Geico Insurance office (Photo: Jonathan Weiss/Shutterstock.com)

The U.S. Court of Appeals for the Eleventh Circuit let stand a Florida judge's decision to scrap a bad-faith jury award of more than $4.4 million and order a new trial against Geico Insurance, which resulted in a defense victory.

Middle District of Florida Judge Susan Bucklew vacated the first verdict after agreeing with Geico that she erroneously allowed in evidence at trial that another insurer had paid its policy limits stemming from a road rage wreck that left a woman dead and seriously injured two other people.

While there was probative value in contrasting how the other insurer, Peak, handled its claim, that value was outweighed by the potential prejudice in allowing the first jury to hear it, according to the per curiam opinion written by Judges Stanley Marcus, Kevin Newsom and Tenth Circuit Senior Judge David Ebel, sitting by designation.

“Although there certainly was independent evidence that GEICO may have acted in bad faith in the way it processed the claimant's claim against its insured, that evidence was not so overwhelming that we can conclude that the introduction of how Peak handled the claim against its insured had no prejudicial effect on the jury's deliberations,” said the unpublished opinion released Friday.

According to the opinion, court filings and other sources, the underlying accident happened in 2010 when Richard Waters, now 54, was under the influence of alcohol and opioids. He cut off another driver, Joshua Moore, as the two were driving along U.S. 98 in Lakeland.

Moore, then a 21-year-old college student, caught up with Waters, and the two “exchanged hand gestures,” the appellate opinion said.

“Waters caused Moore to change lanes several times and then, with Moore in the left lane and perhaps on his cell phone, Waters twice swerved his vehicle into Moore's truck,” it said.

Moore lost control and crossed the median after the second hit, running head-on into a car carrying Amy Krupp, 30, and her 10-year-old son.

Krupp died of her injuries, and her son was with left with permanent brain damage. Moore suffered internal injuries and a shattered leg.

Waters kept driving, but a witness took his tag number and he was subsequently tried and convicted of vehicular homicide, leaving the scene of an accident and two counts of reckless driving with serious injuries. He is currently serving a 22-year sentence at Hamilton Correctional Institute in Jasper, Florida.

Waters had a $10,000 property damage policy with Peak. Moore's parents carried a policy for his vehicle with $10,000 per person/$20,000 per incident and $10,000 property damage coverage.

Shortly after the wreck, the lawyer for the Krupp's family sent letters to Geico and Peak demanding the limits of their coverage with a 21-day deadline to respond.

Both letters demanded releases for the insureds only and affidavits swearing there was no other available insurance. Peak, Waters insurer, complied, and the claimants settled with him. But Geico responded with a form release that included not just its insureds but also all of its “officers, directors, agents or employees.”

It also provided “vague and incomprehensible affidavits from its insureds, the Moores, regarding the possible availability of additional insurance,” the appellate ruling said.

Rejecting Geico's offer, the claimants sued Moore in Polk County Circuit Court.  

In May 2013, a jury awarded damages of nearly $45 million but apportioned only 10 percent of the liability to Moore, and the court entered a judgment against him of more than $4.4 million.

Moore sued Geico in Florida's Middle District the following month for bad faith failure to settle.

Geico denied acting in bad faith and argued that, “even if it had, Moore's damages—primarily the multimillion-dollar state court judgment entered against him—were not caused by that bad faith because claimants had no intention of ever settling their claims against Moore for the small amount of insurance coverage he had with Geico,” the opinion said.

Prior to trial, Geico asked Bucklew to exclude any testimony or evidence regarding Peak's settlin, but she refused, writing that, while she “agrees that the claimants' willingness to settle the property damage claim may be quite different from their willingness to settle their large bodily injury claims, the court cannot say that evidence of the property damage settlement is completely irrelevant or unfairly prejudicial.”

In 2016, the jury found for Moore, and the court entered a judgment awarding more than $4.4 million in damages, plus interest, for a total of more than $5.1 million.

Geico moved for a new trial and in 2017 Bucklew granted it, writing that there was “substantial evidence and argument presented to the jury comparing Geico's claims handling to Peak's claims handling” at trial.

“This unfairly prejudiced Geico, because the focus of the bad faith claim should have been on Geico's conduct,” she said. “Evidence of Peak's claims handling likely significantly distracted the jury from the proper focus in this case—Geico's claims handling.”

Bucklew barred any evidence regarding Peak's handling of its claims during the retrial, and the jury ruled for Geico.

Moore appealed, arguing that Bucklew had erred both in barring evidence of Peak's handling of its claims and that she had abused her discretion by calling for new trial.

The appellate panel disagreed.

“Evidence of claimants' settlement with Peak certainly had some probative value,” the opinion said. “The manner in which Peak handled the claims against its insured was probative, at a minimum, to counter Geico's evidence that it could not understand claimants' settlement conditions, which were the same for both insurers.”

“Moreover, the fact that claimants settled with Peak was relevant to counter Geico's argument that claimants never intended to settle their claims for the minimal insurance coverage available,” it said.

“On the other hand, the probative value of this evidence was diminished because the claim Peak settled was not identical nor even substantially similar to the claim Geico was handling.”

Though there was evidence Geico may have acted in bad faith, “we cannot conclude that the district court abused its discretion in determining that the probative value of the Peak evidence was substantially outweighed by a danger that the evidence would unfairly prejudice Geico, confuse the issues or mislead jurors,” the panel wrote.

As to whether Bucklew had properly granted a new trial, the opinion conceded that the issues at trial, “particularly the questions of whether Geico handled the claim against Moore in bad faith and whether claimants would have ever settled their bodily injury claims against Moore for the minimal amount of insurance coverage he had—were certainly close questions.”

Even so, Bucklew had carefully weighed a number of factors before reaching her decision, the panel wrote.

“Although we might have come out otherwise if reviewing this matter de novo, we cannot say that, after considering those factors, the district court abused its discretion in concluding a new trial was warranted,” the ruling said.

Geico is represented by B. Richard Young, Jordan Thompson, Megan Alexander and Cody Pflueger of Young, Bill, Boles, Palmer & Duke in Tampa, Florida, and Michael Lusko of Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor in Pensacola, Florida.

Moore is represented by Amanda Dunn, Gavin Magaziner, Kerry McGuinn Jr. and Michael Rywant of Rywant, Alvarez, Jones, Russo & Guyton in Tampa, and Kim Wells of Tampa's Wells Law Group.

None of the lawyers responded to requests for comment Monday.