A federal appellate court in Florida granted a Florida accident victim a second chance to compel an auto insurer to pay a $12.7 million judgment after the insurer failed to respond to a $10,000 settlement offer.

A divided panel of the 11th Circuit Court of Appeals ruled that the trial court erred in failing to address the insurer’s duty to notify those insured of a settlement opportunity in a lawsuit filed by Dustin Brink against Direct General Insurance Co. After the first trial ended with a verdict in favor of the insurer, the panel sent the case back to the US District Court in Tampa for a new trial.

The majority opinion quoted a portion of Brink’s attorney’s closing statements: “One of the easiest ways to invite a bad faith claim is to fail to keep the insured advised of settlement opportunities.”

The dissenting member of the three-judge panel wrote separately to say that, in his opinion, there was no error and that the evidence showed that the plaintiff’s attorneys were plotting to file a bad faith claim in the first place.

Brent Steinberg with Swope Rodante in Tampa, Brink’s attorney, said in an email that his client, an Iraq War veteran, suffered permanent brain damage as a result of the accident. There is no doubt that Direct General did not respond to the settlement offer, he said, and the evidence shows that this was not a mistake. Brink was seriously injured when his Kawasaki motorcycle collided with a borrowed vehicle driven by Juan Ruiz Pereles in Kissimmee, Florida at 2:09 am on April 5, 2008.

“Discovery revealed that during the same period, the assigned adjuster was failing to timely respond to approximately 46% of the attorney time-limited demands she received,” Steinberg said. “Her supervisor also had 14 – 20% of claims which were ‘past due’ at any given point.

Three weeks later, Direct General learned of the accident. The insurer’s claims adjusters had difficulty communicating with the parties involved from the beginning. Pereles and his father were unable to be reached by Direct General. The insurer initially communicated with Brink’s attorney, but later learned that the lawyer had dropped him as a client. 

Direct General sent letters to Pereles’ father for months after the accident, explaining its policy limits and asking if any other insurance might apply. The insurer attempted to contact Brink’s new attorney, Alexander Clem, 11 times without success. Direct General eventually decided to pay its policy limits and mailed a $10,000 check to Clem’s office. The check never got cashed.

Clem finally responded to Direct General after over a year, asking if there was any other insurance coverage available. The insurer responded that it had no other coverage and offered to sign an affidavit. Clem did not respond for eight months when he agreed to settle the case for the policy limit if he received the required insurance information “within the next couple of weeks.”

Direct General was the one who went silent this time. After three months, Clem notified Direct General that he had filed a lawsuit against Pereles and his father on Brink’s behalf. He also inquired as to why the insurer had failed to respond to his settlement offer.

Direct General went silent. After three weeks, Clem notified Direct General that he had filed a lawsuit against Pereles, on Brink’s behalf, and his father. He also inquired as to why the insurer had failed to respond to his settlement offer.

Brink was awarded $12.7 million by a jury, six years after the accident.

Brink filed a bad-faith lawsuit against Direct General, alleging that the company failed to respond to its settlement offer on time and failed to notify its insured of the settlement opportunity.

The case went to trial once more. Following the presentation of evidence and arguments, the US District Court issued a standard jury instruction that addressed only an insurer’s liability for failing to settle. 

During deliberations, the jury asked the court whether the bad faith should be based on the entire period since the accident, or just the period following Brink’s lawyer’s settlement offer. The court instructed the jurors to consider “the totality of the circumstances”.

The jury returned a verdict in favor of Direct General. Brink filed an appeal, claiming that jury instruction was flawed because it did not address the insurer’s duty to advise its insureds.

According to Judge Britt Grant’s majority opinion, Brink’s attorneys requested a jury instruction that would have made it clear that the jury could find Direct General liable for “failing to fully, honestly and promptly advise the insured.”

According to the opinion, the trial court’s failure to include that in its jury instruction prejudiced Brink. It made no difference that the plaintiff’s attorneys informed the jury of their obligation during the trial. 

“When a jury makes its findings, it must depend on the law as stated by the court, not the law as construed in various—often conflicting—ways by attorneys throughout the trial,” the opinion says.

In a dissenting opinion, Senior Judge R. Lanier Anderson III stated that the jury instructions provided by Brink’s attorney were defective and that the district court had no obligation to edit them to make them acceptable.

Aside from that, Anderson stated that Pereles and his father were unaffected by their insurer’s refusal to settle. Furthermore, he wrote, “overwhelming evidence” indicates that Brink’s lawyers had no intention of settling the case.

“Rather, it shows that Brink’s counsel tried to lead Direct General into making mistakes that he could later use to generate a bad faith claim,” the dissenting opinion says.

Source : https://www.insurancejournal.com/news/southeast/2022/06/29/673875.htm