JOSEPHINE CHASTAIN, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF WILLIAM WILBUR CHASTAIN, DECEASED, APPELLANT,
v.
FEDERAL INSURANCE COMPANY, APPELLEE; ALLSTATE INSURANCE COMPANY, APPELLANT, V. FEDERAL INSURANCE COMPANY, APPELLEE
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Josephine Chastain and Allstate Insurance Company appealed a judgment in favor of Federal Insurance Company, claiming Federal acted in bad faith by refusing to settle a negligence claim within its policy limits. The court affirmed, holding that bad faith liability requires an actual settlement offer within policy limits, which was never made.
An insurer cannot be held liable for bad faith failure to settle within policy limits absent an actual offer by the claimant to settle within those limits. Because Josephine Chastain made no settlement offer to Federal regarding Jorge, Federal cannot be held liable for bad faith.
[1] An insurer cannot be held liable for bad faith refusal to settle a claim within policy limits absent an offer to settle within those limits by the claimant.
[2] A claimant's failure to make an offer to settle within an insured's policy limits precludes a bad faith action against the insurer for excess judgment.
Previewing 2 of 2 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“in cases where recovery of the excess over policy limits of a judgment against the insured is sought from his insurer upon the ground that the insurer's conduct in failing to effect a settlement within the policy limits amounts to bad faith, there can be no liability in the absence of an offer by the person claiming against the insured to settle within the policy limits”
States the established Florida law requiring a settlement offer as a prerequisite to bad faith liability
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Join FLexlaw to unlock all legal intelligenceOn December 1, 1967, William Chastain was fatally injured and his wife Josephine was seriously injured in a collision with a vehicle driven by Julio S…
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HAVERFIELD, Judge.
Plaintiffs appeal a final judgment in favor of defendant Federal Insurance Company in an action to recover the excess over the policy limits of the judgment on the alleged ground that Federal exercised bad faith in refusing to settle the claim for the policy limits.
On December 1, 1967 William Wilbur Chastain was driving an automobile owned by Jack Rhodabarger and insured by Allstate Insurance Company, one of the appellants, when it was struck by an automobile driven by Julio Sanchez and owned by Maximino Jorge who was uninsured. Sanchez, however, had an automobile liability insurance policy with $10,000/20,000 limits issued by Federal. As a result of the collision, William Chastain was fatally injured and his wife Josephine, a passenger in the car and the other appellant, sustained serious bodily injury. On behalf of herself and as administratrix of her husband’s estate, she filed suit against Sanchez and Jorge. Federal undertook to defend Sanchez, but concluded it afforded no coverage to Jorge. Subsequently, Mrs. Chastain settled with Federal as to Sanchez for $19,500. She also obtained a $70,000 default judgment against Jorge and then successfully pursued a $20,000 uninsured motorist claim against Allstate (because Jorge had no liability coverage). Thereafter Mrs. Chastain and Allstate, as sub-rogee, filed the instant bad faith action for Federal’s alleged failure to settle on behalf of Jorge. The cause came on for final hearing and the trial judge entered judgment in favor of Federal. Allstate and Josephine Chastain appeal. We affirm.
The established law in Florida is that in cases where recovery of the excess over policy limits of a judgment against the insured is sought from his insurer upon the ground that the insurer’s conduct in failing to effect a settlement within the policy limits amounts to bad faith, there can be no liability in the absence of an offer by the person claiming against the insured to settle within the policy limits. Beck v. Kelly, Fla.App.1975, 323 So. 2d 667 and cases cited therein.
It affirmatively appearing from a review of the record that Josephine Chastain made no offer to settle as to Jorge, the trial judge was eminently correct in entering judgment for Federal Insurance Company.
Affirmed.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
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Davis v. Nationwide Mut. Fire Ins. Co., 370 So. 2d 1162 (Fla. 1st DCA 1979)…ual 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 bec…
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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)…pra at 668. In Beck, however, the insurer tendered the offer to settle within policy limits and the existence of an offer by the claimant was not germane to the resolution of the case. The Beck rule was followed in Chastain v. Federal Insurance Co., 338 So. 2d 214 (Fla.3d DCA 1976). Other courts, however, have held different views. In Thomas v. Western World Insurance Co., 343 So. 2d 1298 (Fla.2d DCA 1977), the court refused to accept the requirement of an offer to settle before imposing liability as a rule…
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Snowden Ex Rel. Estate of Snowden v. Lumbermens Mut. Cas. Co., 358 F. Supp. 2d 1125 (N.D. Fla. 2003)…ld liable for bad faith failure to settle within its policy limits if an offer to settle within policy limits was never communicated to the insurer, and Defendant cites two of these early cases in its motion: Chastain v. Federal Insurance Co., 338 So.2d 214 (Fla. 3d DCA 1976) and Beck v. Kelly, 323 So.2d 667 (Fla. 3d DCA 1975). However, although Florida courts once adhered to this rule, more recent cases show that they have relaxed the talismanic requirement of an offer to settle, imposing a…
Authorities Cited
- Beck v. Kelly, 323 So. 2d 667 (Fla. 3d DCA 1975)