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Whiteside v. GEICO Indemnity Co.

United States District Court, M.D. Georgia, Columbus Division

December 12, 2017

FIFE M. WHITESIDE, Trustee in Bankruptcy, Plaintiff,
v.
GEICO INDEMNITY COMPANY, Defendant.

          ORDER

          CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE.

         This is a bad faith failure to settle tort case which the parties confusingly treat as a breach of contract coverage case. Simply put, Defendant GEICO Indemnity Company had an opportunity to settle a liability claim against its insured within its insured's policy limits but failed to do so. When it made the decision not to accept the policy limits demand, no coverage dispute existed. Subsequently, a judgment was entered against its insured in excess of the policy limits. Because the insured failed to notify GEICO that she had been served with the lawsuit and a default judgment was entered against her, GEICO arguably has no contractual liability to pay the judgment under its policy. The issue presented by the parties' motions for summary judgment is whether either party is entitled to judgment as a matter of law on Plaintiff's bad faith failure to settle tort claim under these circumstances. Because genuine fact disputes exist to be tried, the parties' motions for summary judgment (ECF Nos. 36 and 37) are denied.

         SUMMARY JUDGMENT STANDARD

         Summary judgment may be granted only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In determining whether a genuine dispute of material fact exists to defeat a motion for summary judgment, the evidence is viewed in the light most favorable to the party opposing summary judgment, drawing all justifiable inferences in the opposing party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A fact is material if it is relevant or necessary to the outcome of the suit. Id. at 248. A factual dispute is genuine if the evidence would allow a reasonable jury to return a verdict for the nonmoving party. Id.

         FACTUAL BACKGROUND

         On February 26, 2012, Karen Griffis let Bonnie Winslett borrow her vehicle, which was insured by GEICO Indemnity Company.[1] See generally Def.'s Mot. for Summ. J. Ex. A, Ga. Family Auto. Ins. Policy, ECF No. 36-3 [hereinafter Policy]. While Winslett was driving the vehicle, she struck Terry Guthrie as he rode his bicycle. Guthrie went to the emergency room because of his injuries, and Winslett went to jail because she did not have a valid driver's license.

         When Winslett was released from jail, she returned to the apartment complex on 25th Street where she had been staying for free in an unrentable apartment. An unidentified lady gave Winslett a March 5, 2012 letter from GEICO. The letter stated that GEICO determined, based on its investigation, that GEICO was "responsible for the accident." PI.'s Mot. for Summ. J. Ex. P4, Letter from M. Herndon to B. Winslett (Mar. 5, 2012), ECF No. 37-6. GEICO stated that it would handle Guthrie's claim for injuries directly with Guthrie's attorney. Id.The letter asked Winslett to contact GEICO to provide a statement about the accident details. Id. Winslett was "pretty messed up" when she got the letter, and she concluded that it meant that GEICO had taken care of everything and that she did not need to do anything else. Winslett Dep. 48:11-21, ECF No. 35. GEICO assumed that Winslett received the March 5 letter because it was not returned to GEICO.

         GEICO sent Winslett a letter dated May 2, 2012 stating that Guthrie's claim had not yet been settled but that GEICO would notify Winslett once the claim was resolved. Griffis was copied on the letter. At some point, Winslett stopped staying at the apartment complex on 25th Street, and the May 2 letter was returned to GEICO as undeliverable. Winslett did not have a telephone, so GEICO could not call her.

         On May 15, 2012, Guthrie's lawyer, Austin Gower with the firm of Charles A. Gower, P.C., sent a demand letter to GEICO asserting that Winslett was negligent in causing Guthrie's injuries and demanding the policy's bodily injury liability limit of $30, 000. The demand letter contained medical records showing one emergency room visit and itemizing $9, 908.35 in medical bills. The medical records showed that Guthrie received Neosporin for abrasions, that he was prescribed Lortab and Motrin, and that he was released the same day in stable condition. Nearly half of the medical bills were for diagnostic tests that revealed no acute findings.

         The demand letter stated that Guthrie suffered "a contusion to his right hip and chest, " that he had been unable to get recommended follow-up treatment because he did not have health insurance, and that he continued to suffer pain due to his injuries.[2] PI.'s Mot. for Summ. J. Ex. P8, Letter from A. Gower to M. Herndon 2 (May 15, 2012), ECF No. 37-10. The demand letter did not contain a claim for lost wages. The demand letter stated that the demand would be withdrawn at 5:00 p.m. on June 12, 2012.

         Melissa Herndon, a GEICO claims examiner, reviewed Guthrie's demand. She sent Winslett a copy of the demand letter, although it was returned as undeliverable. Based on Herndon's review of the documentation GEICO received from Austin Gower, Herndon and her supervisor determined that the value range for Guthrie's claim was between $12, 409.00 and $15, 909.00. By letter dated May 23, 2012, Herndon offered Guthrie $12, 409.00 to settle his claim against Winslett, and she asked Austin Gower to discuss the offer with Guthrie. Herndon also spoke with Austin Gower that day. Austin Gower did not recall the conversation but believes he would have told Herndon that the counteroffer was too low and that he would file a lawsuit against Winslett on Guthrie's behalf if GEICO did not pay the policy limits.

         Guthrie filed suit against Winslett on May 29, 2012 and served Winslett on May 30, 2012 at the apartment complex on 25th Street. Winslett asked the deputy who served her with the papers for help, and he suggested that she contact the attorney listed on the Complaint. Winslett called the Gower firm and spoke with a paralegal named Jowanda Sparks about what she should do. Sparks told Winslett to get in touch with the insurance company. Winslett also spoke with a social worker at the homeless task force about what to do with the suit papers, and the social worker told Winslett to get in touch with the insurance company. Winslett did not contact GEICO. Instead, she said, "The hell with this shit" and ripped up the papers. Winslett Dep. 79:8-19. Winslett did not know how GEICO would receive notice of the suit if she did not tell GEICO about it.

         After Winslett was served on May 30, 2012, no one notified GEICO of the lawsuit: not Winslett, not Griffis, not Guthrie, not anyone at the Gower firm. On June 1, 2012, Herndon called the Gower firm to follow up on her settlement offer. No one was available to take her call, so she left a voicemail for Austin Gower asking if there was a response to GEICO's offer. That telephone call was not returned. Herndon called the Gower firm to follow up again on June 27, 2012. She left another voicemail for Austin Gower. That telephone call was likewise not returned. Herndon sent a letter to the Gower firm as "a follow up attempt to settle" Guthrie's claim against Winslett. PI.'s Mot. for Summ. J. Ex. P12, Letter from M. Herndon to C. Gower (Jun. 27, 2012). No one from the Gower firm responded. Herndon called the Gower firm to follow up again on July 17, 2012. She was again told that neither an attorney nor a paralegal was available, so she left a message for the paralegal, Sparks. No one from the Gower firm returned that telephone call.

         On August 1, 2012, Superior Court Judge Gil McBride held a short hearing on Guthrie's motion for default judgment against Winslett. He entered a default judgment against Winslett in the amount of $2, 916, 204.00. On August 8, 2012, Austin Gower informed GEICO via letter ...


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