Tuesday, July 18, 2017

Florida Supreme Court Rules GEICO to Pay Attorneys' Fees

Florida Supreme Court Rules Geico to Pay Attorneys Fees

Thanks to a Recent Decision by the Florida Supreme Court, a 15-Minute Call on Car Insurance May Not Cost You Thousands as the Court Ruled Against GEICO in GEICO v. Macedo

Alysia Macedo brought a personal injury claim against Zackery Lombardo after they were involved in a car wreck, for which Lombardo was at-fault. GEICO provided Mr. Lombardo with $100,000 in liability coverage for the loss. Before the case went to trial, Macedo and her attorneys offered to end the case if Lombardo and GEICO would agree to a $50,000 settlement. They refused.

Like most automobile insurance policies, GEICO had sole authority to decide whether to settle the claim or to allow a lawsuit to be filed. GEICO chose not to settle and allowed the lawsuit to move forward. This sole discretion to chose, of course, extended to Ms. Macedo’s personal injury claim against Mr. Lombardo. 

Even though GEICO could have settled the claim for $50,000, GEICO chose not to settle and instead go to trial. They lost the case. 

The jury returned a verdict for more than $200,000 against Mr. Lombardo, more than four times Macedo's original asking price. 

The original $50,000 offer was made in the form of a Proposal For Settlement, which falls under Florida Statute 768.79Normally, attorneys' fees for personal injury cases are paid by the plaintiff based on a contingency fee. This means that the person suing pays their attorney a percentage of their compensation is they win their case or nothing if they don't. 

However, the statue states that if a plaintiff offers a settlement deal to the defendant and they choose not to accept it and the jury's judgment is more than 25% of the offer, the plaintiff is due reasonable costs for having to go to trial. This includes investigative expenses and attorneys' fees. 

This part of the law is designed to encourage defendants to take reasonable settlement offers in order to save the courts time and money, and to expedite the process for everyone involved. 

Because Ms. Macedo's judgement was obviously higher than 25% of $50,000, she was entitled to recover attorneys’ fees and costs against the defendant, Mr. Lombardo. 

In a post-trial decision, the trial court ruled that Mr. Lombardo's insurer, GEICO, should pay for those extra costs and expenses awarded against its insured, specifically because they were the ones who made the decision to go to trial.

GEICO objected and took the matter up on appeal. While GEICO did not object to fees and costs being awarded directly against its insured, it did object to the ruling making GEICO responsible for those fees and costs. 

GEICO asserted its policy did not cover “the costs and attorney’s fees awarded against [its insured] under the [Proposal for Settlement] statute because they were not ‘incurred by an insured at [GEICO’s] request.’”(1). 

The Florida Supreme Court disagreed, pointing out the "expenses awarded against the insured were incurred as a result of the insurance company’s choice not to settle."

Remember, GEICO had sole control over settling the case; it was not up to Mr. Lombardo. It could have authorized a settlement and in essence controlled the litigation. “It follows that any costs or fee incurred as a result of GEICO exercising its authority and control is something that it intended to pay.” The Supreme Court concluded the applicable insurance provisions at issue were ambiguous, and the GEICO policy should therefore be construed to provide coverage for the costs and attorneys’ fees awarded against Mr. Lombardo.  

In the end, while GEICO insurance may have initially saved Zackery Lombardo 15% on his car insurance through GEICO, he was left personally exposed to thousands upon thousands of dollars in litigation expenses from a lawsuit GEICO chose not to settle. Good thing for him, and all of us, that the Florida Supreme Court spent more than 15 minutes debating this important car insurance issue and properly ruled in favor of GEICO paying the expenses they forced everyone to incur.

-Article written by Dave Neiser, Esq., a Board Certified Civil Trial Specialist at Dolman Law Group

(1) GEICO v. Macedo 42 FLW 731(Fla. July 13 2017)