Opinion
Civil Action No. 1:04-cv-2802-GET.
February 21, 2006
ORDER
The above-styled matter is presently before the court on:
1) Medmarc Casualty Insurance Company's motion to intervene [docket no. 55];
2) Defendants' motion for summary judgment [docket no. 56]. Plaintiff was injured in an automobile accident with defendants' insured, Mr. Choi, in September 2002. On March 28, 2003, plaintiff filed suit against Mr. Choi. On June 30, 2004, following a jury trial, plaintiff received a judgment for $850,000. Mr. Choi assigned plaintiff his claim that defendants tortiously failed to settle within policy limits. Subsequently, plaintiff filed the instant action on August 26, 2004, in the State Court of Cobb County, asserting tortious failure to settle and seeking the $850,000 from defendants. On September 24, 2004, defendants removed the instant action pursuant to 28 U.S.C. §§ 1441, 1441(b) and 1332 on the basis of diversity jurisdiction. On November 14, 2005, Medmarc Casualty Insurance Company filed a motion to intervene as plaintiff. On the same date, defendants filed a motion for summary judgment.
Motion for Summary Judgment
Standard
Courts should grant summary judgment when `there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must "always bear the initiall responsibility of informing the district court of the basis of its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548 (1986). That burden is "discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325; see also U.S. v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991).Once the movant has met this burden, the opposing party must then present evidence establishing that there is a genuine issue of material fact. Celotex, 477 U.S. at 325. The nonmoving party must go beyond the pleadings and submit evidence such as affidavits, depositions and admissions that are sufficient to demonstrate that if allowed to proceed to trial, a jury might return a verdict in his favor. Anderson v. Liberty, Lobby, Inc., 477 U.S. 242, 257, 106 S. Ct. 2505 (1986). If he does so, there is a genuine issue of fact that requires a trial. In making a determination of whether there is a material issue of fact, the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Id. at 255; Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (1Ith Cir. 1987). However, an issue is not genuine if it is unsupported by evidence or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248. Thus, to create a genuine issue of material fact for trial, the party opposing the summary judgment must come forward with specific evidence of every element essential to his case with respect to which (1) he has the burden of proof, and (2) the summary judgment movant has made a plausible showing of the absence of evidence of the necessary element. Celotex, 477 U.S. at 323.
Facts
In light of the foregoing standard, the court finds the following facts for the purpose of summary judgment only. Plaintiff sustained injuries in a motor vehicle collision with Young Bae Choi ("Mr. Choi") on September 18, 2002. Several witnesses observed Mr. Choi run a red light, though Mr. Choi initially denied running the red light. At the time of the incident, Mr. Choi was covered by a Nationwide automobile insurance policy that provided bodily injury coverage for $25,000 per person. Defendant Pearson was the claims representative employed by Nationwide who handled the investigation of plaintiff's claim for injury. Ms. Pearson had been doing bodily injury claims handling for only a few weeks before she was assigned to Mr. Choi's case, and appears not to have completed Nationwide's bodily injury adjusting courses before she handled the instant claim.On October 9, 2002, plaintiff's counsel sent a letter of representation to Nationwide requesting insurance information pertaining to Mr. Choi. This correspondence did not contain a settlement demand or any discussion related to settlement. On October 10, 2002, Ms. Pearson sent correspondence to plaintiff's counsel requesting the following information and documentation "in order to avoid delay on settlement:" itemized bills for all medical services received; certified hospital records, diagnostic reports and daily clinical notes for medical services provided; Disability Statement/Verification from the treating physician and documentation of lost time from the employer for any lost wage claims. Plaintiff's attorney received and read this correspondence. On October 28, 2002, Ms. Pearson spoke with plaintiff's counsel's paralegal regarding plaintiff's condition. On December 5, 2002, Ms. Pearson contacted the office of plaintiff's counsel and spoke with an operator, who told her that "they were still in the process of gathering bills." Ms. Pearson had, by this time, received plaintiff's discharge summary, which revealed the lengthy hospital stay, nature and severity of plaintiff's injuries and prompted her to conclude that it was "highly likely" that the treatment costs of the injury alone would total more than $25,000. Plaintiff's counsel did not provide the documentation requested by Ms. Pearson's October 10, 2002 letter, except for this uncertified hospital discharge summary.
On April 3, 2003, Ms. Pearson called plaintiff's counsel's office and was told that she could "get the meds [sic] that [she] needed through the litigation process." At that time, Ms. Pearson asked for a demand but was told that plaintiff's counsel did not have one. Plaintiff had filed suit against Mr. Choi on March 28, 2003. The lawsuit itself did not provide the amount of medical and wage loss expenses. Plaintiff's counsel could have called or written Nationwide before the lawsuit was filed and prov i ded the requested information pertaining to lost wages and medical expenses. Defendants had no legal ability to obtain plaintiff's medical bills or lost wage verification before the lawsuit was filed without plaintiff's consent or authorization, which was not requested by defendants or provided by plaintiff.
Nationwide hired counsel to defend Mr. Choi, who filed a responsive pleading and served written discovery. On or about May 20, 2003, plaintiff responded to the discovery requests and produced plaintiff's medical records, medical bills and lost wage information. On May 22, 2003, Nationwide tendered its policy limits of $25,000, the full amount of coverage available under the policy. Nationwide did not offer interest on the policy limits. Plaintiff's counsel rejected the offer. Plaintiff was not aware that Nationwide made a policy limits offer. Plaintiff took the underlying case to verdict and obtained a judgment in the amount of $850,000 on June 30, 2004. Within a week, Nationwide again tendered its policy limits to plaintiff. The offer was again rejected. After the verdict, Mr. Choi assigned all causes of action against defendants to plaintiff. Plaintiff, as assignee of Mr. Choi's claims, filed the present claim for tortious failure to settle.
Prior to the two policy limits offers, Ms. Pearson never called plaintiff's counsel to initiate settlement talks. Plaintiff never made a demand or offered to settle the case within policy limits. Neither plaintiff nor plaintiff's counsel informed defendants, Mr. Choi or his counsel that the claims related to the automobile incident could be settled prior to filing a lawsuit, or that they would accept a policy limits offer. Plaintiff's counsel could have sent a letter to Nationwide demanding the policy limits, but did not. Defendants have tendered and plaintiff already has received a check for $25,000.
Discussion
Defendants contend that plaintiff cannot establish duty as a matter of law, and that his claim is therefore subject to summary judgment. Specifically, defendants argue that plaintiff cannot show that defendants knew or should have known that the claim could have been settled within policy limits, and accordingly defendants' duty to settle never arose.
An `insurer "awes to the insured a duty independent of the contract not to injure him, and when, from its negligent failure or . . . other bad faith, [the insured] sustains damages other than damages covered by the insurance contract, then an action in tort would be appropriate." Delancy v. St. Paul Fire Marine Ins. Co., 947 F.2d 1536, 1546 (11th Cir. 1991). "Because this suit is in tort . . . the insured may sue the insurer for failure to settle only when the insurer had a duty to settle the case." Id. at 1546-1547. "[T]he insurer does not have an absolute duty to settle." Id.
In the instant action, defendants contend that plaintiff has no evidence establishing that it had a duty to settle the claim. Plaintiff responds that he has sufficient evidence to create an issue of fact as to whether the duty to settle arose and was breached.
In order to give rise to a duty to settle, "[a]t a minimum . . . Georgia law mandates that the insured show that settlement was possible — the case could have been settled within the policy limits — and that the insurer knew, or reasonably should have known, of that fact." Id. at 1550 (internal citations omitted). The knowledge of an opportunity to settle within the policy limits is important because it causes the interests of the insurer and its insured to diverge. Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683, 685 (2003). "The insured is interested in protecting itself against an excess judgment; the insurer has less incentive to settle a claim for the limits of the insurance policy." Id. Therefore, plaintiff must offer some evidence raising a question of fact as to whether defendants knew or should have known that plaintiff would have accepted a policy limits offer. Delancy, 947 F.2d at 1550.
Defendants argue that plaintiff cannot show that defendants should have known plaintiff would have accepted a policy limits offer. Defendants cite Georgia cases finding an insurance company liable for tortious failure to settle based on the insurer's rejection of a settlement demand by plaintiff. See e.g. Briahtman, 276 Ga. 683; McCall v. Allstate Ins. Co., 251 Ga. 869 (1984). It is clear that "where a person injured by an insured offers to settle for a sum within the policy limits, and the insurer refuses the offer of settlement, the insurer may be liable to the insured." McCall, 251 Ga. at 870. Further, it is undisputed that plaintiff made no settlement demand to defendants. Accordingly, if Georgia law requires a demand, plaintiff's claim would be defeated as a matter of law. However, a recent decision affirmed by the Eleventh Circuit holds that Georgia does not per se require a settlement demand in order to recover on a tortious failure to settle case. Kingsley v. State Farm Mut. Auto. Ins. Co., 353 F. Supp. 2d 1242, 1249 (N.D. Ga. 2005), aff'd, 153 Fed. `Appx. 555 (11th Cir. 2005). Consequently, the mere absence of a settlement demand is insuffic ient grounds for summary judgment.
Rather, plaintiff can raise a question of fact as to whether defendants should have known plaintiff would have settled by showing "some certainty regarding the settlement posture of the parties in the underlying lawsuit — i.e., where the insured's liability is clear, the damages are great, and the insurer is on notice that it has an opportunity to settle the case." Id. at 1252. Some communication from plaintiff that he would consider a policy limits offer, short of a demand, is sufficient. See id. at 1252-1253.
Plaintiff argues that defendants' duty to settle arose from: its Best Practices manual, which does not require a demand to be made before defendants make an offer; defendants' internal determination that Mr. Choi was one-hundred percent (100%) liable for the accident and that it was "highly likely" that plaintiff's hospitalization and treatment alone would cost more than the policy limits of $25,000; and defendants' receipt of plaintiff's hospital discharge summary. Plaintiff even presents expert testimony that defendants had sufficient information to make an offer, could reasonably have settled in November 2002, and were negligent in not doing so. However, none of the evidence offered by plaintiff shows communication from the plaintiff that he was willing to settle the case. Though it may tend to show that defendants reasonably could have made an offer, it does not raise an issue of fact as to whether defendants should have known that plaintiff would have accepted that offer, if made.
Plaintiff also alleges in his response that defendants are liable for breaching their fiduciary duty to Mr. Choi. However, "[a] fiduciary relationship does not exist between an insurer and its insured." Clark v. Byrd, 254 Ga. App. 826, 827 (Ga.App. 2002). Accordingly, that claim cannot be a basis for liability.
Because plaintiff may not assert a claim for breach of fiduciary duty, and has not raised a genuine issue of fact as to whether defendants knew or should have known that plaintiff would settle within policy limits, defendants had no duty to settle. Accordingly, plaintiff cannot establish at least one essential element of its claim, and defendants' motion for summary judgment [docket no. 56] is hereby GRANTED.
Motion to Intervene
Movant, who paid benefits to plaintiff under a worker's compensation policy, seeks to intervene in the action in order to protect its interest in any recovery by plaintiff. Because the motion for summary judgment has been granted, plaintiff will receive no recovery. Accordingly, MedMarc Casualty Insurance Company's motion to intervene [docket no. 55] is hereby DENIED AS MOOT.
Summary
1) Medmarc Casualty Insurance Company's motion to intervene [docket no. 55] is hereby DENIED AS MOOT;
2) Defendants' motion for summary judgment [docket no. 56] is hereby GRANTED.
SO ORDERED.