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Farinas v. Florida Farm Bureau General Insurance Co.
Citations: 850 So. 2d 555; 2003 Fla. App. LEXIS 5742Docket: Nos. 4D02-11, 4D02-96
Court: District Court of Appeal of Florida; April 23, 2003; Florida; State Appellate Court
The case revolves around a February 23, 1996 car accident involving Nicholas Copertino, who lost control of his vehicle, resulting in the deaths of five teenagers and severe injuries to others, including a 14-year-old girl left quadriplegic. Copertino's liability was established, and he was covered by his father's insurance policy with Florida Farm Bureau, which had insufficient bodily injury limits of $100,000 per claim and $300,000 per accident for the multiple claims arising from the incident. Following the accident, Farm Bureau settled claims with the other driver and some estates for the policy limits but later sought a declaratory judgment to determine its obligation to defend the Copertinos after exhausting the limits. The appellants, who intervened, filed third-party bad faith actions against Farm Bureau, alleging inadequate consideration for the insured's interests in the settlements. Farm Bureau filed for summary judgment, which was granted, while the Farinases' cross-motion for summary judgment was denied. The court now addresses three key questions: 1) Farm Bureau's good-faith duty to the Copertinos in light of multiple claimants, 2) whether Farm Bureau fulfilled this duty, and 3) if there are any remaining factual issues for a jury. The background of Florida's insurance good-faith law is also discussed, establishing that insurers owe a fiduciary duty to their insureds, akin to that of an attorney-client relationship, and that bad faith actions can be brought by injured third parties against insurers, with statutory provisions enacted in 1982 extending such claims to first-party insureds. A 1990 amendment clarified the availability of both common-law and statutory remedies for bad faith, allowing for a judgment under one but not both. The Third District upheld that this amendment did not alter the common law duty of good faith or the measure of damages. In Hollar v. Int’l Bankers Ins. Co., the court confirmed that insurers must adhere to a standard of good faith, which requires them to act with the care and diligence expected of a reasonable person managing their own affairs. This includes advising insured parties on settlement opportunities, potential litigation outcomes, and the risk of excess judgments, as well as investigating claims and giving fair consideration to settlement offers. The jury determines if an insurer has met this standard. Florida Statute 624.155(b)(1) establishes that an insured can claim bad faith if the insurer fails to act in good faith to settle claims when reasonable under the circumstances. Both federal and Florida courts have recognized that insurers must prioritize the interests of the insured, especially in cases with multiple claimants and limited policy limits. In such scenarios, insurers cannot exhaust policy limits through indiscriminate settlements that jeopardize the insured's interests. The Florida Supreme Court's decision in Shuster v. S. Broward Hosp. Dist. reiterated that while insurers may settle claims within policy limits, they remain bound by their good faith duties to the insured. An insured's good faith discretion in settling claims within policy limits is broader than in refusing to settle or defend claims. While discretion exists, it is not unlimited and is constrained by a duty. The Second District Court of Appeal's decision in Harmon addresses whether an insurer can settle with multiple insureds, depleting policy limits to the exclusion of others under uninsured motorist provisions. The court found that insurers can reasonably settle with some claimants, even if it leaves others without recourse, aligning with precedent from other states. However, this perspective appears to conflict with the Boston Old Colony case, which mandates a full investigation of all claims before settling any individual claim and requires keeping the insured informed. The trial court interpreted these cases as presenting conflicting standards, but they can be harmonized. Boston Old Colony establishes a general standard for all automobile insurance bad faith cases, while Harmon specifically addresses cases with multiple competing claims. In the present case, both standards apply, requiring the insurer, Farm Bureau, to investigate all claims and seek to settle as many as possible within policy limits. Farm Bureau must avoid indiscriminate settlements that could leave the insured vulnerable to excess judgments. The determination of whether Farm Bureau met these obligations is a question for a jury. Although Farm Bureau has primary control over claims settlement, it must ensure that any settlements made are reasonable, adhering to its fiduciary duty to the insured as mandated by Harmon. The Second District Court of Appeal did not provide a definition of “reasonable” in the Harmon case, necessitating reliance on external authorities, specifically the Boston Old Colony case and Florida Statutes section 624.155(b)(1). Farm Bureau's actions must conform to the standard of care established in Boston Old Colony. The court noted that after investigating and communicating with the insured, Farm Bureau could have opted for a settlement strategy with select claimants if deemed reasonable. However, the assessment of this reasonableness is a jury question, influenced by Boston Old Colony and related legal precedents. The trial court's reliance on Harmon prevented necessary determinations of reasonableness, leaving factual issues for the jury to resolve. Key points for jury consideration include: Farm Bureau's duty to thoroughly investigate claims, keep the insured informed, and minimize potential excess judgments through reasonable settlements; whether Farm Bureau fulfilled this duty and employed a reasonable claims settlement strategy; the reasonableness of Farm Bureau's quick settlements with three claimants; the adequacy of its investigation into all claims; and its decisions regarding legal counsel's advice and proposed settlement strategies. Consequently, the court reversed the summary judgment in favor of Farm Bureau, affirmed the denial of the Farinases’ motion for summary judgment, and remanded the case for a jury trial, affirming other aspects of the appeal without further comment.