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Harco Nat’l Ins. Co. v. Knowles

Court of Appeals of Georgia.

HARCO NATIONAL INSURANCE COMPANY

v.

ERIC KNOWLES, INC. et al. (two cases).

A23A1263, A23A1264

|

March 7, 2024

|

Review Denied March 26, 2024

Synopsis

Background: Insurer filed suit against insured, insured’s workers’ compensation carrier, insured’s employee and employee’s supervisor, seeking declaratory judgment that there was no coverage for employee’s injuries under automobile and commercial general liability (CGL) policies. In Case No. A23A1263, the Superior Court, Charlton County, Andrew C. Spivey, J., denied insurer’s motion for summary judgment on coverage issue, and in Case No. A23A1264, the Superior Court, Spivey, J., declined to enforce settlement agreement that employee’s injuries were compensable under Workers’ Compensation Act. Insurer’s applications for interlocutory appeal from both orders were granted.

Holdings: The Court of Appeals, Doyle, P.J., held that:

injuries sustained by employee arose out of employment, and thus were compensable under Workers’ Compensation Act, and

injuries fell within exclusions from coverage, under CGL and automobile policies, for bodily injury to employee of insured “arising out of and in course of employment” and for bodily injury compensable under workers’ compensation law.

Judgment in No. A23A1263 reversed; appeal from judgment No. A23A1264 dismissed as moot.

Attorneys and Law Firms

Kenan G. Loomis, Atlanta, for Appellant.

Hillary Ann Shawkat, for Appellee.

Opinion

Doyle, Presiding Judge.

*1 These related appeals arise out of a declaratory judgment action filed by Harco National Insurance Company against Eric Knowles, Inc. (“EKI”), Forestry Mutual Insurance Company (EKI’s workers’ compensation insurance carrier), Walter Knowles, and Robert Popwell. Harco brought the action seeking a judgment declaring that commercial general liability and auto insurance policies it issued to EKI did not cover liability for injuries suffered by Popwell at a job site while he was working for EKI in 2018. In Case No. A23A1263, Harco contends that the trial court erred by denying its motion for summary judgment (as amended) based on policy language excluding coverage for injuries to EKI employees “arising out of and in the course of [their] employment”with EKI. In Case No. A23A1264, Harco contends that the trial court erred by failing to enforce an alleged settlement agreement in which EKI, Forestry, and Popwell purportedly agreed that Popwell’s injuries arose out of and in the course of his employment with EKI. Because we conclude that the trial court erred by denying Harco’s summary judgment motion in Case No. A23A1263, we reverse the judgment in that case; Case No. A23A1264 is dismissed as moot.

Case No. A23A1263

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.1

The undisputed record shows that in the spring of 2018, Popwell began working for EKI as a “cut down man” in a commercial logging operation. His job was to operate a machine called a feller buncher to cut trees in a controlled manner so that they could be loaded onto trucks. He reported to work when and where directed by EKI, and he was paid every week based on the weight of the wood he cut. Walter Knowles was Popwell’s supervisor.

With respect to the details of the accident, Popwell deposed that on May 3, 2018, he was working at a wooded job site along with Knowles and other personnel. Knowles determined the hours Popwell worked, which fluctuated depending on when they finished loading trailers with logs. According to Popwell’s deposition, around mid-day, he stopped work to eat lunch. He got in his personal vehicle to drive to a nearby store that sold fried chicken, and as he was leaving the logging area on a dirt road, he soon noticed that Knowles was operating a skidder and pushing a loaded truck that needed extra traction to navigate the unpaved road. Popwell put his vehicle in park (facing the skidder) to wait for the operation to finish; when Knowles got the loaded truck moving sufficiently, he turned the skidder around and headed in Popwell’s direction. As Popwell remained stationary in his vehicle, Knowles accidentally drove the skidder into and onto Popwell’s vehicle, causing multiple injuries to him.

*2 Popwell initially received workers’ compensation payments from Forestry (EKI’s carrier) for a few weeks, but thereafter, a dispute arose regarding workers’ compensation coverage, and Popwell sued EKI and Walter Knowles. To get clarity as to its coverage obligations, Harco filed the present action seeking: a declaration that Popwell was acting within the scope of his employment at the time he was injured, that his injuries are compensable under the Workers’ Compensation Act (“the WCA”),2 and that Harco’s WCA exclusions in the policies issued to EKI preclude coverage.

During the pendency of Harco’s suit, EKI and Forestry initially agreed that Popwell’s injuries were compensable under the WCA and controlling precedent.3 Harco moved for summary judgment as to this question, and EKI and Forestry did not initially oppose it.4 But after an affidavit from Knowles emerged in related litigation, EKI and Forestry changed course and opposed Harco’s motion for summary judgment, relying on that affidavit. Knowles’s August 2020 affidavit averred as follows:

On May 8, 2018, I was employed as a crew leader by Eric Knowles, Inc. Robert Popwell was assigned to my crew and was under my supervision.

On May 8, 2018, around noon, Robert Popwell and I ate lunch together in a service truck as I drove around the property where we were clearing timber.

The drive lasted at least 15 minutes. During the drive, I instructed Robert Popwell on his assignment for the day. We looked at a GPS map together and discussed the location where he was to be working.

I drove to the location where Robert Popwell was to be working and showed him exactly where he was to be.

I then returned Robert Popwell to where his feller buncher was parked. He got out of my truck at that location. I instructed Robert Popwell to return to the area shown to him [and] to get that brow cut out because the other crew members would be completing their assigned tasks and would come to his area to gather the trees he was to cut.

I next saw Robert Popwell a few minutes later, after the skidder I was driving was in a collision with the vehicle he was driving.

Robert Popwell had abandoned his assigned task without my permission. Such an abandonment would normally result in termination of employment.

Following a hearing, the trial court denied Harco’s amended summary judgment motion and granted a certificate of immediate review. This Court then granted Harco’s application for interlocutory review.

1. Harco contends that the trial court should have granted its summary judgment motion because the record shows that Popwell’s injury arose out of and in the course of his employment with EKI, so any liability was precluded by policy language excluding coverage for workplace injuries. We agree.

Harco’s commercial general liability and automobile policies contain nearly identical language: “This insurance does not apply to: … ‘bodily injury’ to … [a]n ‘employee’ of the insured arising out of and in the course of … employment by the insured.”5 The policies further explicitly exclude coverage for any obligation under workers’ compensation law.

*3 In the workplace injury context, Georgia case law is clear that general liability insurance contracts may, as was done here, exclude coverage for injuries sustained on the job that are covered by the WCA.6 The question before us is whether there is a genuine issue of fact as to whether Popwell’s injury was such an injury.

The Supreme Court of Georgia has clarified that even though eating lunch is not the actual work an employee is hired to do, an ordinary mid-day lunch break on the employer’s premises is still considered to be “in the course of” employment for purposes of the WCA.7 This is because eating lunch at the workplace is an activity incidental to work and “reasonably necessary to sustain [an employee’s] comfort at work.”8

Furthermore, eating lunch during a break on the premises, or traversing to and from the work area for lunch, is considered to be “arising out of” employment when

the causative danger [is] incidental to the character of the employment, and not independent of the relation of master and servant. The accident must be one resulting from a risk reasonably incident to the employment. And a risk is incident to the employment when it belongs to, or is connected with, what a workman has to do in fulfilling his contract of service.9

Therefore, if an employee slips and falls on a wet surface, for example, when traversing into or out of an employee break room, “[i]t logically follows that her injury was causally connected to the conditions under which she worked, and her injury, therefore, ‘arose out of’ her employment.”10

Here, Popwell deposed that he was sitting in his vehicle in the process of leaving the job site to go to lunch when he was hit by the skidder driven by his supervisor during logging operations. Popwell had not yet left the logging area but was stopped and waiting for a stuck logging truck to be pushed along the roadway by the skidder. Thus, it is undisputed that Popwell’s injury was caused by heavy equipment returning from a task that was part of the timber harvest operation. Further, on the date of the accident, the officer at the scene noted that Knowles stated he was unsure why Popwell was driving his private vehicle at the time of the collision. Knowles’s subsequent affidavit does not dispute Popwell’s assertions that he was in his truck at the job site as part of his lunch break, regardless of whether he had eaten something with Knowles already. Therefore, Knowles’s assertion that Popwell had “abandoned” his assigned task at most shows that he did not immediately perform the task when assigned. It does not change Popwell’s legal status with respect to whether he had abandoned the course of his employment at the time of the accident.11 He had not.12

*4 Based on this record, even considering Knowles’s affidavit, the undisputed evidence shows that at the time Knowles ran into Popwell’s vehicle, Popwell was still in the logging area on his lunch break and was not otherwise engaged in a personal activity outside the course of his employment. The collision with a logging skidder at that time and in that location was a risk “reasonably incident” to Popwell’s employment in the logging operation. Therefore, the injuries sustained by Popwell fell within the Harco policy exclusion for “ ‘bodily injury’ to … [a]n ‘employee’ of the insured arising out of and in the course of … employment by the insured,” and the trial court erred by denying Harco’s amended summary judgment motion.

2. Harco’s remaining enumeration — challenging whether the Knowles affidavit is properly considered — is moot.

Case No. A23A1264

3. Harco also challenges the trial court’s denial of its motion to enforce an alleged agreement that Popwell’s injury arose out of and in the course of his employment with EKI. In light of our holding in Case No. A23A1263, this case is dismissed as moot.

Judgment reversed in Case No. A23A1263; Case No. A23A1264 dismissed.

Gobeil, J., and Senior Judge C. Andrew Fuller concur.

All Citations

— S.E.2d —-, 2024 WL 979231

Footnotes

  1. (Citation omitted.) Matjoulis v. Integon Gen. Ins. Corp., 226 Ga. App. 459 (1), 486 S.E.2d 684 (1997).  
  2. OCGA § 34-9-1 et seq.  
  3. See generally Frett v. State Farm Employee Workers’ Compensation, 309 Ga. 44, 844 S.E.2d 749 (2020) (overruling Ocean Acc. & Guarantee Corp. v. Farr, 180 Ga. 266, 178 S.E. 728 (1935) and holding that an injury occurred “in the course of” and arose “out of” employment when an employee slipped and fell in the break room during her lunch break).  
  4. During this process, Harco amended its motion for summary judgment to remove any request for a declaration specifically ruling on Forestry’s coverage obligations to Popwell. It maintained its request for rulings declaring that the WCA was Popwell’s exclusive remedy, Harco had no duty to defend underlying claims brought by Popwell, and Harco’s WCA policy exclusions precluded coverage for Popwell’s claims against the insured.  
  5. On appeal, there is no genuine dispute that Popwell was an “employee” and that he suffered “bodily injury.”  
  6. See generally Saxon v. Starr Indem. & Liability Co., 339 Ga. App. 495, 498 (2), 793 S.E.2d 659 (2016).  
  7. See Frett, 309 Ga. at 48-49 (2) (a), 844 S.E.2d 749 (“When analyzing the ‘in the course of’ prerequisite, courts generally focus on the nature of the employee’s activity at the time of the injury, not whether she was paid for it or was free to do something else.”), disapproving of language in Ocean Accident & Guarantee Corp., 180 Ga. at 270-271, 178 S.E. 728, stating that an employee’s “preparation for lunch and his eating lunch was his individual affair. It was not a part of his employer’s work.”
  8. Frett, 309 Ga. at 48 (2) (a), 844 S.E.2d 749.
  9. (Punctuation omitted.) Frett, 309 Ga. at 50, 844 S.E.2d 749, quoting Thornton v. Hartford Acc. & Indem. Co., 198 Ga. 786, 792-793, 32 S.E.2d 816 (1945).  
  10. Frett, 309 Ga. at 50, 844 S.E.2d 749.  
  11. See Odom v. Franklin, 368 Ga. App. 246, 249, 889 S.E.2d 405 (2023) (holding that an employee was still in the course of his employment and not on a personal detour even though he was violating company policy by being late to work). See also Frett, 309 Ga. at 49 (2) (a), 844 S.E.2d 749 (deciding that an employee on her lunch break in the break room was “in the course of” her employment was “not … a close case”).  
  12. There is no evidence, for example, that Popwell had been terminated or that he had quit his job.

© 2024 Thomson Reuters. No claim to original U.S. Government Works.  

End of Document

Markuson v. State Farm Mut. Auto Ins. Co

2024 WL 817545

Only the Westlaw citation is currently available.

NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

District Court of Appeal of Florida, Second District.

Benjamin D. MARKUSON; Erik Saterbo; and Stephen Saterbo, Appellants,

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation; Crawford Law Group, P.A., a Florida Corporation; and Larry Walker, Appellees.

No. 2D21-2443

|

February 28, 2024

Synopsis

Background: Insureds and their judgment creditor brought action against automobile liability insurer to recover for bad faith failure to accept offers to settle in excess of policy limits. The Circuit Court, 13th Judicial Circuit, Hillsborough County, Emily A. Peacock, J., entered partial summary judgment in favor of insurer. Insureds and creditor appealed.

[Holding:] The District Court of Appeal held that insurer had no duty to authorize insureds to consent to judgment more than five times amount of policy limit.

Affirmed in part, reversed in part, and remanded.

West Headnotes (9)

[1] InsurancePrerequisites for Claim of Breach or Bad Faith  

Ordinarily, to commence a bad faith action against a liability insurer, a party must first obtain a judgment against the insured in excess of the policy limits.  

[2] InsuranceInsurer’s settlement duties in general  

Liability insurer had no duty to authorize insureds to consent to judgment more than five times amount of automobile policy limit, thereby expediting availability of a bad faith claim, without releasing insurer from liability since the judgment would be functional equivalent of an excess judgment.

[3] InsuranceInsurer’s settlement duties in general  

Liability insurer has no duty to enter into to enter into a consent judgment in excess of the limits of its policy.    

[4] InsuranceInsurer’s settlement duties in general  

An insurer does not ordinarily have a duty to pay a claim in excess of a policy’s limit.  

[5]  InsuranceFulfillment of Duty and Conduct of Defense  

Liability insurer, in handling defense of claims against its insured, has duty to use same degree of care and diligence as person of ordinary care and prudence should exercise in management of his own business; this duty arises because insured has surrendered to insurer all control over handling of claim, including all decisions with regard to litigation and settlement.    

[6] InsuranceCommunications and explanations  

Liability insurer’s good faith duties obligate the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid same.

[7] InsuranceInsurer’s settlement duties in general InsuranceInvestigations and inspections

Liability insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.    

[8] InsuranceSettlement by Liability Insurer

In evaluating a claim, whether liability insurer has acted in bad faith in handling claims against the insured is determined under the “totality of the circumstances” standard.     

[9] InsuranceQuestions of law or fact

Each case of bad faith by insurer is determined on its own facts, and ordinarily the question of failure to act in good faith with due regard for the interests of the insured is for the jury.  

Appeal from the Circuit Court for Hillsborough County; Emily A. Peacock, Judge.

Attorneys and Law Firms

Patrick J. McNamara and David M. Caldevilla of de la Parte & Gilbert, P.A., Tampa; and Daniel J. McBreen and Eric D. Nowak of McBreen & Nowak, P.A., Tampa, for Appellant Benjamin D. Markuson.

Joshua I. Gornitsky of Searles, Sheppard & Gornitsky, PLLC, Ft. Lauderdale, for Appellants Erik and Stephen Saterbo.

Scott E. Damon, John W. Weihmuller, and Mihaela Cabulea of Butler Weihmuller Katz Craig, LLP, Tampa, for Appellee State Farm Mutual Automobile Insurance Company.

No appearance for remaining Appellees.

Opinion

BY ORDER OF THE COURT:

*1 Upon consideration of Appellants’ motion for rehearing, rehearing en banc, and/or clarification filed September 29, 2023,

IT IS SO ORDERED that Appellants’ motion for rehearing is granted. The prior opinion issued on September 15, 2023, is withdrawn, and the following opinion is issued therefor. We deny Appellants’ motion for rehearing en banc and/or clarification. No further motions for rehearing, rehearing en banc, or clarification will be considered.

PER CURIAM.

Appellants, Benjamin Markuson and Erik and Stephen Saterbo, appeal the entry of a partial final summary judgment as to counts I, III, IV, and V entered against them and in favor of State Farm Mutual Automobile Insurance Company. The final summary judgment was based upon the trial court’s conclusion that State Farm was under no legal duty to its insured to accept any or all of the three proposals for settlement made by Mr. Markuson. After consideration of the issue presented, we affirm in part, reverse in part, and remand for further proceedings.

I. Factual Background

The underlying case arises out of a 2006 automobile accident involving Erik Saterbo and Mr. Markuson. At the time of the accident, Erik was operating a vehicle owned by his father, Stephen. Due to his injuries, Mr. Markuson sued the Saterbos on September 10, 2008. The Saterbos had an insurance policy with State Farm which provided policy limits of $300,000.00 against liability for bodily injuries sustained in an auto accident. And on January 15, 2009, State Farm authorized the Crawford Law Group—the firm retained by State Farm to defend the Saterbos—to make a settlement offer to Mr. Markuson to resolve his case for the policy limits. The offer was not accepted.

Instead, in 2011 and 2012, Mr. Markuson issued two settlement offers to State Farm’s insureds (the first, oral; the second, written) that were largely indistinguishable in their terms. In pertinent part, Mr. Markuson’s offer would have required State Farm to (1) tender the $300,000 policy limits to Mr. Markuson; (2) authorize State Farm’s insureds to enter into a consent judgment in the amount of $1.9 million that would not be recorded or enforced against the Saterbos; and (3) authorize the Saterbos to assign their rights in any claims against their insurance agent to Mr. Markuson. In return, Mr. Markuson would execute a release of all his claims against the Saterbos and a satisfaction of the aforementioned consent judgment.1 The proposal made no indication that State Farm would be released from any bad faith liability. State Farm declined to accept these proposals, and the case continued to trial. Following a jury trial, Mr. Markuson recovered a total of $3,084,074.00, a sum considerably greater than the coverage afforded.

*2 The settlement offers by Mr. Markuson formed the basis of a bad faith complaint against State Farm, which brings us to the issue on appeal. Mr. Markuson and the Saterbos brought an amended seven-count complaint against State Farm, Crawford Law Group, P.A., and Larry Walker—the Saterbos’ insurance agent. Count I alleged common law bad faith against State Farm by the Saterbos, count III alleged common law bad faith against State Farm by Mr. Markuson, count IV alleged statutory bad faith against State Farm by the Saterbos, and count V alleged statutory bad faith against State Farm by Mr. Markuson.2 The alleged bad faith occurred when State Farm failed to settle the personal injury action by declining three of Mr. Markuson’s proposals for settlement. State Farm moved for summary judgment on these counts, asserting that it did not act in bad faith because the proposals for settlement included consent judgments above the policy limits and that pursuant to Kropilak v. 21st Century Insurance Co., 806 F.3d 1062 (11th Cir. 2015), it owed no duty to its insured “to enter into a consent judgment in excess of the limits of its policy.” To the extent the bad faith claims rested “on some other basis,” it did not seek a summary judgment. And we note that count I of the amended complaint alleged, among other things, that State Farm (1) failed to exercise good faith in the investigation, evaluation, and negotiation of the claim; (2) failed to handle the claim honestly and with due regard for its insured; and (3) failed to communicate with and advise the insureds.3

The trial court’s written order granting partial summary judgment for State Farm as to counts I, III, IV, and V states that pursuant to Kropilak, State Farm had no duty to enter into a consent judgment that was in excess of the policy limits “as a matter of law.” The trial court found that “each of the three proposals exposed State Farm to extracontractual claims or payment” and that nothing suggested State Farm would be released by entering into the proposed consent judgments. It further found that State Farm never withdrew its offer of the policy limits. Thus, the trial court determined that “State Farm did not act in bad faith when it did not agree to or negotiate with respect to any of the three proposals.”

II. Discussion

In Kropilak, the Eleventh Circuit reviewed an order granting summary judgment in favor of the insurer on the insured’s claim that it acted in bad faith. 806 F.3d at 1063-64. The question before the court was “whether the District Court erred in withholding evidence from the jury as a result of its grant of a motion in limine and thus ruling as a matter of law that the insurer had no duty to enter into a consent judgment in excess of the policy limits.” Id. at 1064. In affirming the district court’s decision, the Eleventh Circuit essentially determined that, in effect, there was no significant difference between a Cunningham agreement and a consent judgment proposal in excess of the policy limits. The Eleventh Circuit thus held that “an insurer owes no duty under Florida law to enter into a so-called Cunningham agreement and likewise owes no duty to its insured to enter into a consent judgment in excess of the limits of its policy.” Id. at 1070.

[1]The holding that “an insurer owes no duty to its insured to enter into a so-called Cunningham agreement” relies upon the Florida Supreme Court’s holding in Cunningham v.Standard Guaranty Insurance Co., 630 So. 2d 179 (Fla. 1994). In Cunningham, the parties “entered into an agreement to try the bad-faith action before trying the underlying negligence claim. The parties further stipulated that if no bad faith was found, the Cunninghams’ claims would be settled for the policy limits, and [the insured] would not be exposed to an excess judgment.” Id. at 180. Ordinarily, to commence a bad faith action against a liability insurer, a party must first “obtain a judgment against the insured in excess of the policy limits.” Id. at 181. However, the parties’ stipulation voluntarily eliminated this procedural prerequisite. Thus, “[t]he stipulation was the functional equivalent of an excess judgment.” Id. at 182; see also Perera v.U.S. Fid. & Guar. Co., 35 So. 3d 893, 899 (Fla. 2010) (“Cunningham agreements have been held by this Court to be the ‘functional equivalent’ of an excess judgment.” (citing Cunningham, 630 So. 2d at 182)); United Servs. Auto. Ass’n v. Jennings, 731 So. 2d 1258, 1259 (Fla. 1999).

*3 [2] [3] [4]Here, the thrust of the bad faith case turns on State Farm’s refusal to enter into the proposals for settlement. In Mr. Markuson and the Saterbos’ view, State Farm had a duty to authorize its insureds to consent to a judgment more than five times the amount of the policy limit and to do so without releasing State Farm from liability. But as the Eleventh Circuit observed, an insurer has no duty “to enter into a consent judgment in excess of the limits of its policy.” Kropilak, 806 F.3d at 1070. And an insurer does not ordinarily have a duty to pay a claim in excess of a policy’s limit. See Bethel v.Sec. Nat’l Ins. Co., 949 So. 2d 219, 222 (Fla. 3d DCA 2006); Mid-Continent Cas. Co. v.Basdeo, 742 F. Supp. 2d 1293, 1321 (S.D. Fla. 2010); see also § 624.155(4)(a), Fla. Stat. (2023) (“An action for bad faith involving a liability insurance claim … shall not lie if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim ….”).

Mr. Markuson and the Saterbos, however, assert that the controlling case law in this case is Fidelity & Casualty Co. of New York v. Cope, 462 So. 2d 459 (Fla. 1985), and Wachovia Insurance Services, Inc. v. Toomey, 994 So. 2d 980 (Fla. 2008). The question in Cope was whether “an injured party who has secured a judgment in excess of a tortfeasor’s insurance coverage can maintain a ‘bad faith’ excess claim against the insurer when the injured party has executed a release of his claims against the tortfeasor who has satisfied the judgment.” 462 So. 2d at 459. The supreme court held that “absent a prior assignment of the cause of action, once an injured party has released the tortfeasor from all liability, or has satisfied the underlying judgment, no such action may be maintained.” Id. The court reasoned that no cause of action for bad faith remained because “the insured could not be exposed to any loss or damage from the alleged bad faith of the insurer.” Id. at 460.

In Toomey, two employees received a judgment against their employer after bringing a claim of termination without cause. 994 So. 2d at 982. Because their employer was unable to satisfy the judgment, the parties entered into an agreement where the employer would assign any claim against Wachovia4 to the employees. Id. at 982-83. In exchange, the employees would simultaneously release their employer from all causes of action except for the breach of employment contract. Id. at 982. The Florida Supreme Court—extending the “prior assignment” requirement—held that a settlement agreement with a simultaneous assignment and release, such as the one fashioned by the parties before it, is a valid agreement.

[5] [6] [7] [8] [9]We pause here to emphasize that the ultimate question in a bad faith cause of action is whether the insurer breached the duty owed to the insured to make decisions in good faith with proper care and concern given to the interests of the insured. Neither Toomey nor Cope comment on an insured’s duty to accept a settlement proposal. We also note that neither case addresses a factual scenario in which the assignee could hold onto the assignment of rights for a period of time before releasing the assignor. However, the holding in Kropilak is not so expansive as to eliminate other theories of bad faith. Those theories require analysis under Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980),5 and its progeny.

III. Conclusion

*4 We conclude that the trial court correctly determined that State Farm had no duty to enter into a consent judgment in excess of the limits of its policy. Having so determined, we hasten to add that our affirmance of the trial court’s ruling is limited to the Kropilak theory of bad faith the court addressed. The trial court erred by entering a final judgment in favor of State Farm to the extent the Appellants’ claims raised other theories of bad faith governed by Boston Old Colony and its progeny. For that reason, we must reverse the partial final judgment and remand for further proceedings.

Affirmed in part, reversed in part, and remanded.

CASANUEVA, MORRIS, and LUCAS, JJ., Concur.

All Citations

Footnotes

  1. The terms of the release in the 2012 offer stated that “[w]ithin three days of executing this Agreement, Markuson shall deliver to counsel for Erik and Stephen Saterbo and counsel for Geico the release of claims and satisfaction of judgment.” Mr. Markuson also issued a third settlement proposal on May 18, 2012, this one in the form of a more straight-forward proposal for settlement under section 768.79, Florida Statutes (2012), requiring payment of $1.5 million (five times the policy limit) within twenty days.  
  2. Count II alleged professional negligence against Crawford Law Group, P.A., by the Saterbos, and count VI alleged negligence against Mr. Walker by Mr. Markuson as assignee of the Saterbos. Count VII sought a declaratory judgment against State Farm.
  3. Florida Rule of Civil Procedure 1.110(b) requires a pleader to set forth “a short and plain statement of the ultimate facts” that support the claim for relief. “In addition to the jurisdictional statement and the relief sought, the complaint must contain a plain statement of ultimate facts establishing entitlement to relief.” Pratus v. City of Naples, 807 So. 2d 795, 796 (Fla. 2d DCA 2002). The amended complaint sets forth the issues to be resolved; it does not identify the entirety of the evidence a party may adduce to establish its case.  
  4. Wachovia was the employer’s insurance broker. The employer could not satisfy the judgment against it because Wachovia allegedly removed coverage for breach of employment contract claims without the employer’s knowledge.  
  5. Under Boston Old Colony, “[a]n insurer, in handling the defense of claims against its insured, has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785 (Fla. 1980) (citing Auto Mut. Indem. Co. v. Shaw, 134 Fla. 815, 184 So. 852 (1938)). This duty arises because “the insured has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement.” Id. The surrender of authority by the insured to the insurer demands the latter make “decisions in good faith and with due regard for the interests of the insured.” Id. (citing Liberty Mut. Co. v. Davis, 412 F.2d 475 (5th Cir. 1969)). The insurer’s good faith duties “obligate[ ] the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid same.” Id. (citing Ging v. Am. Liberty Ins. Co., 412 F.2d 115 (10th Cir. 1969)). Additionally, an insurer must “investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.” Id. (citations omitted). And in evaluating a claim, “whether an insurer has acted in bad faith in handling claims against the insured is determined under the ‘totality of the circumstances’ standard.” Berges v. Infinity Ins. Co., 896 So. 2d 665, 680 (Fla. 2004) (citing State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 63 (Fla. 1995)). “Each case is determined on its own facts and ordinarily ‘[t]he question of failure to act in good faith with due regard for the interests of the insured is for the jury.’ ” Id. (alteration in original) (quoting Boston Old Colony, 386 So. 2d at 785).  

End of Document  

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