Florida Refuses to Offset Tort Damages with Bad Faith Damages from an
Underinsured Motorist Insurer
The Florida Supreme Court was asked to resolve a certified question from
a lower court about whether a personal injury damages award must be
reduced by a payment the plaintiff received to settle a bad faith claim
against his uninsured motorist insurance carrier.
In Alberta S. Ellison v. Randy Willoughby, No. SC2021-1580, Supreme
Court of Florida (November 2, 2023) the Supreme Court answered the
questions posed.
FACTS
Respondent/plaintiff Randy Willoughby was badly injured in a car crash.
After the accident, he sued Petitioner/defendant Alberta Ellison,
bringing a vicarious liability claim based on Ellison's co-ownership of
the other car in the crash. Willoughby also sued his own uninsured
motorist insurance carrier to recover policy benefits and for statutory
bad faith damages. Willoughby and his insurer settled before trial for
$4 million. The subsequent trial against Ellison resulted in a $30
million jury verdict for Willoughby. Ellison then asked the trial court
to set off the $4 million insurance settlement against the damages
award, but the court denied the motion.
The Second District Court of Appeal affirmed the denial of the set off
request. It also certified this two-part question as one of great public
importance.
Is a settlement payment made by an uninsured motorist insurer to settle a
first-party bad faith claim subject to set off under section 768.041(2)
or
a collateral source within the meaning of section 768.76?
The court answered no to both parts of the question, holding that
neither statute authorized a set off in this case. The Second District
explained that, writing on a blank slate, it would have found Ellison
entitled to a set off under section 768.041(2), but it decided that the
Supreme Court's case law precluded that result.
Based on the parties' arguments and the Supreme Court's review of the
record, the Supreme Court determined that Ellison did not ask the trial
court for a set off under section 768.041(2) and refused to consider the
issue.
The Supreme Court rephrased the question posed to it to read: “Is a
settlement payment made by an uninsured motorist insurer to settle a
first-party bad faith claim a collateral source within the meaning of
section 768.76(2)(a)2.?”
Although Willoughby sued his uninsured motorist insurance carrier both
for the $10,000 limit allowed under his policy and for bad faith
damages, his $4 million insurance settlement was undifferentiated (as to
claims and categories of damages). Subject to certain exceptions,
section 768.76(1) mandates damage award reductions for sums that the
plaintiff has received from "collateral sources."
The Supreme Court noted that bad faith damages are not "benefits" for
purposes of the collateral source definition in section 768.76(2)(a)2.
First-party bad faith claims like Willoughby's are a creature of
statute, not of the underlying insurance contract between the parties.
In particular, the damages recoverable in an uninsured motorist
insurance bad faith claim are set out in a statute to be "the total
amount of the claimant's damages, including the amount in excess of the
policy limits, any interest on unpaid benefits, reasonable attorney's
fees and costs, and any damages caused by a violation of a law of this
state."
