Good Faith Drafting Error Leaves Insurer Facing Extra-Contractual Damages
The Fourth District Court of Appeal recently issued an opinion in Allen v. Montalvan, 41 Fla. L. Weekly D2010a (Fla. 4th DCA Aug. 31, 2016) reversing the trial court’s enforcement of a settlement involving the claims of three children injured in an automobile accident. The court found that the settlement was invalid as it did not comply with the statutory requirement that either a guardian with no potential adverse interest to the minor or a guardian ad litem be appointed to represent the minor’s interest in “which the gross settlement involving a minor equals or exceeds $50,000.”
The three children, their mother, and a fourth minor were passengers in a vehicle driven by the children’s grandmother. The grandmother was killed in the accident, while the passengers suffered varying degrees of injuries.
Following the accident, the mother’s attorney contacted the other party’s insurance company, Progressive, and obtained two checks of $25,000 for the accident. The parties agreed that one of the checks was to settle the wrongful death claim of the grandmother’s estate, but there is disagreement as to whether the other $25,000 check was intended to settle the claims of the five passengers. Progressive sent releases that included the name of the passengers but left the consideration amount blank. Two years later, the completed releases were sent back to Progressive; each one signed by the mother and a witness. The mother’s release stated that her claim was being released for a consideration amount of $25,000, while the three children’s each contained a consideration amount of $0.
The mother then filed a complaint for damages arising from the accident. The trial court dismissed the children’s claims, finding that the parties had entered into a binding settlement agreement for damages arising from the accident.
On appeal, the Fourth District held that the requirements of Fla. Stat. § 744.3025 were applicable to this case. The court found that the $50,000 was a single settlement, and thus, the children had not entered into a valid settlement as neither a guardian nor guardian ad litem had been appointed to represent their interests. Relying on the trial court’s finding that Progressive had tendered the $50,000 policy limit to settle all claims, the appellate court rejected Progressive’s contention that the $25,000 paid for the grandmother’s wrongful death claim should be excluded from the settlement amount “involving a minor” which would have removed the guardian requirement. The appellate court noted that Progressive failed its obligation to ensure that the settlement agreement it entered into on behalf of its insured was legally binding. In reversing based on the lack of a guardian, the appellate court did not address any other issues and sent the case back to the trial court where Progressive and its insureds will have to continue to defend an action that should have already been resolved.