• Florida Supreme Court Rules that in a UM Case the Insurer is Bound by the Damages Found in the UM Case and that Trial Court may Reserve Jurisdiction in Judgment to Allow Plaintiff to Amend to Add Bad Faith Claim
  • March 30, 2016
  • Law Firm: Conroy Simberg - Hollywood Office
  • On February 25, 2016, in the case of Fridman v. Safeco Ins. Co. of Illinois, Case No. SC13-1607, the Florida Supreme Court issued a very significant ruling concerning the timing and procedure for bad faith claims inninsured/underinsured motorist (UM) cases. At issue in the case was whether the plaintiff in a UM case is entitled to a determination of liability and the full extent of his or her damages by first bringing a UM case before litigating a bad faith claim under section 624.155, Florida Statutes. The court also decided the related issues of the binding nature of the damages determination in the UM case and the procedural question of whether the UM trial court had jurisdiction to allow the bad faith action to proceed in the UM case.

    In Fridman, the insured sued his UM insurer following an accident with an underinsured motorist. Prior to trial, but after having rejected settlement demands from the insured and having received a civil remedy notice asserting bad faith, the insurer paid its policy limits of $50,000 and then sought a judgment in that amount from the court. The insured opposed entry of judgment, arguing that he was entitled to go to trial to have the full amount of his damages determined. The trial court agreed and a jury found the underinsured driver to be liable for the accident and the insured’s damages to be $1,000,000. The trial court entered final judgment against the insurer for $50,000 and reserved jurisdiction to allow the plaintiff to amend his complaint to assert a bad faith claim.

    Although the Fifth District Court of Appeal found that procedure to be erroneous, the Florida Supreme Court agreed with the trial court. The court first ruled that the insured is entitled to a determination of liability and the full extent of his or her damages in the UM case. Regardless of whether the insurer pays its limits before trial, the insured is entitled to have the underinsured motorist’s liability determined and the amount of the insured’s damages determined.

    The court next ruled that the determination of damages in the UM case is binding in the bad faith case. It is not appropriate to re-litigate the insured’s damages in the bad faith case, since the insurer is a defendant in the UM case and can seek appellate review. Even though the judgment was limited to the policy limits, the court held that the insurer could appeal any issues arising from the verdict itself, including the amount of damages.

    Finally, the court ruled that the trial court correctly retained jurisdiction in the judgment to allow the plaintiff to amend to add a bad faith claim.

    Although not addressed in the court’s opinion, it should be noted that a plaintiff can not preclude the insurer from appealing the judgment, and any potential coverage determination, before the bad faith claim can be litigated. The appropriate procedure is to have the court enter a partial final judgment on the underlying case, which can be appealed, and thereafter, the bad faith claim abated until the conclusion of the appeal.