GOVERNMENT EMPLOYEES INSURANCE COMPANY, A CORPORATION, PETITIONER,
v.
A. C. GROUNDS, RESPONDENT
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The Florida Supreme Court granted certiorari to expunge conflicting language from a First District Court of Appeal decision regarding the characterization of bad faith insurance settlement actions. The Court clarified that such actions are ex contractu (contract-based) rather than tort-based, consistent with its prior decision in Nationwide Mutual Ins. Co. v. McNulty, and affirmed that Florida law applies to the dispute.
An excess judgment action arising from an insurer's bad faith failure to settle is an action ex contractu (contract-based) rather than a tort action. This classification does not alter the determination that Florida law applies because the breached obligation—the duty to provide a good faith defense—goes to the insurer's performance under the contract, and contract performance is governed by the law of the place of performance under conflict of laws principles.
[1] An action for an insurer's bad faith failure to settle is an action ex contractu, not in tort.
[2] Evidence of an insurer's negligence in defending a claim does not transform a bad faith action into a tort claim.
Previewing 2 of 3 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“It follows that the cause of action for an 'excess,' where one arises from bad faith, is bottomed on the contract, and that the nature of an action thereon is ex contractu rather than in tort.”
Establishes the fundamental principle that excess judgment actions are contract-based, not tort-based, which the Court endorsed.
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Join FLexlaw to unlock all legal intelligenceGEICO failed to make a good faith effort to settle a claim against its insured, resulting in an excess judgment (judgment exceeding the policy limits)…
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PER CURIAM.
We have granted certiorari in this cause on the basis of conflict for the limited purpose of expunging certain language contained in the First District Court of Appeal decision which directly conflicts with this Court’s decision in Nationwide Mutual Ins. Co. v. McNulty, 229 So. 2d 585 (Fla. 1969).
The conflicting language in the instant decision relates to the nature of an excess action against an insurance company for bad faith failure to settle and is as follows :
“. . . While this is an action growing out of a contract, it is not a contract action strictly speaking. It is a hybrid which has some of the aspects of a tort action and some aspects of an action ex contractu. In Thompson v. Commercial Union Insurance Company of New York, Fla.App. (1st), 267 So. 2d 18, cert. den. 271 So. 2d 461, this court said:
. Although the courts have labeled a claim for “bad faith” in refusing to settle as a contract action, it possesses certain illegitimate characteristics. The “contract” is one engrafted by the courts upon a detailed written instrument and labeled with such terms as “negligent refusal to settle” and “bad faith”; thus to a great extent the action sounds in tort arising out of a contractual relationship.’
Since an excess judgment action, though bearing certain aspects of a suit upon a contract is, strictly speaking, not one, ..."
This Court in McNulty, supra, quoted with approval the following excerpt from the Third District Court of Appeal in the same case reported at 221 So. 2d 208 (3d D.C.A.Fla.1969):
“. . . It follows that the cause of action for an ‘excess,’ where one arises from bad faith, is bottomed on the contract, and that the nature of an action thereon is ex contractu rather than in tort. The fact that the proofs offered to establish an insurer’s bad faith in this connection may include or consist of showing an act of negligence will not take the cause of action out of the contract category. . . .”
Finding that this is an action ex contrac-tu rather than tort will not alter the decision of the District Court insofar as it determines that Florida law should apply as opposed to Mississippi law, which does not allow excess judgment recoveries. In this case, this is so because the obligation of the contract breached by petitioner was the obligation to provide respondent a good faith defense to the action. Such goes to petititioner’s performance under the contract (or lack thereof), and matters con cerning performance are determined by the law of the place of performance under traditional conflict of laws principles. Scudder v. Union Nat’l Bank, 91 U.S. 406, 23 L.Ed. 245 (1876); State-Wide Ins. Co. v. Flaks, 233 So. 2d 400 (3d D.C.A.Fla. 1970), cert. dismissed, 238 So. 2d 427 (Fla. 1970); Castorri v. Milbrand, 118 So. 2d 563 (2d D.C.A.Fla.1960). In the instant case, the place of performance was Florida, where the cause of action against respondent was maintained and was defended by petitioner. Issues unrelated to the foregoing, which were raised by the petitioner’s brief, have been considered and found to be without merit. We find discussion of such points to be unnecessary to the just determination of this cause.
Accordingly, the conflicting language is expunged and there being no longer any foundation for conflict certiorari, the Petition for Writ of Certiorari is discharged.
It is so ordered.
OVERTON, C. J., and ROBERTS, ADKINS, BOYD and SUNDBERG, JJ., concur.
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Combs v. State, 436 So. 2d 93 (Fla. 1983)…17 So. 2d 731 (Fla.1960). We therefore grant the petition for review for the purpose of expunging language in the district court of appeal opinion that directly conflicts with our earlier decisions. See Government Employees Insurance Co. v. Grounds, 332 So. 2d 13 (Fla.1976). In this case Melvin Combs was convicted in county court of driving while intoxicated. At the trial a police officer testified that while he was working on an accident report concerning a parked car, Combs approached him. The officer tes…
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Boston OLD Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980)…easonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Government Employees Ins. Co. v. Grounds, 311 So. 2d 164 (Fla. 1st DCA 1975), cert. discharged, 332 So. 2d 13 (Fla.1976); Government Employees Ins. Co. v. Campbell, 288 So. 2d 513 (Fla. 1st DCA 1973), quashed, 306 So. 2d 525 (Fla.1974); Baxter v. Royal Indemnity Co., 285 So. 2d 652 (Fla. 1st DCA 1973), cert. discharged, 317 So. 2d 725 (Fla.1975). Because th…
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Ranger Ins. Co. v. Travelers Indem. Co., 389 So. 2d 272 (Fla. 1st DCA 1980)…ess carrier’s action against the primary carrier for bad faith in settlement must be based upon a contract. It is true, as appellee contends, that bad faith actions are grounded upon contractual rights. Government Employees Insurance Co. v. Grounds, 332 So. 2d 13 (Fla.1976). However, as appears from the foregoing discussion a cause of action based upon equitable subro-gation is not dependent upon the existence of a contract between the plaintiff and the defendant. Allstate Life Ins. Co. v. Weldon, supra. For…
Previewing 3 of 21 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Scudder v. Union Nat'l Bank, 91 U.S. 406 (U.S. 1875)
- Nationwide Mut. Ins. Co. v. Kendrick D. McNULTY, 229 So. 2d 585 (Fla. 1969)
- State-Wide Ins. Co. v. Flaks, 233 So. 2d 400 (Fla. 3d DCA 1970)
- Castorri v. Otto E. Milbrand and Mary Milbrand, 118 So. 2d 563 (Fla. 2d DCA 1960)
- Kendrick D. McNULTY v. Nationwide Mut. Ins. Co., 221 So. 2d 208 (Fla. 3d DCA 1969)
- Thompson v. Commercial Union Ins. Co. OF NEW York, 267 So. 2d 18 (Fla. 1st DCA 1972)
- City OF Miami Beach v. Manilow, 238 So. 2d 427 (Fla. 1970)
- Carrington v. Broad St. Christian Church, 238 So. 2d 427 (Fla. 1970)
- Allen Trovillion, Inc. v. Stamper, 271 So. 2d 461 (Fla. 1972)
- Thompson v. Commercial Union Ins. Co. OF NEW York, 271 So. 2d 461 (Fla. 1972)