Mendez v. UNITRIN DIRECT PROPERTY & CAS. INS. CO.

Citations: 622 F. Supp. 2d 1233; 2007 U.S. Dist. LEXIS 80784Docket: 6:06-cv-00563

Court: District Court, M.D. Florida; October 31, 2007; Federal District Court

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Plaintiffs Erika Crystal Mendez and others sued Unitrin Direct Property Casualty Insurance Company, claiming the insurer acted in bad faith by failing to settle a wrongful death claim stemming from a 2004 traffic accident. The insurer was notified of the claim shortly after the accident but did not make a formal settlement offer until January 2005, which was declined. The plaintiffs ultimately faced a judgment of $630,000. At trial for the bad faith claim, the jury ruled in favor of the plaintiffs.

Unitrin subsequently filed motions for judgment as a matter of law and for a new trial, arguing that their attempts to contact the claimant, which went unanswered, demonstrated they could not have acted in bad faith. The court evaluated these motions under the standard that evidence must be viewed favorably for the nonmoving party, and concluded that the determination of bad faith was a jury question. The court rejected Unitrin's arguments, emphasizing that reasonable juries could differ on the evidence regarding bad faith, despite Unitrin's claims that the claimant's inaction should absolve them of liability. The court acknowledged Unitrin's policy concerns regarding claimants deliberately avoiding contact to later pursue bad faith claims but found no legal basis to grant the motion.

The law should discourage behaviors that enable claimants to evade insurers and prolong settlement negotiations, as this runs counter to Florida's public policy favoring settlements. Existing case law should not be interpreted in a way that rewards such behavior, nor should it endorse strategies designed to fabricate bad faith claims against insurers when no actual bad faith exists. In this context, the dissenting opinion emphasizes the importance of maintaining objective standards for bad faith rather than leaving it solely to jury determination. The dissent argues that allowing contrived bad faith claims could lead to increased insurance costs for Florida consumers.

Despite these dissenting views, the majority of the Florida Supreme Court did not accept these arguments, resulting in the denial of the defendant's motion for judgment as a matter of law. The court found sufficient evidence that the defendant had a reasonable opportunity to settle Mr. Ackley's claim, as the defendant did not formally offer to settle within a thirty-day period when Mr. Ackley was willing to settle.

Additionally, the defendant's motion for a new trial is subject to a less rigorous standard than a motion for judgment as a matter of law. A new trial may be granted for various common law reasons, even if substantial evidence supports the verdict. The trial judge must assess whether the jury's verdict aligns with the evidence and determine if it is against the clear weight of the evidence or would lead to a miscarriage of justice. To avoid substituting their judgment for that of the jury, new trials should only be granted if the verdict is against the great weight of the evidence, with the burden of proving harmful prejudice resting on the moving party.

Defendant requests a new trial based on three key arguments: 1) the quashing of a subpoena for Joe Vaccaro, a crucial witness; 2) the admission of prejudicial evidence regarding Hartford’s claim handling; and 3) the admission of prejudicial evidence related to the execution of the excess judgment. 

Regarding the subpoena, Defendant contends that the court's decision to quash it was prejudicial, as Vaccaro authored a key email relevant to Defendant's defense, suggesting there was no opportunity to settle due to Mr. Ackley’s intent to pursue a bad faith claim. Although Defendant deposed Vaccaro, they argue that live questioning was necessary for effective cross-examination. The court, however, found that the videotaped deposition provided sufficient testimony and did not unfairly prejudice Defendant.

On the second point, Defendant argues that the admission of evidence concerning Hartford's claim handling and the excess judgment was prejudicial, enabling the jury to unfairly compare the actions of Hartford and Defendant. The court had previously denied Defendant's motion in limine to exclude such evidence, stating it was relevant to the Plaintiffs' claims. Upon further consideration, the court recognizes that it should have limited the admissibility of evidence pertaining to Hartford's handling of the claim. 

Overall, the court will reassess the validity of the prejudicial claims and the impact of the evidentiary rulings on the trial's outcome.

Hartford's settlement of Mr. Ackley's claim and the settlement amount are pertinent to support Plaintiffs' argument that Mr. Ackley would have settled with Defendant. However, evidence regarding Hartford's claim handling—including the frequency and timing of contacts with Mr. Ackley—should have been excluded, as it could confuse the jury and imply Defendant acted in bad faith compared to Hartford. The Court did not consider the admission of Hartford's claim handling alone sufficient for a new trial, but it combined with errors regarding the excess judgment payment created substantial prejudicial effects. The Court could not confidently determine that the jury's verdict was unaffected by these errors.

Defendant argued that it was unfairly prejudiced by testimony regarding Mr. Ackley's intent to execute the judgment against Plaintiffs, their inability to pay, and the implications of the jury's verdict on responsibility for the judgment. Four specific instances of objectionable evidence were noted: 

1. Plaintiff Angelo Mendez was questioned about his ability to pay the excess judgment, which the Court allowed despite Defendant's objection.
2. Mr. Ackley's attorney, Theodore Leopold, was questioned about Mr. Ackley's options post-judgment, including executing the judgment against Plaintiffs or holding it in abeyance, with the Court overruling Defendant's objections.
3. Leopold explained that executing a judgment entitles the holder to the assets of the judgment debtor and stated that Mr. Ackley could seek $630,000 from Plaintiffs or wait for the outcome of the bad faith claim.
4. The questioning of Defendant's expert, Stephen Day, about the agreement to hold execution in abeyance was also permitted by the Court despite objections. 

These instances collectively suggest that the jury may have been influenced by improper evidence regarding Plaintiffs' financial responsibilities and the implications of the bad faith claim.

Plaintiffs' counsel questioned Mr. Day about the duration of judgments, while during closing arguments, they focused on the implications of a potential loss in the bad faith case. An exchange highlighted that Mr. Leopold, a witness, stated that there was an agreement to postpone asset execution to allow Plaintiffs to pursue their case. Despite objections from Defendant's counsel, the Court allowed this line of questioning. It was noted that Mr. Ackley had obtained a $630,000 judgment against Plaintiffs following the loss of his wife in a car accident. The Court expressed concern that the jury was influenced by irrelevant evidence regarding Plaintiffs' ability to pay the judgment, which could unfairly sway their decision. The Court acknowledged that while Defendant's lack of aggressive settlement attempts might be seen as negligent, such negligence appeared minimal given Mr. Ackley’s unresponsiveness. Ultimately, the Court concluded that the jury's verdict was likely affected by sympathy due to the introduction of this evidence and granted Defendant’s motion for a new trial. The Court ordered vacating prior judgments and set a new trial date for January 2008, with a pretrial conference scheduled for December 18, 2007. Additionally, it was noted that Mr. Ackley had uninsured/underinsured motorist coverage through Hartford.