More than a decade after a woman was shot in the forehead during a fight in the parking lot of a St. Lucie County lodge, a federal appeals court Friday cleared the way for a “bad-faith” lawsuit against one of the lodge’s insurers.
A three-judge panel of the 11th U.S. Circuit Court of Appeals, in a 2-1 decision, overturned a district judge’s ruling in favor of Kinsale Insurance Co. and said a jury should decide the bad-faith issue.
Bad-faith lawsuits involve questions about whether insurers have properly represented the interests of their policyholders, such as pursuing settlements. They have long been a battleground in the Legislature, as insurers can face paying hefty amounts if they lose bad-faith cases — with lawmakers in 2023 passing changes to try to reduce bad-faith litigation.
Friday’s ruling stemmed from the March 2, 2015, shooting of Tanya Oliver in the parking lot of the Pride of St. Lucie Lodge 1189, which was operating as a club and a bar. Oliver never recovered from the gunshot wound and died on July 5, 2016, from her injuries, according to Friday’s ruling.
The shooting happened after two groups of women began fighting on a dance floor in the lodge. Security guards made the women leave, but the fight continued in the parking lot, the ruling said.
The lodge in November 2015 received a letter from an attorney representing Oliver’s interests, and Kinsale began an investigation into the incident. Oliver’s estate filed a negligent-security lawsuit on Aug. 5, 2016, and Kinsale on Aug. 18, 2016, offered the policy limit of $50,000 — an offer that was rejected, according to the ruling.
Ultimately, the case went to trial in a state court, and a judgment was entered against the lodge for nearly $3.35 million. In a subsequent bad-faith case in federal court, the lodge and Oliver’s estate argued that “Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the estate’s claim (lawsuit) was filed,” Friday’s ruling said.
A federal district judge issued a summary judgment for Kinsale, but the appeals-court majority Friday pointed to a state legal precedent that said where “liability is clear, and injuries so serious that a judgment in excess of the policy limits is likely, an insurer has an affirmative duty to initiate settlement negotiations.”
“There can be no dispute that Kinsale knew the damages greatly exceeded the comparatively small $50,000 assault and battery sublimit (the part of the policy that applied),” Judge Stanley Marcus wrote in a 29-page ruling joined by Judge Adalberto Jordan. “Indeed, the jury ultimately awarded the estate a judgment of $3,348,623.89 from the lodge, more than 65 times Kinsale’s policy limit.”
But Judge Barbara Lagoa dissented, arguing that the federal appeals court should ask the Florida Supreme Court for guidance on how to apply the state’s bad-faith law. She said she didn’t think the lodge’s liability was clear before the estate filed the lawsuit.
“Allowing a bad faith case to proceed on these facts ,,, will inevitably affect Florida’s liability insurance consumers, as more bad faith judgments bring higher premium costs. … While the Florida Supreme Court may conclude that a reasonable jury could find clear liability on these facts, it is for that court, not this one, to make a decision that has such ramifications,” Lagoa, a former Florida Supreme Court justice, wrote.
But the majority ruling said a jury should decide whether Kinsale acted in good faith in representing the interests of its policyholder.
“All told, a jury could reasonably find that Kinsale acted in bad faith in failing to tender its policy limit prior to the estate filing suit,” the ruling said. “The district court erred in taking the case away from a jury, holding that as a matter of law, a jury could not find that Kinsale acted in bad faith. On remand, the jury must decide whether — considering the totality of the circumstances — Kinsale acted in bad faith.”
