Cadle v. Geico Gen. Ins. Co., No. 6:13-CV-1591-ORL-31G, 2014 WL 4983746 (M.D. Fla. Oct. 6, 2014).

Middle District of Florida finds that insured’s bad faith claim for first-party failure to settle could not properly be resolved at the summary judgment stage, noting that such claims can rarely be resolved as a matter of law.

On July 27, 2007, a vehicle driven by Catherine Cadle was rear-ended.  Over the next 28 months, Cadle underwent a variety of medical procedures for neck and back issues, including surgery in December 2009. Cadle provided notice of the accident to her auto insurer, GEICO General Insurance Company (“GEICO”), on the day of the accident.  Cadle’s policy with GEICO provided for $75,000 in underinsured motorist (“UM”) coverage.

The driver who rear-ended Cadle had an insurance policy with a liability limit of $25,000.  On May 6, 2008, the driver’s insurer tendered its $25,000 limit to Cadle.  Cadle also received $10,000 in Personal Injury Protection (“PIP”) coverage.  Thereafter, on June 8, 2008, GEICO offered Cadle $500 to settle her claim.  At the time, this represented the difference between the amount of GEICO’s evaluation of Cadle’s then-accrued medical bills and the amount she had received from the other driver’s insurer and PIP coverage. 

On June 11, 2008, Cadle submitted a formal demand for the entire $75,000 limit to GEICO.  GEICO raised its offer only to $1,000.  Cadle sent a notice to GEICO in June 2008 informing the insurer that her medical bills now exceeded $50,000, but GEICO made no response.  Cadle filed suit on March 19, 2010 in Florida state court, alleging first-party bad faith.

On February 2, 2010, after learning that Cadle had undergone surgery, GEICO authorized payment of the entire $75,000 limit to settle Cadle’s claim.  Cadle rejected the offer, and the case proceeded to trial.  On March 8, 2013, the jury returned a $900,000 verdict for Cadle against GEICO, but judgment was only entered for $75,000, the amount of the UM policy limit. Cadle then filed a second lawsuit on October 15, 2013 in the U.S. District Court for the Middle District of Florida, seeking to recover the rest of the verdict rendered in the state court case.  In that suit, Cadle filed a motion for summary judgment on her bad faith claim.

The district court observed that, under Florida statutes, an insurer owes a duty to act in good faith in its handling of first-party claims by acting fairly and with due regard for the insured’s interests and by attempting to settle such claims when possible.  Further, it noted that a finding of bad faith requires not just mere negligence on the part of the insurer, but also knowledge of its own liability to the insured and delay.  The inquiry, the court said, is fact-driven and based on the totality of the circumstances, which makes resolution of such claims rarely possible as a matter of law.

With these principles in mind, the district court denied Cadle’s summary judgment motion due to the presence of genuine issues of material fact.  It noted that although Cadle had undergone a series of treatments when she made her demands, GEICO had reason at the time to believe that her injury was not permanent, in which case her UM recovery under the policy was limited to medical bills.  Given GEICO’s calculation of those bills and the funds Cadle had received from the other driver’s insurer and PIP coverage, the court said that GEICO’s offers to Cadle prior to her surgery were not “patently unreasonable.”