The Eleventh Circuit’s decision in Kinsale Insurance Company v. Pride of St. Lucie Lodge 1189, Inc., -- F.4th ----, 2025 WL 1142094 (11th Cir. Apr. 18, 2025), has significant implications for the good faith standard applicable to insurers handling liability claims in Florida.
At issue was Florida’s Powell doctrine—named after Powell v. Prudential Property & Cas. Ins. Co., 584 So. 2d 12 (Fla. Ct. App. 1991)—which stated that a liability insurer has an affirmative duty to initiate settlement negotiations with a claimant “where liability is clear, and injuries so serious that a judgment in excess of the policy limits is likely.” Insurance practitioners have often interpreted Powell to mean that an insurer has an affirmative duty to initiate negotiations—as opposed to waiting for a settlement demand—only if the insured has no viable liability defenses and damages are likely to exceed the policy limit. This view was bolstered by the fact that previously reported decisions on the Powell rule involved claims with modest policy limits, significant damages, and liability that could not reasonably be disputed, such as auto accidents caused by insureds who were under the influence of alcohol.
In Pride of St. Lucie, one of the insured’s patrons shot another patron in the insured’s parking lot after both were removed from the insured’s bar by security personnel. Eight months after the shooting, the insurer learned about the incident, commenced an investigation, and discovered facts which—to the insurer—painted an unclear picture regarding whether the insured was liable for the incident. Nine months after the insurer learned about the incident, and two weeks after the decedent’s estate filed suit against the insured, the insurer tendered the applicable $50,000 policy limit to the estate. The estate rejected the insurer’s tender and then secured a nearly $3.5 million jury verdict against the insured.
In the resulting bad faith suit, the estate argued that the insurer had an affirmative duty to tender its policy limit before the estate filed suit. Citing Powell, the trial court disagreed and entered summary judgment for the insurer because the insured’s liability was never clear. On appeal, a split Eleventh Circuit panel reversed the trial court, ruling that whether the insured’s liability was clear was a question of fact that precluded summary judgment, despite the fact that the insured had liability defenses.
The majority opinion rejected the notion that “clear liability” under Powell meant a situation where an insured’s liability was 100% guaranteed, reasoning that it could refer to a situation in which “a judgment in excess of policy limits is a likely possibility.” In a notable footnote, the court also commented that whether an insurer acted in bad faith is governed by the totality of the circumstances, and the Powell rule is not “a standalone threshold test for bad-faith liability” in situations where a claimant has not issued a settlement offer. The majority found that the evidence of the insured’s potential culpability, combined with the catastrophic damages presented by the case, was sufficient for a reasonable jury to find that the insurer acted in bad faith by failing to tender its policy limit before the estate filed suit.
The dissent suggested that the proper interpretation of Powell should be certified to the Florida Supreme Court for decision. Alternatively, the dissent would have affirmed summary judgment for the insurer, as there was “a factual dispute as to the Lodge’s liability before suit was filed,” and therefore no “clear liability” triggering a Powell duty to initiate settlement negotiations.
The full significance of the Pride of St. Lucie decision remains to be seen, as does its potential interplay with Florida’s recent tort reform measures, which include a safe harbor from bad faith if an insurer tenders the policy limits within 90 days “after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.” § 624.155(4)(a), Fla. Stat. We also expect that insurers will seek clarity from the Florida state appellate courts in future cases regarding the proper application of Powell.
