Third Party Bad Faith Claim May Not Be Brought in Underlying Tort Action

GEICO Gen. Ins. Co. v. Harvey (Fla. 4th DCA 2013)

In August of 2006, Harvey’s vehicle collided with a motorcycle at an intersection, killing the motorcyclist. The decedent’s estate sued Harvey for negligence and obtained a jury verdict in the amount of $8 million damages. Pursuant to Florida’s nonjoinder of insurers statute (§ 627.4136), the estate added as a defendant GEICO—who insured Harvey pursuant to an automobile liability policy with limits of $100,000—in order to facilitate the entry of final judgment.

Harvey filed a crossclaim against GEICO, raising a new cause of action for insurance bad faith, alleging (1) that GEICO failed to settle the claim when it should have and (2) that GEICO’s failure to notify Harvey that the plaintiff wanted to take a presuit statement led to the filing of suit.

GEICO attempted to remove the action to federal court, but the notice was found to be untimely and the case was remanded to state court where GEICO moved to dismiss or sever the bad faith crossclaim. The motion was denied and GEICO petitioned for a writ of certiorari.

The fourth DCA granted the petition, observing that the denial of GEICO’s motion to dismiss defeated its right to have the action removed to federal court. It then quashed the order denying the motion to dismiss, explaining that per Florida Rule of Civil Procedure 1.170(g), a third party bad faith claim against an insurer for failure to settle may not be brought in the underlying tort action but must be raised in a separate cause of action:

Florida Rule of Civil Procedure 1.170(g) provides [that] “[a] pleading may state as a crossclaim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter of either the original action or a counterclaim therein, or relating to any property that is the subject matter of the original action.” The wrongful death action in this case sounds in tort and arose from the August 2006 automobile accident. By contrast, defendant’s third party bad faith crossclaim against his insurer arises from the insurer’s alleged breach of its duty to act in good faith in handling the estate’s claim against the defendant. We conclude that these causes of action accrued at different times and do not arise out of the same transaction or occurrence for purposes of rule 1.170(g).

Explore posts in the same categories: Bad Faith, New Florida Insurance Coverage Cases, Removal to Federal Court, Wills & Trusts

Tags: Bad Faith, Estate Law, Florida Wills, Removal to Federal Court, Wrongful Death

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