Opinion
C.A. No. 2:18-2975-RMG C.A. No. 2:19-260-RMG
02-03-2020
COLUMBIA INSURANCE COMPANY, Plaintiff, v. William Edmund REYNOLDS, Jr., et al., Defendants. Christopher Kamil Waymer, individually and d/b/a Q.E. Trucking, Inc., Plaintiff, v. Columbia Insurance Company, Defendant.
Allen Mattison Bogan, Brian P. Crotty, C. Mitchell Brown, Nelson Mullins Riley and Scarborough LLP, G. Mark Phillips, Nelson Mullins Riley and Scarborough, Charleston, SC, for Plaintiff. Mark B. Tinsley, Gooding and Gooding, Allendale, SC, for Defendants William Edmund Reynolds, Jr., Angela D. Reynolds. Matthew V. Creech, Peters Murdaugh Parker Eltzroth and Detrick, Ridgeland, SC, Bert Glenn Utsey, III, Peters Murdaugh Parker Eltzroth and Detrick PA, Charleston, SC, for Defendant Christopher Kamil Waymer.
Allen Mattison Bogan, Brian P. Crotty, C. Mitchell Brown, Nelson Mullins Riley and Scarborough LLP, G. Mark Phillips, Nelson Mullins Riley and Scarborough, Charleston, SC, for Plaintiff.
Mark B. Tinsley, Gooding and Gooding, Allendale, SC, for Defendants William Edmund Reynolds, Jr., Angela D. Reynolds.
Matthew V. Creech, Peters Murdaugh Parker Eltzroth and Detrick, Ridgeland, SC, Bert Glenn Utsey, III, Peters Murdaugh Parker Eltzroth and Detrick PA, Charleston, SC, for Defendant Christopher Kamil Waymer.
ORDER
Richard Mark Gergel, United States District Court
This matter comes before the Court on motions for summary judgment filed by Columbia Insurance Company ("CIC"), the plaintiff in C.A. No. 2:18-2975 and the defendant in C.A. No. 2:19-260. (Dkt. No. 32). Responses in opposition have been filed by William Edmund Reynolds, Jr. and Angela D. Reynolds ("the Reynolds") and by Christopher Kamil Waymer ("Waymer") and CIC has filed a reply. (Dkt. Nos. 39, 41, 43). As set forth below, the Court grants CIC's motions for summary judgment.
For purposes of simplicity, the Court will cite to the record in C.A. No. 2:18-2975 unless specifically stated otherwise. The Court's order addresses the pending summary judgment motions filed by CIC in both cases (Dkt. No. 32 in C.A. No. 2:18-2975 and Dkt. No. 27 in C.A. No. 2:19-260), which overlap and raise common factual and legal issues.
All facts are viewed in a light most favorable to the Reynolds and Waymer, as the non-moving parties.
A motor vehicle accident occurred on December 16, 2013 in Colleton County, South Carolina involving a collision between a vehicle occupied by the Reynolds and a commercial logging truck driven by Waymer. CIC insured the Waymer truck with a $1 million dollar liability policy. The Reynolds suffered severe injuries and were transported to the Medical University of South Carolina ("MUSC") Hospital by air ambulance. An investigating law enforcement officer found Waymer to be at fault and issued a ticket for failing to yield the right of way and concluded that the Reynolds did not contribute to the accident.
CIC retained the services of an outside adjustor, O.W. Ray of the James C. Greene Co., on December 19, 2013 to investigate the accident. Soon thereafter, Ray interviewed Waymer, inspected the scene, and spoke with the investigating officer. The Reynolds retained Mark Tinsley on December 30, 2013 to represent them, and Tinsley sent a letter of representation that day to CIC. Ray had conversations with Tinsley and his paralegal, Cherry Vick, on January 9, 2014, and Ray was informed that the Reynolds had severe injuries. Tinsley advised Ray he intended to demand policy limits. The following day CIC retained Jay Saleeby to represent its insured, Waymer, and an in-house claims administrator at CIC, David Dare, was assigned the case.
In a letter dated January 16, 2014, Ray reported to CIC that the investigating officer, Sgt. C.H. Rogers of the Colleton County Sheriff's Office, advised him that "there is no doubt ... that the insured [Waymer] failed to yield [the] right of way to ... Reynolds." Ray also reported that the Reynolds suffered severe injuries and that their counsel, Tinsley, was requesting full policy limits. Ray concluded the report by stating that "it's clear that the insured failed to yield right of way to the claimant." (Dkt. No. 39-35). On January 20, 2014, CIC raised its reserves to its policy limits of $1 million dollars. (Dkt. No. 32-4 at 5).
Tinsley sent CIC a demand letter on January 23, 2014 offering to settle the Reynolds' claims for the policy limits of $1 million dollars and setting a deadline of ten business days for CIC to respond. (Dkt. No. 32-10). This letter, per Tinsley, was prompted by a conversation he had with Ray in which Ray acknowledged that liability was not in dispute and that it appeared the Reynolds' claims likely exceeded the policy limits. (Dkt. No. 39-31). At the time of this demand letter, the Reynolds' medical records from MUSC had not yet been received, much less reviewed, by anyone involved in the litigation, including CIC's in-house and outside adjustors and the attorneys for the insured and the claimants.
Saleeby responded to the Tinsley settlement demand letter on January 31, 2014, explaining that CIC was in the process of gathering information "so that there can be a reasonable opportunity to evaluate" the Reynolds' claims. He noted that the only medical records or bills CIC now had were from the air ambulance transport of the Reynolds following the accident. Saleeby asked Tinsley to forward any medical records and bills he had already gathered and offered to pursue the records himself if the Reynolds would execute medical authorization forms. Saleeby stated that once the records and bills were received, "we will review this matter and respond to your demand for the policy limits." (Dkt. No. 32-12). On January 31, 2014, Vick sent Saleeby pictures of the Reynolds' injuries. (Dkt. No. 39-26). On February 6, 2014, the Tinsley settlement deadline passed without CIC tendering its policy limits.
On April 3, 2014, Tinsley's office sent voluminous medical records to Saleeby via email, requiring multiple transmissions. (Dkt. No. 32-15 at 2-5). A letter emailed from Saleeby to Dare on April 4, 2014 stated that the Reynolds' medical bills from MUSC exceeded $675,000 and detailed their extensive injuries. (Dkt. No. 32-19 at 33-34). On April 7, 2014, Tinsley provided Saleeby the balance of the MUSC records. (Dkt. No. 32-15 at 6). Two weeks later, on April 21, 2014, Saleeby wrote Tinsley "[t]his matter has been roundtabled and I expect to be able to offer you the $1,000,000.00 in coverage, hopefully in 48 hours or less." Saleeby stated that the settlement could be in the form of a covenant not to execute "so that your clients can pursue any other potential tortfeasor, other potential liability, and any available underinsured coverage." He asked Tinsley to advise him whether his client would accept the policy limits offer. (Dkt. No. 50-1). On April 28, 2014, Saleeby advised Tinsley that he could now officially offer the policy limits of $1 million dollars to the Reynolds with a covenant not to execute. (Dkt. No. 32-16).
Tinsley responded to CIC's policy limits offer on May 21, 2014, indicating that he believed carrier's failure to meet the deadline of the first settlement offer of January 23, 2014 constituted bad faith. Tinsley referenced an early conversation with Ray in which he stated that Ray acknowledged that the claims likely exceeded the available coverage and that Tinsley should demand policy limits. Tinsley asserted that CIC was now liable for the full amount of any judgment rendered by a court against Waymer. Tinsley offered "one final chance" to CIC to settle the case and presented the carrier two options for settlement, both of which provided the insured, Waymer, protection against an excess verdict. The first option offered a low of $1 million dollars and a high of $3.5 million dollars, which Tinsley indicated represented a stipulated amount for the verdict the Reynolds would likely receive for their personal injury claims at trial arising from the motor vehicle accident. If the jury found no bad faith by CIC, the verdict would be the $1 million dollars already offered by CIC. If the jury found that CIC had acted in bad faith by refusing to meet the February 6, 2014 deadline imposed by Tinsley, CIC would pay $3.5 million dollars. (Dkt. No. 39-31 at 2-4). Under this option, CIC would immediately pay the $ 1 million to the Reynolds and the parties would "skip the trial in the wreck cases and the assignment of any claims and go straight to the end question, whether the insurance company acted in bad faith or was negligent." The settlement proposal further provided that CIC would be required to waive its right to raise defenses regarding real party in interest and the applicability of any release given by the Reynolds. (Dkt. No. 39-31 at 3-4).
If that option was not acceptable to CIC, Tinsley offered, alternatively, a low of $1 million dollars if no liability was found against CIC on the bad faith claim, with the jury setting the damages amount if bad faith was found. Under Tinsley's second option, CIC would have to agree not to appeal an adverse decision of the jury on the basis that the verdict was excessive and to waive its rights to raise the release and real party in interest issues. Tinsley set a deadline of June 3, 2014, fifteen days hence, to respond to his offer. (Dkt. No. 39-31 at 4-5).
On June 2, 2014, one day prior to the deadline, Waymer's personal counsel, Matthew Creech, wrote Saleeby and "strongly urge[d]" CIC to accept Tinsley's settlement offer. Creech observed that the proposal "certainly offers the carrier a route to protect [Waymer's] interests, as the insured," and stated "I view the demand as being in the best interests of the insured." (Dkt. No. 32-19 at 12).
Saleeby wrote Tinsley on June 3, 2014 stating that CIC would not accept his settlement proposals set forth in his letter of May 21, 2014. He stated that nonetheless CIC "is still ready and willing to pay the $1,000,000.00 policy limits on the Covenant Not to Execute." (Dkt. No. 58-1 at 3-4). Dare also prepared a letter to Tinsley on June 3, 2014, (Dkt. No. 32-18), but apparently was not received by Tinsley until late July 2014 after Tinsley complained to Saleeby on July 31, 2014 that CIC had never directly responded to his offer, (Dkt. No. 39-33).
Dare's letter to Tinsley dated June 3, 2014 explained that when CIC received his first demand, "neither Mr. Saleeby nor our company had adequate information available to evaluate the claim/demand being presented. We took the necessary steps to request medical information related to the injuries of your clients." Dare then stated that "[b]ased upon the information we ultimately received," CIC offered on April 28, 2014 "the $1 million dollar policy limits in exchange for a release of all defendants as well as Columbia Insurance Company." Dare concluded that notwithstanding the rejection of that offer reflected by Tinsley's May 21, 2014 letter, he wanted Tinsley to know that CIC's policy limits offer "remains available, subject to the appropriate releases." (Dkt. No. 32-18).
With the case unresolved, the parties proceeded to litigate the motor vehicle accident case in the Colleton County Court of Common Pleas. CIC thereafter brought a declaratory judgment case in this Court on December 16, 2014, which the Court dismissed on April 13, 2016 without prejudice on the basis of a lack of ripeness and abstention. (C.A. No. 2:14-4739, Dkt. No. 74). The Reynolds' motor vehicle accident claims against Waymer were litigated before a special referee on October 24-25, 2018, and judgment was subsequently entered on November 16, 2018 in favor of William Reynolds in the amount of $3 million dollars and for Angela Reynolds in the amount of $3.5 million dollars.
CIC refiled its declaratory judgment action in this Court on November 2, 2018, seeking court rulings on whether the failure of CIC to accept the January 2014 settlement offer within the ten business day time limit constituted bad faith. (Dkt. No. 1 at 10-12). Several days later, on November 5, 2018, Waymer filed suit against CIC in the Colleton County Court of Common Pleas asserting bad faith refusal to settle by failure to accept the Reynolds settlement offers of January and May 2014. (C.A. No. 2:19-260, Dkt. No. 1-1). CIC removed the bad faith case to federal court and filed an answer and counterclaims against its insured, seeking again to litigate the same legal questions raised in the declaratory judgment action. (C.A. No. 2:19-260, Dkt. No. 4). CIC thereafter filed motions for summary judgment in both cases, which have now been fully briefed and are ready for disposition.
Legal Standard
To prevail on a motion for summary judgment, the movant must demonstrate that there is no genuine dispute of any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying the portions of the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, [which] show that there is no genuine issue as to any material fact and that the moving part is entitled to a judgement as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322-23 & n.4, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citing Rule 56(c) ). The Court will interpret all inferences and ambiguities against the movant and in favor of the non-moving party. U.S. v. Diebold, Inc. , 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). Where the moving party has met its burden to put forth sufficient evidence to demonstrate there is no genuine dispute of material fact, the non-moving party must come forth with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing Rule 56(e) ). An issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict in favor of the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
South Carolina recognizes a cause of action for bad faith refusal to settle, which arises out of the implied covenant of good faith and fair dealing in every contract. This is a duty "the insurer owes its insured ... to settle a personal injury claim covered by the policy, if settlement is a reasonable thing to do." Trotter v. State Farm Mut. Auto. Ins. Co. , 297 S.C. 465, 377 S.E. 2d 343, 349 (S.C. App. 1988). Where there is a conflict between the interests of the carrier and the insured regarding settling a claim within policy limits, the insurance company is "bound, under its contract of indemnity, and in good faith, to sacrifice its interests in favor of the [insured]." Tyger River Pine Co. v. Maryland Cas. Co. , 170 S.C. 286, 170 S.E. 346, 348 (1933) (emphasis in the original). "The critical issue is whether there was a reasonable basis" for the carrier's actions "when considering the best interest of the carrier's insured." Vanderhall v. State Farm Mut. Auto. Ins. Co., No. 4:14-518-RMG, 2015 WL 1507838, at *4 (D.S.C. Mar. 30, 2015). So long as there is sufficient evidence in support of a bad faith claim on which a rational factfinder could return a verdict for the insured, the determination of whether the carrier acted in bad faith is a jury question and is based on a totality of circumstances. See Smith v. Maryland Cas. Co. , 742 F. 2d 167, 170 (4th Cir. 1984).
Discussion
A. The First Settlement Offer
When the Reynolds' counsel demanded a policy limits settlement on January 23, 2014 and gave CIC ten business days to respond, the carrier was under the impression that its insured was likely liable and that the Reynolds had suffered severe injuries. At this time, however, none of those involved, including CIC staff, outside adjusters, and counsel for the respective parties, had received the MUSC medical records and bills associated with the Reynolds' hospitalization. At least some of CIC's information regarding the Reynolds' injuries had been provided by Tinsley.
Shortly after receiving Tinsley's demand, defense counsel Saleeby responded, explaining that CIC was actively reviewing the case and needed the Reynolds' MUSC records to properly evaluate the claims. Saleeby asked Tinsley to provide him any copies of records he had and offered to obtain the records himself from MUSC if Tinsley could arrange to have medical authorization forms executed by the Reynolds. (Dkt. No. 32-12 at 2-3). At this point, Saleeby had been assigned the case three weeks and Tinsley had represented the Reynolds for one month.
The Reynolds' full MUSC records and bills were not obtained until April 3, 2014, when Tinsley's office emailed the voluminous records to Saleeby. (Dkt. No. 32-15 at 2-5). Within a day, Saleeby provided a report to CIC advising the carrier that the Reynolds' medical bills exceeded $675,000 and that the injuries were complex and substantial. (Dkt. No. 32-19 at 27). On April 21, 2014, Saleeby informed Tinsley that CIC had "roundtabled" the case, and he thought he would have authority to offer policy limits in the near future. A week later, Saleeby, on behalf CIC, formally offered the policy limits to the Reynolds. (Dkt. Nos. 32-16 at 2; 50-1).
Viewing these facts in a light most favorable to the nonmoving parties, it is apparent that early on the carrier had the impression that this was a likely policy limits case. Indeed, by January 20, 2014, CIC had raised its reserves to $1 million dollars. However, until CIC obtained and reviewed the MUSC records and bills, the carrier had not validated that impression with hard medical evidence and lacked documentation regarding the Reynolds' treatment and course at MUSC and the amount of their medical expenses to date. When the MUSC records and bills finally arrived, they confirmed what the Reynolds' counsel had been telling CIC, and, within a matter of weeks, the carrier tendered the policy limits.
The key question presented by these facts is whether an insurance carrier, faced with a substantial policy limits demand with a short response time unilaterally imposed by the plaintiff's counsel at the outset of a case, has the right to conduct a reasonable investigation before its failure to accept the settlement demand constitutes a bad faith refusal to settle. South Carolina's bad faith cause of action is designed as a shield for insureds, to prevent an insurance carrier from sacrificing the best interests of its insured in an effort to obtain a settlement for less than the maximum limits of the insurance coverage. The South Carolina Supreme Court recognized this potential for conflict between the best interests of an insurance company and its insured and required in such a situation that the carrier must "sacrifice its interests in favor of " its insured. Tyger River Pine Co. , 170 S.E. at 348 (emphasis in the original).
A carrier's duty to protect the interests of its insured does not require a carrier to immediately accede to a demand for settlement before it has had a reasonable time to conduct an investigation. "The linchpin of the insurer's liability is its unreasonable delay in tendering its policy limit." Noonan v. Vermont Mut. Ins. Co. , 761 F. Supp. 2d 1330, 1336 (M.D. Fla. 2010) (emphasis in the original) (granting summary judgment for excess insurer finding no bad faith where primary insurer tendered policy limits roughly one month after accident, but excess insurer requested medical records and tendered policy limits two weeks after obtaining said records nearly eleven months later). Thus, "an insurer, acting with diligence and due regard for its insured, is allowed a reasonable time to investigate a claim; no obligation exists to accept a settlement offer ... without time for investigation." Johnson v. GEICO , 318 Fed. Appx. 847, 851 (11th Cir. 2009). A rule to the contrary would "starv[e] the insurer of the information needed to make a fair appraisal of the case" and undermine the adversarial system. See Wade v. EMCASCO Ins. Co. , 483 F. 3d 657, 669-70 (10th Cir. 2007).
The record, read in a light most favorable to the non-moving parties, amply documents that nearly from the outset the carrier had an impression that this was likely a policy limits case. The carrier diligently set about to review the documents necessary to validate that impression, most notably the MUSC in-hospital treatment records. While some scattered medical records arrived prior to April 3, 2014, it was on that date that the full MUSC records and bills were transmitted by Tinsley to Saleeby. Within a day, Saleeby had provided a report to CIC and 18 days after the records arrived Saleeby told Tinsley that the policy limits of $1 million dollars would likely be offered. On April 28, 2014, 25 days after the receipt of the full MUSC records, the policy limits on a covenant not to execute were offered by CIC.
The Court finds that no reasonable jury could find CIC's failure to meet the ten business day deadline set by Tinsley before the carrier had conducted a basic investigation, that included a review of the relevant medical records, constituted a bad faith refusal to settle. See Keifer v. GEICO , No. 01-15545, 2002 WL 34924509, at *2-3 (11th Cir. 2002) (affirming summary judgment for insurer finding no bad faith and noting that while insurer "had been alerted that Plaintiff's injuries would exceed policy limits, [insurer] was under no duty to accept undocumented information about those injuries"); Noonan , 761 F. Supp. 2d at 1336 ; Johnson , 318 Fed. Appx. at 851 (affirming summary judgment for insurer noting insurer's right to a "reasonable time to investigate a claim"). Consequently, CIC's motion for summary judgment is granted on the claim that its failure to accept the January 23, 2014 offer within ten business days constituted bad faith.
B. The Second Settlement Offer
The issue of whether CIC's rejection of the Plaintiffs second settlement offer, of May 21, 2014, constituted bad faith is asserted only in Waymer's bad faith lawsuit (C.A. No. 2:19-260, Dkt. No. 1-1 at 9) and was not raised in CIC's declaratory judgment action.
When the second offer of settlement was submitted on behalf of the Reynolds on May 21, 2014, circumstances had substantially changed. CIC had gathered the relevant medical records and bills, conducted an appropriate investigation of liability, and offered to tender the policy limits of $1 million dollars to the Reynolds under a covenant not to execute. (Dkt. Nos. 32-16; 50-1). Under this proposal, the Reynolds could pursue actions against any other possible tortfeasors, other possible liability insurance coverage, and any underinsurance coverage. (Dkt. No. 32-16).
Tinsley responded to CIC's settlement offer on May 21, 2014, rejecting the carrier's offer of a policy limits settlement with a covenant not to execute and offering several settlement options to the carrier, all which protected Waymer from an excess verdict and preserved the Reynolds' right to pursue a bad faith claim against CIC. The first of these options was a classic high-low offer ($1 million / $3.5 million), with the jury determining whether CIC acted in bad faith. If the jury found bad faith, the Reynolds would receive $3.5 million and if there was no bad faith found the Reynolds would receive nothing beyond the policy limits of $1 million. Tinsley included several rather non-traditional elements to the settlement, including skipping over the motor vehicle proceedings and proceeding directly to the bad faith litigation and requiring the carrier to waive certain defenses, including whether the plaintiff in the bad faith case was the real party in interest and whether the claims had been extinguished by a release. (Dkt. No. 39-31 at 3-4).
If the "high" proposed by Tinsley was not acceptable to CIC, he offered a second option, a low of $1 million and provided that the jury would set the damages amount. Otherwise, the terms of the proposal tracked the first option except that the carrier would also have to agree not to appeal the jury's verdict on the basis that it was excessive. Tinsley's imposed a deadline of fifteen days to accept one of his settlement options. (Id. ). A day before the settlement offer deadline, June 2, 2014, personal counsel for CIC's insured, Creech, informed CIC that he viewed "the demand as being in the best interests of the insured" and "strongly urge[d] the carrier to accept this demand so that Mr. Waymer and his business ... receive protection." (Dkt. No. 32-19 at 12).
The various options offered by Plaintiffs' counsel in his May 21, 2014 letter required CIC to waive significant legal rights, including potential defenses relating to the impact of a release and real party in interest and a partial waiver of appellate rights. This begs the question of whether, in fulfilling its duty of loyalty to its insured, a plaintiff can require the defendant's carrier to abandon its defenses and appeal rights or face a claim of bad faith refusal to settle. Could the plaintiff demand that the carrier waive its right to a jury trial or insist that it confess judgment for $2 million on a $1 million policy if the plaintiff would give the insured a covenant not to execute? The potential for abuse is obvious and such leveraging of a bad faith litigation against a carrier would undermine the adversarial system and transform a cause of action designed to protect insureds from disloyal carriers to a weapon to be used by plaintiffs to break the ability of an insurance company to mount proper defenses.
The parties discussed in their briefs a line of cases out of Florida that, while not the identical situation, highlight the potential risk of forcing onto carriers improper limitations on their legal rights through a threat of a bad faith claim. Some years ago, Florida courts were asked to bless a procedure where parties contesting both a motor vehicle accident and an alleged bad faith refusal to settle could bypass a trial relating to the motor vehicle accident and proceed to trial on the bad faith claim. In such an arrangement, which came to be known as a "Cunningham Agreement" (after a case by that name), the parties could agree to a high-low for the trial over the carrier's alleged bad faith refusal to settle. Cunningham v. Standard Guaranty Ins. Co. , 630 S. 2d 179, 181 (Fla. 1994). Thereafter, some Florida plaintiffs in motor vehicle cases began demanding Cunningham Agreements for the settlement of their cases and then pursued bad faith claims when insurance companies refused to enter into such agreements. The Florida Supreme Court appropriately held that a refusal to enter into a Cunningham Agreement did not constitute bad faith. Berges v. Infinity Ins. Co. , 896 So. 2d 665, 671 n.1 (Fla. 2004).
Although CIC could have by agreement waived certain procedural and substantive rights and adopted the unorthodox procedures recommended by Tinsley, the Court finds that no reasonable jury could find that the carrier's refusal to accept these settlement terms constituted a bad faith refusal to settle. A carrier has the duty to act reasonably in light of the best interests of its insured and to tender policy limits without unreasonable delay once its timely investigation determines that the case presents a real risk of an excess verdict. This does not require capitulating to unorthodox demands of a plaintiff's counsel that require waiving or abandoning the carrier's important rights and defenses.
Saleeby responded on June 3, 2014 to Tinsley's settlement proposals by explaining that while CIC was unwilling to accept his various options, CIC was "still ready and willing to pay the $1,000,000.00 policy limits on a Covenant Not to Execute." (Dkt. No. 58-1 at 4). No deadline was placed on the offer. This re-offered settlement proposal of CIC, identical to the earlier offer of April 28, 2014, allowed the Reynolds to receive the full policy limits and pursue claims against third parties. Further, the CIC offer did not impact the ability of Plaintiffs to pursue an excess verdict against Waymer and then have the Reynolds on assignment or Waymer bring a bad faith claim against CIC. Counsel for the Reynolds conceded at oral argument that this offer by CIC was not in bad faith and his clients were unwilling to accept it after CIC failed to accept the first settlement offer by the February 6, 2014 deadline.
Dare also wrote Tinsley a letter dated June 3, 2014 but this letter apparently did not reach Tinsley under late July 2014. Dare stated that the April 28, 2014 offer tendering policy limits of $1 million dollars "remains available," but indicated that the Reynolds were required to provide releases to the insureds and CIC. (Dkt. No. 32-18 at 2). Counsel for CIC conceded at oral argument that the practical effect of this proposal would have been to foreclose the possibility of a future bad faith claim against CIC since all claims against Waymer would be released under the settlement proposal, eliminating the possibility of an excess verdict.
If the only offer presented to the Reynolds from CIC had been the Dare letter, conditioning the tendering of policy limits on the Reynolds abandoning bad faith claims against CIC, this would have raised serious questions concerning whether the carrier had been disloyal to its insured by insisting on a release of bad faith claims against it as the price for tending policy limits. This, however, was not the case. Tinsley, on behalf of the Plaintiffs rejected on multiple occasions a policy limits offer with a covenant not to execute and explained at oral argument that his clients were insisting on CIC accepting one of the settlement options set forth in the May 21, 2014 letter.
Plaintiffs were again offered a $1 million dollar policy limits settlement with a covenant not to execute on February 10, 2015 and did not accept the offer. (Dkt. No. 58-2).
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The Court finds that no reasonable jury could find that CIC's offers, relayed by CIC counsel to Tinsley on April 28 and June 3, 2014 and February 10, 2015, for a $1 million dollar policy limits payment with a covenant not to execute, constituted bad faith. Further, as set forth above, no reasonable jury could find that CIC's rejection of the May 21, 2014 offer constituted a bad faith refusal to settle. Consequently, CIC is entitled to summary judgment in Waymer's bad faith action regarding the claim that rejection of the May 21, 2014 settlement offer constituted bad faith. (C.A. No. 2:19-260, Dkt. No. 1-1 at 9).
Conclusion
Based on the foregoing, the Court GRANTS CIC's motions for summary judgment (C.A. No. 2:18-2975, Dkt. No. 32; and C.A. No. 2:19-260, Dkt. No. 27). Both actions are now dismissed with prejudice.
AND IT IS SO ORDERED.