Facts

On September 8, 2015, June Collins and Juan Martinez were involved in an automobile accident; Collins's car collided with a motorcycle driven by Martinez. Collins's insurance coverage was with GEICO General Insurance company. Her auto liability policy provided a limit of $50,000 for bodily injury coverage that was effective at the time of the accident. Collins reported and provided a description of the accident to GEICO, who then assigned a liability of 80 percent to Collins and 20 percent to Martinez. Collins, at the time of the accident, was employed by Nu-Era Home Health Agency as a home health care nurse. She was driving home from a client visit. Capitol Specialty Insurance Corporation insured Nu-Era under both a primary and umbrella policy, which each had a $1 million limit of liability. Both policies were in effect at the time of the accident and would cover both Collins and Nu-Era if Collins was acting in the course and scope of employment at the time of the accident. Between September and November of 2016, GEICO made requests to Martinez's counsel for proof of Martinez's liability insurance, medical bills, and records. Sometime around December 5, 2016, Martinez sent GEICO a letter that partially stated that he was seriously hurt, his lawyer told him that there was a $50,000 policy and he was asking GEICO to pay Collins's policy maximum. He then requested to be informed by December 19, 2016. Included with the letter were the police report from the accident and eight pages of medical records that indicated that Martinez was paralyzed as of October 2015. At the time Martinez wrote the letter, he did not know that Collins was employed by Nu-Era or that GEICO had issued a policy to Nu-Era that could provide coverage to his claim. GEICO attempted to contact Martinez about the letter between December 7 through 13 of 2016. Then in December 13, 2016, GEICO sent Martinez a letter stating that it did want to resolve the claim as soon as possible and requested medical bills and insurance information. Three days later, GEICO sent another letter stating that they would not meet Martinez's demand because the owner of the motorcycle that Martinez was riding did not have liability insurance that was in effect at the time of the accident. It then also stated that it had requested more information regarding Martinez's own liability insurance and Martinez had not responded. As such, GEICO was considering Martinez to be an uninsured motorist. It requested proof of pecuniary damages and liability coverage that was effective at the time of the accident. The following month, on January 6, 2017, Martinez then filed suit against Collins. On March 18, 2018, Martinez amended his complaint to substitute Nu-Era as a defendant. That lawsuit settled in March 2019 with Capitol Insurance contributing its $2 million policy limits to the settlement amount. In December 17, 2019, Capitol Insurance filed a complaint against GEICO.

PLAINTIFF'S CONTENTIONS: Plaintiff asserted that it suffered damages due to defendant's failure to initially settle the underlying lawsuit. It argued that defendant's failure to settle for its policy limits was the proximate cause of it having to contribute $2 million towards Martinez's claims. Plaintiff contended that had defendant settled with Martinez on behalf of Collins, Martinez would never have discovered Nu-Era's potential liability and plaintiff's coverage. Specifically, plaintiff alleged breach of implied covenant of good faith and fair dealing caused by defendant's failure to accept Martinez's December 2016 settlement demand.

DEFENDANT'S CONTENTIONS: Defendant alleged that because plaintiff's sole claim of breach of good faith and fair dealing requires it to step into the shoes of its insureds, plaintiff was also required to prove the elements of equitable subrogation. It therefore was entitled to summary judgment because plaintiff failed to establish that justice required shifting plaintiff's $2 million payment to defendant. Moreover, it did not act in bad faith in rejecting Martinez's settlement offer. Here, while the police report and medical records provided with the settlement demand established that Martinez was badly injured, it did not provide quantifiable medical costs associated with the injury. Also, plaintiff's obligation was to provide excess coverage and arguing that Martinez would never have discovered Nu-Era's potential liability and the excess coverage if defendant had settled with Martinez, did not change plaintiff's obligation to pay under the contract.

Result

The court granted defendant GEICO's motion for summary judgment.