Geico Gen. Ins. Co. v. Gould, No. 14-10913, 2014 WL 7013971 (11th Cir. Dec. 15, 2014) (per curium).
The U.S. Court of Appeals for the Eleventh Circuit reversed a grant of summary judgment for an insurance company. It found that there remained a question of fact as to whether the injured claimant owned a motorcycle damaged in an accident and whether the insurer had acted in bad faith by failing to settle the claimant’s claims for property damage and bodily injury, which subsequently led to a judgment against the insured in excess of the policy limits.
On November 13, 2008, a car driven by Sara Farag struck Elliot Gould, who was riding a motorcycle. Gould broke several bones and required multiple surgeries, and the motorcycle was also damaged.
Sara Farag was insured under her father Hussein’s policy with GEICO General Insurance Company (“GEICO”). The policy provided $100,000 each of bodily injury and property damage coverage.
Soon after the accident, GEICO reached out to Gould’s attorney and offered the policy limits in exchange for a release of claims. It also appointed counsel for the Farags and advised them that Gould’s claim could exceed the policy limits. On January 30, 2009, Gould’s attorney made a time-limited demand to GEICO to settle Gould’s claims for bodily injury and property damage for $107,730.35. The demand was to remain open until February 16, 2009. It was unclear if GEICO ever transmitted this demand to the Farags.
GEICO was unwilling to accept Gould’s demand because it could not confirm that Gould was the actual owner of the motorcycle, which was registered to Crystal Johnson, Gould’s girlfriend. Gould and Johnson provided evidence that the bike did belong to Gould but hadn’t been registered in his name because of a lien on his license. GEICO, however, continued to view Johnson as the owner and therefore would not authorize payment for the property damage claim. GEICO also rejected Johnson’s offer to sign a release of claims unless it received a letter indicating that Gould’s attorney represented Johnson as well.
GEICO never attempted to extend its time to accept Gould’s demand while it sorted out the ownership issue. When that demand expired, Gould filed suit in state court against the Farags. A jury subsequently awarded Gould $298,000. Eventually, Gould and Johnson signed releases and GEICO paid approximately $5,900 to settle the property damage claim.
In May 2012, GEICO filed a declaratory judgment action in the U.S. District Court for the Middle District of Florida against Gould and Farags. It sought a declaration that it had not engaged in bad faith. Both Gould and the Farags filed counterclaims for bad faith.
The district court granted summary judgment for GEICO, finding that Gould had no valid claim for property damage because he was not the owner of the bike, and thus GEICO had no obligation to settle, advise the Farags or negotiate with Gould with respect to that claim. Further, it found that because Gould would not settle the bodily injury claim without also receiving payment for the property damage, GEICO had no real opportunity to settle the bodily injury claim. Finally, it found that any failure by GEICO to keep the Farags informed about Gould’s demand was at most negligent and did not rise to the level of bad faith.
On appeal, the Eleventh Circuit reversed. It found that there was at least a question of material fact about whether Gould was the owner of the bike, noting that under Florida law, a certificate of title is merely evidence of ownership, not a requirement. Because the district court’s entire opinion hinged on its conclusion that Gould did not own the bike, the question of whether GEICO acted in bad faith by failing to settle the property damage claim, and thus exposing the Farags to an excess judgment, remained open. The court therefore vacated the summary judgment ruling and remanded for further proceedings.
