Eleventh Circuit Dismisses Bad Faith Claim Against Insurance Company

In Mesa v. Clarendon Nat’l Ins. Co. No. 14-12868, 2015 WL 5059496 (11th Cir. Aug. 28, 2015), the Eleventh Circuit found that Clarendon National Insurance Company adequately performed the good faith duty owed to the insured, and that the plaintiff’s claim of bad faith failed.

Mesa, the victim in a car accident, sued Clarendon, the insurance company for the other driver, for acting in bad faith in the way the company handled the claims against the insured, Cesar Zelaya. After the district court granted Clarendon’s motion for summary judgment, Mesa appealed, saying he presented evidence sufficient for the court to find that Clarendon (1) failed to settle, (2) failed to sufficiently investigate, and (3) failed to adequately advise the insured, which amounted to bad faith.

The Eleventh Circuit on appeal reviewed the case de novo and looked at all of the evidence presented in the light most favorable to Mesa. The court also applied Florida law, the law of the forum state. Under Florida law, “an insurer owes a duty of good faith to its insured,” Berges v. Infinity Ins. Co., 896 So. 2d 665, 672 (Fla. 2004), which includes giving advice to the insured about settlements and excess judgments as well possible options to avoid adverse judgments, investigating the claims and facts, and using “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).

The court looked at the evidence presented in the light most favorable to Mesa and held that Clarendon did in fact act in good faith towards Zelaya. Upon receiving notice from Mesa’s lawyer of the claim, Clarendon immediately hired an adjuster and attorney to look into the claims, whose subsequent actions satisfied the adequate investigation step. Clarendon’s counsel then contacted Mesa in addition to the other three claimants for the purpose of proposing a global settlement, as the insurance policy would not cover the entire amount of damage of each of the claimants, thus making a reasonable attempt to settle. While Mesa contended that he would not accept anything less than the $10,000 per person policy limit, the Court found no evidence that Mesa ever told Clarendon that he would not participate in the settlement. Once Mesa filed a suit against Zelaya, Clarendon hired a lawyer to represent Zelaya and communicated with him regarding the attempts to reach a settlement. The Court further held that even if Clarendon should have done more to communicate with Zelaya, any such negligence was not the cause of the excess judgment, and therefore not evidence of bad faith. Thus, the Eleventh Circuit concluded that there was not enough evidence to pose a question to the jury as to Clarendon acting in bad faith, and affirmed the lower court’s summary judgment ruling.

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