Insurance Coverage and Bad Faith

11th Circuit Reaffirms Insurers Can Still Prevail as a Matter of Law in Post-Harvey v. Geico Landscape

11th Circuit Reaffirms Insurers Can Still Prevail as a Matter of Law in Post-Harvey v. Geico Landscape

On June 1, 2021, the Eleventh Circuit Court of Appeals affirmed a summary judgment granted in favor of an insurer in a third party bad faith claim. The case, Eres v. Progressive American Insurance Company, Case No. 20-11006, represents a significant victory for insurers following the Florida Supreme Court’s Harvey v. Geico decision in 2018. In Harvey, the Supreme Court reinstated an $8 million judgment against an insurer and reversed an appellate court which had held that an insurer did not act in bad faith when it tendered its policy limits in nine days. In Eres, however, the Eleventh Circuit found that the trial court correctly concluded that Progressive did not engage in bad faith conduct when it acted diligently in attempting to resolve the plaintiff’s claim. Accordingly, Eres shows that insurers can still prevail as a matter of law in third party bad faith claims where the evidence shows that the insurer acted diligently and consistent with its good faith duties under Florida law.

The Claim

The claim arises from a May 2007 motor vehicle accident in which Progressive’s insured, Eli Villareal Alvarez, was driving while intoxicated and hit Heather Eres’s vehicle, pushing it into an oncoming train. As a result, Eres suffered permanent injuries, and her eight year old son was killed.

Progressive learned of the accident four days after it occurred and determined on the same day that it should tender the $20,000 policy limits. The next day, Progressive offered the policy limits to Eres’ attorney. However, Eres’ lawyer advised that an executor for her son’s estate had yet to be chosen, and Eres wished to await the results of Villareal’s criminal proceedings before considering a settlement. Throughout the two-year pendency of the criminal proceedings, Progressive consistently informed the attorney that they were ready to disburse the checks at his direction.

Plaintiff’s Demand

Finally, on March 25, 2009, Progressive received a settlement offer from Eres’ attorney, Peter Macaluso for $20,650.00.  The settlement was conditioned on “strict compliance” with several requests.  Specifically, Progressive was to provide: 1) certain insurance-information as required by Florida Stat. §627.4137; 2) an affidavit from Villareal that he had no other insurance coverage; 3) $650 in reimbursement for Eres’s son’s personal belongings lost in the accident; and 4) a release limited to the insured, Villareal, and that expressly prohibited “hold harmless” and “indemnity” provisions. 

With two days to spare, Progressive delivered the checks for $20,650.00, a full policy disclosure, a signed affidavit of no insurance by Villareal, and a proposed release naming only Villareal.  The documents were sent with a cover letter from Progressive’s attorney requesting to be notified if Plaintiff did not agree that the conditions of settlement had been met.

Although the release did not include any “hold-harmless” or “indemnification” language, Macaluso interpreted the waiver of subrogation language in the release to be a “hold-harmless” provision. Accordingly, the attorney viewed Progressive’s response as a counteroffer and rejection of the settlement demand.

Eres then filed suit and obtained a judgment of more than $10 million in state court. A state appellate court affirmed the judgment and ruled that no pre-suit settlement had been reached, based in part on a 2012 ruling that found subrogation waivers to be tantamount to a “hold-harmless” clause.

The Bad Faith Case

In an effort to collect on the excess judgment, Eres filed a third-party bad-faith action against Progressive, which was removed to federal court. Eres’ bad faith case turned primarily on the contention that Progressive provided her with an overbroad release that was not a mirror image response to her demand.  The Eleventh Circuit noted that, while an overbroad release can create a jury question about bad faith, it does not necessarily do so. Here, the Court found no bad faith on Progressive’s part, because Progressive offered to strike the offending language from the release, and more importantly, the release did not include express hold harmless language. The court reasoned thata reasonably prudent person in Progressive’s shoes would not have known that a waiver-of-subrogation was equivalent to a hold-harmless clause at the time of the attempted settlement in 2009. 

Furthermore, although Eres had established some ways in which Progressive might improve its claims handling process, she failed to prove that Progressive had been negligent, let alone acted in bad faith.  Therefore, under a totality of circumstances approach, the Court found that Progressive acted “diligently” and “quite the opposite” of bad faith in attempting to settle Eres’ claim. 

The Takeaway

The Eleventh Circuit’s decision in Eres shows that summary judgment is still possible in the post-Harvey v. Geico landscape. Of course, it may have been beneficial for Progressive to litigate the bad faith action in federal court, as opposed to state court. But, any favoritism of being in federal court over state court may be less of an issue moving forward with Florida’s adoption of the federal summary judgment standard[1] and recent appointments of conservative judges to the appellate bench. 

[1] For a discussion of the new summary judgment standard in Florida’s state courts, see