SUSAN C. BUCKLEW, District Judge.
This cause comes before the Court on two motions: (1) GEICO's Renewed Motion for Judgment as a Matter of Law (Doc. No. 158), which Plaintiff opposes (Doc. No. 162); and (2) GEICO's Motion for a New Trial (Doc. No. 157), which Plaintiff opposes
This is a lawsuit in which Plaintiff Joshua Moore claims that Defendant GEICO General Insurance Company ("GEICO") acted in bad faith by failing to settle a bodily injury claim asserted against him. Plaintiff was an insured driver under his parents' automobile insurance policy issued by GEICO, which provided bodily injury ("BI") limits of $10,000 per person/$20,000 per occurrence.
On May 11, 2010, Plaintiff was involved in a multi-car accident. Plaintiff was driving northbound on U.S. Highway 98 when another driver, Richard Waters, cut him off in traffic and the two drivers engaged in hand gestures. Waters then swerved his truck into the side of Plaintiff's truck, and Plaintiff lost control of his truck, crossed into the southbound lanes, and hit Amy Krupp's vehicle nearly head on. Krupp and her minor son ("AO") were severely injured, and Krupp later died.
Gregory Kyser, as Personal Representative of the Estate of Amy Suzanne Krupp, retained Lance Holden to represent the Estate for the bodily injury claim against Plaintiff. GEICO made several attempts to pay the claimants
This case went to trial on November 28, 2016. The jury found that GEICO acted in bad faith in failing to settle the bodily injury claim against Plaintiff. (Doc. No. 143). Thereafter, GEICO filed the instant motions for judgment as a matter of law and for a new trial.
GEICO moves for a judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(b). In analyzing this motion, the following standard of review applies:
In support of this motion, GEICO argues that the evidence before the jury undisputably showed that GEICO did not act in bad faith. GEICO contends that the sole basis for the jury's finding that it acted in bad faith was GEICO's inclusion in its release of the word "agents" and that the claimants would be releasing Plaintiff's "agents." According to Plaintiff's evidence at trial, the claimants refused to accept the release because they believed that such language was a release of their claims against GEICO (as Plaintiff's agent) if GEICO misrepresented Plaintiff's insurance coverage. GEICO argues that this is not a valid basis for a jury to find bad faith for three reasons: First, GEICO sent the claimants' attorney, Holden, the proposed release four days prior to the demand deadline set by Holden in order for Holden to determine if the release was acceptable. Second, as a matter of law, GEICO was not Plaintiff's agent. Third, even if GEICO could be considered Plaintiff's agent, the claimants had no claim against GEICO, and as such, there was no claim against GEICO actually released by that language.
In response, Plaintiff argues that bad faith is governed by the totality of the circumstances. As such, Plaintiff contends that GEICO's bad faith consisted not only of the problem with the release, but also evidence of GEICO's bad faith included providing incomprehensible affidavits, failing to send Plaintiff a copy of the settlement offer, and failing to inform him of the time deadline.
The evidence before the jury was that GEICO attempted to pay the BI policy limit several times, sent a proposed release to Holden four days before the demand deadline, and was clearly open to making changes to the release prior to the demand deadline. The evidence was also that Holden made a deliberate choice not to return GEICO's phone calls or object to the inclusion of the word "agent" in the release prior to the arbitrary deadline that Holden set for a response to his settlement demand. (Doc. No. 159-2, p. 113-90). The evidence at trial was substantially the same as the evidence presented to the Court at summary judgment. GEICO's handling of the claim seems to this Court now as it did then to be sufficient, as a matter of law, to avoid a bad faith finding against it. However, the Eleventh Circuit reversed this Court's conclusion in its summary judgment order on this issue. (Doc. No. 64). Given the Eleventh Circuit's conclusion based on this evidence, the Court is constrained to deny GEICO's motion for judgment as a matter of law.
Next, GEICO moves for a new trial, arguing that this Court allowed unfairly prejudicial evidence and argument to be presented to the jury comparing GEICO's claims handling to the claims handling of Peak Insurance ("Peak"). Peak was Waters' insurance company whose policy provided property damage coverage.
Federal Rule of Civil Procedure 59(a)(1)(A) provides that after a jury trial, court may grant a new trial on all or some of the issues "for any reason for which a new trial has heretofore been granted in an action at law in federal court." In ruling on this motion, this Court must determine whether the verdict is against the clear weight of the evidence or whether it will result in a miscarriage of justice, even though there may be substantial evidence that would prevent the direction of a verdict.
A new trial based on an erroneous evidentiary ruling should not be granted unless GEICO demonstrates that the ruling produced a substantial prejudicial effect.
GEICO points out that prior to trial, it filed a motion in limine to exclude evidence and argument that GEICO could have settled the bodily injury claim against Plaintiff based on the fact that the claimants settled their property damage claim against Waters with Peak.
Plaintiff responded to the motion in limine that because the jurors must consider the totality of the circumstances, they should be allowed to consider the fact that Peak settled the property damage claim against Waters. Plaintiff also argued that the claimants' settlement of their property damage claim against Waters shows that they were willing to settle their bodily injury claim against Plaintiff.
The Court denied GEICO's motion, stating:
(Doc. No. 88).
Upon reflection, the Court should have either granted the motion in limine or put specific limitations on the evidence and argument about Peak's claims handling that was admissible. Due to this failure, Plaintiff asked questions and made arguments comparing GEICO and Peak's claims handling that unfairly prejudiced GEICO by confusing and distracting the jury from the issue before them—whether GEICO acted in bad faith.
From the very beginning of this case, Plaintiff's counsel suggested that the jury should compare GEICO's claims handling and Peak's claims handling. In his opening statement, Plaintiff's counsel stated the following:
(Doc. No. 147, p. 115)(emphasis added).
When questioning Kecia Sirmans, the GEICO employee handling the GEICO claim, Plaintiff introduced the demand letter Holden sent to Peak, and GEICO objected based on the relevancy of Peak's handling of the property damage claim against Waters. (Doc. No. 147, p. 209-12). The Court overruled GEICO's objection. (Doc. No. 147, p. 212). Thereafter, Plaintiff asked Sirmans questions based on a comparison of the demand letters Holden sent to GEICO and Peak. (Doc. No. 147, p. 213-15, 226-28).
Gregory Kyser, Krupp's husband and AO's stepfather, testified about his decision to send a demand letter to Peak insurance and that his claim against Waters was settled by Peak. (Doc. No. 147-1, p. 83-87). Plaintiff then asked Kyser, "Now after this happens, you settle with Waters, but you don't settle with the Moores, correct?" (Doc. No. 147-1, p. 89). Kyser responded affirmatively. (Doc. No. 147-1, p. 89).
On cross-examination, GEICO asked Kyser to agree that GEICO did not cause the car accident at issue, it simply insured the driver that caused the accident. (Doc. No. 147-1, p. 95). In response, Kyser volunteered that GEICO did not comply with the demand letter, but Peak did everything exactly as requested. (Doc. No. 147-1, p. 95). Thereafter, GEICO asked Kyser what was wrong with GECIO sending a proposed release and asking Holden to approve it, and Kyser responded, "I mean, Peak didn't have to do it. We sent [the demand letter] to two different insurance companies, one could do it correctly, one couldn't." (Doc. No. 147-1, p. 99). GEICO again asked Kyser what was wrong with GEICO submitting a proposed release, and Kyser responded as follows:
(Doc. No. 147-1, p. 105).
When Plaintiff twice asked Holden about the demand letter he sent to GEICO, Holden responded in both instances by volunteering that he sent a demand letter to both GEICO and Peak. (Doc. No. 147-1, p. 123-25). When Plaintiff asked Holden whether his clients would have settled with GEICO had GEICO fully complied with the demand letter, Holden responded, "Yes . . . just like Mr. Waters . . . with Peak Insurance." (Doc. No. 147-1, p. 125). Plaintiff then questioned Holden about the demand letters that he sent to Peak and GEICO. (Doc. No. 147-1, p. 125, 127). When Plaintiff asked if Peak and GEICO complied with the demand letters, Holden responded as follows:
(Doc. No. 147-1, p. 128-29).
Thereafter, Plaintiff attempted to introduce Peak's letter in response to Holden's demand letter, to which GEICO objected and the Court heard arguments at sidebar. (Doc. No. 147-131-32). At sidebar, the Court expressed its concern regarding the relevance of the letter, stating, "I'm assuming you want to [introduce] this just to say, okay, Peak did it right — Peak did it one way and you think that's the right way, and GEICO did it another way and you think that is the wrong way. Is that the relevance of this?" (Doc. No. 147-1, p. 132). Plaintiff responded affirmatively, to which GEICO stated the following:
(Doc. No. 147-1, p. 133). The Court overruled the objection, stating:
(Doc. No. 147-1, p. 133-34). Thereafter, Plaintiff questioned Holden about Peak's response letter and about Peak's handling of the claim, including the fact that Peak hired two law firms to help it respond to Holden's demand letter. (Doc. No. 147-1, p. 134-35).
Plaintiff also asked Holden about the release that Peak submitted. (Doc. No. 147-1, p. 136-37). Then Plaintiff asked Holden why he objected to GEICO's proposed release that contained the word "agents," and Holden responded that if an insurance company makes misrepresentations about their insured's insurance coverage and the claimants released the insured and his agents, the claimants would be releasing any claims they had against the insurance company. (Doc. No. 147-1, p. 140-41). Plaintiff then asked why the demand letter required a sworn response regarding insurance coverage, and Holden responded, "I want someone telling me that under oath, let's make it clear, do what Peak and this [sic] lawyers did and we can settle the case." (Doc. No. 147-1, p. 141). Plaintiff asked Holden whether he sued Waters, to which Holden responded that he did not because Peak had complied with the demand letter. (Doc. No. 147-1, p. 142).
On cross-examination, GEICO asked Holden why he did not return GEICO's three phone calls requesting a letter of representation. (Doc. No. 147-1, p. 166-67). In response, Holden stated that he sent a letter to both GEICO and Peak. (Doc. No. 147-1, p. 167). GEICO asked why Holden did not respond to GEICO's proposed release that GEICO faxed and mailed, and Holden responded that he responded to both GEICO and Peak. (Doc. No. 147-1, p. 167).
GEICO then asked Holden about his demand letter, to which Holden responded, "It was a bona fide settlement offer and Peak and its lawyers got it right." (Doc. No. 147-1, p. 173). GEICO asked Holden why he did not give more instructions about the release in his demand letter, to which Holden responded that he worded the demand letter to GEICO the same way he worded the demand letter that he sent to Peak. (Doc. No. 147-1, p. 184).
Plaintiff's counsel asked Plaintiff's mother, Lisa Moore, about the underlying personal injury lawsuit that was filed in state court, and she responded that after the lawsuit was filed, she learned that "Lance" [Holden] had made similar demands to Waters' insurance company, Peak, and Peak complied, which meant that Waters was absolved of his financial obligation for the car accident. (Doc. No. 147-1, p. 209). Mrs. Moore went on to state the following:
(Doc. No. 147-1, p. 209-10).
On cross-examination, GEICO asked Mrs. Moore about GEICO's handling of the claim, to which she responded, "[W]hy did Peak settle, why was he released, why did that insurance company do what they were supposed to do and solve the problem or whatever was the issue." (Doc. No. 147-1, p. 231). Thereafter, the following exchange occurred:
(Doc. No. 147-1, p. 231-32).
Plaintiff asked Peter Knowe, Plaintiff's expert, about Peak's claims handling, including the fact that Peak hired two lawyers to respond to Holden's demand letter. (Doc. No. 147-2, p. 80-81). Knowe testified that Peak's hiring of two lawyers was consistent with insurance custom and practice. (Doc. No. 147-2, p. 81). Knowe went on to state that Holden gave the same settlement opportunity to both GEICO and Peak, to which GEICO objected (arguing that the claims handling of GEICO and Peak could not be compared to show bad faith), and the Court sustained GEICO's objection. (Doc. No. 147-2, p. 81). However, Plaintiff continued to question Knowe about Peak.
Plaintiff asked Knowe about the demand letter that Holden sent to Peak and whether Peak complied with the conditions set forth in the demand letter. (Doc. No. 147-2, p. 86-87). Knowe testified that Peak provided a drafted release, rather than a form release, in order to comply with the conditions set forth in the demand letter. (Doc. No. 147-2, p. 87-89).
During a break and outside the presence of the jury, the following exchange occurred between counsel and the Court:
(Doc. No. 147-2, p. 92-95).
On cross-examination, GEICO asked Knowe whether it would be reasonable for an attorney to discuss his settlement demand with the insurance company and answer the insurance company's questions about the terms of the demand. (Doc. No. 147-2, p. 137-38). In response, Knowe responded, "It would be reasonable for GEICO to comply with the settlement opportunity presented, just like Peak Insurance did." (Doc. No. 147-2, p. 138).
On re-direct, Plaintiff asked Knowe whether there would have been anything wrong with GEICO reaching out to Peak and working with Peak to comply with Holden's demand letter. (Doc. No. 147-2, p. 158). Knowe responded, "[I]nsurance companies are responsible for releasing and performing their duties for the benefit of their insureds. If they think another insurance company may have more expertise or more understanding, nothing wrong with communicating with them." (Doc. No. 147-2, p. 158).
Plaintiff then asked if there would have been anything wrong with GEICO getting attorneys involved to help Kecia Sirmans, like Peak got attorneys involved for Waters. (Doc. No. 147-2, p. 158-59). GEICO objected to the comparison to Peak, and the Court sustained GEICO's objection. (Doc. No. 147-2, p. 159).
In Plaintiff's closing argument, Plaintiff's counsel compared GEICO's claims handling to Peak's claims handling. Specifically, he stated the following:
(Doc. No. 147-3, p. 46-47). GEICO objected to this argument, and the Court sustained GEICO's objection. (Doc. No. 147-3, p. 47).
Based on the above, it is clear that there was substantial evidence and argument presented to the jury comparing GEICO's claims handling to Peak's claims handling. This unfairly prejudiced GEICO, because the focus of the bad faith claim should have been on GEICO's conduct. Evidence of Peak's claims handling likely significantly distracted the jury from the proper focus in this case—GEICO's claims handling. The relevance of Peak's settlement of a property damage claim that did not appear to exceed Waters' and Plaintiff's property damage limits is marginal at best. However, the evidence that was introduced at trial regarding Peak's claims handling and the claimants' settlement with Peak was substantial and likely confused and misled the jury, leading them to believe that Peak handled the property damage claim correctly, and GEICO's failure to handle the bodily injury claim the same way must be deemed bad faith. As such, this Court cannot say with fair assurance that the verdict was not substantially swayed by the Court's error in allowing this evidence and argument. Thus, allowing the bad faith verdict to stand when it may have been based in large part on this unfairly prejudicial evidence and argument would be a miscarriage of justice.
Accordingly, the Court grants GEICO's motion for a new trial. In doing so, the Court revisits it earlier ruling on GEICO's motion in limine regarding Peak's claims handling. Upon reconsideration, the Court grants GEICO's motion in limine to the extent that it requested that the Court exclude evidence and argument that it could have settled the bodily injury claim based on the fact that the claimants settled their property damage claim against Waters. During the retrial, the Court finds that no evidence regarding Peak should come in. The only evidence about Waters' insurance that may be introduced is that Waters did not have bodily injury insurance coverage. The only claim against Peak's insured, Waters, was a property damage claim, and the relevance of Peak's settlement of that claim is far outweighed by the danger of unfair prejudice, confusing the issues, and misleading the jury.
Accordingly, it is ORDERED AND ADJUDGED that: