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Whritenour v. Thompson, Case No. 2D13-3434 (2nd DCA)

In Whritenour, the Second DCA reversed summary judgment entered in favor of the defense in a negligence action. In what the Second DCA called an “unprecedented situation,” the defendant obtained a final summary judgment that compelled the plaintiff to accept the defendant’s liability insurance policy limits in full and complete satisfaction of her damages. The trial court therefore barred the plaintiff from obtaining a jury verdict on the issue of damages because of her perceived inability to prove a subsequent bad faith claim against the defendant’s insurance carrier.

The plaintiff brought suit against the defendant relating to an auto accident. The defendant had bodily injury limits of $300,000. The defendant’s insurance carrier retained defense counsel who answered the complaint and advised the defendant to file for bankruptcy. The defendant later filed for Chapter 7 bankruptcy. In bankruptcy, the defendant listed the pending personal injury claim as valued in excess of one million dollars. The bankruptcy court issued an automatic stay. The plaintiff later requested and obtained relief from stay, permitting the plaintiff to commence, prosecute, complete and liquidate through final judgment her claims against the defendant, for purposes of pursuing the defendant’s insurance carrier and not for purposes of pursuing personal liability against the defendant. The order granting relief from stay further provided that should the plaintiff proceed against the insurance company for an excess judgment, the plaintiff would have to file another motion for relief.

The trial court interpreted Camp v. St. Paul Fire & Marine Insurance Co., 616 So. 2d 12 (Fla. 1993), to hold that the plaintiff was not entitled to proceed to a jury determination of the negligence action because she failed to file an action for bad faith prior to the defendant being discharged in bankruptcy and that policy limits were the maximum recovery. The Second DCA reversed, determining that the viability of the plaintiff’s potential bad faith action for bad faith is not a legal basis upon which to grant summary judgment in the underlying negligence action. The court stated that the plaintiff has a right to have a jury decide and liquidate the damages. The Second DCA found that the trial court misinterpreted Camp, in which the Florida Supreme Court held that the insurer’s liability for bad faith was not extinguished when the insured defendant declared bankruptcy while the underlying personal injury action was pending.

The Second DCA noted that the negligence action and any potential subsequent bad faith action are two separate and distinct causes of action. Negligence requires duty, breach, causation and injuries, and the defendant failed to argue any of these elements in the summary judgment motion. “Under Florida law, a bad faith action is a separate cause of action that does not arise until an insured is legally obligated to pay an excess judgment.” A plaintiff must first obtain a judgment in a negligence action that determines liability and the amount of resulting damages because the determination is essential to a potential suit against the insurer for its bad faith in handling a liability claim against its insured. A tortfeasor’s bankruptcy filing and discharge does not change this procedure. The Second DCA therefore concluded that the viability of a potential bad faith action is not a legal basis that can support granting a summary judgment motion in a negligence case. A trial court cannot compel a plaintiff to accept a defendant’s policy limits, and a defendant’s discharge in bankruptcy cannot be a legal basis upon which to compel a plaintiff to accept liability insurance policy limits. “If such were the case, every insurance carrier would instruct its insured to declare bankruptcy in order to limit recovery to the policy limits.”

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