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Extra-Contractual Liability Law
The Eleventh Circuit Holds a Consent Judgment Constitutes an “Excess Judgment” to Satisfy the Causation Element in a
By Michael K. Kiernan & Susan L. Deng
Bad faith litigation abounds in Florida, and a hotly contested aspect of proving a bad faith claim is the “causation” element—that is, whether the insurer’s conduct caused the insured’s loss when the insurer failed to settle a lawsuit. A means for proving causation is demonstrating that the insured suffered an “excess judgment” as a result of the insurer’s actions.
Recently, in McNamara v. Gov’t Employees Ins. Co., 30 F.4th 1055 (11th Cir. 2022), the Eleventh Circuit Court of Appeals provided clarification on whether a qualifying “excess judgment” must be based on a verdict following a trial or if it may be based on a consent judgment that memorializes a settlement agreement. McNamara involved an automobile accident where Emily McNamara (“McNamara”), while driving a vehicle owned by Williard Warren (“Warren”), caused a collision that injured Deborah Bennett (“Bennett”). At the time of the accident Warren was insured with GEICO, and the insurance policy provided bodily injury coverage up to $100,000 per person. After failing to reach a settlement with GEICO within the policy limits, Bennett sued Warren and McNamara in Florida state court. Pursuant to the policy, GEICO provided Warren and McNamara with a lawyer.
Bennett subsequently served both Warren and McNamara with proposals for settlement pursuant to Fla. Stat. § 768.79. The proposal directed towards Warren totaled $474,000, and the proposal directed towards McNamara totaled $4,740,000. The proposals were conditioned on two factors: (1) Warren and McNamara had to consent to the entry of judgments against them in the amounts of the proposals, and (2) GEICO had to confirm that it would not assert that Warren and McNamara had breached the policy by accepting the proposals. GEICO was informed of the proposals and advised that it would not assert that Warren or McNamara had breached the policy if the proposals were accepted. Both Warren and McNamara accepted Bennett’s proposals, and the state court entered final judgments against them.
Warren and McNamara then sued GEICO for bad faith, seeking to recover the amounts of the final judgments entered against them that exceeded the $100,000
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FDCC ANNUAL FIVES 2023
Bad Faith Action
Michael K. Kiernan
Susan L. Deng