the $10,000 property damage limit based solely on her loss of $100 worth of clothing), Torrey was unable or unwilling to contribute $9,900 in order to satisfy McGuire's demand (as Nationwide would only pay for the $100 substantiated clothing loss). (Matthews depo,
Nationwide argues that Gallagher's June 5, 2008 settlement demand did not present a realistic opportunity for settlement, because: (1) it was impossible to meet the condition of supplying the requested statement accepting all liability for causing the accident; and (2) Plaintiffs refused to accept the Bodily Injury Release. Accordingly, the Court will analyze both demand conditions.
Nationwide argues that Gallagher's June 5, 2008 settlement demand did not present a realistic opportunity for settlement, because it was impossible to meet the condition of supplying the requested statement accepting all liability for causing the accident. In support of this argument, Nationwide points out that Torrey was quite clear that he would not make such a statement, nor would he authorize Nationwide to do so on his behalf. (Doc. No. 27-16). Furthermore, Nationwide points out that in the underlying state court tort action, Plaintiffs argued to the state court judge that providing a statement accepting all liability for causing the accident was one of the conditions for accepting the June 5, 2008 settlement demand, and the statement from Nationwide's claim manager did not comply.
Plaintiffs have not specifically addressed Nationwide's argument on this issue, and as such, the Court deems their silence to be a concession as to the merits of this argument. Accordingly, the Court finds that Nationwide has shown that Gallagher's June 5, 2008 settlement demand did not present a realistic opportunity for settlement, because it was impossible to meet the condition of supplying the requested statement accepting all liability for causing the accident.
Nationwide also argues that Gallagher's June 5, 2008 settlement demand did not present a realistic opportunity for settlement, because Plaintiffs refused to accept the Bodily Injury Release. Nationwide points out that Plaintiffs argued to the state court judge that the release was rejected because Gallagher believed that Nationwide worded it to release not only Ms. Miller's own claims, but also her son's derivative claim. Specifically, Gallagher took issue with the fact that the document states that Torrey is being released "from any and all claims, . . .
Nationwide points out, however, two very important things: (1) the person executing the release is the guardian for Ms. Miller, and (2) the derivative claims being released are the derivative claims, if any, that belonged to Ms. Miller, not the derivative claim that belonged to her son. Mr. Miller's claim, pursuant to Florida Statute 768.0415, is derivative in the sense that it is derived from the injuries to his mother, but it is still an independent claim that belonged to him.
Plaintiffs have not specifically addressed Nationwide's arguments on this issue, and as such, the Court deems their silence to be a concession as to the merits of these arguments. Accordingly, the Court finds that Nationwide has shown that Gallagher's June 5, 2008 settlement demand did not present a realistic opportunity for settlement, because Plaintiffs refused to accept the Bodily Injury Release.
Nationwide argues that it properly communicated with Torrey regarding Gallagher's June 5, 2008 settlement demand, and as such, there can be no bad faith in that respect. The Court agrees. On June 9, 2008, Nationwide informed Torrey of the June 5th settlement demand and forwarded Gallagher's demand letter. (Doc. No. 27-12). On June 16, Russell sent Torrey a letter explaining each condition set forth in Gallagher's settlement demand and informing Torrey of Nationwide's intent to accept the settlement. (Doc. No. 27-15). On June 19, 2008, Russell sent a letter to Gallagher seeking clarification of the sworn statement condition in the settlement demand, and Torrey's attorney was sent a copy of the letter. (Doc. No. 27-17). On June 24, 2008, Russell sent a letter to Gallagher regarding Nationwide's acceptance of the settlement, and Torrey's attorneys were sent a copy of the letter. (Doc. No. 27-20).
Plaintiffs have not specifically addressed Nationwide's arguments on this issue, and as such, the Court deems their silence to be a concession as to the merits of these arguments. Accordingly, the Court finds that Nationwide properly communicated with Torrey regarding Gallagher's June 5, 2008 settlement demand, and as such, there can be no bad faith in that respect.
Based on the above, and considering the totality of the circumstances, it is clear that Nationwide did not act in bad faith in the handling of the claims against Torrey. Instead, from the very beginning, Nationwide stood ready to tender the full $25,000 bodily injury limit and attempted to tender it. In addition, Nationwide agreed to pay the cost of setting up Ms. Miller's guardianship, which Nationwide was not required to do under the terms of the insurance policy. When its first proposed release was rejected by Gallagher, Nationwide incorporated all of the requested changes into the Bodily Injury Release that it sent as part of its acceptance of Gallagher's June 5th settlement demand. Finally, Nationwide did all that it could to supply a sworn statement accepting all liability for causing the accident, as requested by Gallagher as a condition of the June 5th settlement demand.
Thus, for the reasons stated above, the Court concludes that Nationwide met its duty to act in good faith to protect the interests of Torrey and that no reasonable juror could find that Nationwide put its interests ahead of Torrey's interests. As such, the Court finds, as a matter of law, that Nationwide did not act in bad faith.
Bad faith law was designed to protect insureds who must surrender to the insurance company control over whether a claim against them is settled. As a result, bad faith jurisprudence merely holds insurers accountable for failing to fulfill their obligations to the insured, and it has played a useful role in encouraging insurance companies to act properly. However, as noted by Justice Wells and reiterated by this Court:
As a result of the proliferation of bad faith claims, many insurance companies now actively and preemptively attempt to tender the full policy limits to claimants at the earliest possible time. However, given that acceptance of such offers would hinder bad faith claims, strategies such as (1) imposing additional, and often vague, conditions on settlement, (2) imposing short, artificial deadlines for satisfying the conditions, and (3) being unresponsive to the insurance companies' attempts at communication are sometimes employed by claimants and their counsel. It appears that this is exactly what happened in the instant case.
For example, Gallagher imposed the condition that Torrey or a Nationwide claims manager provide a sworn statement accepting all liability for causing the accident. The accident resulted in the death of Swails and significant injury to Ms. Miller, and as a result, Torrey was in jail and facing felony DUI charges; therefore, Gallagher knew that Torrey would not provide such a statement. That left Nationwide to satisfy the vague condition of providing a statement accepting all liability for causing the accident, and when Nationwide asked for clarification regarding the content of the requested statement, Gallagher refused to provide any.
In addition, when Nationwide submitted the Bodily Injury Release that Gallagher rejected, Gallagher did not just pick up the phone and ask if the "derivative" claim language could be removed. Instead, he simply rejected Nationwide's attempt to settle and filed suit. When a similar tactic was employed by the injured claimant's attorney in
Finally, it appears that the twenty day time limit imposed in Gallagher's June 5, 2008 settlement demand was an artificial deadline with no real purpose, other than to help "create" a bad faith claim. When asked why the settlement demand contained a twenty day time limit or why a twenty day period was necessary, McGuire responded that she did not know. (McGuire depo, p. 61-62).
Having said the above, the Court is mindful that the focus of bad faith claims is the insurer's actions
Accordingly, it is ORDERED AND ADJUDGED that Defendant's Motion for Summary Judgment (Doc. No. 27) is
Courts have recognized that parents are entitled to bring a derivative claim for their child's injuries for the same reasons that Florida Statute § 768.0415 provides that a dependant can bring a derivative claim for its parent's injuries.
Furthermore, given that Gallagher's June 23, 2008 letter failed to provide a meaningful response to Russell's questions regarding the amount being sought for Ms. Miller's clothing, as well as the content of the requested statement accepting all liability for causing the accident, the Court is also disturbed by Gallagher's statement in the letter that "I trust I have answered your questions and I really don't
