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dismissing a premature claim without prejudice because "the Court favors the outcome that does not risk running afoul of Article III of the Constitution or the Federal Rules of Civil Procedure."
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CASE NO. 19-80301-CIV-COHN-MATTHEWMAN
2019-04-17
Celia TERENZIO, Plaintiff, v. LM GENERAL INSURANCE COMPANY, Defendant.
Thomas Michael Bates, West Palm Beach, FL, for Plaintiff. David Barry Krouk, Jamie Rebecca Combee, Butler Weihmuller Katz Craig LLP, Tampa, FL, Nicole Paulette Ramos, Law Offices of J. Christopher Norris Liberty Mutual Insurance Company, Miami, FL, for Defendant.
Thomas Michael Bates, West Palm Beach, FL, for Plaintiff.
David Barry Krouk, Jamie Rebecca Combee, Butler Weihmuller Katz Craig LLP, Tampa, FL, Nicole Paulette Ramos, Law Offices of J. Christopher Norris Liberty Mutual Insurance Company, Miami, FL, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
JAMES I. COHN, United States District Judges
THIS CAUSE is before the Court on Defendant's Notice of Removal [DE 1] ("Notice") and Defendant's Motion to Dismiss [DE 6] ("Motion"). The Court has considered the Motion, Plaintiff's Response [DE 13], and the record in this case, and is otherwise advised in the premises.
I. Background
This is an action to recover uninsured/underinsured motorist ("UM") benefits. Plaintiff Celia Terenzio alleges that on January 7, 2018, she was injured in an automobile accident when another driver ran a red light. See DE 1-2 (Pl.'s Compl.). Because the other driver did not have bodily injury coverage, Terenzio sought the policy maximum of $100,000 in UM benefits from her insurer, LM General Insurance Company, to cover her injuries. (Id., ¶ 16). After LM Insurance refused to tender the policy maximum, Terenzio commenced this action on February 1, 2019 in the Fifteenth Judicial Circuit for Palm Beach County. The Complaint asserts two counts: an underlying claim for UM benefits (Count I) and a claim for bad-faith settlement negotiations under Fla. Stat. § 624.155 (Count II).
On March 5, 2019, LM Insurance removed the case to federal court pursuant to 28 U.S.C. § 1441, asserting diversity jurisdiction under 28 U.S.C. § 1332(a). DE 1. On March 11, 2019, LM Insurance moved to dismiss Count II of the Complaint [DE 6]. The parties agree that Plaintiff's bad-faith claim is premature because her underlying claim for UM benefits (Count I) has not been resolved. However, Plaintiff contends that abatement, as opposed to dismissal, is the appropriate remedy. Thus, the sole issue raised by Defendant's Motion to Dismiss is whether Count II of Plaintiff's Complaint should be dismissed without prejudice or abated.
There is no dispute as to this Court's jurisdiction: the parties are diverse and the amount in controversy exceeds $75,000.
II. Discussion
Under Florida law, if an insurer does not attempt to settle a claim in good faith, the policyholder may sue for damages above the policy maximum and up to the full amount of her injuries. Fla. Stat. § 624.155(1)(b)(1) ; Bottini v. GEICO, 859 F.3d 987, 988 (11th Cir. 2017). But before the bad-faith claim can accrue, "an insured's underlying first-party action for insurance benefits against the insurer necessarily must be resolved favorably to the insured." Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, 1291 (Fla. 1991). In other words, Plaintiff must prevail on her underlying UM benefits claim in Count I before she can maintain her bad-faith claim in Count II.
When a bad-faith claim under § 624.155 is included in an action for UM benefits, "the only question for the Court to decide is whether this claim should be dismissed without prejudice or abated until resolution of the underlying coverage dispute." Gilbert v. State Farm Mut. Auto Ins. Co., 95 F. Supp. 3d 1358, 1363 (M.D. Fla. 2015). Courts are divided on whether to abate bad-faith claims or dismiss them without prejudice. Compare e.g. Beaubrun v. Geico Gen. Ins. Co., No. 16-24205-CIV, 2016 WL 6804626 (S.D. Fla. Nov. 17, 2016) (abating the bad-faith claim) with e.g. Fantecchi v. Hartford Ins. Co. of the Midwest, No. 15-23969-CIV, 2015 WL 12516629 (S.D. Fla. Nov. 24, 2015) (dismissing the bad-faith claim without prejudice). The ultimate decision is within the sound discretion of the trial court. Shapiro v. Gov't Emps. Ins. Co., No. 14-civ-62792, 2015 WL 127897, at *2 (S.D. Fla. Jan. 8, 2015) (citations omitted).
Some courts have chosen abatement "to conserve judicial resources and reduce the potential for inconsistent rulings in successive UM benefits and bad-faith actions." Lawton-Davis v. State Farm Mut. Auto. Ins. Co., 6:14-CV-1157-ORL-37, 2014 WL 6674458, at *2 (M.D. Fla. 2014). In Lawton, the court observed that concerns about inconsistent rulings "can be traced to a discrete question of Florida law: does an excess verdict in a UM benefits action fix a plaintiff's damages in a subsequent bad-faith action?" Id. at *2.
The Florida Supreme Court subsequently resolved that discrete question in Fridman v. Safeco Ins. Co. of Illinois, 185 So.3d 1214 (Fla. 2016). The Court held that "the determination of damages obtained in the UM action becomes a binding element of damages in the subsequent bad faith litigation against the same insurer." Id. at 1228. After Fridman, courts are no longer faced with the possibility of inconsistent rulings in successive UM benefits and bad-faith actions. The Court in Fridman nonetheless endorsed abatement as a procedural device because it allows the trial court to retain jurisdiction over the subsequent bad-faith claim. Id. at 1229.
Many district courts, however, have held that abatement is not permitted in federal court. Some courts have found that abatement is contrary to the Federal Rules of Civil Procedure because a plaintiff is not "entitled to relief" on a bad-faith claim under Rule 8(a) where the underlying UM benefits action has not been resolved. See e.g. Fantecchi, 2015 WL 12516629, at *2 (collecting cases). Other courts, meanwhile, have dismissed premature bad-faith claims on ripeness grounds because the "case or controversy" requirement in Article III of the U.S. Constitution precludes federal courts from adjudicating claims that "rest[ ] upon contingent future events that may not occur as anticipated, or indeed may not occur at all." See, e.g. Ralston v. LM Gen. Ins. Co., No. 6:16-cv-1723-Orl-37DCI, 2016 WL 6623728, at *3 (M.D. Fla. Nov. 9, 2016) (quoting Texas v. United States, 523 U.S. 296, 300, 118 S.Ct. 1257, 140 L.Ed.2d 406 (1998) ).
As Plaintiff points out, some courts have rejected that reasoning. In Nicophene v. Hartford Ins. Co. of the Southeast., the court held that abatement was not an "adjudication" within the meaning of Article III, and thus ripeness was not a concern. No. 8:18-CV-02565-T-02AEP, 2018 WL 6504373, at *3 (M.D. Fla. Dec. 11, 2018). Plaintiff also notes that even after Fridman, at least four judges in the Southern District of Florida have chosen abatement over dismissal to preserve judicial resources. See, Beaubrun v. Geico Gen. Ins. Co., No. 16-24205-CIV, 2016 WL 6804626 (S.D. Fla. Nov. 17, 2016) ; Hinds v. Am. Sec. Ins. Co., No. 16-20780-CIV, 2016 WL 8677863 (S.D. Fla. Sept. 9, 2016) ; Cole v. Safeco Ins. Co. of Illinois, 2:16-CV-14392, 2016 WL 10586298 (S.D. Fla. Oct. 19 2016) ; Riascos-Mazo v. Certain Underwriters at Lloyd's of London, No. 17-23988, 2018 WL 4258278 (S.D. Fla. Sept. 5, 2018).
Some courts have held, however, that abatement may undermine, rather than preserve, judicial resources. Nelson v. Travelers Home & Marine Ins. Co., No. 615CV1137ORL22TBS, 2015 WL 12830480, at *2 (M.D. Fla. Aug. 19, 2015) ("Postponing discovery on the bad faith claim until the conclusion of the summary judgment phase—at the very soonest—has the potential to unreasonably delay the ultimate resolution of the entire case."); see also Williams v. Safeco Ins. Co. of Illinois, No. 8:17-CV-751-T-17MAP, 2017 WL 4465737, at *1 (M.D. Fla. May 17, 2017) ("[I]t [does] not significantly aid judicial economy if the claims are abated rather than dismissed without prejudice"); Ironshore Indem., Inc. v. Banyon 1030-32, LLC, No. 12-61678-CIV-COOKE, 2013 WL 4711155, at *8 (S.D. Fla. Aug. 30, 2013) ("Parties should not be encouraged to file claims that may never ripen.... This is a waste of the court's and the parties' resources.")
The Court finds that dismissal is a better remedy than abatement. For one, it appears that a majority of federal district courts in Florida have ruled in favor of dismissal. See Gilbert v. State Farm Mut. Auto. Ins. Co., 95 F. Supp. 3d 1358, 1364 (M.D. Fla. 2015) (collecting cases and finding that a majority of courts have favored dismissal). Because it is unsettled whether abatement of a premature bad-faith claim is permitted in federal court, the Court favors the outcome that does not risk running afoul of Article III of the Constitution or the Federal Rules of Civil Procedure. Therefore, the Court will dismiss without prejudice, rather than abate, Plaintiff's bad-faith claim.
Accordingly, it is
ORDERED AND ADJUDGED as follows:
1. Defendant's Motion to Dismiss [DE 6] is GRANTED . Count II of Plaintiff's Complaint is DISMISSED without prejudice.
2. Defendant shall file its Answer to the Complaint on or before May 1, 2019.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, this 17th day April, 2019.