Florida Court Rules in Favor of the Insurer in Complex Bad Faith Insurance Case

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On November 17, 2016, the U.S. District Court for the Middle District of Florida ruled in favor of Travelers Casualty and Surety in a dispute over an insurance settlement agreement. The court found the agreement unenforceable under Florida law due to fraud and collusion on the part of the policyholder, Culbreath Isles Property Owners Association.

Understand the Facts of the Case

The underlying controversy in this case involves a property management company (Culbreath) and a property owner (Kirkwood). Kirkwood lived in a planned community that was managed by Culbreath. The property management company originally sued Kirkwood for failure to adequately maintain the landscaping on her property. Soon after, she countersued Culbreath for slander. Under the Florida statutes, a successful slander claim entitles the plaintiff to reasonable attorneys’ fees. Culbreath promptly notified its insurer (Travelers) about the state of the slander claim. Travelers agreed to defend the lawsuit. Culbreath lost the slander claim in court and notified Travelers of the attorneys’ fees for which they were now liable under the statute. Even though they defended the lawsuit, Travelers denied any coverage for the attorneys’ fees. Eventually, Culbreath and Kirkwood reached settlement on the attorneys’ fees claim that included a $295,000 consent judgment against Culbreath as well as stipulation that Kirkwood would never actually seek enforcement of the judgement. Instead, Culbreath agreed to transfer any claim they had in the case against Travelers to Kirkwood. Additionally, without disclosing it to the court, Culbreath agreed to pay Kirkwood $50,000 minus whatever Kirkwood could obtain from Travelers Casualty.

The Settlement Agreement Was Unenforceable

The court found that the settlement agreement negotiated by the homeowner and the property management company could not be enforced under Florida law. This is because the agreement was negotiated in bad faith. Culbreath allowed Kirkwood to enter a very high attorneys’ fees judgement against them ($295,000) in exchange for not executing that judgement. In essence, Culbreath was willing to accept such a high figure for attorney’s fees because they knew that money would never come out of their pocket. This is supported by the fact that Culbreath made a side agreement with Kirkwood and did not disclose it to the court. The case is a reminder that bad faith insurance settlement practices can sometimes be the fault of a policyholder. It is important that all parties involved in an insurance claim follow the good faith and fair dealing requirements stipulated in the Florida Insurance Code.

Were You the Victim of Bad Faith Insurance Practices in Florida?

You have legal options. At Geyer Fuxa Tyler, our Fort Lauderdale bad faith insurance attorneys have helped many victims recover fair compensation for the full extent of their losses.  Let us use our skills and knowledge of Florida insurance law to protect your legal rights and financial interests. To request a free review of your case, please contact our Sunrise office today. We handle bad faith insurance claims throughout Broward County, including in Davie and Weston.

Resource:

media.ca11.uscourts.gov/opinions/pub/files/201515197.pdf

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