Key Points

  • The Eleventh Circuit vacated summary judgment for Progressive and remanded Charbel Consul's Florida bad-faith suit, holding that genuine disputes of material fact exist over whether the insurer acted in good faith.
  • The majority held that a jury could find bad faith in Progressive's insistence on a loss-of-consortium release from the claimant's wife, whom it never contacted, after the parties had apparently agreed on policy-limits amounts.
  • The majority read Fla. Stat. ยง 319.30(3)(b) to let the vehicle owner forward a total-loss title to the state himself, so Progressive did not need to demand the title as a settlement condition.
  • The court also found disputes over whether Progressive sent Consul an excess-judgment warning letter and kept him informed, and held that a jury could find a settlement was still possible after Dec. 13, 2016.
  • Judge Tjoflat dissented, would have affirmed, and alternatively would have ordered joinder of the claimant and his lawyer under Rule 19 and a Rule 11 show-cause order directed to Consul's counsel.

A federal appeals court on Nov. 5 revived a Florida driver's bad-faith lawsuit against Progressive American Insurance Co., ruling that a jury should decide whether the insurer derailed a policy-limits settlement by adding two conditions the injured motorist would not accept. The failed deal left the driver, Charbel Consul, facing a judgment of more than $1 million on a policy that covered $10,000 per person for bodily injury.

A divided panel of the U.S. Court of Appeals for the Eleventh Circuit vacated summary judgment, a ruling without trial, that Progressive had won in the U.S. District Court for the Middle District of Florida. Circuit Judge Abudu wrote the published opinion for a majority that included Circuit Judge Rosenbaum. Circuit Judge Tjoflat dissented and called for a sanctions inquiry into Consul's lawyers.

The decision means a jury will weigh whether Progressive acted in bad faith when it accepted the injured man's dollar figures but conditioned payment on a release from his wife, whom it never contacted, and on the surrender of his car's title, which the majority said Florida law did not require. Under Florida law, an insurer that fails to handle a claim with care and diligence can be liable to its insured for an excess judgment, one larger than the policy limits.

Consul rear-ended William Choisser on Sept. 6, 2016, and Progressive found Consul 100% at fault. On Oct. 17, 2016, Choisser's lawyer, Matthew Posgay, offered to settle for $10,000 for his client's injuries and $5,000 for damage to his 1991 Mercedes, provided Consul completed a financial affidavit stating he could not pay damages out of pocket.

Progressive's Nov. 15 response agreed to both amounts and enclosed checks, but it added two conditions. Choisser's wife had to release any loss-of-consortium claim, a spouse's claim for losses flowing from a partner's injuries. And Choisser had to transfer the car's title to Progressive, which had declared the vehicle a total loss. Posgay did not represent the wife, and Progressive's own search led it to list Choisser's ex-wife on the release. Posgay rejected the counteroffer on Dec. 13.

Choisser sued Consul in state court in November 2017. He later settled the property claim by surrendering the title for $7,500, and a jury trial on the injury claim produced the judgment of more than $1 million. Consul sued Progressive in May 2021, and the district court ruled for the insurer, finding its consortium and title demands reasonable and its communications with Consul sufficient.

Judge Abudu wrote that Progressive's adjuster, "contrary to her standard practice, never attempted to reach out to Choisser's wife," who later testified she had no interest in pursuing a claim. Progressive offered to fix the release's wording or the name, but "it refused to remove the waiver requirement even when it became clear that it was one of the primary impediments to settling the case," the majority wrote. Consul testified he would have given up the waiver had Progressive asked him.

On the title, the majority read a provision of Florida's title statute, Section 319.30(3)(b), to let either the owner or the insurer forward a total-loss title to the state. "The plain text of this subsection of the statute shows that Progressive did not need to insist on the title once it learned that Choisser wanted to retain the car," Abudu wrote. The insurer could have used a reservation-of-rights clause or sought a declaratory judgment, the court said, instead of trying "to impose another precondition just as the parties were close to a meeting of the minds."

The panel also found disputes over Progressive's communications with Consul. An adjuster testified she mailed him a letter warning that damages could exceed his coverage and produced a time-stamped copy, but a Progressive litigation manager could not find one in the company's files, and Consul did not recall receiving it. Credibility is for a jury, the court said.

"Taken together, a jury could conclude that Progressive failed to act with the required diligence and care when it demanded that Choisser relinquish title to his vehicle and insisted upon the release of rights from a third party with whom it never communicated," Abudu wrote. The majority also found that a deal remained possible after Dec. 13, citing Choisser's testimony that he "would have" settled.

Judge Tjoflat would have affirmed. He noted it was uncontested that Consul is judgment-proof and that, asked whether he had sued Progressive, Consul answered, "I'm not sure." Any recovery would pass through to Choisser under an agreement Consul signed with Choisser and Posgay, the dissent said, so Consul "would seem to have little to gain and much to lose in bringing this third-party claim." The state judgment included $388,505 in attorney's fees.

Tjoflat wrote, "I caution against the potential for the majority's proper regard for Consul's nominal interest to swallow due concern about Choisser and Posgay's continued gamesmanship throughout the settlement process in this case." On remand, he would have the district court join Choisser and Posgay as parties under Federal Rule of Civil Procedure 19, and order Consul's lawyers, identified as Richardson and Thompson, to show cause why they should not be sanctioned under Rule 11, which bars filings made for an improper purpose.

On the merits, Tjoflat cited Choisser's testimony that "I don't think she would have signed a release." If the wife would not have signed, "then it can hardly follow that Progressive acted in bad faith by pursuing a waiver," he wrote. On the title statute, he wrote, "I disagree that the statute is so clear," noting the district court's uncertainty and the scarcity of case law.

Lawyers for Consul included Richardson, who argued at the summary-judgment hearing, according to transcript excerpts in the dissent. The opinion does not name Progressive's counsel.

The case returns to the district court for further proceedings. The majority's disposition, "VACATED and REMANDED," includes neither the joinder nor the sanctions instruction that Tjoflat proposed.