Insurer Not Liable For Excess Judgment Where Alleged Bad Faith Did Not Cause the Judgment

In Messinese v. USAA Casualty Insurance Company, 2015 U.S. App. LEXIS 13519 (11th Cir. Aug. 4, 2015), the insured struck the plaintiff, Mr. Messinese, while driving intoxicated. Mr. Messinese sustained serious injuries including paralysis and brain damage. The insured had an auto policy with USAA with limits of $100,000 per person and $300,000 per accident. The insured also had a homeowner’s policy with USAA, but it excluded coverage for injuries arising out of the use of an automobile. USAA immediately advised the insured that Mr. Messinese’s damages could exceed the auto policy limits and learned from the insured’s wife that the only other insurance policy they had was the USAA homeowner’s policy. USAA tendered the $100,000 auto policy limit to Mr. Messinese to settle the case. It was rejected. Mr. Messinese and Sylvia Messinese demanded $300,000, affidavits from the insured and his wife describing any other insurance and personal assets available and a statement from USAA about additional insurance policies. The insured provided the requested affidavit. USAA then re-offered the $100,000 policy limit, which was rejected. The Messineses subsequently brought suit against the insured and his wife. Six months later USAA disclosed the existence of the homeowner’s policy. The case went to trial against the insured and his wife. The jury awarded the Messineses $3.5 million in damages. The Messineses then brought a bad faith action against USAA claiming that USAA caused the judgment in excess of the policy limits. The district court granted USAA’s motion for summary judgment concluding that USAA’s alleged actions did not cause or contribute to the excess judgment. The Messineses appealed the decision. On appeal, the Messineses argued that USAA acted in bad faith by failing to diligently pursue a settlement. The Eleventh Circuit rejected this claim because only 10 days after the accident, USAA had tendered its policy limits. The Eleventh Circuit then stated that even if this were bad faith, the Messineses failed to show how it caused the excess judgment.  The Messineses highlighted two specific ways they believed USAA breached its duty: (1) filing to advise the insured of the possibility of an excess judgment until after settlement talks preventing him from having an opportunity to contribute to a settlement and (2) failing to notify the Messineses in a timely manner the existence of the homeowner’s policy. The Eleventh Circuit found that the alleged failure to advise the insured of an excess judgment was not a cause of the excess judgment because the insured signed an affidavit at the beginning of the case saying that he had no assets. The Eleventh Circuit then found that USAA’s alleged late disclosure of the homeowner’s policy was not a cause of the excess judgment because the policy did not provide coverage for the accident anyway and the Messineses did not take any action even upon learning of the policy to determine if there was coverage under it. The Eleventh Circuit also highlighted that the Messineses would have rejected USAA’s settlement offer regardless of when USAA informed the insured about the potential for an excess judgment and when it disclosed the homeowner’s policy because the Messineses continually and persistently argued that there were assets and coverage available to satisfy their claims despite being told otherwise. Therefore, the Eleventh Circuit affirmed the district court’s granting of USAA’s motion for summary judgment.

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