Insurer with the right to settle or litigate claims against their insureds is held responsible for plaintiff’s attorney’s fees and costs pursuant to rejected proposal for settlement.

Geico challenged the final judgment in an automobile insurance case holding it liable to pay the injured plaintiff’s attorney’s fees and costs. On behalf of its insured, Geico had rejected the plaintiff’s proposal for settlement pursuant to §§ 768.79, Fla. Stat. and Fla. R. Civ. P. 1.442. A jury returned a verdict in the plaintiff’s favor, awarding more than four times the amount of the proposal. The trial court awarded fees and costs against both the defendant and her insurer.

The First District Court of Appeal for the State of Florida affirmed the trial court’s judgment based on the rationale of its prior decision in New Hampshire Indemnity Co. v. Gray, 177 So.3d 56 (Fla. 1^st DCA 2015). Under insurance policies where insurers enjoy the sole right to settle or litigate claims against their insureds, choosing to litigate may encompass not only the insured’s legal costs but those of the opposing party should that party prevail. The court held that “it is the insurer’s choice to litigate—a decision only it could make—that results in these costs being incurred; thus, those expenses [are] incurred at the insurer’s request.” The insurer’s policy provisions stated that it covers “other reasonable expenses incurred at our request” and “all investigative and legal costs incurred by us.” The policy didn’t provide definitions of legal or other costs and didn’t specifically exclude attorney’s fees and costs awarded to a plaintiff pursuant to a proposal for settlement.

The First District certified a conflict with the Second District’s decision in Steele v. Kinsey, 801 So. 2d 297 (Fla. 2d DCA 2001) (“[a]lthough it seems unjust that an insured should be required to bear the brunt of satisfying an excess adverse judgment that resulted, at least in part, from the insurance company’s total control of the litigation, any remedy for that injustice is within the sphere of the legislature, not the courts”).

_{Case Law Alerts, 3rd Quarter, July 2016}

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