In an earlier blog concerning this case, I noted we represented two large car dealerships who had been sued in major class actions.  Universal Underwriters Insurance Company insured both dealerships.  The dealers asked Universal Underwriters to defend and indemnify them for the claims in the class actions. Universal agreed to defend the claims, but advised that even though the class actions covered multiple years, the dealers were only entitled to indemnity coverage under one of policy years. Each dealer carried $500,000 in indemnity coverage per year for most of the years involved in the class actions. Therefore, it was Universal’s position that the dealers were only entitled to $500,000 in coverage, while the dealers believed that they were entitled to up to the full policy limits per year for each of the years involved in the class actions.

One of my clients also sued Universal for breach of contract for failing to settle the class action when Universal could have settled the claim for slightly more than the $500,000 which it believed was available to pay for damages, but significantly less than what the court ultimately determined were the actual policy limits.  (I did not sue for "bad faith," but filed a simple breach of contract claim for breaching the contract by failing to settle when the insurer could have done so below the actual policy limits.)  Universal defended by claiming that we were actually suing for "bad faith," and could not do so given its reasonable belief concerning its available policy limits. 

Last week the 11th Circuit gave us a complete victory on the two issues involved in the case.  First, the11th Circuit agreed that the car dealers were entitled to the available policy limits for each of the years involved in the class actions.  Second, the court held that the breach of contract action for failing to settle could proceed regardless of Universal’s "good faith or bad faith."  The court noted that whether Universal breached the contract can be determined "objectively" without regard to Universal’s intent or belief.  A copy of the decision can be downloaded by clicking here