COULTER v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Filing 101

ORDER GRANTING STATE FARM'S MOTION FOR SUMMARY JUDGMENT - State Farm's motion for summary judgment doc. 61 is GRANTED. Coulter's motion for summary judgment doc. 58 is DENIED. State Farm's motion to strike doc. 86 is DENIED.The clerk shall enter summary judgment stating: "Judgment is entered in State Farm's favor as to all claims." Signed by SENIOR JUDGE WILLIAM STAFFORD on 1/16/2014. (dlt)

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UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA
TALLAHASSEE DIVISION

EDITH COULTER, individually and
as assignee of VICTOR LEE HUSZAGH,
Plaintiff,
v.

4:12cv577-WS/CAS

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.

ORDER GRANTING STATE FARM'S MOTION
FOR SUMMARY JUDGMENT
On March 20, 2009, Edith Coulter was seriously injured in an accident
caused by Victor Lee Huszagh. At the time of the accident, Huszagh was insured
by State Farm Mutual Automobile Insurance Company ("State Farm"). In this
action, Coulter sues State Farm, alleging bad faith failure to settle Coulter's claim
against Huszagh.
Before the court at this time are the parties' cross-motions for summary
judgment. Docs. 58 & 61. For the reasons set forth below, the court finds that

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State Farm is entitled to summary judgment.
I.
This third-party action for common law bad faith stems from the underlying
accident-related bodily injury ("BI") claim asserted by Coulter against State Farm's
insured, Huszagh. Coulter was injured when Huszagh, driving a pick-up truck,
turned into the path of Coulter, who was driving a motorcycle. Huszagh, an
attorney, was insured under a State Farm automobile insurance policy with a
$50,000 BI liability limit. He had no other insurance policies that would cover
Coulter's injuries.
Huszagh reported the accident to his State Farm agent the evening of the
accident. The next day, Saturday March 21, 2009, State Farm began its
investigation of the accident. On Monday, March 23, 2009, Claim Representative
Leslie Shannahan was assigned to handle the claim. That same day Shannahan
interviewed Huszagh, explained his policy's BI limit, reviewed BI handling,
advised him that she would be sending him an excess exposure letter, and
suggested to him that he might want to consult an attorney of his choosing and at
his own expense to discuss personal exposure beyond the policy limits. Shannahan
also advised Huszagh that State Farm would likely be tendering the $50,000 policy
limits once Coulter's injuries were confirmed. Shannahan memorialized her

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conversation with Huszagh in a letter dated March 23, 2009, again stressing that
Coulter's BI claim could exceed his policy limits.
Also on March 23, 2009, Shannahan spoke with Coulter's son, Bradley
Coulter ("Bradley"), who reported that his mother was still in the hospital and
needing surgery. Shannahan explained Huszagh's $50,000 liability limit, explained
the health insurer's right to reimbursement against any settlement proceeds, and
requested hospital admission and discharge records to confirm Coulter's injuries.
Bradley asked Shannahan to confirm Huszagh's coverage limit in writing. Two
days later, on March 25, 2009, Shannahan recorded in her Activity Log that
Bradley left a voice mail asking that verification of Huszagh's BI liability limit be
faxed to him at [phone].
On March 25, 2009, in response to Bradley's request, Shannhan faxed a
letter signed by Tim Scott, State Farm's Team Manager, confirming Huszagh's
$50,000 liability coverage limit. A copy of Huszagh's policy was purportedly
attached to Scott's letter. Whether the policy was, in fact, attached to the letter is
disputed.
On March 26, 2009, just six days after the accident, Scott authorized
Shannahan to tender the $50,000 BI limit to Coulter. By letter dated March 27,
2009, and mailed to Coulter on March 31, 2009, Shannahan tendered a draft (made

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out to Coulter and Tallahassee Memorial Hospital) for the full BI policy limit of
$50,000.1 Shannahan enclosed a proposed BI release, explaining that "tender of
the policy limit is not conditioned upon this particular release, as it is only a
proposed release." Shannahan invited Coulter to contact her with any questions. A
copy of Shannahan's tender letter was sent to Huszagh.
On April 10, 2009, twenty-one days after the accident, Shannahan spoke
with Bradley about his mother's condition. Bradley explained that his mother was
in a rehabilitation facility and was expected to remain there for another two to three
weeks. On May 14, 2009, Shannahan again called Bradley, leaving a voice mail
asking for an update on his mother's condition and asking for a phone number
where his mother could be reached.
On June 3, 2009, having received no word from Coulter or Bradley about
State Farm's $50,000 check, Shannahan called the phone number listed for Edith
Coulter but learned that the number was not in service. She next called Bradley
and left him a message, asking for Coulter's contact number. That same day,
Shannahan wrote Coulter, asking Coulter to please contact her.
On June 9, 2009, an adjuster with Capital Health Plan ("CHP"), Coulter's

1

Coulter mistakenly believed that Tallahassee Memorial Hospital was a lien
hospital and, thus, a necessary co-payee.

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health insurer, called Shannahan to advise her of CHP's lien and intent to
subrogate. On June 12, 2009, Shannahan received CHP's written subrogation
notice. That same day, Shannahan again attempted to reach Coulter by phone
without success. She then sent Coulter a letter stating:
I have been unable to reach you to discuss your accident. I can see
that you have not negotiated the $50,000 draft we issued payable to
you and Tallahassee Memorial Hospital. Since the time I issued the
draft, we have been put on notice of Capital Health Plan's intent to
subrogate. Accordingly, I have stopped pay[ment] on draft number
11929928BJ. Please destroy the draft and contact me to discuss
further handling.
On July 14, 2009, having heard nothing from Coulter for almost four
months, Shannahan wrote to Coulter and sent another $50,000 check, representing
Huszagh's full $50,000 BI limit, to resolve Coulter's BI claim against Huszagh.
Shannahan stated in her letter:
I previously provided a policy disclosure to you reflecting the bodily
injury liability limit of $50,000 which pertains to this accident.
Enclosed is our draft in the amount of $50,000 representing the per
person bodily injury liability limit. The draft is payable to Capital
Health Plan and you. Tallahassee Memorial Hospital did not file a
lien against you; however, Capital Health Plan has paid benefits on
your behalf. Enclosed is a copy of the letter I received from Capital
Health Plan regarding their subrogation.
Once again, Shannahan sent a copy of a proposed release and invited Coulter to
contact her with any questions.
During the months following the accident, Shannahan copied Huszagh with

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all of the correspondence she sent to Coulter. On August 4, 2009, Shannahan
advised Huszagh that no contact had been made with Coulter, no response from
Coulter had been received, and no notice of attorney representation had been
provided. Shannahan explained that Coulter's phone had been disconnected but
mail had not been returned.
Coulter hired counsel, Stephen Marino, on April 24, 2009, but never advised
State Farm of that fact. Indeed, Shannahan did not learn about Marino's
representation until August 26, 2009, when she received a letter dated August 11,
2009—sent by certified mail on August 12—from Marino, advising Shannahan
that he represented Coulter regarding her BI claim against Huszagh.2 In his letter,
Marino acknowledged Coulter's receipt of the two $50,000 checks, explaining that
he was returning them as "a housekeeping matter." Marino's letter then went on to
state:
Although your July 14, 2009 letter indicates that State Farm
previously provided documents to comply with Fla. Stat. § 627.4137,
the documents that I have do not show full compliance. It could just
be that some documents didn't make it to my office, so I wanted to
give you another opportunity to comply with the statute, and to give
you the time provided within the statue [sic] to do so.

2

The record contains outgoing certified mail documentation that reflects
that the letter was mailed on August 12, 2009. The record, however, does not
contain the letter's return receipt, documenting by whom and when State Farm
signed for the letter.

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You have also previously indicated that you spoke on more than
one occasion with Ms. Coulter's son, Bradley. . . . So that we can all
keep our facts straight, please provide me with a written summary of
the information you believe that you obtained from Bradley so that I
can make sure that we are all on the same page.
Finally, it is my understanding that Mr. Huszagh is aware of the
severity of Ms. Coulter's injuries, and that he left her a voicemail
expressing his sympathies. Mr. Huszagh should therefore be
amenable to executing an affidavit confirming that he has no
additional insurance coverage that could be used to pay for the losses
that he caused.
In addition to providing the items discussed above, please also
provide me with the full policy benefits available under Mr. Huszagh's
policy in a draft made payable to Edith Coulter and Ver Ploeg &
Lumpkin, P.A. In exchange for all the items discussed, we will
provide you and your insured with a general release that will not
obligate my client to pay any damages suffered by State Farm or its
client relating to this crash. Obviously, you can be assured that my
firm will fulfill all of its obligations pursuant to the Florida Statutes
with regard to valid liens asserted against Ms. Coulter relating to the
crash.
With all these items in hand, we should shortly be able to put this
matter to rest for both my client and your insured.
On August 26, 2009, the day she received Marino's letter, Shannahan
directed Cindy Cannon, State Farm Customer Service Assistant, to obtain a copy of
Huszagh's automobile insurance policy and declarations page. The next day, she
called Marino's office to ask if he had an insurance affidavit he wanted Huszagh to
use. When she was unable to reach him, she sent a letter to Marino—dated August
28, 2009—(1) providing a summary of the information she obtained from her

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conversations with Bradley Coulter; (2) acknowledging that Marino wanted
Huszagh to submit "an affidavit confirming that he has no additional insurance
coverage that can be used to pay for the loss in this accident"; (3) asking Marino if
he had an affidavit he wanted Huszagh to use; (4) enclosing a draft in the amount
of $50,000, made payable to Edith Coulter and Marino's law firm as requested by
Marino; and (5) advising that a complete policy disclosure would follow under
separate cover.
On August 27, 2009, after Shannahan reviewed Marino's letter with
Huszagh, Huszagh emailed Marino, advising Marino that he had no other
insurance coverage apart from the State Farm policy with a $50,000 BI limit.
Huszagh also informed Marino of his willingness to execute an affidavit to that
effect. Huszagh received no response to his email.
By letter dated August 28, 2009, Marino advised Shannahan that he "was
preparing for a trial . . . scheduled to start on Monday, August 31, 2009, so a
telephone conference is not likely to be possible in the near future." He said he
would respond to any written questions or information "as soon as I can."
By affidavit, Cindy Cannon asserts that, pursuant to Shannahan's BI
disclosure request, she secured a copy of the policy booklet, policy endorsements,
and declarations page that were in effect on March 20, 2009, the day of the

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accident. She also performed a search of State Farm's records regarding all
umbrella or excess insurance known to State Farm at the time and found that no
additional insurance existed for Huszagh. On August 31, 2009, Cannon presented
the applicable declarations page and policy booklet with endorsements, along with
a disclosure letter, to Tim Scott.
By letter dated August 31, 2009, Tim Scott responded to Marino's disclosure
request pursuant to Florida Statute 627.4137. In his letter, signed under penalty of
perjury, Scott identified Huszagh's automobile insurance policy, stated that
Huszagh had $50,000 in BI liability coverage, and denied knowledge of any
umbrella or excess insurance coverage. Scott says he verified that copies of the
applicable declarations page,3 policy booklet, and endorsements were enclosed
with his letter. After signing the letter, Scott gave the letter and enclosures to
Cindy Cannon for mailing. Cannon declares that, after Scott reviewed the
insurance disclosure materials and signed the disclosure letter on August 31, she
collected the disclosure materials and letter from Scott, put them in an envelope,

3

According to Scott, State Farm does not prepare a new declarations page
each time the policy period renews unless there has been a material change in the
policy, such as a new vehicle or different coverage limits. As to Huszagh's policy,
there had been no material changes in his policy since the 2005-2006 period and,
therefore, the 2005-2006 declarations page enclosed with the other policy
documents in the August 31, 2009, letter applied to the March 20, 2009, accident.

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and readied them for mailing to Marino.
According to Marino, Tim Scott's August 31 correspondence was received in
his office on September 5, 2009. By affidavit, Marino states that neither the
declarations page nor the policy booklet were included in the mailing.
Marino advised Shannahan by letter dated September 4, 2009, that he found
it "unusual that you would ask me to draft an affidavit for your insured to sign."
Marino instead suggested that Huszagh "would be in the best position to provide
the information needed and hopefully, with your help, will create and execute a
document that will formalize his testimony under oath on the issue."
On September 8, 2009, Shannahan left a message for Jacksonville attorney
Dwane Tyson (a State Farm claim litigation lawyer), asking for assistance in
drafting an affidavit for Huszagh's use. The next day, she discussed the matter
with Tyson and faxed him Marino's letters regarding the request for an insurance
affidavit. On September 11, 2009, Tyson forwarded an "Affidavit of No Other
Insurance" for Huszagh's use. The affidavit stated: "With regard to this accident
[dated March 20, 2009], there was no other insurance policy in effect at the time of
the accident providing any coverage on said motor vehicle except as follows: State
Farm Policy Number 5302-513-59 with Bodily Injury Liability Limits of $50,000."
The language in Tyson's draft affidavit did not mirror Marino's request for an

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affidavit stating that Huszagh had "no additional insurance coverage that could be
used to pay for the losses that he caused."
Shannahan reviewed Marino's letter with Huszagh by phone on September
11, 2009. She faxed the proposed affidavit to Huszagh that same day with
instructions to execute it "if all is correct," to mail the original to Marino, and to
fax a copy to Shannahan. Huszagh executed the affidavit before a notary on
September 11, 2009. Huszagh's secretary mailed the original to Marino on
September 12, 2009, and faxed a copy to Shannahan.
By letter dated September 14, 2009, and received by State Farm on
September 17, 2009, Marino returned State Farm's $50,000 check. He enclosed a
copy of the complaint filed that day on Coulter's behalf against Huszagh,
explaining that State Farm had failed to timely comply with the terms of Coulter's
settlement offer. He asserted that State Farm failed to provide the requested
affidavit, failed to provide a certified copy of Huszagh's insurance policy, and
failed to include a declarations page "that would allow us to determine what
coverages were afforded to Mr. Huszagh under the policy." According to Marino,
State Farm had "frustrated" Coulter's goal of achieving a "prompt resolution" of
her claim.
Marino received Huszagh's affidavit on September 15, 2009, one day after

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suit was filed. Marino maintains that Huszagh's affidavit was untimely because it
was received in Marino's office more than thirty days after the settlement demand
was sent to State Farm on August 12, 2009. He also maintains that the form of the
affidavit was unsatisfactory because it did not comply "with the wording or
purpose of the request set forth in Coulter's settlement demand."
The underlying lawsuit resulted in a consent judgment in favor of Coulter in
the amount of $2,000,000. The lawsuit was defended by a lawyer retained by State
Farm.
II.
Under Florida common law, an insurer is obligated to exercise good faith
when handling claims against its insured. When defending its insured against a
claim, the insurer "must investigate the facts, give fair consideration to a settlement
offer that is not unreasonable under the facts, and settle, if possible, where a
reasonably prudent person, faced with the prospect of paying the total recovery,
would do so." Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785 (Fla.
1980). "The essence of an insurance bad faith claim is that the insurer acted in its
own best interests, failed to properly and promptly defend the claim, and thereby
exposed the insurer to an excess judgment." Goheagan v. American Vehicle Ins.
Co., 107 So. 3d 433, 441 (Fla. 4th DCA 2012) (internal quotation marks omitted).

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While evidence of carelessness may be relevant to proving bad faith, the "standards
for determining liability in an excess judgment case is bad faith rather than
negligence." Campbell v. Gov't Emp. Ins. Co., 306 So. 2d 525, 530 (Fla. 1974).

Whether an insurer acted in bad faith is generally a question for the jury to
decide. Gutierrez, 386 So. 2d at 785. Florida courts, however, "regularly uphold
summary judgments when the undisputed facts demonstrate that the insurer could
not have acted in bad faith." Berges v. Infinity Ins. Co., 896 So. 2d 665, 687 (Fla.
2004) (citing cases).
Here, there is a complete absence of evidence that State Farm acted solely on
the basis of its own interests as to Coulter's claim. Instead, the record demonstrates
that State Farm promptly investigated the accident and diligently
attempted in good faith to settle Coulter's claim for Huszagh's BI policy limit.
Within three days of the accident, State Farm representatives had visited the scene
of the accident, secured the police report, talked with Coulter's son, interviewed
Huszagh, and explained available liability coverages to Huszagh. Huszagh was
advised that Coulter's injuries were serious, warned about the possibility of an
excess judgment, told that he might want to consult an attorney of his own
choosing regarding his personal exposure, and informed that State Farm would be

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seeking to settle the claim for Huszagh's $50,000 BI liability limit. Shannahan
thereafter apprised Huszagh about all steps taken to effect such a settlement.
Within six days of the accident, State Farm had authorized payment of
Huszagh's $50,000 policy limit to settle Coulter's BI claim. Eleven days after the
accident, State Farm sent Coulter a $50,000 check along with a proposed release.
Over the next four months, despite State Farm's multiple attempts to contact
Coulter, Coulter neither returned State Farm's calls nor responded to its letters.
She also did not negotiate the tendered check.
State Farm sent Coulter a second $50,000 check in mid-July, again with a
proposed release. One month later, Marino—who, unbeknownst to State Farm,
had been retained to represent Coulter four months earlier—returned the tendered
checks to State Farm by letter sent August 12, 2009. Marino's letter represented
the first communication that State Farm received from Coulter in the five months
that had elapsed since the accident.
In his letter, which State Farm did not receive until August 26, Marino made
four requests of State Farm: (1) full compliance with Florida Statute § 627.4137;
(2) a written summary of the information that State Farm obtained from Bradley
Coulter; (3) an affidavit confirming that Huszagh had no additional insurance
coverage that could be used to pay for Coulter's losses; and (4) a check—made

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payable to Coulter and Marino's law firm—for the full policy benefits available
under Huszagh's policy. Marino did not set a deadline for acceptance of his
settlement demand.
Shannahan sent a written response to Marino's letter within two days of
receipt, summarizing her conversations with Bradley Coulter, asking for guidance
regarding the requested affidavit, advising that disclosure documents would be sent
under separate cover, and including a third check for $50,000 made out to Coulter
and Marino's law firm as requested by Marino. Shannahan thus promptly
communicated—again—State Farm's willingness to settle Coulter's claim for
Huszagh's policy limit. Just as promptly, Shannahan tasked the appropriate people
to (1) gather and send the disclosure documents required by Florida Statute §
627.4137; and (2) prepare, execute, and send the requested affidavit.
On September 14, 2009, one month after Marino sent his settlement demand
and two weeks after State Farm received it, Marino returned the third $50,000
check to State Farm and filed suit against Huszagh on Coulter's behalf, a suit that
ultimately resulted in a $2,000,000 consent judgment against Huszagh. In this
ensuing action, Coulter contends that State Farm acted in bad faith in failing to
settle Coulter's claim. In particular, Coulter contends that State Farm "frustrated"
Coulter's goal of achieving a "prompt resolution" of her claim by failing to timely

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provide the disclosures required by Florida law and by failing to timely provide a
satisfactory affidavit of no other insurance. The court is not persuaded by Coulter's
contentions.4
Regarding insurance disclosure documents, Florida law requires an insurer
to provide, within thirty days of a claimant's written request, "a statement under
oath, of a corporate officer . . . setting forth the following information with regard
to each known policy of insurance, including excess or umbrella insurance: (a) the
name of the insurer[;] (b) the name of each insured[;] (c) the limits of the liability
coverage[;] . . . [and] (e) a copy of the policy." Fla. Stat. § 627.4137(a)–(c), (e).
Coulter asserts that State Farm failed to comply with subsection (e) of the statute
by failing to provide her with a complete copy of Huszagh's insurance policy prior
to the thirty-day deadline imposed by the statute.
For purposes of deciding the parties' summary judgment motions, the court
accepts Coulter's assertion that she did not receive a complete copy of Huszagh's
insurance policy within the requisite thirty-day period. While the court accepts
such assertion, the court rejects the argument that an insurer's failure to strictly

4

Upon questioning at his deposition, Huszagh stated that he was satisfied
with the steps taken by State Farm in its efforts to settle Coulter's claim, and he
believed that State Farm acted at all times in his best interest. Thus, in Huszagh's
opinion, State Farm did not act in bad faith.

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comply with the disclosure statute necessarily constitutes an act of bad faith. Here,
given the record evidence of State Farm's diligent and timely efforts to pursue a
settlement on behalf of Huszagh, it cannot reasonably be said that State Farm acted
in bad faith simply because it failed to send—despite genuine and welldocumented efforts to do so—a complete copy of Huszagh's policy within the
requisite thirty-day period.
The court is likewise unpersuaded that State Farm evinced bad faith when it
failed to provide Coulter with a satisfactory affidavit from Huszagh within thirty
days of the date Marino sent his settlement demand. In his demand letter, Marino
did not identify a date by which he expected compliance with his settlement
requests. Coulter now suggests that State Farm should have known that the thirtyday period specified in § 627.4137 applied to her entire settlement demand. Section
627.4137, however, provides a thirty-day deadline for providing certain listed
disclosures; it does not otherwise set any deadlines. State Farm can hardly be
blamed for failing to recognize that Coulter would reject State Farm's efforts to
settle based upon State Farm's failure to comply with an unspecified deadline.
Furthermore, upon receiving Marino's settlement demand, Shannahan took
prompt action regarding Marino's request for an affidavit from Huszagh. After
discussing Marino's request with Huszagh (who, on his own initiative, emailed

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Marino, stating that he had no other insurance apart from the State Farm policy),
Shannahan attempted unsuccessfully to contact Marino to obtain his guidance
regarding the wording of the requested affidavit. Once she learned that Marino
declined to provide such guidance, Shannahan immediately asked a State Farm
lawyer for assistance in drafting an affidavit for Huszagh's signature. Shannahan
faxed the lawyer's draft affidavit to Huszagh as soon as she received it, instructing
Huszagh to execute the affidavit "if all is correct" and to mail the original to
Marino. Huszagh did so without delay. Under the circumstances, no reasonable
juror could find that State Farm acted in bad faith with regard to Huszagh's
affidavit.
Because the record does not support a finding that State Farm acted in bad
faith, it is ORDERED:
1. State Farm's motion for summary judgment (doc. 61) is GRANTED.
2. Coulter's motion for summary judgment (doc. 58) is DENIED.
3. State Farm's motion to strike (doc. 85) is DENIED.
4. The clerk shall enter summary judgment stating: "Judgment is entered in
State Farm's favor as to all claims."
DONE AND ORDERED this 16th

day of

January

, 2014.

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s/ William Stafford
WILLIAM STAFFORD
SENIOR UNITED STATES DISTRICT JUDGE