MARY JANE CHALKE DAVIS, EARL COSGROVE AND JAMES MICHAEL WILEY, APPELLANTS,
v.
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, A FOREIGN CORPORATION, AND ALLSTATE INSURANCE COMPANY, A FOREIGN CORPORATION, APPELLEES
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Appellants sued their insurers for bad faith in failing to settle a claim within policy limits, resulting in an excess verdict. The court reversed the dismissal, holding that where an insurer misrepresents coverage limits through its attorney, the failure to make a settlement offer does not bar a bad faith claim.
The court held that under circumstances where an insurer misrepresents coverage limits through its attorney, thereby preventing settlement negotiations, the absence of a settlement offer is not a prerequisite to maintaining a bad faith claim.
[1] An allegation of an offer to settle within policy limits is generally a prerequisite for a suit against an insurer for an excess verdict.
[2] An insurer may be liable for an excess verdict even without an offer of settlement within policy limits when the insurer's misrepresentation of coverage prevented settlem…
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Join FLexlaw to unlock all legal intelligence“under some circumstances the offer of settlement is not a prerequisite to excess liability”
Establishes the exception to the general rule that allows bad faith claims even without a settlement offer when misrepresentation of coverage occurs.
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Join FLexlaw to unlock all legal intelligenceAppellants were involved in an automobile accident. Davis (the negligent driver) was insured by Nationwide for $25,000; Cosgrove (the car owner) was i…
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PER CURIAM.
Appellants appeal from an order granting a motion to dismiss with prejudice their complaint against appellee insurance companies for bad faith dealings. They contend that under the circumstances of this case an allegation of an offer to settle within policy limits was not a prerequisite for their suit against the insurer for an excess verdict.
We agree and reverse. Appellants were involved in an automobile accident. Davis, the negligent driver, was insured by Nationwide for $25,000; Cosgrove, the owner of the car, was insured by Allstate for $15,000; and Wiley was the injured party. Appellants alleged that both insurance companies were represented by the same attorney, Tygart, and that he deceived all of the parties concerning the extent of coverage under the insurance. They contend that he assisted in preparing answers to interrogatories which stated that the insurance coverage was only the $15,000 on the Allstate policy and also stated the limits as $15,000 in a pre-trial stipulation concerning the liability coverage. Since there was a medical lien of $18,000, appellants allege that this misrepresentation and deceit on the part of the attorney and the insurance companies foreclosed settlement negotiations and prevented an offer of settlement. They claim that only after a judgment was entered for $240,000 and the insurance companies limited their liability to $40,000 did any of the plaintiffs in this action know of the additional $25,000 coverage.
Appellants brought suit against the attorney and the insurance companies alleging bad faith dealings and asked for punitive damages. The complaint acknowledged that Wiley had never made a settlement offer and claimed Tygart made it clear that Allstate would not be interested in accepting any demand for settlement or in making any offer of settlement. Further, they claim that Tygart told the insurance companies, but not the insureds, of the substantial injuries and of the potential excess verdict. Further, they allege that had the insurance companies and the attorney disclosed that the insurance limit was $40,000 instead of just $15,000, an amount below even the medical lien, the plaintiff in the prior action, Wiley, would have entered into settlement negotiations and that this would have benefitted all of them. The insurance companies filed a motion to dismiss on the grounds that there was no allegation of a demand to settle by Wiley and the court granted the dismissal with prejudice.
The trial court was correct in determining that the general rule under the case law of this state is that insurance companies will not be liable for an excess verdict if there is no offer of settlement within the policy limits. Cheek v. Agricultural Ins. Co. of Watertown, 432 F. 2d 1267 (5th Cir. 1970); Seward v. State Farm Mutual Automobile Insurance Co., 392 F. 2d 723 (5th Cir. 1968); Bush v. Allstate Insurance Company, 296 F.Supp. 368 (S.D.Fla.1969), aff’d, 425 F. 2d 393 (5th Cir.), cert. den. 400 U.S. 833, 91 S.Ct. 64, 27 L.Ed.2d 64; Chastain v. Federal Insurance Co., 338 So. 2d 214 (Fla. 3d DCA 1976), cert. den., 352 So. 2d 169; Beck v. Kelly, 323 So. 2d 667 (Fla. 3d DCA 1975); American Fidelity Fire Insurance Co. v. Johnson, 177 So. 2d 679 (Fla. 1st DCA 1965).
However, we believe the facts of this case are distinguishable because of the alleged misrepresentation of the insurance coverage.
We agree with the holding in Thomas v. Western World Insurance Company, 343 So. 2d 1298 (Fla. 2d DCA 1977), that under some circumstances the offer of settlement is not a prerequisite to excess liability.
In view of the allegations that the attorney represented both companies, that he misrepresented the coverage, and that there would have been an offer of settlement had the true liability limits been revealed, we consider that the complaint states a cause of action sufficient to withstand a motion to dismiss.
Reversed.
McCORD, C. J., and ERVIN and MELVIN, JJ., concur.
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Ranger Ins. Co. v. Travelers Indem. Co., 389 So. 2d 272 (Fla. 1st DCA 1980)…fer of settlement is not a prerequisite to excess liability. In Thomas, an insurer wrongfully refused to defend the insured, so that there was no offer within the policy limits, yet suit was allowed. In Davis v. Nationwide Mutual Fire Insurance Co., 370 So. 2d 1162 (Fla. 1st DCA 1977), no offer was made because an insurance attorney misrepresented the policy limits to the injured party, negligent driver, and car owner. In Valentine v. Aetna Ins. Co., supra, the trial court found that the personal injury litiga…
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Caldwell v. Allstate Ins. Co., 453 So. 2d 1187 (Fla. 1st DCA 1984)…under such a theory is foreclosed because of the absence of any offer by the Caldwells to settle within the policy’s limits of liability.1 Although this court has recognized such to be the general rule, Davis v. Nationwide Mutual Fire Insurance Co., 370 So. 2d 1162 (Fla. 1st DCA 1979), it does not necessarily apply in all breach of contract excess recovery claims. For example, if the insured is unable to employ [*1191] his own attorney, and if it can be demonstrated that an attorney could have asserted defense…1 / 2
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Gen. Accident Fire & Life Assurance Corp., Ltd. v. Am. Cas. Co. of Reading, 390 So. 2d 761 (Fla. 3d DCA 1980)…The court held that an insurer might be liable for bad faith in circumstances where no offer of settlement was made. The court in Thomas dealt with an insurer’s failure to defend. Thomas was followed by Davis v. Nationwide Mutual Fire Insurance Co., 370 So. 2d 1162 (Fla.1st DCA 1979) in which the court [*765] avoided the Beck rule by distinguishing its facts. In Canadian Universal Insurance Co. v. Employers Surplus Lines Insurance Co., 325 So. 2d 29 (Fla.3d DCA), cert. denied, 336 So. 2d 1180 (Fla.1976), the c…
Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Am. Fid. Fire Ins. Co. v. Johnson, 177 So. 2d 679 (Fla. 1st DCA 1965)
- M. P. Howlett, Inc. v. The Michael Moran, 400 U.S. 833 (U.S. 1970)
- Bush v. Allstate Ins. Co., 400 U.S. 833 (U.S. 1970)
- Thomas v. W. World Ins. Co., 343 So. 2d 1298 (Fla. 2d DCA 1977)
- Seward v. State Farm Mut. Auto. Ins. Co., 392 F.2d 723 (5th Cir. 1968)
- Bush v. Allstate Ins. Co., 425 F.2d 393 (5th Cir. 1970)
- Beck v. Kelly, 323 So. 2d 667 (Fla. 3d DCA 1975)
- Cheek v. Agric. Ins. Co. OF Watertown, 432 F.2d 1267 (5th Cir. 1970)
- Chastain v. Fed. Ins. Co., 338 So. 2d 214 (Fla. 3d DCA 1976)