United States District Court, M.D. Georgia, Columbus Division
FIFE M. WHITESIDE, Trustee in Bankruptcy, Plaintiff,
GEICO INDEMNITY COMPANY, Defendant.
D. LAND CHIEF U.S. DISTRICT COURT JUDGE.
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.
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.
February 26, 2012, Karen Griffis let Bonnie Winslett borrow
her vehicle, which was insured by GEICO Indemnity
Company. 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
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.
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.
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
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. 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.
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.
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.
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
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 ...