Florida Driver Could Get $12M After Insurer Did Not Respond to Settlement Offer

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A Florida accident victim gets a second chance to compel an auto insurer to pay a $12.7 million judgment after the insurer failed to respond to a $10,000 settlement offer, a federal appellate court ruled Tuesday.

A divided panel of the 11th Circuit Court of Appeals held that the trial court botched the jury instructions in a lawsuit filed by Dustin Brink against Direct General Insurance Co. by failing to address the insurer’s duty to advise its insureds of a settlement opportunity. The panel returned the lawsuit to the US District Court in Tampa for a new trial after the first one ended with a verdict in favor of the insurer.

The panel’s majority opinion repeated part of a statement that Brink’s attorney said during closing arguments: “One of the easiest ways to invite a bad faith claim is to fail to keep the insured advised of settlement opportunities.”

The dissenting member of the three-judge panel wrote separately to say that there was no error, in his view, and the evidence showed that the plaintiff’s attorneys were plotting to pursue a bad faith claim to begin with.

Brink’s attorney, Brent Steinberg with Swope, Rodante in Tampa, said in an email that his client, an Iraq War veteran, suffered permanent brain damage as a result of the accident. There is no dispute that Direct General failed to respond to the settlement offer, he said, and the evidence shows that this was not the result of an honest oversight.

“Discovery revealed that during the same period, the assigned adjuster was failing to timely respond to approximately 46% of the attorney time-limited demands she received,” Steinberg said. “Her supervisor also had 14 – 20% of claims which were ‘past due’ at any given point.

Brink was seriously injured at 2:09 a.m. on April 5, 2008 when his Kawasaki motorcycle collided with a borrowed vehicle driven by Juan Ruiz Pereles in Kissimmee, Florida. The car was insured through a policy that Direct General issued to Pereles’ father, who owned the car.

Direct General learned about the accident three weeks later. From the start, the insurer’s claims adjusters had trouble communicating with the parties involved. Direct General was unable to reach Pereles or his father. The insurer initially communicated with Brink’s attorney, but later learned the lawyer had quit representing him.

For months after the accident, Direct General sent letters to Pereles’ father explaining its policy limits and asking if any other insurance might apply. The insurer tried 11 times to reach Brink’s new attorney, Alexander Clem, with no luck. Eventually, Direct General decided to pay its policy limits and mailed a check for $10,000 to Clem’s office. The check was never cashed.

When Clem finally responded to Direct General more than a year later, he asked whether there was any other insurance coverage available. The insurer replied that it was unaware of any other coverage and offered to sign an affidavit. Clem did not reply until eight months later, when he agreed to settle the case for the policy limit as long as he received the insurance information he requested “within the next couple of weeks.”

This time, it was Direct General that went silent. After three weeks passed, Clem informed Direct General that he had filed a lawsuit on Brink’s behalf against Pereles and his father. He also asked why the insurer had not responded to his settlement offer.

A jury awarded Brink $12.7 million. By then, six years had passed since the accident.

Next, Brink filed a bad faith lawsuit against Direct General, alleging that the company had failed to timely respond to its settlement offer and had not advised its insureds of the settlement opportunity.

Once again, the case went to trial. After evidence was presented and arguments made, the US District Court gave a standard jury instruction that addressed only an insurer’s liability for failing to settle.

During deliberations, the jury asked the court whether the bad faith should be based on the full length of time since the accident or just the time after Brink’s lawyer made a settlement offer. The court advised the jurors to consider “the totality of the circumstances.”

The jury returned a verdict in favor of Direct General. Brink appealed, arguing that jury instruction was defective because it did not address the insurer’s duty to advise its insureds.

A majority opinion written by Judge Britt Grant says that Brink’s attorneys had asked for a jury instruction that would have made if clear that the jury could find Direct General liable by “failing to fully, honestly and promptly advise the insureds.”

The trial court’s failure to include that in its instruction to the jury prejudiced Brink, the opinion says. It didn’t matter that the plaintiff’s attorneys informed the jury of that duty during trial.

“When a jury makes its findings, it must depend on the law as stated by the court, not the law as construed in various—often conflicting—ways by attorneys throughout the trial,” the opinion says.

In a dissenting opinion, Senior Judge R. Lanier Anderson III said the jury instructions offered by Brink’s attorney were defective and the district court had no duty of doing the editing that would have been necessary to make them acceptable.

Aside from that, Anderson said Pereles and his father were not prejudiced by their insurer’s failure to settle. What’s more, “overwhelming evidence” indicates that Brink’s lawyers had no intention of settling the case, he wrote.

“Rather, it shows that Brink’s counsel tried to lea Direct General into making mistakes that he could later use to generate a bad faith claim,” the dissenting opinion says.