Decamp v. State Farm Fire & Casualty Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

CHRISTINE DECAMP, as Guardian

of the Property of

Timothy Decamp, Jr. and

assignee of Jasmina Woltcheck,

and CONSTANCE DECAMP,

as Guardian of the Person

of Timothy Decamp, Jr.

and assignee of Jasmina Woltcheck,

Plaintiffs,

v. Case No. 8:20-cv-1747-VMC-TGW

STATE FARM FIRE & CASUALTY

COMPANY,

Defendant.

______________________________/

ORDER

This matter comes before the Court upon consideration of

Defendant State Farm Fire & Casualty Company’s Motion for

Final Summary Judgment (Doc. # 45), filed on August 9, 2021.

Plaintiffs Christine Decamp and Constance Decamp, as

Guardians of Timothy Decamp, Jr. and assignees of Jasmina

Woltcheck, responded on September 3, 2021. (Doc. # 57). State

Farm replied on September 16, 2021. (Doc. # 61). For the

reasons that follow, the Motion is granted in part and denied

in part.

I. Background

A. The Accident and the Aftermath

On the night of November 17, 2009, Jasmina Woltcheck was

driving to work when she hit pedestrian Timothy Decamp, Jr.

(Doc. # 44-2 Woltcheck Dep. at 5:9-7:21). Prior to the

accident, Mr. Decamp was unable to work because he has

Asperger’s syndrome, Tourette’s syndrome, and obsessive-

compulsive disorder. He was receiving Supplemental Security

Income (“SSI”). His SSI checks were deposited into a custodial

account controlled, with his consent, by his sister,

Christine Decamp. (Doc. # 44-5 Christine Decamp Dep. at 12:24-

14:19, 58:3-19).

State Farm provided bodily injury liability coverage to

Woltcheck with limits of $50,000 per person and $100,000 per

accident. (Doc. # 44-1 Owen Aff. & attachment; Doc. # 44-3

Leeper Dep. at Ex. 10 at 7-9). The supplemental payments

provision of the policy, as modified by an endorsement, states

in relevant part:

In addition to the limits of liability, we

will pay for an insured any costs listed below

resulting from such accident.

1. Court costs of any suit for damages.

. . .

4. The following costs and expenses if related

to and incurred after a civil lawsuit has been filed

against an insured for damages for which liability

coverage is provided by this policy:

a. loss of wages or salary, but not other

income, up to $100 for each day an insured attends

at our request:

(1) an arbitration;

(2) a mediation; or

(3) a trial of a civil suit.

b. reasonable expenses incurred by an insured

at our request, other than loss of wages, salary,

or other income.

The amount of any of the costs or expenses

listed above that are incurred by an insured must

be reported to us before we will pay.

(Doc. # 44-1 at 13, 41). The supplemental payments provision

ends with the sentence: “We have the right to investigate,

negotiate and settle any claim or suit.” (Id. at 13).

Adjuster Zachary Chauhan sent a letter to Mr. Decamp the

day after the accident to make contact with him. (Doc. # 44-

3 Leeper Dep. at 30:12-14).

Mr. Decamp’s injuries from the motor-vehicle accident

left him unable to communicate for several months. Mr.

Decamp’s mother, Constance Decamp, and Christine Decamp,

along with other relatives, retained Daniel Leeper, Esq.,

shortly after the accident. (Id. at 23:10-24:15).

The Decamps were concerned that Mr. Decamp would lose

his SSI and Medicaid if he received too much money in a

settlement, which had happened before when he received an

inheritance from his father. (Id. at 34:11-35:8). Leeper

determined that the way to maintain Mr. Decamp’s eligibility

for SSI and Medicaid was to place the settlement proceeds in

a special-needs trust. A special-needs trust allows a trustee

to pay for a ward’s needs without jeopardizing the ward’s

eligibility for Medicaid or SSI, which are lost if a

beneficiary receives a certain amount of money over a legal

maximum. (Id. at 19:11-20:18, 34:2-35:2, 61:1-3).

Leeper spoke to State Farm’s adjuster Chauhan on

December 2, 2009, and sent a confirmation letter the same

day. (Id. at 30:15-20 & Ex. 10 at 10-11). During the

conversation, Leeper advised that Mr. Decamp was still in the

neuro-intensive care unit, had already undergone surgeries,

and would undergo more. (Id. at 32:16-33:23). He noted that

the family wanted to set up a special-needs trust so that Mr.

Decamp would not lose his benefits. (Id. at 33:24-34:2, 35:8-

13, 36:19-38:25 & Ex 10 at 10-11).

Leeper’s letter requested disclosure of State Farm’s

bodily injury policy limit. Leeper also requested that

Woltcheck fill out a financial affidavit on a form that he

provided. State Farm retained Bruce Austin, Esq., to assist

Woltcheck with the affidavit. (Id. at 37:4-7, 39:1-10 & Ex.

10 thereto at 12-14).

Leeper’s letter also stated that Mr. Decamp’s mother and

family did not want any settlement to jeopardize Mr. Decamp’s

continued eligibility for SSI and Medicaid:

To that end, I request State Farm agree to provide

assistance in resolving this case in a manner that

preserves those benefits and will work with you to

that end. This may include establishment of some

sort of trust which the family will ask State Farm

[to] provide for. I look forward to hearing from

State Farm concerning their thoughts and position

on how best we can resolve this matter on behalf of

all concerned.

(Id. at Ex. 10 at 10-11).

Austin provided Leeper with Woltcheck’s completed

financial affidavit on December 8, 2009. It attested that

Woltcheck’s mortgage exceeded the value of her home, that her

combined savings and checking accounts contained less than

$5,000, that her combined IRA and 401K accounts were valued

between $10,000 and $12,000, that she was not within the

course and scope of employment, and that she had no other

liability coverage. (Doc. # 44-2 Woltcheck Dep. at Ex. 1;

Doc. # 44-3 Leeper Dep. at 88:1-89:23). State Farm also

provided Leeper with a statement pursuant to Florida Statute

§ 627.4137 attesting to the policy limits. (Doc. # 44-3 Leeper

Dep., Ex. 10 at 7-8).

B. Settlement Offers

On December 17, 2009 – thirty days after the accident

and prior to receiving any settlement demand – Austin wrote

to Leeper offering to settle Mr. Decamp’s claim against

Woltcheck for her $50,000 policy limit. (Id. at Ex. 14). The

letter offered to cooperate with the Decamps to structure the

settlement in a manner that did not jeopardize Mr. Decamp’s

eligibility for SSI or Medicaid:

I have not attached a check with this letter, since

you have asked that a settlement be coordinated in

a manner which would not adversely affect your

client’s receipt of SSI and Medicaid benefits. To

this end, if you have established a special needs

trust for your client, State Farm is more than

willing to issue the settlement draft to the trust

so long as a properly executed Release is provided

in favor of the insured, Jasmina Woltcheck. If you

would prefer a structure[d] settlement of the

$50,000 tender, we will prepare and submit

structure[d] settlement statements for your review.

If your client would prefer the policy limits paid

as a lump sum, please let me know how you would

have the draft made payable and I will provide you

the settlement draft and a proposed settlement

release for your consideration.

(Id.).

State Farm adjuster Chauhan sent a second letter on

January 21, 2010, offering to settle Mr. Decamp’s claim

against Woltcheck for $50,000 in exchange for a release. (Id.

at 81:7-15 & Ex. 10 at 6).

Christine Decamp testified that the $50,000 policy limit

alone was not enough money: “[A]fter the added expense of

having to pay for the establishment of the guardianship and

special needs trust ourselves out of that settlement money,

it would have left [Mr. Decamp] with a negligible amount of

money.” (Doc. # 44-5 Christine Decamp Dep. at 35:14-18).

Accordingly, the Decamps decided to reject the $50,000

settlement offer. (Id. at 34:10-36:5).

Christine Decamp also testified that they would not have

been willing to settle for $50,000 even if Leeper were willing

to waive his contingency fee so that they could use the money

that would have gone to Leeper to hire another attorney to

establish the guardianship and special-needs trust. (Id. at

36:23-37:10). Christine Decamp is the ultimate decision-maker

with respect to settling Mr. Decamp’s claim. (Id. at 38:4-

8).

Leeper wrote to State Farm on February 2, 2010, stating

that the Decamps would settle the claim against Woltcheck

only if State Farm would agree to pay their attorney’s fees

for establishing a guardianship and a special-needs trust at

an estimated cost of $15,000. (Doc. # 44-3 Leeper Dep. at

45:11-46:4 & Ex. 10 at 4-5). Although this letter suggested

State Farm use an attorney named Mr. Faglie to set up the

trust, Leeper would have been fine with State Farm hiring a

different attorney of its choice to establish the

guardianship and trust. (Id. at 68:10-15).

On February 8, 2010, Leeper spoke to Chauhan, who told

him that State Farm did not have a duty to pay for the

guardianship and special-needs trust. Instead, he suggested

a structured settlement as an alternative. Leeper replied

that he believed a structured settlement would not preserve

Mr. Decamp’s government benefits. (Id. at 76:1-77:25).

Although she could not remember the timing, Woltcheck

recalls someone at State Farm explaining to her that she could

contribute her own funds toward a settlement, but she told

State Farm that she did not have enough money to do so. (Doc.

# 44-2 Woltcheck Dep. at 15:6-17:9, 18:5-20:25). Woltcheck

was living paycheck-to-paycheck and sharing a home with her

ex-husband and son, and she spent her weekly earnings on car

payments and rent. (Id. at 21:19-22:6).

Moreover, Woltcheck was unwilling to contribute any

personal funds toward a settlement. She felt that the accident

was not her fault, testifying:

I felt, at the time, I was not responsible.

Actually, at the time, I remember the $50,000,

[be]cause I even questioned. I said, it’s really

not my fault what happened. He ran into my car and

then they expect me to pay for everything. I mean,

how is that fair? So then he said that we’re not –

we’re not going to even go after them or go

whatever, because he had such extensive injuries

that they felt that the $50,000, they’ll just give

it to them. But then they wanted an additional 15

grand for them to put it in a trust and to hide it

from the government, so that – at that point, I

felt it was not my fault or not my responsibility

to where they put their money in. My – my policy is

50 grand. They were willing to give it. The other

15, I felt that I’m not responsible for it because,

at that point, they can put their money wherever

they want. They have the 50,000, they can use

whatever they needed to use it for. So I didn’t

feel I should contribute to something that they

wanted to hide from the government. That was my

thinking at the time and I still believe in that.

(Id. at 17:22-18:16). Woltcheck also testified that she would

not have been willing to borrow $15,000, or any portion of

it, to contribute toward the cost of a guardianship or

special-needs trust or court approval of a settlement. (Id.

at 83:9-15).

Again, Woltcheck does not remember exactly when she had

the above-referenced discussions with State Farm about

contributing to a settlement. (Id. at 18:17-19:7).

Regardless, she testified that there was no point in time at

which she would have been willing to contribute her personal

funds toward setting up a guardianship and special-needs

trust. (Id. at 20:5-21:17). She said: “I felt that if they

want to do anything with the guardianship or any legal issues

like that, that’s their responsibility.” (Id. at 21:15-17).

C. Civil Remedy Notice and Establishment of

Guardianship

Roughly a month after the February 8, 2010 demand for

payment of the Decamps’ legal expenses relating to

establishing the guardianship and special-needs trust, Leeper

filed a Civil Remedy Notice of Insurer Violation (“CRN”) with

the Florida Department of Financial Services on March 5, 2010.

(Doc. # 44-3 Leeper Dep. at Ex. 13). The CRN asserted that

State Farm’s policy provided: “IN ADDITION TO THE LIMITS OF

LIABILITY, WE WILL PAY FOR AN INSURED ANY COSTS LISTED BELOW

RESULTING FROM SUCH ACCIDENT. 1. COURT COSTS F [sic] ANY SUIT

FOR DAMAGES.” (Id. at Ex. 13 at 2). The CRN complained that

State Farm was refusing to pay for the Decamps’ legal expenses

for the guardianship and special-needs trust, asserting that

“THE INSURER HAS VIOLATED INDUSTRY STANDARDS IN REFUSING TO

PAY FOR THE COSTS NEEDED TO ESTABLISH THE SPECIAL NEEDS TRUST

AND THE GUARDIANSHIP” and “THE INSURER’S POLICY STATES THAT

IT WILL PAY SUCH COURT COSTS ABOVE AND BEYOND THE POLICY

LIMITS.” (Id. at Ex. 13 at 3). The CRN alleged that State

Farm had made a “material misrepresentation” with intent to

settle the claim “on less favorable terms than those provided

in, and contemplated by, such contract or policy.” (Id. at

Ex. 13 at 2). It also contended that State Farm had not

attempted in good faith to settle the claim when, under all

the circumstances, “it could and should have done so, had it

acted fairly and honestly toward its insured and with due

regard for her or his interests.” (Id.).

State Farm Team Manager Michael Dupree responded on May

3, 2010:

After thoroughly reviewing and evaluating this

case, we made a good faith policy limit offer to

settle Mr. Decamp’s bodily injury claim. We do not

agree that we owe expenses above policy limit to

set up a guardianship. However by way of this

response, we again offer $50,000 policy limit to

settle this claim.

(Doc. # 45-1).

Leeper testified that the guardianship was necessitated

by State Farm’s request for a signed release because Mr.

Decamp was not competent to sign it. (Doc. # 44-3 Leeper Dep.

at 22:15-22). Still, the Decamps and their counsel concede

that a guardianship needed to be set up for Mr. Decamp, with

or without a settlement, because he was unable to make

financial or medical decisions for himself. (Doc. # 44-5

Christine Decamp Dep. at 31:13-32:9; Doc. # 44-3 Leeper Dep.

at 43:16-44:15).

Leeper practices law with his law partner and spouse

Silvia Leeper, Esq. (Doc. # 44-3 Leeper Dep. at 5:9-12).

Silvia Leeper primarily practices family law. (Id. at 6:25-

7:2). She also practices probate and guardianship law. (Id.

at 7:6-10). Silvia Leeper ultimately set up the guardianship

for Mr. Decamp, naming Constance Decamp as guardian of Mr.

Decamp’s person and Christine Decamp as guardian of his

property. (Id. at 7:3-10:7 & Exs. 7-8). The guardianships

were established effective June 18, 2010. (Id. at 12:24-

13:2).

Another attorney, Lee Carr, Esq., eventually established

a special-needs trust for Mr. Decamp in October 2011. (Doc.

# 44-5 Christine Decamp Dep. at 28:9-29:21). Carr’s fees for

doing so were paid out of Mr. Decamp’s SSI benefits. (Id. at

30:4-8).

Adjuster Chauhan wrote to Leeper again on September 17,

2010 – after the guardianships had been established but before

the Decamps filed suit against Woltcheck – again offering to

settle the claim for $50,000. The letter stated:

This is a follow-up to our letter of January 21,

2010. As of this date, we have not received a

response from you. State Farm is offering

$50,000.00 in an effort to settle the above-

referenced Bodily Injury claim against our

insured(s) in exchange for a Release. Please review

our offer of settlement and advise us of your

position in this matter.

(Doc. # 44-3 Leeper Dep. at 81:16-23 & Ex. 10 at 1). The

letter ended with a post-script stating: “Again I must

reiterate that State Farm is not responsible for the fees and

costs for setting up a trust and/or guardianship for your

client.” (Id. at Ex. 10 at 1).

D. State Court Action

Even after the guardianship was in place, the Decamps,

as guardians, did not accept a settlement on Mr. Decamp’s

behalf. Instead, in April 2011, the Decamps filed suit against

Woltcheck. (Id. at 16:11-23, 27:7-12).

Leeper and the Decamps concede that they did not file

suit against Woltcheck believing that Woltcheck could pay a

judgment exceeding her $50,000 policy limit; they filed suit

intending to obtain a judgment against her and then attempt

to collect the judgment from State Farm. (Id. at 94:18-97:8;

Doc. # 44-5 Christine Decamp Dep. at 52:7-53:7). Six years

into the litigation, on July 19, 2017, Leeper reached a verbal

agreement with State Farm to resolve the litigation via a

$1.5 million Cunningham agreement. (Doc. # 44-3 Leeper Dep.

at 82:16-84:12).

Woltcheck testified that she would not agree to a

Cunningham agreement that required her to sue State Farm

because she did not believe that State Farm had done anything

wrong. (Doc. # 44-2 Woltcheck Dep. at 24:25-25:11). The

Cunningham agreement was finalized eighteen months later,

with State Farm executing it first on January 8, 2019,

Woltcheck on January 19, 2019, Christine Decamp on February

7, 2019, and Constance Decamp on May 16, 2019. (Id. at 22:18-

24 & Ex. 3 at 6-9; Doc. # 44-7 at ¶ 3; Doc. # 44-8 at ¶ 3).

The Cunningham agreement states that the parties agree

to entry of a Final Judgment against Woltcheck for

$1,500,000.00. (Doc. # 1-1 at ¶ 1). The agreement further

provides that State Farm would pay Woltcheck’s $50,000 policy

limit to the Decamps in exchange for a partial satisfaction

of judgment, and the Decamps would then collect the balance

of the judgment by pursuing a bad-faith action against State

Farm. (Id. at ¶¶ 5-6). The Decamps agreed never to record the

judgment or attempt to collect it from Woltcheck, and the

Decamps agreed to provide Woltcheck with a satisfaction of

judgment at the conclusion of this bad-faith action

regardless of the outcome. (Id. at ¶ 6).

Notwithstanding the parties’ agreement to entry of a

judgment against Woltcheck, the underlying action was

terminated, instead, by an order of dismissal dated November

16, 2018 – roughly a month and a half before the first

signature on the Cunningham agreement. (Doc. # 44-7 at ¶ 1 &

Ex. A; Doc. # 44-8 at ¶ 1).

On August 25, 2020 — almost two years after the state

court action was dismissed and approximately one month after

this federal court action was filed by the Decamps — the

Decamps filed a motion in the state court action entitled

“Unopposed Motion to Set Aside 11/18/2018 Final Judgment and

for Substitution Based on Subsequently Executed Settlement

Agreement of the Parties and Defendant’s Liability Insurer.”

The trial court entered an order granting the motion. (Doc.

# 44-7 at ¶¶ 5-6 & Exs. B-C; Doc. # 44-8 at ¶¶ 5-6).

The Decamps then filed an “Amended Unopposed Motion to

Set Aside 11/18/2018 Dismissal and for Substitution of a Final

Judgment Based on Subsequently Executed Settlement Agreement

of the Parties and Defendant’s Liability Insurer.” The trial

court then entered a $1,500,000 judgment against Woltcheck on

October 20, 2020. (Doc. # 44-7 at ¶¶ 7-8 & Exs. D-E; Doc. #

44-8 at ¶¶ 7-8).

E. Other Instances of Guardianship Payments

Leeper testified that, in other cases, he had dealt with

insurance companies that would pay to establish guardianships

for injured minor claimants. (Doc. # 44-3 Leeper Dep. at

20:21-21:2; 48:20-49:25).

Likewise, Daniel Doucette, an expert in the insurance

industry, opined that “in refusing to pay or contribute to

the expense of the guardianship to resolve this catastrophic

claim, State Farm was not acting consistent with the custom

and practice in the industry.” (Doc. # 42-10 at 10). “State

Farm and other carriers had done this many times to obtain a

settlement and there is no reason why it should not have been

done in this case.” (Id.).

Doucette explained that the guardianship and trust fees

would be classified by insurance companies like State Farm as

expenses, rather than indemnity payments governed by the

terms of the insurance policy. (Id. at 7). One type of expense

is an allocated loss expense (“ALE”), which “reflects

payments made specifically because of activity in a claim

file.” (Id.). Although there is no one binding definition of

ALE, ALEs are “routine expenses incurred by a company in

appropriate cases,” including costs of compulsory medical

exams, “coverage counsel,” “attorneys helping to prepare

financial affidavits,” and “attorneys for minor guardianships

and fees of the” guardian ad litem. (Id. at 7-8). Doucette

opined further that it “is irrelevant that the policy does

not promise to pay for guardianship costs” because the “policy

does not specify many of the very routine expenses insurers

pay daily.” (Id. at 10).

Indeed, State Farm has paid to establish guardianships

for incapacitated adult claimants at least twelve times in

Florida since 2009, and has paid to establish guardianships

for the minor children of deceased adults multiple times as

well. (Doc. # 64-2; Doc. # 73 at 1, 2 n.1). In all of these

instances, the costs of establishing the guardianship were

coded by State Farm as defense costs or defense attorney’s

fees, rather than as indemnity payments. (Doc. # 64-2; Doc.

# 64-1 at 35:10-38:15).

F. Procedural History

The Decamps, as Guardians for Timothy Decamp, Jr.,

initiated this action on July 29, 2020, asserting claims

against State Farm for common law bad faith (Count I),

statutory bad faith (Count II), and unfair claim settlement

practices (Count III). (Doc. # 1). State Farm filed its answer

and affirmative defenses on October 28, 2020 (Doc. # 15), and

the case proceeded through discovery.

Now, State Farm moves for summary judgment in its favor.

(Doc. # 45). The Motion is fully briefed (Doc. ## 57, 61, 64,

73, 74), and ripe for review.

II. Legal Standard

Summary judgment is appropriate “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). A factual dispute alone is not enough to

defeat a properly pled motion for summary judgment; only the

existence of a genuine issue of material fact will preclude

a grant of summary judgment. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 247-48 (1986).

An issue is genuine if the evidence is such that a

reasonable jury could return a verdict for the non-moving

party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742

(11th Cir. 1996)(citing Hairston v. Gainesville Sun Publ’g

Co., 9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if

it may affect the outcome of the suit under the governing

law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.

1997). The moving party bears the initial burden of showing

the court, by reference to materials on file, that there are

no genuine issues of material fact that should be decided at

trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260

(11th Cir. 2004)(citing Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986)). “When a moving party has discharged its

burden, the non-moving party must then ‘go beyond the

pleadings,’ and by its own affidavits, or by ‘depositions,

answers to interrogatories, and admissions on file,’

designate specific facts showing that there is a genuine issue

for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,

593-94 (11th Cir. 1995)(quoting Celotex, 477 U.S. at 324).

If there is a conflict between the parties’ allegations

or evidence, the non-moving party’s evidence is presumed to

be true and all reasonable inferences must be drawn in the

non-moving party’s favor. Shotz v. City of Plantation, 344

F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact finder

evaluating the evidence could draw more than one inference

from the facts, and if that inference introduces a genuine

issue of material fact, the court should not grant summary

judgment. Samples ex rel. Samples v. City of Atlanta, 846

F.2d 1328, 1330 (11th Cir. 1988). But, if the non-movant’s

response consists of nothing “more than a repetition of his

conclusional allegations,” summary judgment is not only

proper, but required. Morris v. Ross, 663 F.2d 1032, 1034

(11th Cir. 1981).

III. Analysis

A. Validity of the Underlying Judgment

First, State Farm argues that the claims against it fail

because the judgment entered against Woltcheck in state court

is void. (Doc. # 45 at 23-26). Specifically, it contends the

judgment is void because the state court had dismissed the

lawsuit nearly two years before the Decamps sought to set

aside the dismissal and have the state court enter the

Cunningham agreement as its judgment in that case.

Florida Rule of Civil Procedure 1.540(b) states in

relevant part:

On motion and upon such terms as are just, the court

may relieve a party or a party’s legal

representative from a final judgment, decree,

order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable

neglect;

(2) newly discovered evidence which by due

diligence could not have been discovered in time to

move for a new trial or rehearing;

(3) fraud (whether heretofore denominated intrinsic

or extrinsic), misrepresentation, or other

misconduct of an adverse party;

(4) that the judgment, decree, or order is void; or

(5) that the judgment, decree, or order has been

satisfied, released, or discharged, or a prior

judgment, decree, or order upon which it is based

has been reversed or otherwise vacated, or it is no

longer equitable that the judgment, decree, or

order should have prospective application.

The motion shall be filed within a reasonable time,

and for reasons (1), (2), and (3) not more than 1

year after the judgment, decree, order, or

proceeding was entered or taken.

Fla. R. Civ. P. 1.540(b) (emphasis added).

Here, the judgment was entered over a year after the

case was closed. Thus, Rule 1.540(b)(1)-(3) cannot form the

basis for the entry of the judgment. Rather, the motion to

set aside the dismissal and enter a judgment memorializing

the terms of the Cunningham agreement relied on Rule

1.540(b)(5). The motion stated that the new circumstance of

the Cunningham agreement made it no longer equitable for the

state court’s dismissal order to stand. (Doc. # 44-7 at Ex.

D). Based on this argument, the state court set aside the

dismissal and entered a final judgment for $1,500,000 in favor

of the Decamps and against Woltcheck. (Id. at Ex. C & E).

But according to State Farm, Rule 1.540(b)(5) did not

apply because that rule only “provides jurisdiction to modify

a final order where ‘it is no longer equitable that the

judgment, decree, or order should have prospective

application’” and “a dismissal order does not have

‘prospective’ application.” (Doc. # 61 at 6); see Curtiss-

Wright Corp. v. Diaz, 507 So. 2d 1197, 1198 (Fla. 3d DCA 1987)

(noting that, for purposes of Rule 1.540(b)(5), “a judgment

dismissing a plaintiff’s action for damages is not deemed to

have prospective application merely because the plaintiff

continues to be bound by it”), approved, 519 So. 2d 610 (Fla.

1988). Thus, State Farm reasons, because Rule 1.540(b)(5)

could not be used to set aside the dismissal order, the state

court’s order setting aside the dismissal and entering

judgment in favor of the Decamps was legally void. (Id. at

7).

Even if the Court assumes that the state court judgment

is void, the Court does not agree that the Decamps’ claims

must fail. As the Decamps note, there is case law indicating

that an excess judgment is unnecessary where the parties have

entered a Cunningham agreement:

There are three exceptions [to the excess judgment

rule], which are deemed ‘functional equivalents’ of

an excess judgment under Florida law. When an

exception applies, an insured can show causation

based on a stipulation of damages rather than an

excess judgment. The first exception is called

a Cunningham agreement, wherein the insurance

company and the injured third party agree to try

the bad faith claim first, and, if the jury finds

no bad faith, the parties agree to settle for policy

limits.

Cawthorn v. Auto-Owners Ins. Co., 791 F. App’x 60, 64 (11th

Cir. 2019) (citations omitted).

While State Farm argues this exception does not apply

because the Cunningham agreement here anticipated entry of a

judgment by the state court (Doc. # 61 at 7), it does not

cite any case law establishing that Cunningham agreements are

only exceptions to the excess judgment rule when they do not

mention the entry of judgment. Thus, the Court is unpersuaded

by State Farm’s argument. In short, the Decamps are not

precluded from bringing this bad faith action.

B. Merits Analysis

The Decamps assert three claims: common law bad faith

(Count I), statutory bad faith (Count II), and unfair claim

settlement practices (Count III). (Doc. # 1). State Farm

maintains that the same analysis is applicable to all claims.

(Doc. # 74).

“An insurer, in handling the defense of claims against

its insured, has a duty to use the same degree of care and

diligence as a person of ordinary care and prudence should

exercise in the management of his own business.” Bos. Old

Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785 (Fla.

1980)(citation omitted). “For when the insured has

surrendered to the insurer all control over the handling of

the claim, including all decisions with regard to litigation

and settlement, then the insurer must assume a duty to

exercise such control and make such decisions in good faith

and with due regard for the interests of the insured.” Id.

(citation omitted). “This good faith duty obligates the

insurer to advise the insured of settlement opportunities, to

advise as to the probable outcome of the litigation, to warn

of the possibility of an excess judgment, and to advise the

insured of any steps he might take to avoid same.” Id.

(citation omitted). “The insurer must investigate the facts,

give fair consideration to a settlement offer that is not

unreasonable under the facts, and settle, if possible, where

a reasonably prudent person, faced with the prospect of paying

the total recovery, would do so.” Id. (citation omitted).

“In determining whether an insurer has acted in bad faith

in handling a claim, the totality of the circumstances

standard is applied.” Harrison v. State Farm Fire & Cas. Co.,

No. 2:12-cv-205-SPC-UAM, 2013 WL 12147771, at *7 (M.D. Fla.

Dec. 11, 2013)(citation omitted), order clarified, No. 2:12-

cv-205-SPC-UAM, 2013 WL 12156036 (M.D. Fla. Dec. 19, 2013).

“While the issue of whether an insurer acted in bad faith is

ordinarily a question for the jury, courts have, in certain

circumstances, concluded as a matter of law that the insurance

company did not act in bad faith.” Id. (citation omitted).

The Decamps argue that State Farm acted in bad faith by

(1) failing to advise and communicate with Woltcheck

sufficiently and (2) refusing to pay for the costs of

establishing Mr. Decamp’s guardianship and special-needs

trust. (Doc. # 57).

1. Communication with Woltcheck

In their response, the Decamps argue that State Farm

acted in bad faith in part because “State Farm [] failed to

communicate with . . . Woltcheck in compliance with Florida

law . . ., precluding summary judgment concerning allegations

of failure to advise.” (Doc. # 57 at 13). The Decamps

highlight that State Farm never sent Woltcheck an “excess

letter” and that State Farm’s written correspondence and

claims notes “through the filing and expiration of the Florida

CRN are void of any discussion with the named insured of a

potential excess judgment and/or the issue of contributing

towards paying for guardianship proceedings and/or special

needs trust.” (Id.). And the Decamps contend that Woltcheck’s

deposition testimony is “irrational, contradictory and

inconsistent” such that it should not be relied upon. (Id. at

13-14).

Even taking the evidence in the light most favorable to

the Decamps, there is no genuine issue of material fact on

the failure to advise allegations. Here, Woltcheck testified

that she was advised by State Farm about the risk of an excess

judgment and her ability to pay the costs of the guardianship

and special-needs trust herself to obtain a settlement. (Doc.

# 44-2 Woltcheck Dep. at 15:6-17:9). True, it is unclear when

State Farm had these conversations with Woltcheck because she

could not recall the dates. Nevertheless, the uncertainty

regarding time does not create a genuine issue of material

fact on bad faith because Woltcheck likewise testified that

she was at no point willing or able to pay any amount beyond

her policy limits to reach a settlement. (Id. at 18:5-21:25).

Therefore, even if State Farm only advised Woltcheck of

the risk of an excess judgment when it was “too late” as the

Decamps assert, this failure was not the cause of the excess

judgment later being entered against Woltcheck. See McGuire

v. Nationwide Assur. Co., No. 8:11-cv-559-SCB-TBM, 2012 WL

712965, at *9 (M.D. Fla. Mar. 5, 2012) (“[E]ven if Nationwide

had informed Torrey about McGuire’s May 14, 2008 [settlement]

demand and advised him to accept it, Torrey would have been

unwilling or unable to do so, and her offer would still have

been rejected. Accordingly, Nationwide’s failure to

communicate with Torrey about this offer did not result in

the excess judgment, and without causation, there can be no

bad faith damages.”). The Motion is granted to the extent it

seeks summary judgment on the Decamps’ claims regarding the

failure to advise or communicate theory.

2. Refusal to Pay the Decamps’ Fees

It is undisputed that State Farm repeatedly offered to

settle the claim for the policy limits of $50,000. The Decamps

rejected these offers, demanding that State Farm also pay for

the costs of setting up a guardianship and special-needs trust

for Mr. Decamp. The Decamps even rejected State Farm’s offer

of the policy limits after the guardianship was already

established. (Doc. # 44-3 Leeper Dep. at 7:3-10:7 & Exs. 7-

8). The question is therefore whether State Farm acted in bad

faith by refusing to pay the costs of the guardianship and

special-needs trust.

The Court agrees with State Farm that no language in the

relevant policy required State Farm to pay to set up a

guardianship or special-needs trust for Mr. Decamp. First,

the Court rejects the Decamps’ argument that the following

sentence from the supplemental payments provision obligated

State Farm to pay the Decamps’ fees and costs for the

guardianship and special-needs trust: “We have the right to

investigate, negotiate and settle any claim or suit.” (Doc.

# 44-1 at 13). Nowhere in this sentence does State Farm

obligate itself to pay for a third-party claimant’s fees,

even if those fees to establish a guardianship enable to

signing of a release and settlement of a case.

Next, the other portions of the supplemental payments

provision, as amended by the policy’s endorsement, likewise

did not require the payment of the Decamps’ fees to establish

a guardianship or special-needs trust. The Decamps argue that

the supplemental payments provision is ambiguous because it

“fail[s] to specifically address [unallocated loss expenses

and/or allocated loss expenses].” (Doc. # 57 at 10).

“Courts construe insurance contracts according to their

plain language.” Gov’t Emps. Ins. Co. v. Macedo, 228 So. 3d

1111, 1113 (Fla. 2017) (citing Fayad v. Clarendon Nat’l Ins.

Co., 899 So. 2d 1082, 1086 (Fla. 2005)). “However, any

ambiguity which remains after reading each policy as a whole

and endeavoring to give every provision its full meaning and

operative effect must be liberally construed in favor of

coverage and strictly against the insurer.” Id. (citation and

internal quotation marks omitted). “A provision is ambiguous

if it is ‘susceptible to two reasonable interpretations, one

providing coverage and the other excluding coverage.’” Id.

(quoting Fayad, 899 So.2d at 1086). “The ambiguity must be

genuine, and the lack of a definition for an operative term

does not, by itself, create an ambiguity.” Id. (citation and

internal quotation marks omitted). “When a term in an

insurance policy is undefined, it should be given its plain

and ordinary meaning, and courts may look to legal and non-

legal dictionary definitions to determine such a meaning.”

Id. (citation omitted).

But the lack of inclusion of loss expenses in the

supplemental payments provision does not render it ambiguous;

rather, this absence means that State Farm did not

contractually obligate itself to pay such expenses in the

policy. The supplemental payments provision is unambiguous

and, by its plain terms, applies to “court costs of any suit

for damages” and costs “incurred after a civil lawsuit has

been filed against an insured for damages.” (Doc. # 44-1 at

13, 41) (emphasis added). The lawsuit against Woltcheck had

not been filed when the Decamps demanded payment of the

guardianship and trust fees from State Farm and, in fact,

they established the guardianship before they sued Woltcheck.

(Doc. # 44-3 Leeper Dep. at 7:3-10:7 & Exs. 7-8). Regardless

of whether a “friendly suit” qualifies as a suit for damages

as the Decamps argue (Doc. # 57 at 9), no friendly suit was

initiated here, so State Farm was not obligated to pay “court

costs” for such friendly suit. The supplementary payments

provision, which merely governs the incurred costs State Farm

must pay, cannot be read as obligating State Farm to have

filed a friendly suit.

Additionally, the Decamps’ legal fees related to the

guardianship and trust cannot be characterized as incurred by

Woltcheck at all, let alone at State Farm’s “request.” (Doc.

# 44-1 at 41). Thus, the portion of the supplementary payments

provision covering “reasonable expenses incurred by an

insured at our request” does not apply. In short, nothing in

the policy’s language required the payment of the Decamps’

guardianship and special-needs trust fees by State Farm. See

McGuire, 2012 WL 712965, at *8 (“Plaintiffs cite no case law

to support their contention that the ‘Additional Payments’

provision obligates Nationwide to pay the cost of setting up

Ms. Miller’s guardianship. Furthermore, the Court finds the

‘Additional Payments’ provision to be unambiguous, and it

clearly does not impose a duty on Nationwide to pay the cost

of setting up a guardianship in addition to paying the $25,000

bodily injury policy limit.”).

This leaves the Court with another question: can an

insurance company be held liable for bad faith where it

offered to pay the policy limits but refused to pay for costs

that were not explicitly required under the terms of the

insurance policy? Two district court opinions suggest

opposite answers to this question. See McGuire, 2012 WL

712965, at *8; LaVigne v. Safeco Ins. Co. of Illinois, No.

3:17-cv-167-HES-PDB, 2018 WL 6308677, at *7 (M.D. Fla. Sept.

12, 2018). In McGuire, the Court granted summary judgment to

the defendant insurance company, finding that the company

“did not act in bad faith in refusing to pay the cost of

setting up the injured claimant’s guardianship” because the

insurance policy did not contain a requirement to pay for

such costs. McGuire, 2012 WL 712965, at *8. The court noted

that the insurance company had later agreed to pay for the

cost of the guardianship but emphasized that such “gratuitous

agreement to pay such cost” did not “in any way show[] [the

insurance company] was actually obligated to do so under the

insurance policy.” Id. at *8 n.7.

In contrast, the LaVigne court denied summary judgment

on the bad faith claims, which were likewise premised in part

on the insurance company’s refusal to pay an injured

claimant’s guardianship costs in addition to the policy

limits. LaVigne, 2018 WL 6308677, at *7. The LaVigne court

distinguished McGuire because the totality of the

circumstances in that case were different. Id. Specifically,

in LaVigne, the plaintiff’s expert, Mr. Doucette, opined that

“in accordance with custom and practice in the industry, [the

defendant insurance company] Safeco should have authorized

the expenditure of ‘a couple of thousand dollars to get the

guardianship appointed to eliminate a five million dollar

exposure to their insured.’” Id. (citation omitted).

“Importantly too, Safeco ha[d] a limited history of treating

payments for guardianships as a claims expense,” including a

case in which “Safeco coded the payments in its system as

adjustment expenses, not indemnity payments subject to policy

limits.” Id. The LaVigne court concluded that the insurance

company’s history of paying guardianship costs as claims

expenses, “in conjunction with Doucette’s opinions, [were]

sufficient for this Court to distinguish this case with

McGuire and determine an issue of fact exists.” Id.

Based on the record before it, the Court agrees with the

approach in LaVigne. In so deciding, the Court emphasizes

that “an action for bad faith is extra contractual in nature

and relates to the duties of an insurer as defined by statute,

not the express terms of the contract.” Townhouses of

Highland Beach Condo. Ass’n, Inc. v. QBE Ins. Corp., 504 F.

Supp. 2d 1307, 1310 (S.D. Fla. 2007). “This duty exists

outside any contractual duties owed under the insurance

policy, and it gives rise to an independent cause of action.”

King v. Gov’t Emps. Ins. Co., No. 8:10-cv-977-JSM-AEP, 2012

WL 4052271, at *8 (M.D. Fla. Sept. 13, 2012); see also

Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289,

1291 (Fla. 1991) (“Several courts have reasoned that the claim

arising from bad faith is grounded upon a legal duty to act

in good faith, and is thus separate and independent of the

claim arising from the contractual obligation to perform.”).

“In other words, a plaintiff’s bad faith claim may not

necessarily be based on any specific policy language. It may

instead be based on the insurer’s statutory duty to act in

good faith and deal fairly when handling the claims of its

insureds.” Wopshall v. Travelers Home & Marine Ins. Co., No.

18-14424-CIV, 2021 WL 1247501, at *7 (S.D. Fla. Mar. 29,

2021), reconsideration denied, No. 18-14424-CIV, 2021 WL

4189852 (S.D. Fla. Sept. 14, 2021).

True, the Court agrees with State Farm that State Farm

was not required to pay over the $50,000 policy limit as an

indemnity payment. See Mattadeen v. State Farm Mut. Auto.

Ins. Co., No. 04-80034-CIV, 2004 WL 6247906, at *8 (S.D. Fla.

Dec. 23, 2004) (“[I]n a case where a liability policy has

limits of $100,000, and the plaintiff in the underlying tort

action demands $100,001, an insurer that offers the full

policy limit but refuses to pay a dollar more cannot be held

to have acted in bad faith.” (quoting Greenidge v. Allstate

Ins. Co., 312 F. Supp. 2d 430, 439 (S.D.N.Y. 2004), aff’d, 446

F.3d 356 (2d Cir. 2006))).1

But, here, the evidence is that the costs of establishing

the guardianship and special-needs trust would not have been

an indemnity expense. Rather, the Decamps’ expert — the same

Mr. Doucette from the LaVigne case — opined that such fees

would be allocated loss expenses, rather than indemnity

expenses. (Doc. # 42-10 at 7, 10). Likewise, State Farm has

paid to establish an injured adult claimant’s guardianship in

1 State Farm also cites to Kropilak v. 21st Century Insurance

Co., 806 F.3d 1062, 1068-70 (11th Cir. 2015), but that case

is of no help to it. State Farm asserts that that case stands

for the proposition that “bad faith cannot be imputed to an

insurer . . . for failing to agree to a Cunningham agreement

where nothing in its policy required it to agree to one.”

(Doc. # 61 at 3). Thus, State Farm reasons, “like Kropilak,

bad faith cannot be imputed to State Farm for not paying

Plaintiffs’ legal expenses for establishing a guardianship

and special-needs trust [] because the insurance policy did

not require State Farm to pay them.” (Id.). But Kropilak does

not discuss an insurer’s duty in relation to the terms of the

insurance policy and certainly never analyzes the terms of

the insurance policy at issue there. That is, Kropilak did

not hold that the insurer had no duty to enter a Cunningham

agreement or Cunningham-type agreement because the insurance

policy did not require such agreement. Rather, the Eleventh

Circuit held that the insurer did not act in bad faith by

failing to enter a Cunningham-type agreement because “Florida

law is clear that an insurer has no duty to enter into a

Cunningham agreement.” Kropilak, 806 F.3d at 1068. Thus,

Kropilak relied on preexisting Florida law regarding an

insurer’s duties, rather than the terms of the insurance

policy, to analyze bad faith. For this reason, Kropilak does

not support State Farm’s argument that its duty of good faith

here was coterminous with the terms of its insurance policy.

order to facilitate a settlement and release in its insured’s

favor in at least twelve instances in Florida since 2009. In

each of those instances, State Farm categorized the expense

as a defense attorney cost or defense cost, rather than as an

indemnity expense. See (Doc. # 64-2; Doc. # 64-1 at 35:10-

38:15).

Notably, Mr. Doucette opined here that focusing on

whether guardianship and special-needs trust expenses were

explicitly outlined in the policy language was the wrong

inquiry. See (Doc. # 42-10 at 10) (“It is irrelevant that the

policy does not promise to pay for guardianship costs. The

policy does not specify many of the very routine expenses

insurers pay daily.”). Mr. Doucette, instead, focuses on the

standard practice and custom of the insurance industry. He

opines that “in refusing to pay or contribute to the expense

of the guardianship to resolve this catastrophic claim, State

Farm was not acting consistent with the custom and practice

in the industry.” (Doc. # 42-10 at 10).

Taking all this evidence in the light most favorable to

the Decamps, the Court cannot conclude as a matter of law

that State Farm did not act in bad faith under the totality

of the circumstances. Therefore, all of the Decamps’ claims

survive summary judgment to the extent they are premised on

State Farm’s failure to pay the guardianship and special-

needs trust costs.

Accordingly, it is hereby

ORDERED, ADJUDGED, and DECREED:

Defendant State Farm Fire & Casualty Company’s Motion

for Final Summary Judgment (Doc. # 45) is GRANTED in part and

DENIED in part. Plaintiffs’ claims survive summary judgment

only to the extent they are premised on State Farm’s failure

to pay the costs of establishing a guardianship and special

needs trust.

DONE and ORDERED in Chambers in Tampa, Florida, this

10th day of November, 2021.

VIR TA M. HERNANDEZ*COVINGTON

UNITED STATES DISTRICT JUDGE

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