The Fifth District Court of Appeal recently issued an opinion in which the court held that an insurance company does not have to go forward with an unnecessary trial on a claim for UM benefits where the insurer is willing to concede the insured is entitled to and pays the UM policy limits.  Safeco Ins. Co. of Illinois v. Fridman, 2013 WL 2256531, No. 5D12-428 (Fla. 5th DCA May 24, 2013).  In Fridman, the insured filed a one-count complaint seeking recovery of the $50,000 UM limits provided by his policy.  Shortly before trial, Safeco filed a motion to confess judgment in which it agreed to entry of a final judgment in favor of the insured for the $50,000 UM limits sought in his complaint.  Safeco also tendered a $50,000 check to the insured.

However, the trial court refused to enter judgment on the confession and the case proceeded to trial resulting in a $1,000,000 verdict for the insured.  Following the verdict, the trial court entered a final judgment for the $50,000 UM policy limits.  The trial court also reserved jurisdiction to determine the insured’s right to amend the complaint to add a bad faith claim and further held that if the insured prevailed in such a bad faith action, the insured would be entitled to recover the amount of the excess verdict as damages in that action.

The Fifth District Court reversed.  The Fifth District, in a two-judge majority, agreed with Safeco’s argument that the trial court erred in denying the motion to confess judgment and in having the case to proceed to trial.  The Fifth District concluded that the issue before the trial court as framed by the pleadings—the demand for $50,000 UM benefits—had been rendered moot by Safeco’s confession of judgment.  The Fifth District further held that that Safeco’s confessed judgment in the amount of the UM limits provided a sufficient basis to pursue a bad faith action, in which action the insured could prove his damages.  The majority then declared that the jury verdict was a nullity, and directed the trial court to enter an amended final judgment deleting any reference to the jury verdict obtained and declining to reserve jurisdiction to amend the complaint to add a bad faith claim.

Judge Sawaya disagreed with the majority decision in a 17-page dissent, claiming that the decision was unprecedented and impractical.  The majority position, however, is both consistent with Florida precedent and the more practical approach.

Florida law is clear that an insured cannot recover more than the policy limits in a UM lawsuit.  As a result, judgments entered against an insurer must be limited to the policy limits.  Nationwide Mut. Fire Ins. Co. v. Voight, 971 So. 2d 239 (Fla. 2d DCA 2008).  An insurer’s agreement to pay policy limits, which is all that the insured can recover, is thus both supported by precedent and practical in that it obviates the need for a trial.

The dissent’s position, however, is impractical in light of other courts’ treatment of excess verdicts.  For example, in King v. Geico, 2012 WL 4052271 (M.D. Fla. 2012), the jury returned a $1.6 million excess verdict in a UM case, with judgment being entered for the UM limits of $25,000.  In the subsequent bad faith litigation, the federal judge refused to give preclusive effect to the excess jury verdict, and held that the jury verdict was not an element of damages in that litigation.  As a result, the insured will be forced to present his damages claim twice, with two separate juries being forced to hear it.

The result in King is necessary in order to provide the insurer procedural due process in the review of excess jury verdicts.  As demonstrated in Geico v. Bottini, 93 So. 3d 476 (Fla. 2d DCA 2012), appellate courts are precluded from reviewing whether excess verdicts are reasonably supported by the evidence, or if any error improperly affected their amount, unless the complained of error otherwise affects the judgment entered for policy limits.  In Bottini, the jury returned a $30,872,266 verdict in favor of the insured.  The Second District, however, declined to review any claims of error raised by Geico that may have impacted the amount of damages awarded in the verdict, noting that any such errors were harmless in light of the $50,000 judgment that was ultimately entered.

Under the Fifth District’s decision in Fridman, an insured recovers all that he is entitled to under the policy, an unnecessary trial on damages is avoided, and the insured is free to establish his damages in a subsequent bad faith action.  An insurer also has the opportunity to challenge any damages awarded by an appropriate appeal. 

While this tactic may not be appropriate in every situation, the Fridman decision at least provides another option for insurers in Florida’s anti-insurer climate.