In Michael Johnson v. GEICO, _____ F. 3rd _____ (11th Cir. March 11, 2009), the 11th Circuit affirmed a summary judgment in favor of GEICO, after its insureds sued for GEICO’s bad faith failure to settle.
On May 24, 2003, Michael Johnson was involved in a fatal accident. The driver of the other car, Woody Staley, Jr., was taken to the hospital from the scene; his passenger died at the scene. Johnson carried bodily injury liability limits of $10,000 per person/ $20,000 per accident with GEICO. Staley carried uninsured motorist limits of $10,000/$20,000, also with GEICO.
Johnson reported the accident to GEICO on May 25, 2003. When Johnson reported the accident to GEICO, he advised GEICO that at least one witness to the accident said that Johnson had run a red light. Johnson said he thought he had a green light, and contested liability.
On May 29, within 5 days of learning of the accident, GEICO’s UM adjuster advised Staley’s attorney that it would tender its Uninsured Motorists limits. (It is unclear from the opinion if this tender is to Staley or the passenger’s estate). On June 3, Staley’s attorney sent a letter to Johnson’s BI adjuster at GEICO requesting certain information within 30 days. Staley’s attorney did not request tender of the BI policy limits.
The accident report did not become available until June 9. The accident report stated that Johnson had run the red light. The accident report assessed Staley’s injuries as “non-incapacitating.” On June 12, 18 days after learning of the accident, GEICO authorized the payment of GEICO’s BI limits to the passenger’s estate.
On June 12, GEICO’s BI adjuster learned that Staley was still in the hospital, in ICU and on a respirator. On June 27, GEICO’s BI adjuster learned that Staley had died. On that date, GEICO authorized its BI adjuster to contact Staley’s attorney and offer the BI limits to settle the case. The adjuster tried to reach Staley’s attorney by phone twice that day with no luck. When the adjuster finally spoke to Staley’s attorney, on July 1, the attorney advised that suit had been filed that day and that tender of the policy limits would not be accepted.
A wrongful death judgment in excess of $2,000,000 was entered against the Johnsons – GEICO’s insureds. Thereafter, Johnson filed suit against GEICO for bad faith failure to negotiate a settlement for GEICO’s policy limits. The trial court determined that in light of GEICO’s quick turnaround between learning of the accident and tender – 33 days – no reasonable jury could conclude that GEICO had committed bad faith.
Johnson argued that given the fact that GEICO immediately tendered its UM limits to Staley (which is excess over the BI limits), and knew of the extent of Staley’s injuries as early as June 12, GEICO should have tendered its limits earlier. The 11th Circuit disagreed, holding that:
After viewing all the evidence in the light most favorable to Insureds, we conclude that insufficient evidence of bad faith was proffered to take this case to a jury. The record shows that liability was contested initially by Johnson. GEICO’s BI adjuster moved quickly to determine liability. Staley’s counsel made a 30-day demand for policy information; GEICO responded in far fewer days. Even though no facts suggested Staley needed immediate funds and no settlement demand was made, GEICO offered the policy limits within that 30-day period and just 33 days of the accident date. In light of the information known to GEICO and the totality of the circumstances, no reasonable jury could find that GEICO breached its duty of good faith.”
With regard to the impact which the resolution of the UM claim had on the BI claim, the Court stated:
the UM claim was a claim based on the insurance contract between Staley and GEICO; the BI claim was based on the insurance contract between Insureds and GEICO. The two contracts and the two claims files were unrelated….The inquiry here is whether GEICO acted reasonably in handling the BI claim in the light of the totality of circumstances.”
A copy of the Johnson opinion in its entirety can be viewed and downloaded by clicking here.