Florida's First-Party Uninsured Motorist Bad-Faith Doctrine Needs a Pit Stop
When an insurance company in Florida fails to handle a first-party insurance claim in accordance with its duty of good faith, F.S. §624.155 (civil remedy statute) provides the claimant a statutory private right of action to file suit against the offending insurer. This circumstance arises with some frequency in the context of uninsured motorist (UM) and underinsured motorist (UIM) claims. F.S. §627.727 (UM statute) governs uninsured motorist claims against insurers. Generally, the civil remedy statute provides a private right of action against insurers who run afoul of certain enumerated guidelines set forth in F.S. §624.1551 while the UM statute provides the damages available to a plaintiff who has prevailed in such a suit arising out of their UM/UIM motorist insurance.2
In a line of recent cases, insurers have asserted that their procedural due process rights to appellate review have been encumbered when a trial court allows the insured to bind the insurer to the damages determined in the UM breach of contract action. The insurers’ arguments arise out of the interaction of longstanding Florida bad-faith doctrine, the UM statute, and limitations on appellate jurisdiction. Several courts have agreed with the insurers and held that damages must be tried in subsequent proceedings. Moreover, the Florida courts that have attempted to reconcile this area of the law in order to avoid a constitutional problem — and great inefficiency — have strained to set forth an analytical framework or rationale that convincingly preserves due process principles.
The situation is well deserving of attention from the Florida Legislature and the Florida Supreme Court. Florida practitioners should also beware of the unsettled legal terrain in first-party UM bad-faith proceedings. The diversity of rationales applied in cases binding insurers to predetermined damages in bad-faith proceedings means unpredictable results until the UM statute’s language is altered, the Florida Supreme Court provides further guidance, or the Florida Rules of Civil Procedure are supplemented to include special provisions for these actions. This article begins by setting forth the relevant bad-faith doctrine, examining those cases finding a constitutional defect and the rationales of those courts that avoided the defect, and concludes that Florida courts should not grant preclusive effect to UM damages in subsequent bad-faith actions until the problem is resolved.
Accrual of a UM Bad-Faith Claim
In a typical UM claim, the driver who has been injured by an uninsured motorist files a claim with their insurer and the insurer will cover the insured’s losses up to the UM policy limits. If the insurer challenges the insured’s claim, the insured may bring a breach of contract action against the insurer. As part of the breach of contract action, the insured will make a case for their damages as a necessary component of their claim. If the insured prevails in the breach of contract action, the judge or jury will return a verdict that declares the dollar amount of the plaintiff’s damages caused by the uninsured tortfeasor. If the verdict exceeds the policy limits, the verdict will be reduced to the policy limits contained in the claimants UM policy because the maximum amount of recoverable damages that can be awarded to the insured is the contract amount ( i.e., the policy limits).3
Sometimes, while disputing the validity of a claim, the insurer behaves in a manner that runs afoul of its duty to perform the contract in good faith. The civil remedy statute enumerates several such acts that can give rise to insurer bad-faith liability.4 When an insurer acts in bad faith and the insured’s damages exceed the available UM/UIM policy limits, the insured will be able to plead a prima facie bad-faith claim. In a bad-faith action, the plaintiff’s damages are not limited by the insurance policy limits — the plaintiff may recover the full dollar amount of their damages caused by the uninsured tortfeasor. Specifically, the UM statute provides:
The damages recoverable from an uninsured motorist carrier in an action brought under s. 624.155 shall include the total amount of the claimant’s damages, including the amount in excess of the policy limits, any interest on unpaid benefits, reasonable attorneys’ fees and costs, and any damages caused by a violation of a law of this state. The total amount of the claimant’s damages is recoverable whether caused by an insurer or by a third-party tortfeasor.5
Critically, the bad-faith action cannot commence, as a matter of Florida law, until the liability of the uninsured tortfeasor and the extent of the damages have been established.6 This is the rule, irrespective of whether bad faith is alleged with the breach of contract action or brought separately.7
In third-party bad faith, the verdict from the underlying action is considered conclusive as to the measure of damages in the subsequent bad-faith action. In keeping with third-party claims, plaintiffs in first-party UM bad-faith claims have successfully utilized collateral estoppel and res judicata to bind insurers to the excess verdict awarded in the breach of contract action.8 It is at this juncture of Florida law that a defect in Florida’s UM bad-faith doctrine manifests itself. Because the breach action must precede the bad-faith action due to Blanchard v. State Farm Mut. Auto Ins. Co., 575 So. 2d 1289, 1291 (Fla. 1991), and because the verdict is reduced to policy limits in accordance with the common law of contract, when the excess verdict from the breach action is granted, preclusive effect in the subsequent bad-faith proceeding, the insurer is deprived of its due process rights to appellate review of the excess verdict.9 The following caselaw illustrates the problem.
Bottini and its Progeny
In Geico v. Bottini, 93 So. 3d 476 (Fla. 2d DCA 2012), the Bottini estate was awarded $30,872,266 by the jury at its UM breach of contract trial. That verdict was reduced to Bottini’s UM policy limit of $50,000 in accordance with general contract principles and prevailing bad-faith doctrine.10 Geico appealed to the Second District, asserting five discrete points of reversible error, but the appellate body affirmed, per curiam. The summary opinion addressed only one of Geico’s arguments — that reversible errors at trial contributed to the large jury verdict. The court reasoned, “[b]ased on the evidence presented, we are satisfied that even if Geico were correct that errors may have affected the jury’s computation of damages, in the context of this case and the amount of the judgment, any such error were harmless.”11
In the concurring opinion, Judge Altenbernd provided a deeper analysis of the court’s rationale. He explained that harmless error analysis of the case addressed only those matters affecting the judgment, not the verdict. Judge Altenbernd further explained:
[T]his court is given power to review final judgments for reversible error. We can also write an opinion affirming a judgment as to issues that, if we were to reach an opposite result, would lead to a reversal of the judgment. But I am unconvinced that we have a scope of review that allows us to rule on issues that do not and cannot affect the judgment on appeal.12
Despite the constitutional limitation, reasoned Judge Altenbernd, the court was able to determine that any errors contained in the large verdict were harmless because Geico had conceded that the measure of damages could have reasonably reached $1,050,000.13 "Accordingly, no alleged error raised by Geico can be a harmful error as to the judgment totaling $50,000.”14
Finally, Judge Altenbernd addressed the gravity of the jurisdictional limitation in the context of the UM breach of contract setting, stating, “[t]his appeal is motivated by the lawsuit that both parties know will follow…under section 624.155 [Civil Remedy Statute], Florida Statutes, for failure to settle this claim at an earlier time….The statute does not explain how the finder of fact in the next lawsuit determines the ‘total amount’ of the claimant’s damages.”15 Judge Altenbernd then speculated that the plaintiff would attempt to bind Geico to the multimillion dollar verdict, which, as a constitutional limitation on the appellate court’s power, would not have been subject to appellate review.
The Middle District of Florida expressed similar concerns in King v. Geico, No. 8:10-cv-977-T-30AEP, 2012 WL 4052271 (M.D. Fla. 2012), which involved a first-party bad-faith action arising out of a 2004 automotive accident in Tampa.16 At the breach of contract trial, the jury awarded the insured driver, King, a $1,638,171 verdict and the state court entered judgment in the amount of $25,000, the policy limit. After the jury verdict in the breach of contract action, King amended his complaint to state a claim for bad-faith failure to settle. Geico removed the bad-faith action to the federal court for the Middle District of Florida.
In its motion for partial summary judgment, Geico argued that King was constitutionally prohibited from utilizing either collateral estoppel or res judicata to treat the trial verdict as conclusive evidence on the element of damages in the bad-faith action.17 The Middle District began its analysis with a review of the UM statute’s damage provision, noting that it fails to prescribe any procedure for arriving at the “‘total amount’ of the claimant’s damages.”18 The court also reasoned that “[a]ppellate review affords procedural due process to litigants.”19 The court then shifted into a discussion regarding the tensions created by the structure of UM bad-faith claims procedure.
The court reasoned that both res judicata and collateral estoppel were inapplicable on two discrete bases. First, the court declared that both doctrines are useless in determining the bad-faith damages amount.20 Because under Blanchard bad-faith actions are legally distinct proceedings from the underlying breach of contract action, the necessary conditions precedent for utilizing res judicata cannot be established.21 Also, collateral estoppel fails because a verdict is not a final judgment that can be “accorded [sic] preclusive effect.”22 In other words, the King court did not identify a legal mechanism under Florida law that would support granting the breach verdict preclusive effect in a subsequent proceeding.
The court then described the opposing forces at work in this context, reasoning, “[y]et, as conditions precedent to bringing the bad faith action, insureds must allege in their complaints that there has been a final determination of both liability and the extent of damages.”23 The King court acknowledged that plaintiffs will meritoriously attempt to work an estoppel on damages in the subsequent bad-faith proceedings, conceding, “[p]resumably, that is what §627.727(10) is referencing.”24 The court finally admonished, “this [c]ourt will not resolve the conundrum that Florida law has created. Rather, to accord due process to insurers, the insured must prove their damages in the bad-faith action and are not entitled to rely on the underlying verdict as conclusive proof of those damages.”25 The court entered partial summary judgment in favor of Geico.26
The Southern District of Florida adopted the reasoning of King in Harris v. Geico, 961 F. Supp. 2d 1223, 1233 (S.D. Fla. 2013). In Harris, the plaintiff prevailed on her UM/UIM claim and was awarded a jury verdict of $336,351. That award was reduced to the $100,000 UM policy limit.27 Geico removed the ensuing bad-faith claim to the Southern District and the case was tried. The jury found for the plaintiff and awarded the excess verdict from the breach of contract action, $236,351. In post-verdict motions, Geico asserted that it was entitled to judgment as a matter of law because the measure of damages from the breach of contract trial were inaccurate and did not comport with the bad-faith damages contemplated by the UM statute. Geico also argued that affording the excess verdict preclusive effect would result in a violation of the insurer’s procedural due process rights to appellate review of the damages. The Southern District agreed with both arguments and granted the motion.28
Despite the concerns expressed in Bottini, King, and Harris, several courts have afforded the jury verdicts from an insured’s breach of contract action preclusive effect in the subsequent bad-faith case. These opinions rest on diverse and questionable footing. The underpinning of each, however, appears to be that the policy objective of judicial efficiency calls for the verdict to be carried forward. In effecting this aim, the courts inferred the Florida Legislature’s intent to grant the excess verdict preclusive effect, then offered a procedural mechanism or legal doctrine as sufficient protection of the insurer’s procedural due process rights.
The Harmless Error and Judicial Efficiency Approach
In Batchelor v. Geico Cas. Co., No. 6:11-cv-1071-Orl-37GJK, 2014 WL 3906312 (M.D. Fla. 2014), the Middle District squarely addressed the issue on Geico’s Motion to Compel Better Answers to Interrogatories. In Batchelor, the insured prevailed in her breach of contract action and the jury returned a verdict of $1.8 million.29 The verdict was reduced to $30,000 in accordance with her UM policy limit. Geico removed the action to federal court and the court agreed to abate the bad-faith proceedings while Geico appealed the trial decision. As part of that appeal, Geico argued that certain trial testimony pertaining to damages was impermissible. The Fifth District affirmed the trial court’s judgment, per curiam, without opinion.30
In the ensuing bad-faith proceeding, Geico propounded interrogatories targeted toward ascertaining the plaintiff’s damages. The plaintiff objected on relevance grounds, arguing that the damages issue was resolved by the trial verdict.31 The judge’s magistrate ordered the plaintiff to provide the answers, basing her opinion on King and Harris. The Middle District rejected the magistrate’s opinion and reversed.32 The court disposed of the procedural due process argument, stating, “[l]ogic dictates that in order to hold an error harmless, one must consider it — and that is precisely what the majority did. Judge Altenbernd’s concurrence, thus, improperly conflates a lack of jurisdiction with harmless error review.”33
The court reinforced its opinion with two examples — abuse of discretion review of the grant of a remittitur, and review of orders granting judgment notwithstanding verdict — of courts reviewing the validity of a verdict.34 A ccordingly, reasoned the court, Geico “received all of the process to which it is due.”35 The court continued to find that the appropriate measure of damages intended by the UM statute may be inferred by considering Florida’s bad-faith precedent,36 the pleading requirements for a bad-faith action,37 and the language of the civil remedy statute.38
Content that it had disposed of the constitutional infirmity, the court then addressed the policy considerations, reasoning:
Forcing plaintiffs to relitigate their damages in first-party bad faith actions would have serious ramifications, including: running the almost-certain risk of inconsistent verdicts; potentially raising comity issues between state and federal courts; creating a discrepancy (surely unintended and definitely illogical) between first- and third-party bad faith claims; placing inexplicable burden on the plaintiff to prove their cases twice; and causing a great deal of judicial inefficiency.39
The Motion for New Trial and Judicial Efficiency Approach
Florida’s Fourth District Court of Appeal addressed the issue directly in Geico v. Paton, No. 4D12-4606, 2014 WL 4626860 (Fla. 4th DCA 2014).40 In Paton, the plaintiff was awarded a jury verdict of $469,247 on her breach of contract claim. The trial court reduced that award to the $100,000 UM policy limit. Paton then amended her complaint to add a count for bad-faith failure to settle. The parties then filed cross-motions in limine — Geico seeking to exclude the verdict and Paton seeking to exclude the issue of damages. The trial court denied Geico’s motion, granted Paton’s, and the matter proceeded to trial. Paton prevailed at the bad-faith trial and the excess verdict from the underlying case was awarded to her in the amount of $369,247. Importantly, Geico took its first appeal in this matter after the conclusion of the bad-faith proceedings.
The Fourth District issued a qualified rejection of Geico’s argument on appeal, asserting that the language of the statutes in combination with dicta from the Florida Supreme Court’s decision in State Farm Mut. Auto Ins. Co. v. LaForet, 658 So. 2d 55, 56-57 (Fla. 1995) ,41 was adequate to construe the UM statute as operating to grant the underlying verdict preclusive effect.42 Although Laforet addressed only whether the UM statute operated prospectively or retrospectively, the Fourth District asserted, “based on the Florida Supreme Court’s construction of the applicable statutes, the initial action between the insurer and the insured fixes the amount of damages in a first-party bad faith action.”43
Having construed the operative statute, the court then turned to Geico’s procedural due process argument, reasoning, “retrial of plaintiff’s damages at a first-party bad-faith trial, as Geico urges, is such bad policy that we do not glean even a hint of its existence in any case the Supreme Court has decided in this area.”44 Consistent with Batchelor, the court also called attention to the fact that a plaintiff must be entitled to bad-faith damages before a bad-faith action accrues under Florida law.45 The court then identified Fla. R. Civ. P. 1.530, governing motions for a new trial, as the procedural vehicle that would resolve Geico’s procedural due process argument that only judgments — not verdicts — are subject to appellate review.
The court reasoned that appellate review from a denial of a motion for new trial would grant the appellate court the authority to review a verdict because the language in the rule provides that a “new trial may be granted to all or any of the parties and on all or a part of the issues.”46 The court further asserted that because the verdict, judgment, and damages were all “in the same ballpark,” that legal errors affecting the judgment could have affected amounts both above and below the judgment amount. Thus, the court concluded that the verdict was interrelated to the judgment allowing the appellate court to review the verdict.47 Finally, the court proclaimed, “because Geico never filed a rule 1.530(a) motion, we are left to guess at what error might have infected the first trial.”48
Finally, the court addressed the Bottini and King opinions. Although the Fourth District declared, “we do not discern the constitutional conundrum identified by Judge Altenbernd’s concurring opinion,” it went on to advise that appellate courts read Fla. Const. art. V, §4(b)(1), “expansively…to include an appeal from an order denying a new trial in a first party suit for uninsured motorist benefits…where a jury’s damage award far exceeds the amount of a final judgment.”49 This would allow the appellate court to review the verdict.50 Finally, the court endorsed harmless error analysis,51 a lthough it concedes that when an entirely new bad-faith action is filed, “[t]he procedure might be problematic.”52
One Court Followed Paton , but Expressed Doubts
The Middle District of Florida addressed the issue once more in Cadle v. Geico Gen. Ins. Co., No. 6:13-cv-1591-Orl-31GJK, 2014 WL 4983791 (M.D. Fla. Oct 6, 2014). The plaintiff in Cadle was awarded a $900,000 jury verdict at trial. In the subsequent bad-faith proceeding, Geico moved for summary judgment, arguing that the measure of damages determined at the breach of contract trial were not determinative in the subsequent proceeding. The court reasoned, “[t]he most recent ruling on this issue by a Florida appellate court is found in [ Paton ]…[a]lthough the [c]ourt shares the concern expressed by Judge Altenbernd in Bottini, the current state of law in Florida does not support [d]efendant’s position.” The court denied Geico’s motion.
The First-Party UM Bad-Faith Conundrum is Not Cured by Any of These Approaches
Each of the cases granting the breach of contract verdict preclusive effect in the subsequent proceeding, whether implied or expressed, acknowledge that there is a problem in the structure of first-party UM bad-faith cases. Each adopted its own approach to address the issue based on the facts and procedural posture of the case before it. The common thread in those courts’ reasoning is that the judicial inefficiency caused by retrying damages is so great and bad-faith doctrine stemming from Blanchard so entrenched, that the UM statute must preclude the insurer from disputing damages in the subsequent proceeding.
The Harmless Error Approach Misreads Bottini and Misses the Due Process Problem
Batchelor argues that the Bottini harmless error analysis prevents a large verdict from binding an insurer in a subsequent bad-faith proceeding.53 Paton endorsed harmless error review, but acknowledged that circumstances exist when reliance on such mechanism becomes problematic.54 The rule in Florida is that “harmless error occurs in a civil case when it is more likely than not that the error did not contribute to the judgment. ”55 While the rule contemplates verdicts elsewhere, the baseline of whether a harmful error occurred is the judgment. This limitation is mandated by the Florida Constitution.56
Therefore, an error that could affect a verdict of $10 million by $50,000 is virtually guaranteed to be harmless if the policy limits are $100,000. In fact, the error would have to translate to $9,900,001 for harmless error review to guarantee due process protection. The only exception to this elementary arithmetical proposition is the scenario described in Paton, in which the judgment is so interrelated with the verdict that review is warranted for the entire verdict amount. This approach requires the judgment and verdict to be reasonably related to one another. As a result, reliance on harmless error to remedy the problem leaves a due process protection gap between big verdicts and the associated policy limit judgments.57 This means that the larger the verdict, the bigger the gap in due process protection.
Where the Batchelor court states, “[l]ogic dictates that in order to hold an error harmless, one must consider it — and that is precisely what the majority did,” the court misses the point.58 Batchelor sets up the concurrence in Bottini as a dissent so that it can rely on harmless error review as a mechanism that prevents the due process harm argued by Geico.59 But the Bottini concurrence does not argue that the court’s holding is incorrect. The Bottini concurrence magnifies the court’s rationale in order to make it clear that jurisdictional limitations contained in the Florida Constitution prevent the court from addressing verdict amounts that do not affect the judgment. Thus, despite the strident approach embraced by the Batchelor court, its summary disposition of the issue fails to resolve the problem presented in Bottini, King, and Harris.
The Florida Rules of Civil Procedure Offer Little Assistance
The Paton court’s reliance on Fla. R. Civ. P. 1.530 is similarly flawed. A denial of a motion for new trial will provide the moving party a basis for immediate appellate review, but it does nothing to change the limitation on the appellate court’s jurisdiction to review more than the judgment amount. The Paton court’s analysis was couched in the reasonable relationship between the verdict and judgment amounts.60 The court reasoned that, on appeal from a denied motion for new trial in such cases, the “entire amount of damages was interrelated for the purpose of being appealable.”61
Thus, in cases when the verdict bears a reasonable relationship to the judgment, the Paton court believes that Fla. R. Civ. P. 1.530 protects insurers’ procedural due process rights. In circumstances when the damage far exceeds the judgment amount:
[T]he “final judgment or order” language of [art.] V, [§]4(b)(1) should be expansively read to include an appeal from an order denying a new trial in a first party suit for uninsured benefits. The final judgment subsumes the earlier order’s resolution of the jury’s damage determination so that the total amount is an immediately appealable issue.62
Presumably, the court means that the Florida Constitution should be read to cover the jury’s verdict in excess of policy limits when the trial court has been compelled by the filing of a motion for new trial to make findings regarding the excess verdict amount. The court does not explain how the jury’s excess verdict amount becomes part of the final judgment after a denial of the insurer’s motion for new trial.63
The Paton court also stops short of explaining how the appellate court avoids issuing an advisory opinion in instances when the appellate body determines that the excess verdict has been contaminated by error, but has had no impact on the breach of contract judgment.64 The Paton opinion works, if at all, on the facts of Paton, but fails to confront the problem presented by Bottini. Paton prescribes an approach whereby the appellate court determines the presence of a reasonable relationship between verdict and judgment, enlarges the scope of its jurisdiction if no reasonable relationship is present, and then, presumably, provides an advisory opinion regarding error infecting a verdict for a cause of action, which may not have been pled. The consequences of such an approach promise to be as negative as those attending retrying damages in the subsequent action.
The problem with all of the approaches is that the issue arises not from the record or thoroughness of appellate review, but from an ambiguous UM statute and established UM bad-faith doctrine played out within the framework of jurisdictional limitations imposed on the appellate courts by the Florida Constitution. The problem manifests itself in particular circumstances and only in the appropriate procedural posture. When these conditions are present, there is a gap in the protection of procedural due process rights, which will require mending by the Florida Legislature or the Florida Supreme Court.
The Inefficient Solution
The obvious remedy to the conundrum in UM first-party bad-faith claims is as simple as acknowledging that due process is often neither cheap nor efficient, and that a new trial on damages is commanded by the fundamental principles inherent in our legal system. While this option is admittedly inefficient, it guarantees all parties the protections of procedural due process. As the foregoing analysis demonstrates, no court has provided a competent rationale explaining how due process can be protected in this context under existing UM/UIM bad-faith law. The Paton court prescribed a method that could be workable, but would require the promulgation of special procedural rules for UM/UIM bad-faith actions.
Under the Paton court’s endorsement of the harmless error approach, the judge defers adjudicating the propriety of damages until the conclusion of the bad-faith proceedings. Then, harmless error review could be relied upon as a method of review that would encompass the entire verdict resulting in a bad-faith judgment. The Paton court forewarned that in circumstances when two separate actions — a UM/UIM breach followed by bad faith — are filed, the method could fail. Thus, special procedural rules would need to be promulgated for UM/UIM actions to avoid this pitfall.
Under either approach, however, the damages determined by the breach of contract action would be admissible in evidence in the subsequent bad-faith proceeding, but would not be granted preclusive effect. This renders Paton’s prescription for reliance on harmless error far less inviting. While this option likely represents the least efficient available alternative, it preserves the due process rights of the parties, would eliminate disputes regarding collateral estoppel in UM first-party bad-faith proceedings, and is entirely in keeping with Blanchard’s conception of the coverage action and bad-faith proceedings as entirely independent.65
When this issue reaches the Florida Supreme Court, it should declare that an insurer may not be bound to bad-faith damages determined in a prior proceeding because such damages are not subject to appellate review. In the meantime, The Florida Bar’s Civil Procedure Rules Committee should consider promulgating a specialized procedure that defers adjudication of the propriety of damages in first-party UM bad-faith actions until the final judgment is entered on bad faith.
1 See Fla. Stat. §627.727(1)(a)1-6 (2005).
2 See Fla. Stat. §627.727(10) (2013).
3 State Farm Mut. Auto Ins. Co. v. St. Godard, 936 So. 2d 5, 9 (Fla. 4th DCA 2006) (“[I]n the absence of a judicial finding of bad faith, in an action against the insurer for damages under a policy of insurance, a final judgment against the insurer cannot exceed the stated policy limits.”); see also Nationwide Mut. Fire Ins. Co. v. Voigt, 971 So. 2d 239, 242 (Fla. 2d DCA 2008).
4 See note 1 .
5 Fla. Stat. §627.727(10).
6 Blanchard v. State Farm Mut. Auto Ins. Co., 575 So. 2d 1289, 1291 (Fla. 1991) (“Absent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff’s damages, a cause of action cannot exist for a bad-faith failure to settle.”); Porcelli v. OneBeacon Ins. Co., 635 F. Supp. 2d 1312, 1316 (M.D. Fla. 2008).
7 See Blanchard, 575 So. 2d 1289.
8 See Batchelor v. Geico Cas. Co., No. 6:11-cv-1071-ORL-37GJK, 2014 WL 3906312 (M.D. Fla. 2014).
9 The state of Florida recognizes a constitutional right to appellate review. Lehmann v. Cloniger, 294 So. 2d 344, 347 (Fla. 1st DCA 1974) (“Access to the courts and appellate review are constitutionally recognized rights.”); see also T.A Enters., Inc. v. Olarte, Inc., 931 So. 2d 1016, 1018-19 (Fla. 4th DCA 2006) ( Fla. Const. art. V, §4(b)(1) and art. I, §21 grant constitutional rights to appeal and access to courts, which must be read together); and Kennedy v. Guarantee Mgmt. Servs., Inc., 667 So. 2d 1013, 1014 (Fla. 3d DCA 1996) (appellate court has jurisdiction and obligation to hear appeal as of right and dismissal of appeal-deprived party of constitutional right of access to courts).
10 Godard, 936 So. 2d at 9.
11 Bottini, 93 So. 3d at 476.
12 Id. at 478.
13 Id.
14 Id.
15 Id.
16 King, 2012 WL 4052271 at *1.
17 See id. at *5.
18 Id. (quoting Fla. Stat. §627.727 (10)).
19 Id.
20 Id. at *6.
21 Id.
22 Id. at *5 (“[A]ccorded” is inappropriate in this context; the court likely intended to use, “afforded.”).
23 Id.
24 Id.
25 Id. at *6.
26 Id.
27 Harris, 961 F. Supp. 2d at 1226 .
28 The plaintiff has appealed this ruling to the 11th Federal Circuit Court of Appeals. Harris v. Geico Gen. Ins. Co., No. 13-14171-FF, 2013 WL 6909993 (11th Cir. Dec. 26, 2013).
29 Batchelor, 2014 WL 3906312 at *1.
30 Id.
31 Id.
32 Id. at *2.
33 Id.
34 Id.
35 Id.
36 Id. at *3 ( Batchelor interprets the accrual formulation set forth in Blanchard, and the Florida Supreme Court’s dicta in LaForet as precedent, which “strongly suggests that it would rule the same way, though it has not yet been presented squarely with this issue.”).
37 The court’s rationale on this point relies heavily upon Blanchard’s use of the word “extent” for its argument that a first-party bad-faith claim cannot be pled without a fixed damages figure. Although this reading of the rule is possible, it is improbable that the Florida Supreme Court intended this interpretation. It is more likely that Blanchard requires that damages, particularly excess damages, be identified as a threshold consideration for the accrual of bad faith. If the damages are there, then the cause of action accrues and becomes available; if the damages are illusory, then no action for bad faith exists. The precise figure, which is a necessary component for the Batchelor court’s rationale, is not critical to such a determination.
38 Batchelor, 2014 WL 3906312 at *4. The court quoted the civil remedy statute’s damages provision, which provides “[t]he damages recoverable pursuant to this section…may include an award or judgment in an amount that exceeds the policy limits,” as supplemental support that the breach of contract damages were contemplated by the legislature to be conclusive as to bad-faith damages. The critical language does not appear in the UM statute’s damages provision.
39 Id.
40 A t the time this article was written, this opinion was not published in a reporter and remains subject to revision and/or withdrawal.
41 LaForet, 658 So. 2d at 56-57 (Fla. 1995) (“[T]he damages recoverable from an uninsured motorist insurance carrier in a bad faith action…shall include the total amount of a claimant’s damages, including any amount in excess of the claimant’s policy limits awarded by a judge or jury in the underlying claim.”).
42 Paton, 2014 WL 4626860 at *3.
43 Id.
44 Id. (quoting Batchelor’s list of negative consequences as further support on this point).
45 Id.
46 Id. at *4 (quoting Fla. R. Civ. P. 1.530(a)).
47 Paton, 2014 WL 4626860. The Fourth District concluded its analysis, stating, “This approach conserves judicial resources and best serves the procedure contemplated by Blanchard. failing to file a Rule 1.530(a) motion or take an appeal in the first trial, Geico did not preserve its right to challenge the total amount of the jury’s damage award from the first trial.”
48 Id.
49 Id. at *5. The court did not attempt to define “far exceeds.”
50 A ssuming that the court can unilaterally enlarge the scope of jurisdiction granted by the Florida Constitution, it does not explain what an appellate court might do in the event that it reviews the verdict and determines that a problem exists for bad-faith purposes, but no error affecting the breach of contract judgment, can be identified. Any action taken by a court in such a posture is likely violative of the prohibition against advisory opinions. In this regard, the prohibition against advisory opinions — an outgrowth of constitutional “case or controversy” jurisdictional limitations upon the courts — underscores Blanchard’s role in the procedural due process dilemma in this context. Can a court author an opinion on errors contaminating the calculation of damages for a cause of action not even pled?
51 Paton, 2014 WL 4626860 at *5. The court’s hypothetical harmless error scenario is workable, although it expressly preserves the right of the insurer to challenge damages in the bad-faith portion of the proceedings when “the [bad faith] trial judge defers ruling on the propriety of any amount of damages in excess of the final judgment until after a finding of bad faith.”
52 Id.
53 Batchelor, 2014 WL 3906312 at *2 (“The Bottini majority entered a per curiam affirmance with a brief opinion holding that ‘even if Geico were correct that errors may have affected the jury’s computation of damages, in the context of this case and the amount of the judgment, any such error were harmless.’ Logic dictates that in order to hold an error harmless, one must consider it — and that is precisely what the majority did.”).
54 Paton, 2014 WL 4626860 at n. 4.
55 Special v. Baux, 79 So. 3d 755, 771 (Fla. 4th DCA 2011) (emphasis added) (explaining further that “[t]o avoid a new trial, the beneficiary of the error in the trial court must show on appeal that it is more likely than not that the error did not influence the trier of fact and thereby contribute to the verdict.”).
56 F la. Const. art. V, §4(b)(1) (“District courts of appeal shall have jurisdiction to hear appeals, that may be taken as a matter of right, from final judgments or orders of trial courts, including those entered on review of administrative action, not directly appealable to the supreme court or a circuit court….”) (emphasis added).
57 Paton, 2014 WL 4626860 at *5. The Paton court implicitly acknowledges this in both its adoption of the “same ballpark” approach and prescription for appellate courts to broaden the scope of their jurisdiction in order to capture errors affecting judgments when “a jury’s damage award far exceeds the amount of a final judgment.”
58 Batchelor, 2014 WL 3906312 at n. 1.
59 Id. at *4, n. 1, 2. Strongly suggesting that the Batchelor court misread the Altenbernd concurrence, the court argues in a footnote that “both of these opinions were predicated on the Bottini concurrence, which this [c]ourt finds to be contrary to law, the [c]ourt must respectfully disagree with its colleagues, “ and, “this opinion did not garner the votes of his fellow judges and is thus not binding law in the Second District Court of Appeal or on this [c]ourt.” The concurrence agrees with the majority, but writes to identify a problem that the court is unable to address due to constitutional limitations.
60 Paton, 2014 WL 4626860 at *5.
61 Id.
62 Id.
63 See generally Paton, 2014 WL 4626860.
64 The contingent judgment of attorneys’ fees in a UM breach of contract action provides an analytical parallel to the issue of the excess verdict when the court determines the amount of attorneys’ fees due and owing in the underlying breach action. In Gov’t Employees Ins. Co. v. King, 68 So. 3d 267, 270 (Fla. 2d DCA 2012), the court addressed whether the contingent fee award could bind the insured in the bad-faith proceeding. The King court held, “[i]t is the finder of fact in the subsequent lawsuit [bad-faith proceeding] that is entitled to determine the amount of those fees. We are aware of no legal authority granted to this court or the trial court to predetermine the amount of those fees for the trier of fact in the subsequent lawsuit.”
65 The Paton and Batchelor courts each advance the argument that Blanchard compels the conclusion that the damages should be granted preclusive effect because the rule requires both “the extent of the damages,” and “a determination of liability.” While the language supports those arguments, the reasoning is not persuasive. The purpose behind ascertaining damages is to determine whether a bad-faith proceeding will have damages. If the damages fall within the policy limits, there will be no actionable bad-faith claim. Thus, the “extent of the damages,” language is a threshold requirement for bad faith to proceed and exact values are unnecessary.
Anthony Hearn is an attorney in the Coral Gables offices of Marlow, Adler, Abrams, Newman & Lewis, P.A., and is currently a member of The Florida Bar Journal & News Editorial Board. He concentrates his practice on commercial contract disputes, professional liability, insurance coverage, and insurance bad faith actions.
