Wrong Jury Instructions Nix Safeco’s Win In Crash Row
By Jeff Sistrunk
Law360 (October 24, 2018, 9:14 PM EDT) — A Florida appeals court on Wednesday vacated a lower court’s judgment freeing Safeco Insurance Co. from covering a policyholder’s costs in a car crash injury case, saying the trial judge improperly instructed the jury on the standard for assessing the insurance carrier’s argument that the insured failed to cooperate in the claim investigation.
In a brief opinion, a panel of the Fourth District Court of Appeal ordered a new trial in policyholder Fleurimond Barthelemy’s coverage dispute with Safeco.
Safeco has taken the position that it is excused from any coverage obligations in the underlying litigation due to Barthelemy’s failure to submit to an examination under oath, or EUO, as part of the insurer’s investigation into the 2011 accident.
The trial court instructed the jury that, for Safeco to prevail on its “failure-to-cooperate” defense, it needed to show that Barthelemy didn’t comply with his post-loss obligations, and that this failure “actually prejudiced” the insurance company. In March 2017, the jury found that Safeco had met both prongs of that standard and entered a verdict in its favor.
But on appeal, Barthelemy said the jury instructions about Safeco’s defense were contrary to the Florida Supreme Court’s 1985 decision in Bankers Insurance v. Macias . Under that precedential ruling, an insurer asserting a failure-to-cooperate defense must show that the policyholder “materially failed” to comply with his post-loss obligations, and that the failure to cooperate “substantially prejudiced” the insurer.
The appellate panel agreed, finding that the Florida high court’s 2014 decision in another case involving the failure-to-cooperate defense, State Farm Mutual Automobile Insurance v. Curran , didn’t change the standard set forth in Macias.
“In the absence of an express holding receding from Macias, we abide by that case’s formulation of the ‘failure to cooperate’ defense,” the panel wrote. “In issuing a ‘failure to cooperate’ instruction that did not include ‘material failure’ to comply and ‘substantial prejudice,’ the trial court misstated the law and could have misled the jury into applying an incorrect standard.”
The accident at issue occurred in 2011, when Barthelemy’s car collided with another vehicle in an intersection in Palm Beach County, Florida, according to court documents. Barthelemy promptly notified Safeco of the crash, but on three occasions he failed to submit to an EUO, court papers indicate.
However, Barthelemy later asserted that Safeco is to blame for the failure to schedule an EUO because, among other things, it sent reminder letters to him in English rather than his native Creole, and it unilaterally set appointment dates without first asking him if he could attend.
The driver and passenger of the other vehicle in the accident, John Howell and Kevin Wachtel, sued Barthelemy over costs stemming from “minor soft-tissue injuries” they suffered. Barthelemy didn’t respond to the complaint, and Howell and Wachtel later obtained a $2 million arbitration award, according to court documents.
Safeco didn’t fund Barthelemy’s defense in the crash case or cover the resulting judgment because of his failure to submit to an EUO, court papers say. As a result, he filed the current suit against the insurance company in Florida state court.
Following the March 2017 jury verdict excusing Safeco from any coverage duties, Barthelemy asked the lower court for a new trial, but was denied. He then appealed to the Fourth District.
Before the appellate court, Barthelemy and Safeco locked horns on the proper case law to apply to the insurer’s failure-to-cooperate defense. Safeco asserted that the jury instruction given by the trial court was proper under the Curran decision, while Barthelemy argued that the more stringent Macias standard should have been applied.
The appellate panel found that the trial court erred in declining to base its jury instruction on the Macias standard, saying that Macias is still the “dispositive case” on the failure-to-cooperate defense.
Contrary to Safeco’s assertions, the panel said, the Curran ruling didn’t alter the standard established in Macias. That decision didn’t address the level of prejudice that an insurer must show to succeed on a failure-to-cooperate defense, and it approvingly cited the reasoning in Macias, “suggesting that the [Florida Supreme Court] in Curran did not intend to overrule Macias,” the panel noted.
“There is no clear indication that the standard for ‘failure to cooperate’ cases was to be changed as a result of Curran,” the appellate panel wrote.
Accordingly, the panel reversed the trial court’s judgment for Safeco and remanded the case for a new trial.
Michael S. Smith of Lesser Lesser Landy & Smith PLLC, who represents Barthelemy, told Law360 the ruling was a significant win for policyholders.
“The standard applied at trial is nearly impossible for an insured to overcome,” Smith said. “If an insured fails to do virtually anything, the carrier can say he ‘did not comply’ with his post-loss obligations. The insurer then merely has to show it was ‘actually prejudiced’ — even to a trivial degree — in order to avoid providing coverage. By following Macias, the [Fourth District Court of Appeal] leveled the playing field.”
An attorney for Safeco did not immediately respond to a request for comment.
Judges Spencer D. Levine, Jonathan D. Gerber and Mark W. Klingensmith sat on the panel for the Fourth District Court of Appeal.
Barthelemy is represented by Bard D. Rockenbach of Burlington & Rockenbach PA, and Michael S. Smith of Lesser Lesser Landy & Smith PLLC.
Safeco is represented by Gary J. Guzzi and Antonio Morin of Akerman LLP.
The case is Barthelemy v. Safeco Insurance Co. of Illinois et al., case numbers 4D17-1254 and 4D17-1543, in the Fourth District Court of Appeal of the State of Florida.