SUPREME COURT OF FLORIDA

Transcription

1 SUPREME COURT OF FLORIDA THE HARTFORD INSURANCE COMPANY OF THE MIDWEST, for itself and on behalf of WILLIE BRADHAM, LILLIE BRADHAM and CEDRICK FRASIER, CASE NO: SC Petitioners, vs. CYNTHIA NICHOLS and the, ESTATE OF LILA NICHOLS, Respondents. THE HARTFORD INSURANCE COMPANY OF THE MIDWEST, FOR ITSELF AND ON BEHALF OF WILLIE BRADHAM, LILLIE BRADHAM AND CEDRICK FRASIER S BRIEF ON JURISDICTION On Review from the First District Court of Appeal Case Nos. 1D , 1D BUTLER PAPPAS WEIHMULLER KATZ CRAIG LLP KATHY J. MAUS, ESQ. Florida Bar No.: ANTHONY J. RUSSO, ESQ. Florida Bar No Thomasville Road, Suite 102 Tallahassee, Florida Telephone: (850) Attorneys for Petitioners

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT...iv STATEMENT OF THE CASE AND FACTS... 1 SUMMARY OF ARGUMENT... 2 ARGUMENT... 4 CONCLUSION... 9 CERTIFICATE OF SERVICE CERTIFICATE OF TYPE SIZE & STYLE i

3 TABLE OF AUTHORITIES Cases Page(s) Abe v. Ehrling, 768 So. 2d 1225 (Fla. 3d DCA 2000)... 3, 6, 7, 9 Bateski v. Ransom, 658 So. 2d 630 (Fla. 2d DCA 1995)... 7 Boyco v. Ilardi, 613 So. 2d 103 (Fla. 3d DCA 1993)... 3, 6, 7, 9 Cheverie v. Geisser, 783 So. 2d 1115 (Fla. 4th DCA 2001)... 7 Cruz v. American United Ins. Co., 580 So. 2d 311 (Fla. 3d DCA 1991)... 8, 9 Dania Jai-Alai Palace, Inc. v. Sykes, 495 So. 2d 859 (Fla. 4th DCA 1986)...3-5, 9 Erhardt v. Duff, 729 So. 2d 529 (Fla. 4th DCA 1999)... 3, 5, 9 Infinity Ins. Co. v. Berges, 806 So. 2d 504(Fla. 2d DCA 2001), rev. granted 826 So. 2d 991(2002) (case no. SC argued Feb. 4, 2003)... 8 Nichols v. Martell, 612 So. 2d 657 (Fla. 3d DCA 1993)... 3, 6, 9 ii

4 TABLE OF AUTHORITIES (Cont d) Cases Page(s) Robbie v. City of Miami, 469 So. 2d 1384 (Fla. 1985)... 8, 9 Statutes Section , Fla. Stat. (2003)... 2 Section , Fla. Stat. (2003)... 4, 6, 9 iii

5 PRELIMINARY STATEMENT Petitioner is The Hartford Insurance Company of the Midwest, for itself and on behalf of its insureds, who are defendants in a personal injury lawsuit, Willie and Lillie Bradham and Cedrick Frasier (collectively Hartford ). Respondents are the personal injury plaintiffs, Cynthia Nichols and the estate of Lila Nichols (hereinafter collectively Nichols or Plaintiffs ). iv

6 STATEMENT OF THE CASE AND FACTS The following facts are taken from the district court s opinion. This is an action by an insurance company to enforce a settlement agreement. Plaintiffs attorney offered to settle his clients personal injury claims if Hartford would deliver to his office by a time and date certain the insured s policy limits of $10,000. Failing performance, the attorney said he would sue Hartford s insureds. The terms of the release were not made a part of the Plaintiffs demand. Hartford tendered the policy limits timely, and sent a proposed release form along with the check for the Plaintiffs to execute. Plaintiffs do not dispute that their signing a release was an implicit part of the settlement agreement. But the Plaintiffs attorney rejected the proposed release asserting it contained an unacceptable indemnification provision. Hartford responded by submitting a release without the objectionable language which Plaintiffs ignored. Hartford then sued to enforce the settlement. Plaintiffs argued there was no meeting of the minds and therefore no settlement. Hartford argued the language of the release was not an essential element of the agreement. The trial court granted Hartford s motion for summary judgment but the district court reversed, holding that the Plaintiffs objection to the indemnification language in the release demonstrated a lack of mutual assent to an essential element of 1

7 the offer to settle, i.e., a counter offer that the Plaintiffs were not required to accept. Hartford never made the indemnity language a condition of the settlement. SUMMARY OF ARGUMENT The Nichols case establishes a one-strike-and-you re-out standard for liability carriers trying to settle personal injury claims under time demands. The failure of the settlement exposes both the insureds and Hartford to a judgment in excess of the policy limits. The insureds would be directly exposed to the judgment, and Hartford would be exposed because section , Fla. Stat. (2003) and Florida common law provide an avenue for the insured to recover damages for such excess liability if the liability carrier has failed to settle the case within policy limits when it was possible to do so, i.e., a bad-faith claim. The insured defendant subjected to an excess judgment typically assigns his rights to this bad-faith remedy against his liability insurer to the plaintiff following entry of the excess judgment in exchange for a promise that the plaintiff will not collect the judgment against the insured defendant. The plaintiff then attempts collection of the excess judgment against the insurer as the subrogee of the insured. In this way, the policy limits are effectively made unlimited when settlement is first made possible, but then not achieved. Plaintiffs thus have an incentive to first raise the potential to settle, and then to destroy the settlement in order to set up the bad-faith remedy. Nichols facilitates this setup, and contradicts Abe v. 2

8 Ehrling, 768 So. 2d 1225 (Fla. 3d DCA 2000); Boyco v. Ilardi, 613 So. 2d 103 (Fla. 3d DCA 1993); Dania Jai-Alai Palace, Inc. v. Sykes, 495 So. 2d 859 (Fla. 4th DCA 1986); Erhardt v. Duff, 729 So. 2d 529 (Fla. 4th DCA 1999); and Nichols v. Martell, 612 So. 2d 657 (Fla. 3d DCA 1993)(all upholding settlement agreements despite initial disagreement over the form or necessity for the release). Under Nichols, if a release form proposed by the insurer contains anything the plaintiff s attorney deems to be objectionable (and who can contradict his professional opinion as to what is an essential element for his client?) then the plaintiff is free to withdraw his offer and sue the insured tortfeasor and possibly obtain a judgment in excess of policy limits; expose the insured to an excess judgment by effectively obliterating the ability of the liability carrier to settle the case within policy limits; blow the limits of any liability policy to set up an insurer bad-faith claim. Florida has never been a one-strike-and-you re-out state. Under Florida law, the form of the release is not an essential element of a settlement agreement, the execution of the release is a ministerial matter the plaintiff is obligated to perform, and a liability insurer is afforded a reasonable opportunity to negotiate the form of the release. ARGUMENT 3

9 The Nichols case improperly establishes a one-strike-and-you re-out standard and so is contrary to Florida cases which hold, and section , Fla. Stat. (2003) which clearly implies (1) the execution of a release by a personal injury plaintiff is not an essential element to the formation of a settlement agreement; and (2) a liability insurer must be afforded a reasonable opportunity to negotiate the form of the release in the context of a time demand to a liability insurer. First, Nichols conflicts with the following cases, all of which involve settlements of personal injury claims or settlements of time demands by insurers, and all of which hold that the execution and form of the release are not essential elements of the agreement to settle. Dania Jai-Alai Palace, Inc. v. Sykes, 495 So. 2d 859 (Fla. 4th DCA 1986) is most offended by the Nichols opinion. The issue was whether the trial court erred in enforcing a settlement where the defendant objected to an indemnification clause in a release form proposed by the plaintiff. Did the plaintiff s mere proposal of a release that contained a variation from the parties original understanding terminate the offer and constitute a counter offer which the defendants were free to reject? The district court said no because the parties were free to negotiate the form of the release, and therefore the initial agreement was not disturbed by the subsequent submission of a release with the variation. Because the form was not submitted on a take-it-or-leave- 4

10 it basis, the indemnification language was not a deal-breaker. The two sides initially said the same thing as to the terms of the agreement, and so the settlement was upheld. Under Nichols, however, courts in the First District would be free to declare this same agreement dead; but under Dania, courts in the Fourth District will find them to be enforceable. Erhardt v. Duff, 729 So. 2d 529 (Fla. 4th DCA 1999) is very similar to Nichols in that it too involves a time demand by a plaintiff against the tortfeasor s liability carrier. The insurer responded to the plaintiff s time demand for policy limits with a letter accepting the terms and adding [u]pon receipt of your acceptance, we are prepared to forward our settlement drafts and Releases. The plaintiff ignored the response and sued. The insurer moved to compel settlement. The trial court rejected the plaintiff s argument that the insurer s letter was a counter offer and not an acceptance saying that s not how the real world works. The district court upheld the settlement holding the defendant s letter was sufficient acceptance to form a contract. The subsequent request for a release was not an attempt to impose a new condition to the deal because the execution of the release was implicit as part of the tender and not an additional element of the agreement. Abe v. Ehrling, 768 So. 2d 1225 (Fla. 3d DCA 2000)(the insurer s letter to the plaintiff s lawyer confirming their agreement to settle the case contained a request for 5

11 a release from the plaintiffs, yet this request did not constitute a rejection of the offer to settle or counter offer.) Boyco v. Ilardi, 613 So. 2d 103 (Fla. 3d DCA 1993), was an appeal by a plaintiff from an order compelling her to execute settlement documents. The Third District affirmed because the execution of the settlement documents was not a condition precedent to the settlement agreement, but rather a mere procedural formality which both parties to the settlement agreement were obligated to perform. Nichols v. Martell, 612 So. 2d 657 (Fla. 3d DCA 1993), was a time demand by a plaintiff for the insured s policy limits. The insurer in Martell, as in this case, accepted the offer by tendering the limits along with a release form. The plaintiff said this submission was a counter offer which destroyed the offer but the Third District held that this action was not... a counter offer in any sense. Finally, section , Fla. Stat. (2003), recognizes that the existence of a mutually agreeable release is not a precondition to the existence of a binding settlement agreement. Only two times (to Petitioners search) has a dispute over language in a release destroyed an agreement to settle, and even these cases are undercut by Nichols: Cheverie v. Geisser, 783 So. 2d 1115 (Fla. 4th DCA 2001) involved the repeated refusal of the insurer to remove indemnification language from a proposed 6

12 release form, plus other deal-breakers insisted on by the insurer. The agreement to settle in Cheverie did not collapse because the insurer proposed a release with objectionable indemnification language, but because the parties failed during a reasonable time following agreement to negotiate the form of the release. In Bateski v. Ransom, 658 So. 2d 630 (Fla. 2d DCA 1995), the personal injury plaintiff s offer to settle was accompanied by a release form which the plaintiff s attorney stated would be the only release the plaintiff would sign. The offeror thus expressly made the form of the release an essential element of the agreement. When Hartford responded by submitting releases without the objectionable language, (Op. at 3) there was a meeting of the minds, contrary to the district court s holding that there was no meeting of the minds as to whether indemnification language would be included in the releases. (Op. at 4) Why didn t Hartford have a reasonable opportunity to formulate a mutually agreeable release as in Abe, Boyco, et cet., supra? Because Nichols has established a one-strike-and-you re-out rule in the First District. The law is clear: contracts should be upheld and settlements encouraged. Parties to a contract do not have to deal with every contingency in order to have an enforceable contract. Robbie v. City of Miami, 469 So. 2d 1384, 1385 (Fla. 1985) Where the parties have said the same thing as to the essential elements... the 7

13 settlement should be enforced. Robbie at [S]ettlements are highly favored and will be enforced whenever possible. Robbie at Contrary to this law, Nichols requires the insurer to speculate, at great risk to both the insured and itself, what is and what is not acceptable language for a release. Any disagreement by plaintiff renders the agreement, otherwise reached, a nullity, because the insurer only gets one strike. Second, Nichols conflicts with Florida law that allows an insurer a reasonable time to negotiate an acceptable release. The legal standard governing an insurer s settlement conduct is one of reasonableness. Cruz v. American United Ins. Co., 580 So. 2d 311, 312 (Fla. 3d DCA 1991). In Infinity Ins. Co. v. Berges, 806 So. 2d 504, 508(Fla. 2d DCA 2001), rev. granted 826 So. 2d 991(2002)(case no. SC argued Feb. 4, 2003), the Second District ruled that [s]ince Infinity had no reasonable opportunity to settle the claim [within the time demanded by the personal injury plaintiff], Infinity could not have acted in bad faith as a matter of law. Id. at 508. By contrast, Nichols holds that an insurer s mere submission of a proposed release with language that the plaintiff refuses to accept is a counter offer which destroys the deal. Nichols does not afford an insurer a reasonable opportunity to settle the claim. If this lack of opportunity proves to be a valid defense to a subsequent bad-faith action, then the hapless insured will be left with (a.) no settlement; (b.) an excess judgment; and (c.) no recourse against the liability carrier for bad-faith to cover this excess 8

14 exposure because the plaintiff never afforded the insurer a reasonable opportunity to settle the claim. Is this good public policy? CONCLUSION Nichols conflicts with the following aspects of Florida law: (1) the formation of contracts under Robbie, supra; (2) the public policy favoring settlements; (3) the financial protection of insureds from excess judgments; (4) the provision of a reasonable opportunity to liability insurers to settle claims under Cruz, supra; (5) section (recognizing settlements prior to final agreement as to the form of a release); (6) Dania, Abe, Erhardt, Boyco and Martell, supra (all holding the plaintiff s execution of a release is a ministerial act and the form of the release is not an essential element of the agreement); and (7) the power of trial courts to enforce settlements and compel execution of release documents. This Court possesses the jurisdiction to review this case and it should do so to protect Florida s insureds and to inject a measure of certainty into the business of settling liability claims. Respectfully submitted, BUTLER PAPPAS WEIHMULLER KATZ CRAIG LLP KATHY J. MAUS, ESQ. Florida Bar No.: ANTHONY J. RUSSO, ESQ. 9

15 Florida Bar No.: Thomasville Road, Suite 102 Tallahassee, Florida Phone: (850) Attorneys for Petitioners CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by regular U.S. Mail this day of March 2003, to: Jeremy E. Cohen, Esq Maclay Commerce Drive Tallahassee, FL Michael T. Callahan, Esq Delta Boulevard, Suite 101 Tallahassee, FL ANTHONY J. RUSSO, ESQ. CERTIFICATE OF TYPE SIZE & STYLE Petitioner certifies that the type, size, and style utilized in this Brief is 14 point Times New Roman, which is 10 characters per inch. ANTHONY J. RUSSO, ESQ. 10