Geico Loses Summary Judgment Bid In Florida Bad Faith Case

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TAMPA, Fla., May 12 — On May 12, GEICO Insurance lost a bid in Florida federal court to dismiss a bad faith suit premised upon its alleged failure to adequately defend a GEICO insured in a personal injury action.  The Court ruled that a genuine issue of material fact existed as to whether the insurer acted in bad faith in its handling of the claim.

The insureds,  Manuel A. and Aleli Gonzalez bought auto insurance from GEICO General Insurance Co. and added their grandson Ishmael Ramjohn as an additional insured. Ramjohn allegedly injured Lisa Anderson in an automobile accident in February 2009, whereupon Anderson’s attorney attempted to settle Anderson’s claim with GEICO .

Anderson’s lawyer and GEICO communicated several times during 2009, leading to his sending a demand for the $100,000.00 bodily injury policy limit insuring Ramjohn. GEICO offered $2,581.16 to resolve the claim.  Later, GEICO increased its offer to $22,500.00 after receiving additional information on Anderson’s injuries.

After  Anderson sued the insureds in the Hillsborough County, Fla., Circuit Court for damages,  GEICO offered the $100,000 policy limits, which Anderson rejected.  A jury in that case returned a verdict for Anderson in the amount of  $398,097.82.

The insureds then sued GEICO in the U.S. District Court for the Middle District of Florida, alleging bad faith in handling Ramjohn’s defense.

In denying GEICO’s motion for summary judgment, Judge James S. Moody Jr. held:

“the record reflects facts that could permit a jury to find that GEICO acted in bad faith…In other words, this case, like most bad-faith cases, presents a genuine dispute that requires a jury’s resolution…For example, [insureds’ expert Peter] Knowe’s testimony creates a genuine issue for trial. Knowe testified that GEICO’s handling of the Anderson claim deviated from industry standards in several key respects. Remarkably, GEICO does not address or reference Knowe’s expert opinion anywhere in its motion…there is also evidence suggesting that GEICO did not evaluate Anderson’s claim from the perspective of a reasonable insured facing unlimited exposure.”

Judge Moody added that a reasonable jury could find that GEICO’s offer strategy in the case was executed in aid of a policy to reduce average loss payments.

Gonzalez et al v. GEICO General Insurance Company, (M.D. Fla. 2016)(Moody, J.)

Pa. Supreme Court To Take Up Insurer Fiduciary Duty Question

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PHILADELPHIA, March 30 – The Pennsylvania Supreme Court will review a Superior Court decision holding that Ameriprise  Financial, Inc. may owe a fiduciary duty to a couple who were allegedly misled into buying an insurance policy and annuity.

In September, the Pa. Superior Court reversed in part a summary judgment ruling in favor of Ameriprise in which the trial court struck claims of breach of fiduciary duty against an Ameriprise agent made by Plaintiffs Eugene and Ruth Yenchi.  The Yenchis alleged that the Ameriprise agent used a financial planning review the Yenchi’s purchased as an opportunity to sell life insurance and annuities, and that in the process, Ameriprise’s agent made material misrepresentations.

In what it called a matter of first impression, the Superior Court ruled that the sale of insurance was “typically considered an arm’s-length transaction, in which the insurer incurs no fiduciary duty apart from those that may be defined in the insurance contract.”   It also ruled, however, that under the facts alleged by the Yenchis, they paid an Ameriprise agent a fee for a financial planning review, which led to recommendations to buy life insurance through the agent, under what the Yenchis alleged were fraudulent circumstances.

The Superior Court held that there were sufficient facts present which might prove a confidential relationship existed between the Yenchis and their agent which, under Pennsylvania law, could create a fiduciary duty:

“the Yenchis claim a confidential relationship arose with Mr. Holland [the agent], prior to their purchase of life insurance, when they agreed to purchase what they believed was independent, financial planning advice.  It is significant that Mr. Holland cultivated a relationship with the Yenchis first as a financial advisor, not an insurance salesperson.  That this advise resulted in their purchase of life insurance products from [Ameriprise] is not determinative of the nature of the relationship.”

The Superior Court opinion can be found here:  Yenchi v. Ameriprise Financial (Pa. Super. 2015) .

In granting Ameriprise’s petition for allowance of appeal, the Supreme Court indicated it will review whether the Superior Court erred in reversing the summary judgment decision striking the Yenchi’s fiduciary duty claims, as well as Superior court rulings vacating decisions to exclude certain evidence at trial.

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