INSURANCE COMPANIES CAN BE HELD JOINTLY AND SEVERALLY LIABLE FOR FEES AND COSTS WHEN PROVIDING A DEFENSE TO ITS INSURED
May 17, 2016 in Case Law Updates by bronsteincarmona
In Government Employees Insurance Company v. Alysia M. Macedo and Zackery R. Lombardo, the 1st District Court of Appeal affirmed a trial court’s ruling holding that an insurance company can be held jointly and severally liable with its insured for taxable fees and costs when the insurance company is defending its insured. In this case, the Plaintiff made a $50,000 settlement proposal pursuant to Florida Statute §768.79. The Government Employees Insurance Company (GEICO) rejected the proposal on behalf of its insured.
Florida Statute §768.79(6)(b) states that “if a Plaintiff serves an offer which is not accepted by the defendant, and if the judgment obtained by the plaintiff is at least 25 percent more than the amount of the offer, the plaintiff shall be awarded reasonable costs…and attorney’s fees.” Here, the Plaintiff made a $50,000 proposal for settlement, and received a jury verdict of $200,000. The Court held that Plaintiff was clearly entitled to fees and costs pursuant to Florida Statute §768.79, but the question before the court was whether GEICO was jointly and severally liable, with its insured, for fees and costs as GEICO was merely defending its insured and not a party to the suit.
The Court ruled that GEICO’s policy “gave it the sole right to litigate and settle claims, and contractually obligated it to pay for ‘all investigative and legal costs incurred by us.’” The Court also relied on its prior decision in New Hampshire Indemnity Company v. Gray, 177 So. 3d 56 (Fla. 1st DCA 2015), where the Court ruled “It is the insurer’s choice to litigate—a decision only it can make —that results in these costs being incurred.” The Court affirmed the trial court’s ruling that GEICO was jointly and severally liable on the basis that GEICO’s right to litigate claims, and their decision to litigate this claim, caused the Plaintiff to incur the fees and costs it sought to recover. The court reasoned that GEICO could have chosen not to litigate the claim, or chosen to settle the claim, but instead chose to litigate, and absent policy language specifically excluding payment of fees and costs on behalf of its insured, GEICO was jointly and severally liable for the fees and costs incurred by the Plaintiff.
Proposals for settlement are a common and integral part of the litigation process. Florida Statute §768.79 is clear that when proposals for settlement are not accepted that it entitles the party who made the proposal to recover fees and costs under certain circumstances. Each settlement proposal should be individually evaluated to determine if the proposal should be accepted.