Petition — Gutierrez v. Boston Old Colony Insurance

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80-1144 DEC 8 1980

MICHAEL RODAK, JR., CLERK

No. 80-

In the

Supreme Court

of the

United States

October Term, 1980

RAUL GUTIERREZ,

Petitioner,

vs.

BOSTON OLD COLONY

INSURANCE COMPANY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF FLORIDA

TOBIAS SIMON, ESQUIRE

Simon, Schindler & Tripp, P.A.

1492 South Miami Avenue

Miami, Florida 33130

(305) 358-8611

Attorneys for Petitioner

QUESTION PRESENTED FOR REVIEW

WHETHER THE DECISION OF THE FLORIDA

SUPREME COURT, WHICH SUBSTITUTED

THE COURT’S JUDGMENT FOR THAT OF

THE JURY, DENIED PETITIONER HIS RIGHT

OF DUE PROCESS OF LAW AS GUAR-

ANTEED BY THE FOURTEENTH

AMENDMENT TO THE UNITED STATES

CONSTITUTION, BY ARBITRARILY

DISREGARDING THE SUBSTANTIAL

EVIDENCE OF BAD FAITH WHICH WAS

BEFORE THE JURY AND WAS THE BASIS

FOR THE JURY’S VERDICT AND THE

DISTRICT COURT’S AFFIRMANCE.

LIST OF ALL PARTIES

The following is an inclusive list of all parties to

the cause herein:

Raul Gutierrez, Petitioner

Boston Old Colony Insurance Company,

Respondent.

TABLE OF CONTENTS

Page

Question Presented for Review...........csssssesscesseeees i

Lilet OF ALB PRG iiccickicsiicoctsocensstinsginvacsemnnshaiaapidiaieiets i

Table of Cqmte ite ssicissincsssccincusesnscohitinsissnedutaiaaieuianas ii

Teh CT P.UCROCIIIG cssesesesscstesscicnssaveibiicansesiamnanniinaiaal ili

Opindets DOGG. ...11..csiisssssntrentigeitainnnemenaiaamaaie Vii

Statement of JUrisdiction..............ccccccsrscscsssssscessssesees Vili

Constitutional Provisions..............c.scscssesscsssssssssceeces ix

Statement of the Caw .crocsscocscassrsseuciedinntineatiannenmmulian 1

Stage of Proceedings Wherein Federal Questions

Sought to be Reviewed Were Raised................. 12

Reason for Granting the Wit............sscsssssssssssseeeeeess 13

THE DECISION OF THE FLORIDA SUPREME

COURT SERVED TO DENY PETITIONER

HIS RIGHT OF DUE PROCESS OF LAW, AS

GUARANTEED BY THE FOURTEENTH

AMENDMENT TO THE U.S. CONSTITUTION,

BY ARBITRARILY DISREGARDING THE

SUBSTANTIAL EVIDENCE OF BAD FAITH

WHICH WAS BEFORE THE JURY AND WAS

THE BASIS FOR THE JURY’S VERDICT

AND THE DISTRICT COURT'S AFFIRMANCE

CCORCTUSIOR scccserciccicccesssnvsrocminbadedaiinsstaaiammaann 30

TABLE OF AUTHORITIES

CASES Page

American Mutual Liability Ins. Co. v. Cooper,

OE Fe BOG IE Gib. 10GB) nic ccscnscsessmicssivcssaicctesees 19

Auto Mutual Indemnity Co. v. Shaw,

134 Fla. 815, 174 So. 852 (1938)............scccssseseseene 8

Baxter v. Royal Indemnity Co.,

285 So.2d 652 (Fla. Ist DCA 1978)...........csccsesssees 19

Bell v. Commercial Ins. Co.,

BOO FOG GLEBE Cll. TOGO) sccvccccccsconecessiseccacoansneceses 23

Boston Old Colony Ins. Co. v. Gutierrez,

360 So.2d 464 (Fla. 3d DCA 1978).............0. vii, 1, 10,

13, 16

Boston Old Colony Ins. Co. v. Gutierrez,

386 So.2d 783 (Fla. 1980)...........ccce00e vii, 12, 20, 21,

22, 23, 24

Brown v. U.S. Fidelity & Guaranty Co.,

SUG B20 OIG IEG CAP. TDG B)aeiccccscccccicisciscssoncconscosese 23

Campbell v. Government Employees Ins. Co.,

BOG SO.2d SZ5 (PA. 1974). .os.ccicasoiessseicccsessccesesssesere 18

City of West Plains, Mo. v. Loomis,

279 F.2d 564 (8th Cir. 1960).............cccccsscecsssessoceee 17

ili

TABLE OF AUTHORITIES (Continued)

CASES

Coleman v. Holecek,

542 F.2d 532 (LOth Cir. 1976).........scsssccercssesseees

Community Blood Bank, Inc. v. Russell,

196 BoB 115 Wiss 1967). .cccensccrisccossnisstnsnvininssees

Edwards v. Doherty,

TE Oe Sec Wi avviccheccachtinssnenscaniscravesecs

Fryer v. Industrial Fire & Casualty Ins. Co.,

339 So.2d 285 (Fla. 3d DCA 1976)..........sseseseeees

Government Employees Ins. Co. v. Grounds,

311 So.2d 164 (Fla. 4th DCA 1975)...

Greenwood v. Oates,

251 S0.2d 665 (Fla. 1971).............cccccsssssscesescereees

Herzog v. Herzog,

BEG SOG SG Pik. 1977 )..cecsccnssscsescesscosesssonsscsseces

Hicks v. Oklahoma,

__ U.S. _, 48 U.S.L.W. 4724 (June 17, 1980)...

Hopkins v. Tallahassee,

TOD BORG TIO PIA. 1OGB) a sicccncsesessescscnsscenssssonsens

Hughes v. Mathews,

576 F.2d 1250 (7th Cir. 1978)..........sssscssesssersees

TABLE OF AUTHORITIES (Continued)

CASES Page

Jackson v. Virginia,

_U.S._,99S.Ct. 2781, _ L.Ed. 2d _ (1979)... 14, 27

Klingman v. Nat'l Indemnity Co.,

$17 F.2d 850 (7th Cir. 1969)...............ccccccccccscesseees

Koch v. Secretary of Dep’t of Health, Educ.

& Welfare,

590 F.2d 260 (8th Cir. 1978)................ccsscsscsecceerees

Liberty Mutual Ins. Co. v. Davis,

412 F.2d 475 (Sth Cir. 1969).........cc.ccccccccccrcsssreecees

Loew v. Freedman,

a ieenmebnmenetinnions

Maryland Casualty Co. v. Elmira Coal Co.,

69 F.2d 616 (8th Cir. 1934)...........cscssccseereeee, ceeeeee

Merek v. Patterson,

a sacensnusinmececosoncens

Myers v. Atlantic Coastline R. Co.,

DE IE OF ER. BOO acsnescscccseccccccescsocecccnccccocenee

Re Estate of Thompson,

84 So.2d 911 (Pia. 1955)...........c..cccccscsccccecoscscccseeeees

Schultz & Lindsay Constr. Co. v. Erickson,

352 F.2d 425 (8th Cir. 1965)..............ccc.cccccccscssecsees

TABLE OF AUTHORITIES (Continued)

CASES Page

Seifert v. Solem,

OPE Be WAT GM CIP, LOOT Da cccccccsseasercorcssccsesZeccenee 19

Smith Engineering & Constr. Co. v. Cohn,

INI AEE, BOET Riccssendccossoseesessecenssasscssoseeceees 15

Southern Convalescent Home v. Wilson,

BOO 90.20 404 (Pa, 1973),.....csccsccocesceccocescescesesceceese 15

Springer v. Citizens Casualty Co.,

246 F.2d 123 (Sth Cir. 1957).........ccccccccscsscssesceree 19, 26

Thompson v. Commercial Union Ins. Co.

of New York,

250 S0.2d 259 (Fla. 1971).........ccccccccsccccccessonsess 8, 9, 11,

19, 27

Thompson v. Louisville,

362 U.S. 199, 4 L.Ed2d 654,

as cnccennsesnassneceen 14, 26

Westerman v. Shell’s City, Inc.,

ST 1 ED |»: 15

Williams v. Smelt,

I SDs coccincctiuninebetsocccsubsecevetsoseees 15

CONSTITUTIONAL PROVISIONS

NINE: BRE V g WENGE, crcccocscsccesensecsesecoasese ix, 12, 13, 28

Art. I, §22, Fla. Const. ........... anialnliiasiigbaaeihivsiions ee Ae |

OPINIONS BELOW

The opinion of the District Court of Appeal of

Florida, Third District, which affirmed the final judgment

of the circuit court, is reported as Boston Old Colony

Insurance Company v. Gutierrez, 360 So.2d 464 (Fla. 3d

DCA 1978), and dated July 11, 1978. The full decision is

set forth in the Appendix at page 6.

The opinion of the Supreme Court of Florida, which

quashed the decision of the district court and remanded

the cause for further proceedings, is reported as Boston

Old Colony v. Gutierrez, 386 So.2d 783 (Fla. 1980), and

dated April 10, 1980, rehearing denied September 4,

1980. The full decision is set forth in the Appendix at

page 1, and the Order Denying Rehearing is at page 11

of the Appendix.

vii

ee ee nr

STATEMENT OF JURISDICTION

The decision of the Supreme Court of Florida was

rendered on April 10, 1980. A timely Petition for Rehearing

was denied on September 4, 1980. An extension of time

to and including December 8, 1980 was granted by this

Court, and the Petition was timely filed on December

8, 1980. This Court’s jurisdiction is invoked pursuant

to 28 U.S.C. §1257(3).

viii

CONSTITUTIONAL PROVISIONS INVOLVED

A. The Fourteenth Amendment to the United

States Constitution provides in Section 1:

All persons born or naturalized in the United

States, and subject to the jurisdiction thereof,

are citizens of the United States and of the

State wherein they reside. No State shall make

or enforce any law which shall abridge the

privileges or immunities of citizens of the United

States; nor shall any State deprive any person

of life, liberty or property, without due process

of law; nor deny to any person within its

jurisdiction the equal protection of the laws.

B. Article I, Section 22 of the Florida Constitution

provides:

The right of trial by jury shall be secure to all

and remain inviolate. The qualifications and

the number of jurors, not fewer than six, shall

be fixed by law.

STATEMENT OF THE CASE!

On January 1, 1973, at approximately 6:00 P.M..,

Petitioner Raul Gutierrez and Boston Old Colony’s insured,

Bruce Brown, were involved in a head-on collision on

West Flagler Street in Miami, Florida. An unusual

circumstance of the accident was that both Brown and

Gutierrez claimed to have been proceeding east on

Flagler Street and that the other car was heading west

on Flagler, crossed the center line and then collided

head-on with his car.

There were three eyewitnesses to the accident

who independently testified, both at the scene of the

accident and subsequently at trial, that it was in fact

Gutierrez who had been proceeding east on Flagler

when Brown, who was traveling west, crossed the center

line and struck Gutierrez’ vehicle head on.? The investigating

officer, after extensively viewing the scene and interviewing

the three eyewitnesses, issued a citation charging Brown

with causing the accident.’

‘The Statement of the Case is taken substantially from the

district court decision of Boston Old Colony Insurance Company

v. Gutierrez, 360 So.2d 464 (Fla. 3d DCA 1978), and supplemented

by the use of footnotes where relevant. Although portions of the

Statement utilize the exact language cf the district court, for ease

of reading quotation marks are not indicated nor will the court's

language be single-spaced or indented.

“All three eyewitnesses were traveling eastward, in the same

direction as Gutierrez. One was directly in front of Gutierrez, and

the other two were directly behind him.

the three eyewitnesses, issued a citation charging Brown

with causing the accident.’

Brown subsequently produced three witnesses of

his own, although not eyewitnesses, who gave statements

to his insurance company supporting Brown's version

of the accident. The three individuals, friends of Brown’s

family, lived in a trailer park which was approximately

two blocks west from the scene of the accident. They

stated that Brown had been with them shortly before

the accident and that when he drove out of the trailer

park, they assumed he headed east on Flagler Street.‘

Brown had a $10,000.00 liability policy and also an

uninsured motorist policy with Boston Old Colony. Boston

Old Colony was notified, and on January 2, the day

following the accident, the case was assigned to George

Heider, a senior adjuster for the company.°

Having reviewed the accident report, Heider knew

there was a question of liability despite Brown’s version

of the accident, and he so stated in his file. Further,

‘Two highly-trained police homicide accident investigators

arrived at the accident scene shortly after its occurrence. They

conducted an investigation by establishing the point of impact,

the skid marks, and the final resting place of both vehicles. Both

independently concluded that Brown — not Gutierrez — had been

traveling west, crossed the center line, and caused the collision.

‘Interestingly, these alleged witnesses were not called upon

to testify at the trial on bad faith.

‘Heider, an experienced claims adjuster, had been in the

business since 1964. He handled the case along with John Dinapoli,

his claims supervisor, who had been an adjuster since 1957.

within two days of the accident Heider knew that Gutierrez’s

injuries were serious; he noted in his file that Gutierrez

was in South Miami Hospital in the intensive care unit,

listed in critical condition. On January 9, Heider learned

that Gutierrez had suffered a fractured arm, thirteen

fractured ribs, a fractured leg and was paralyzed from

the waist down. Additionally, a tracheotomy had been

performed so that Gutierrez was unable to talk.

Although Boston Old Colony denied any liability

to Gutierrez’s attorney, first on January 9th and again

on February 12th, Heider, its adjuster, had in fact on

January 18th set up a reserve of $9,500.00 on Brown's

policy of $10,000.00. Heider had full authority to settle

where there was a possibility of a verdict and judgment

in excess of the $10,000.00 policy limits.*

On January 18th, Boston Old Colony engaged Mr.

David Plummer, an accident reconstructionist, to investigate

the physical evidence and to render an opinion as to

which car had in actuality been traveling east.’ After

‘In his field report of January 18, Heider assigned a negligence

factor of 25% to his insured, Brown. Given the extensive injuries

and necessary intensive hospital care of Gutierrez, it was apparent

very shortly after **e incident that even a 25% liability for Brown

would well exceed the policy limits of $10,000.00.

‘Boston Old Colony first contacted Mr. Delton Dollar, a well-

known and highly respected accident reconstruction expert, to

reconstruct the accident. Mr. Dollar disagreed with their version

of the accident, however, and was thus not retained by them.

Subsequently, counsel for Mr. Gutierrez engaged Mr. Dollar's

services. Mr. Dollar investigated the facts of the accident and at

trial testified that Mr. Gutierrez had been traveling east and

Brown, traveling west, crossed the center line and caused the

accident.

examining the accident site and the wrecked vehicles,

a report was sent by Plummer to Heider on March 14th

in which Plummer discussed the physical evidence and

gave his opinion that Brown was eastbound and Gutierrez

was westbound on Flagler Street and that Gutierrez

had been on the wrong side of the pavement at the

point of impact.*

Brown reported to Heider that he had employed a

personal attorney, Malcolm Kneale, and was planning

to make, and later did make, a claim for his own injuries.

Heider testified that because of the seriousness of

Gutierrez’s injuries and the conflict in liability testimony,

he decided he would offer to pay the $10,000.00 policy

limit to settle the Gutierrez claim. Before making the

offer to Gutierrez, however, Heider again talked with

Brown. Although there was nothing in the policy that

gave Brown the right to approve or disapprove the

settlement, Heider consulted with him because Heider

knew that Brown was represented by personal counsel

and was going to make claim for his own injuries.

According to Heider, Brown opposed offering any

settlement to Gutierrez even though Heider alleged to

have warned him of a possible excess verdict. Heider

asked Brown to provide Old Colony with a hold harmless

letter; the letter, dictated by Heider to Brown's attorney,

Kneale, was signed by Brown on March 5, /973.

*To reach this conclusion Plummer theorized that the two

vehicles collided slightly off center, causing them to each become

airborne, revolve 180 degrees, and, upon returning to earth, create

the skid marks and other evidence which suggested that Brown

was at fault in causing the accident.

There was conflict in the testimony between Kneale

and Heider as to the circumstances leading up to the

hold harmless letter.’ Kneale testified at trial that prior

to the execution of the hold harmless letter, Heider

had informed him that Gutierrez had no liability insurance.

Kneale and Heider then discussed an uninsured motorist

claim by Brown against Boston Old Colony. According

to Kneale, Heider’s position had been that Boston Old

Colony would not “pay both ways;” that is, Boston Old

Colony would pay either the uninsured motorist claim

to Brown or would pay against Gutierrez’s claim, but

would not pay both. Kneale also testified that Heider

told him that Brown’s uninsured motorist claim would

not receive favorable treatment unless the hold harmless

letter was prepared, and that he was relying on Heider

to make immediate settlement under the uninsured

motorist claim.

In actuality, Gutierrez had a liability insurance

policy with Government Employees Insurance Company

(GEICO). Boston Old Colony was well aware, and had

been since January 9, that Gutierrez carried liability

insurance with GEICO. At no time during the discussion

of Brown’s uninsured motorist claim with Boston Old

Colony did Heider indicate to Brown or his attorney,

Kneale, that such coverage for Brown was unavailable

because of the fact that Gutierrez was insured. To the

contrary, Kneale testified that Heider had specifically

told him Gutierrez had no liability insurance.

On March 14th, Gutierrez’s attorney wrote Boston

Old Colony offering to settle the claim against Brown

*Brown did not testify at the second trial because for obvious

reasons he could not be located.

and Boston Old Colony for the policy limits. On March

22nd, Heider, the adjuster, with the hold harmless

letter in hand, wrote Gutierrez’s attorney denying liability

and refused any attempts to settle. Heider testified

that at that time he would have paid the policy limits of

$10,000.00 had he not obtained the hold harmless letter.

On March 23rd, Heider sent Kneale, Brown's attorney,

a copy of Gutierrez’s letter of March 14th offering to

settle for the policy limits.”

With no possibility of settlement, Gutierrez in

April 1973 filed suit against Brown and Boston Old

Colony in the Circuit Court of the Eleventh Judicial

Circuit, in and for Dade County, Florida, for damages

sustained as a result of the January 1st collision.

Boston Old Colony engaged George Lanza, a Miami

attorney, to defend Brown and Boston Old Colony.

After reviewing the file and conducting initial interviews

of witnesses, on two separate occasions" Lanza reported

to Boston Old Colony that the case was bad and

recommended settlement for the policy limits." Although

The record reflects that at no time did Boston Old Colony

advise Brown: (1) that settlement with Gutierrez would not constitute

an admission of liability; (2) of the possible extent of the excess

judgment that could issue against him; or (3) of the change of law

that had occurred regarding comparative negligence.

Testimony at trial revealed that Lanza contacted Boston

Old Colony first on May 1 and again on June 12, advising settlement.

{Unable to convince Boston Old Colony to settle the case,

Lanza began discovery and scheduled depositions of the three

eyewitnesses. In anticipation of these depositions, he stated to

Boston Old Colony in writing that his only recourse at that point

was to try to “foul up the testimony of the eyewitnesses as to

what actually occurred.”

Lanza was not asked for his opinion on liability, he

testified that, if asked, he would have stated that,

without considering the damage factor, Gutierrez had

a fifty-fifty possibility of recovery.

On June 13th, Brown filed a claim against Boston

Old Colony under the uninsured motorist provision of

his policy."’ On July 11th, Heider wrote Brown’s attorney

that Gutierrez did, in fact, have insurance."

Left with no other legal recourse, Kneale’s law

firm filed a counterclaim for Brown’s damages in the

collision. On November 13th, Gutierrez’s attorney wrote

Boston Old Colony a letter accusing it of bad faith and

withdrawing the offer to settle for the policy limits. On

December 27th Brown settled his counterclaim against

Gutierrez’s insurer for $5,000.00.

On the first day of trial on Gutierrez’s claim against

Brown — January 2, 1974 — Boston Old Colony for the

first time offered to settle with Gutierrez for its policy

limits. Gutierrez declined the offer,’ the trial proceeded

"The filing of this claim evidences Brown's ignorance of the

fact that Gutierrez carried liability insurance — a fact known to

Boston Old Colony since January 9.

"'This was six months after the point in time that Heider first

learned that Gutierrez was insured with GEICO.

The fact that Gutierrez declined the settlement offer the

day of trial, over one year from the date of the accident, was

understandable in light of his extensive injuries, impaired future

earnings, and extensive attorney's fees and costs incurred in

preparation for trial — the vast portion of which would not be

recouped by a $10,000.00 settlement.

on the merits, and the jury returned a verdict for

Gutierrez in the amount of $1,418,350.16."

Subsequent to that case, Gutierrez filed a second

suit in circuit court against Boston Old Colony only, in

which he charged that Boston Old Colony had acted in

bad faith in refusing to settle his claim against Brown."

This ciaim was fully tried before a jury. The court

received extensive testimony and, except for the

testimony of Brown — who was nowhere to be found

— the facts as set forth herein were fully explored.”

Finding that Boston Old Colony had indeed acted in

at this time.

"Florida law is clear that a third party beneficiary to an

insurance policy, such as Gutierrez was, has a cause of action

directly against a tortfeasor liability insurer for recovery of a

judgment in excess of the policy limits upon a claim of fraud or

bad faith of the insurer in the conduct or handling of the suit. See

Thompson v. Commercial Union Ins. Co. of New York, 250 So.2d

259 (Fla. 1971); Auto Mutual Indemnity Co. v. Shaw, 134 Fla. 815,

184 So. 852 (1938).

At trial, Gutierrez had two experts review the facts of this

case as they related to the issue of bad faith on the part of Boston

Old Colony. Both Arthur Hawkesworth and Ray Dwyer were trial

lawyers with extensive experience in insurance defense litigation,

the evaluation and settlement of insurance claims, and the intricacies

and legal theories in bad faith cases. Both Hawkesworth and

Dwyer were of the opinion that Boston Old Colony’s failure to

settle Gutierrez’s claim within policy limits when it had the

opportunity to do so was a breach of its fiduciary obligation to its

insured, Brown, and constituted bad faith under the facts of this

case. Hawkesworth and Dwyer based their opinions on the severity

of Gutierrez’s injuries and the magnitude of his damages; the fact

that policy limits were only $10,000.00; the physical and eyewitness

bad faith in failing to settle Gutierrez’s claim against

Brown, the jury returned its verdict for Gutierrez against

Boston Old Colony in the amount of $1,418,350.16, with

interest and costs.

Boston Old Colony appealed the judgment to the

District Court of Appeal of Florida, Third District. The

position of Boston Old Colony was three-fold: (1) the

trial court had erred in refusing to grant Boston Old

Colony’s motion for a directed verdict;' (2) the law on

bad faith of an insurer, as set forth in Thompson v.

Commercial Union Insurance Company of New York,

250 So.2d 259 (Fla. 1971), was erroneous and should be

receded from; and (3) the trial court had erred in refusing

to instruct the jury upon the doctrine of avoidable

consequences.

Declining to discuss the second position because

the Thompson doctrine governed, the district court of

(Footnote 18 continued)

evidence as to liability; the duty of the carrier to investigate and

evaluate the claim as though there were no policy limits; the duty

to settle the claim within the policy limits if there was a possibility

of an excess verdict; and the repeated recommendations of Boston

Old Colony’s own lawyer to settle. Hawkesworth characterized

the bad faith of Boston Old Colony as “unequivocal” and “open and

shut.” He believed that the hold harmless agreement extracted

from Brown was a “flagrant” example of bad faith for the sole

purpose of protecting Boston Old Colony at the expense of its

insured.

"Boston Old Colony urged this point on the grounds that: (1)

Brown had maintained at all times that he was not at fault, a

position for which he had some evidence, albeit weak; (2) Brown's

independent counsel prosecuted and recovered on a counterclaim

against Gutierrez and expressly requested that the cause not be

settled; and (3) after the settlement of Brown's counterclaim against

Gutierrez, Boston Old Colony offered to settle for its policy limits.

appeal held that the record contained sufficient evidence

to support the verdict despite the fact that Boston Old

Colony had a request from its insured not to settle the

Gutierrez claim. In Boston Old Colony Insurance Company

v. Gutierrez, 360 So.2d 464 (Fla. 3d DCA 1978), the

court reasoned:

We are impressed with the testimony that the

policy between Boston Old Colony and Brown

left the insurance company free to exercise its

own judgment as to settlement. Further, there

is evidence which, if believed by the jury,

could support Gutierrez’s position that Brown's

position and the hold harmless letter were

procured without a full disclosure of facts known

to Boston Old Colony.. . . In this case, where

there was evidence of less than open-handed

dealings with the insured, we think that the

submission of the cause to the jury cannot be

said to be faulty as a matter of law.

Id. at 467-68 (emphasis added).”

“The court, in considering the third aspect of Boston Old

Colony’s argument for error upon the denial of its motions for a

directed verdict in light of the offer to settle for the policy limits

on the day of trial, observed:

The jury in this case was fully informed of the offer to

settle just prior to trial. The same jury found bad faith

in the insurance company’s dealing with its insured. . . .

The jury verdict must be interpreted as finding that

the belated offer to settle, made only after bad faith

had been charged and Gutierrez’s offer to settle had

been withdrawn, reasonably resulted in the excess verdict.

We cannot now say that if bad faith had occurred, as

the jury found, that this bad faith was, as a matter of

law, wiped out by the belated offer to settle.

360 So.2d 464, 468.

Boston Old Colony petitioned the Florida Supreme

Court to review the decision of the district court, and

the district court certified to the supreme court the

following question:

Does the law as enunciated in Thompson v.

Commercial Union Insurance Co., 250 So.2d

259 (Fla. 1971), authorize a bad faith action

against an insurance company when that

company has refused to settle a claim at the

express direction of its own insured who obtains

a settlement of his claim and the insurance

company, thereafter offers to settle for its

policy limits before trial?

The Florida Supreme Court accepted jurisdiction

of the cause. Although answering the certified question

in the affirmative, the court found that the evidence in

the case before it was legally insufficient to show bad

faith on the part of Boston Old Colony:

We hold that under the facts of this case,

Thompson does not require the result reached

by the district court of appeal. There is no

sufficient evidence from which any reasonable

jury could have concluded that there was bad

faith on the part of the insurer. The facts in

Thompson are materially different from the

facts now before us. In the present case, Brown,

the insured, at all times contested liability

and had evidence to support his position. Brown

expressly requested Boston Old Colony not to

settle the claim because he was pursuing a

counterclaim against plaintiff Gutierrez. Brown

executed a “hold harmless” agreement in which

he assumed responsibility for any excess

judgment. After settlement of Brown's

counterclaim, prior to trial, Boston Old Colony

offered to settle for policy limits. Unlike

Thompson, where the insurer refused to settle

at all times despite advice of its own counsel,

here the insurer was ready to settle, expressed

its willingness to settle, and only because of

the explicit request of its own insured did not

settle. Furthermore, in the present case, unlike

Thompson, the plaintiff refused to settle when

the insurer subsequently offered to settle prior

to trial.

Boston Old Colony Insurance Company v. Gutierrez,

386 So.2d 783, 785-86 (Fla. 1980) (emphasis added).

In seeking review by this Court, Petitioner Gutierrez

contends that the holding of the Florida Supreme Court

is totally arbitrary and unsupported by the facts as

presented to and determined by the jury, and therefore

has the effect of denying Petitioner his right of due

process, as guaranteed by the Fourteenth Amendment

to the United States Constitution, and his right to trial

by jury, as guaranteed by Article I, Section 22 of the

Florida Constitution.

STATE OF PROCEEDINGS WHEREIN

FEDERAL QUESTIONS SOUGHT

TO BE REVIEWED WERE RAISED

The federal questions herein presented arose at

the time the Supreme Court of Florida rendered its

decision on April 10, 1980, wherein the court quashed

the decision of the district court and remanded the

cause to the circuit court for further proceedings. Prior

to that time there had been no denial of due process or

denial of a trial by jury; these constitutional violations

occurred by virtue of the holding of the Florida Supreme

Court in Boston Old Colony Insurance Company v.

Gutierrez, 386 So.2d 783 (Fla. 1980), and its adverse

effect upon the Petitioner herein. As a result, this

Petition for Writ of Certiorari is the first opportunity

Petitioner has had to raise these constitutional issues.

It should nevertheless be noted that in his brief to

the Florida Supreme Court, Petitioner addressed the

constitutionality of an opinion which would be favorable

to Boston Old Colony:

To strip Gutierrez of his judgment against

Boston Old Colony would be equivalent to

depriving him of property without due process

of law or to impairing a contractual obligation

retroactively, both of which are proscribed by

public policy; the Declaration of Rights of the

Florida Constitution, and previous decisions

of this Court.

Brief for the Respondent at 36 (served Oct. 16,

1978) (emphasis added).

REASON FOR GRANTING THE WRIT

THE DECISION OF THE FLORIDA

SUPREME COURT, WHICH SUBSTITUTED

THE COURT’S JUDGMENT FOR THAT OF

THE JURY, DENIED PETITIONER HIS

RIGHT OF DUE PROCESS OF LAW AS

GUARANTEED BY THE FOURTEENTH

AMENDMENT TO THE UNITED STATES

CONSTITUTION BY ARBITRARILY

DISREGARDING THE SUBSTANTIAL EVI-

DENCE OF BAD FAITH WHICH WAS

BEFORE THE JURY AND WAS THE BASIS

FOR THE JURY’S VERDICT AND THE

DISTRICT COURT’S AFFIRMANCE

Petitioner Gutierrez contends that the decision by

the Florida Supreme Court, in finding that there was

insufficient evidence from which a reasonable jury could

have concluded bad faith on the part of Boston Old

Colony, serves to deny Petitioner his fundamental right

to due process of law as guaranteed by the Fourteenth

Amendment to the United States Constitution. This

holding by the court is arbitrary, capricious, and flies

in the face of substantial evidence in the record to the

contrary.

Due process requires an orderly and objective review

of the record by an appellate court to determine whether

the decision of the lower tribunal was supported by

competent substantial evidence. Just as it is a denial of

due process for a state to convict a person without

evidence of his guilt,” it is equally a denial of due

process for a state to take away a person’s property —

in this case, a judgment for damages — by arbitrarily

holding that there is insufficient evidence in the face of

overwhelming evidence to the contrary.”

“Thompson v. City of Louisville, 362 U.S. 199, 4 L.Ed.2d 654,

80 S.Ct. 624 (1960); Jackson v. Virginia, __ U.S. __, 99 S.Ct. 2781, __

L.Ed.2d____ (1979).

Hicks v. Oklahoma,_ U.S._, 48 U.S.L.W. 4724 (June 17, 1980);

Hughes v. Mathews, 576 F.2d 1250 (7th Cir. 1978).

Florida Jaw is clear that reviewing courts may not

sit as triers of fact or substitute their judgment and

conclusions for those rendered below.” Appellate courts

in Florida, therefore, are limited to reviewing errors of

law and are not generally authorized to review questions

of fact.“ While a question as to sufficiency of the evidence

as a matter of law may be presented to the reviewing

court, the court is bound by the judgment below so

long as there is some substantial evidence to support

the judgment.”

This type of review was afforded by the district

court in its review of the judgment herein, but was

subsequently denied by the Florida Supreme Court.

Contrary to established principles of law, the Florida

Supreme Court reweighed the evidence pertaining to

bad faith by disregarding substantial evidence of bad

faith that was presented to the jury through the testimony

of numerous witnesses and the evidence of various

documents of Boston Old Colony. The court’s holding

that there was “no sufficient evidence from which any

“Westerman v. Shell's City, Inc., 265 So.2d 43 (Fla. 1972);

Greenwood v. Oates, 251 So.2d 665 (Fla. 1971); Edwards v. Doherty,

74 So.2d 686 (Fla. 1954).

“Community Blood Bank, Inc. v. Russell, 196 So.2d 115 (Fla.

1967); Fryer v. Industrial Fire and Casualty Ins. Co., 339 So.2d 285

(Fla. 3d DCA 1976).

*Southern Convalescent Home v. Wilson, 285 So.2d 404 (Fla.

1973); Myers v. Atlantic Coastline Railway Co., 112 So.2d 263 (Fla.

1959); Hopkins v. Tallahassee, 105 So.2d 770 (Fla. 1958); Smith

Engineering and Consir. Co. v. Cohn, 94 So.2d 826 (Fla. 1957);

Williams v. Smelt, 83 So.2d 1 (Fla. 1955).

of numerous witnesses and the evidence of various

documents of Boston Old Colony. The court’s holding

that there was “no sufficient evidence from which any

reasonable jury could have concluded that there was

bad faith on the part of the insurer” cannot be reconciled

with the evidence in this cause.

The district court of appeal, in affirming the judgment

in favor of Gutierrez, noted that there was “evidence

of less than open-handed dealings with the insured.”

Specifically, the district court identified the following

evidence as support for the jury verdict:

We are impressed with the testimony that the

policy between Boston Old Colony and Brown

left the insurance company free to exercise its

own judgment as to settlement. Further, there

is evidence which, if believed by the jury,

could support Gutierrez’s position that Brown’s

position and the hold harmless letter were

procured without a full disclosure of facts known

to Boston Old Colony.

360 So.2d at 467-68. |

In contrast, the decision of the Florida Supreme

Court mentions neither the fact that the insurance

policy expressly provided that Boston Old Colony was

free to settle a case despite objections from the insured

or that evidence suggested the hold harmless letter

had been procured from Boston Old Colony without a

full disclosure of facts known to it. Rather than viewing

the evidence in the light most favorable to the prevailing

party as required by state and federal law,” the supreme

court appears to have accepted as true the statements

made by Boston Old Colony in its brief, without any

independent review or verification of the record itself.

As the district court correctly concluded, “the record

contains sufficient evidence to support the verdict” —

evidence which the supreme court arbitrarily chose to

disregard, ignore or overlook. Briefly, the record supports

the jury’s verdict and finding of bad faith in the following

respects:

1. It was evidence of bad faith to disregard the

testimony of three impartial eyewitnesses, two police

officers who investigated the scene of the accident, and

one expert witness, Mr. Delton Dollar, and accept instead

the testimony of Brown’s three family friends and the

expert retained by him.”

2. It was evidence of bad faith for Boston Old

Colony to deceive Brown into believing that Gutierrez

had no insurance and that he would receive money

from Boston Old Colony from his uninsured motorist

claim.”

3. It was evidence of bad faith for Boston Old

Colony to induce Brown into executing the hold harmless

letter on the belief that Brown would be able to recover

on his uninsured motorist claim.

*See, e.g., Koch v. Secretary of Dep't of Health, Educ. &

Welfare, 590 F.2d 260 (8th Cir. 1978); Seifert v. Solem, 387 F.2d 925

(7th Cir. 1967); Schultz & Lindsay Constr. Co. v. Erickson, 352

F.2d 425 (8th Cir. 1965); City of West Plains, Missouri v. Loomis,

279 F.2d 564 (8th Cir. 1960); Herzog v. Herzog, 346 So.2d 56 (Fla.

1977); Greenwood v. Oates, 251 So.2d 665 (Fla. 1971); Re Estate of

Thompson, 84 So.2d 911 (Fla. 1955); Loew v. Friedman, 87 So.2d

672 (Fla. 1955); Merek v. Patterson, 75 So.2d 808 (Fla. 1954).

4. It was evidence of bad faith to induce Brown

into believing that Boston Old Colony’s settlement with

Gutierrez constituted an admission of guilt and would

preclude recovery of Brown’s claim.

5. It was evidence of bad faith to obtain the hold

harmless agreement from Brown because it deliberately

served to insulate Boston Old Colony and to expose its

insured, Brown, to excess liability.

6. It was evidence of bad faith to disregard the

advice of Boston Old Colony’s privately-retained counsel,

who on two separate occasions advised that the company

pay the $10,000.00 policy limit to Gutierrez.”

7. It was evidence of bad faith not to pay the

policy limits when the damages far exceeded the policy

limits.

8. It was evidence of bad faith, where, as here,

the insurer was gambling with a far greater portion of

the insured’s financial risk than its own.”

In light of the above identified evidence, it is difficult

“See, e.g., Klingman v. National Indemnity Co., 317 F.2d 850

(7th Cir. 1963). In Klingman, the Seventh Circuit Court of Appeals

noted:

Under some circumstances, in order to act in good faith,

an insurer may be required to disbelieve its insured.

Id. at 854.

“See Campbell v. Government Employees Ins. Co., 306 So.2d

525 (Fla. 1974).

to understand how the court could conclude that the

evidence presented to the jury was “legally insufficient”

to show bad faith on the part of Boston Old Colony. An

analysis of this decision of the Florida Supreme Court

reveals the following inconsistencies with the facts

presented at trial:

1. The supreme court failed to note that the three

eyewitnesses at the accident all independently testified

that Brown, not Gutierrez, had been traveling west

and had caused the accident.

2. The court places much emphasis on the fact

that Boston Old Colony’s reconstruction expert concluded

that Gutierrez was at fault. The court fails to note that

the first reconstruction expert contacted by Boston

Old Colony, Delton Dollar, subsequently testified for

and in favor of Gutierrez.

3. The court completely misinterprets and mistates

the facts leading up to execution of the hold harmless

agreement. In the court’s words:

Brown was opposed to a settlement. He had

counterclaimed against Gutierrez for his own

injuries and apparently did not want to make

“See, e.g., American Mutual Liability Ins. Co. v. Cooper, 61

F.2d 446 (5th Cir. 1932); Maryland Casualty Co. v. Elmira Coal Co.,

69 F.2d 616 (8th Cir. 1934); Thompson v. Commercial Union, 250

So.2d 259 (Fla. 1971).

“Baxter v. Royal Indemnity Co., 285 So.2d 652 (Fla. lst DCA

1973); Springer v. Citizens Casualty Co., 246 F.2d 123 (5th Cir.

1957); Liberty Mutual Ins. Co. v. Davis, 412 F.2d 475 (5th Cir.

1969).

the admission of fault implied by an offer to

settle. So Boston Old Colony asked for, and

Brown executed, a “hold harmless agreement”,

in which Brown assumed responsibility for any

excess judgment.

386 So.2d at 784.

The sequence of events and rationale therefore are in

error. Testimony of Mr. Kneale, Brown’s attorney,

revealed that Brown was induced to execute the hold

harmless agreement because he believed that he would

be unable to recover from Boston Old Colony on his

uninsured motorist policy without such an agreement.

This inducement occurred despite the fact that Boston

Old Colony had been aware since January that Gutierrez

in fact had liability insurance and that Brown would

not be able to recover under the uninsured motorist

provision of his policy.

Brown executed the hold harmless letter on March

5, 1973. It was not until one month later, in April, that

Gutierrez sued Brown for his damages. On June 13,

1973, Brown submitted his claim to Boston Old Colony

for reimbursement pursuant to his unemployed motorist

coverage. It was not until after Boston Old Colony

informed Brown that he could not recover under that

provision that Brown then counterclaimed against

Gutierrez in circuit court.

The sequence of events of the hold harmless letter

is highly relevant to the issue of bad faith on the part

of Boston Old Colony, in that: (1) Boston Old Colony

induced Brown to execute the hold harmless agreement

on the mistaken belief that he would be able to recover

under the uninsured motorist provision of his policy —

a mistaken belief deliberately given him by Boston Old

Colony; and (2) by inducing Brown to execute the hold

harmless agreement, Boston Old Colony intentionally

exposed him to a substantial excess judgment over and

above the $10,000.00 policy limits.

4. While the court notes that Boston Old Colony

offered Gutierrez the policy liraits in settlement after

Brown's counterclaim was no longer pending, the court

fails to note that said offer was made on the day of the

trial — and by that time Gutierrez had incurred

substantial medical expenses, loss of earnings, and

attorneys’ fees and costs well in excess of the $10,000.00

policy coverage.

In its opinion, the court discusses three obligations

of an insurance carrier, and then concludes that “[t]he

evidence presented in the present case demonstrates

that Boston Old Colony fulfilled all these obligations.”

386 So.2d at 785. To the contrary, the evidence in the

record which was presented to the jury — and which

the jury rightfully chose to believe — demonstrates

that Boston Old Colony in fact scorned these obligations

and acted in total disregard to them.

First, the court stated, an insurer has the 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. This includes the

duty to exercise such control and make such decisions

in good faith and with due regard for the interests of

the insured. /d. at 785. Testimony given at trial, however,

strongly suggested that Boston Old Colony did not act

in good faith and with due regard for the interests of

its insured, Brown. Rather, Boston Old Colony

intentionally led Brown to believe that he would be

able to recover under his uninsured motorist policy —

when, in fact, Boston Old Colony had known since January

that Gutierrez had insurance and this remedy was

therefore not available to Brown. As Kneale, Brown’s

lawyer, testified at trial, Boston Old Colony’s position

to Brown was that it would not pay both ways: it would

either pay the uninsured motorist claim to Brown or

would pay Gutierrez’s claim, but would not pay both.

Kneale further testified that Boston Old Colony had

told him that Brown’s uninsured motorist claim would

not receive favorable treatment unless the hold harmless

letter was prepared. By inducing Brown to execute the

hold harmless agreement, Boston Old Colony virtually

insulated itself from liability and subjected only Brown

to the excess judgment. In fact, at the time of the

execution of the hold harmless agreement in March, it

was apparent that Gutierrez’s injuries were so substantial

as to have already surpassed the $10,000.00 policy

coverage.

Second, the court stated, the good faith duty of an

insurer obligates it 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. Jd. at 785. Yet there was no

testimony presented to the jury which indicated that

Boston Old Colony had ever undertaken to advise Brown

as to those matters, nor does the court make reference

to any such testimony in the record.

Third, the court stated, the insurer must investigate

the facts, give 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. Jd.

at 785. Boston Old Colony knew that the liability for an

automobile accident which rendered Gutierrez paraplegic

would unquestionably be high, and would far exceed

the policy coverage of $10,000.00. Because of its devious

manueverings to extract the hold harmless letter from

Brown, Boston Old Colony obviously never considered

what it would do if faced with the prospect of paying

the total recovery in this cause.”

The court contrasted the factual Situation of

Thompson v. Commercial Union Insurance Company of

New York, 250 So.2d 259 (Fla. 1971), with the facts in

this case before it, and concluded that the “facts in

Thompson are materially different from the facts now

before us.” Jd. at 785. The court perceived the differences

between Thompson and the instant case to be as follows:

1. “In the present case, Brown, the insured, at all

times contested liability and had evidence to support

his position.”

Brown contested liability only because he had been

led to believe by Boston Old Colony that he would be

paid on his uninsured motorist claim only if he were

not liable for the accident. The fact is that when

Gutierrez’s insurance company settled Brown's

counterclaim prior to trial for $5,000.00, Brown at that

"See Brown v. U.S. Fidelity & Guaranty Co., 314 F.2d 675 (2d

Cir. 1963); Bell v. Commercial Ins. Co., 280 F.2d 514 (3d Cir. 1960):

Coleman v. Holecek, 542 F.2d 532 (10th Cir. 1976).

point directed Boston Old Colony also to settle. The

only evidence that Brown had to support his position of

non-liability was the testimony of three witnesses, who

were friends of the family and not eyewitnesses, as to

their “assumptions,” and the testimony of the accident

reconstructionist hired by Boston Old Colony after the

first reconstructionist contacted by them, Delton Dollar,

reported that Brown was in fact responsible for the

accident.

2. “Brown expressly requested Boston Old Colony

not to settle the claim because he was pursuing a

counterclaim against Plaintiff Gutierrez.”

This is an inaccurate misstatement of the facts of

this case. As previously discussed, Brown did not file

his counterclaim against Gutierrez until after his claim

pursuant to the uninsured motorist policy had been

denied.

3. “Brown executed a ‘hold harmless’ agreement in

which he assumed responsibility for any excess

judgment.”

The record reflects that this agreement was

frauduently induced by Boston Old Colony for the sole

purpose of insulating it from additional liability in what

was obviously a case involving substantial damages.

4. “After settlement of Brown's counterclaim, prior

to trial, Boston Old Colony offered to settle for

policy limits.”

This offer came to Gutierrez on the day of trial,

approximately one year from the date of the accident.

Clearly his damages far exceeded the $10,000.00 policy

limit — as the jury so correctly found in awarding him

$1,418,350.16 .

5. “Unlike Thompson where the insurer refused to

settle at all times despite advice of its own counsel,

here the insurer was ready to settle, expressed its

willingness to settle, and only because of the explicit

request of its own insured, it did not settle.”

Testimony at trial revealed that Boston Old Colony

was not only not willing to settle, but was not even

willing to negotiate in the early stages of this case. As

attorney Lanza testified at trial, subsequent to his

involvement in the case he recommended to Boston

Old Colony on two separate occasions that they settle

the case for the policy limits, because the facts supported

Gutierrez’s claim and the damages were going to be

heavy.” When informed by Boston Old Colony that

they would not settle, Lanza informed the company

that his only hope was to “foul up” the testimony of the

eyewitnesses as to what actually happened.

6. “Furthermore in the present case, unlike Thompson,

the plaintiff refused to settle when the insurer

subsequently offered to settle prior to trial.”

Gutierrez rightfully refused to sectle at the time

of the first offer, on the day of the trial, because his

damages far exceeded the $10,000.00 policy limit.

In sum, contrary to being “materially different”

from the facts in Thompson, the case herein is completely

analogous and similar to the Thompson case.

A reading of the supreme’s court opinion, when

contrasted with the opinion of the district court of

appeal, suggests that the court, in total contravention

to case law, viewed the facts herein in the light most

favorable to the non-prevailing party, Boston Old Colony.

Nowhere in the court’s opinion is there discussion of

the substantial testimony given by Gutierrez’s two

expert witnesses, Arthur Hawkesworth and Ray Dwyer,

on the issue of bad faith. Although the testimony existed

and was given to the jury, the court gave it no credence

whatsoever.* This clearly amounts to a “weighing of

the evidence” — which appellate courts are strictly

prohibited from doing.

The effect of the supreme’s court ruling is to deny

Petitioner his right to a trial by jury by substituting

its judgment for that of the jury. Only if there were no

evidence of bad faith in the record below would the

court's ruling be proper; however, as demonstrated

herein, there was substantial evidence of bad faith of

the insurer, Boston Old Colony. The jury so found, the

district court of appeal correctly acknowledged, yet

the Florida Supreme Court dismissed such evidence as

being insufficient or non-existent.

The total effect of this ruling is to deny Petitioner

his right to due process of law, in violation of the

Fourteenth Amendment to the United States Constitution.

This case is the converse of the cases of Thompson

v. Louisville, 362 U.S. 199, 4 L.Ed. 2d 654, 80 S.Ct. 624

(1960), and Jackson v. Virginia, __ U.S.___, 99 S.Ct. 2781

See Springer v. Citizens Casualty Co., 246 F.2d 123 (5th Cir.

1957).

“See Government Employees Ins. Co. v. Grounds, 311 So.2d

164 (Fla. 4th DCA 1975).

(1979). In both Thompson and Jackson, the United States

Supreme Court held that it was a denial of due process

for a state to take away a person’s liberty in the absence

of sufficient evidence supporting a conviction. It follows,

therefore, that it is equally a denial of due process for a

state to take away a person’s property in the absence

of sufficient evidence to do so.

In the case sub judice, the Supreme Court of Florida

has denied the Petitioner due process of law by taking

away his property in the absence of sufficient evidence.

As grounds for its decision, the court states that there

was insufficient evidence to support a finding of bad

faith by the jury. As delineated herein, however, there

was not only sufficient evidence to support the jury

verdict, the evidence was overwhelming and virtually

uncontradicted on major points, such as the bad faith

evidenced by Boston Old Colony’s inducement of Brown

to execute the hold harmless letter. For the highest

court of this state to disregard the substantial evidence

presented at trial and to view the record in a light

most favorable to Boston Old Colony, the non-prevailing

party, amounts to an arbitrary and capricious denial of

Petitioner’s due process right.

It cannot be said that, because this case involves

State action by a state court, no federal right exists or

no federal right has been violated. Case law is clear

that when a state acts arbitrarily in violation of its own

rules, a violation of federal law will be found to have

occurred.

In Hicks v. Oklahoma,___ U.S.___, 48 U.S.L.W.. 4724

(June 17, 1980), the United States Supreme Court

opined:

It is argued that all that is involved in this

case is the denial] of a procedural right of

exclusively state concern. Where, however, a

State has provided for the imposition of criminal

punishment in the discretion of the trial jury,

it is not correct to say that the defendant’s

interest in the exercise of that discretion is

merely a matter of state procedural law. The

defendant in such a case has a substantial and

legitimate expectation that he will be deprived

of his liberty only to the extent determined by

the jury in the exercise of its statutory discretion,

cf. Greenholtz v. Nebraska Penal Inmates, __ U.S.

(1979), and that liberty interest is one that

the Fourteenth Amendment preserves against

arbitrary deprivation by the State. See Vitek

v. Jones,___ U.S.__, citing Wolff v. McDonnell,

418 U.S. 539; Greenholtz v. Nebraska Penal

Inmates, supra at__; Morrissey v. Brewer, 408

U.S. 471. In this case Oklahoma denied the

petitioner the jury sentence to which he was

entitled under state law, simply on the frail

conjecture that a jury might have imposed a

sentence equally as harsh as that mandated

by the invalid habitual offender provision. Such

an arbitrary disregard of the petitioner’s right

to liberty is a denial of due process of law.

48 U.S.L.W. at 4725 (footnote omitted).

Similarly, in the case at bar, Florida law provides

that reviewing courts may not sit as triers of fact or

substitute their judgment or conclusions for those of

the trial court. Rather, Florida appellate courts are

required to view the evidence in the light most favorable

to the prevailing party; where any evidence can be said

to exist in support of the judgment, the court is bound

thereby and must affirm the judgment. Yet the Supreme

Court of Florida in reviewing this cause did exactly the

opposite, in flagrant violation of its own rules. The

court reweighed the evidence below and took that

evidence in the light most favorable to the non-prevailing

party. The sum effect of such arbitrary state action is

to deny Petitioner his property in violation of the

Fourteenth Amendment.

While the full parameters of a state’s arbitrariness

have yet to be defined by the United States Supreme

Court, at least one circuit has held that a state court’s

refusal to allow a defendant to present evidence to a

jury relating to his defense is a denial of due process of

law. In Hughes v. Mathews, 576 F.2d 1250 (7th Cir.

1978), the Seventh Circuit Court of Appeals considered

whether a state court’s exclusion of psychiatric testimony

in a murder prosecution where a defendant’s defense

was that he lacked the specific intent required for a

first degree murder conviction served to deprive the

defendant of presenting his defense and thereby denied

him due process of law. The court held that such testimony

was indeed relevant and competent, and its arbitrary

exclusion deprived defendant his right to due process

of law:

... [T]he right of a defendant to present evidence

is a right which has independent status under

the sixth and fourteenth amendments.

... What we have done is to recognize that a

state may not relieve the prosecution of its

duty to prove all elements of the crime charged

beyond a reasonable doubt by improper use of

presumptions. We have also recognized the

due proce.s right of the defendant to present

relevant and competent evidence in the absence

of a valid state justification for excluding such

evidence. Upon the particular facts of this case,

we find Wisconsin's justifications to be

inapplicable.

Id. at 1255, 1259.

It follows, therefore, that the Florida Supreme

Court’s arbitrary denial that substantial competent

evidence existed to support a finding of bad faith similarly

amounted to a denial of due process of law. In Hughes,

the state refused to allow the defendant to introduce

relevant evidence essential to his case. In the instant

case, while Gutierrez was permitted to present substantial

evidence at trial in support of his allegation of bad

faith on the part of Boston Old Colony, the Supreme

Court of Florida has arbitrarily disregarded this evidence

— and the ultimate denial of due process here is identical

to that identified by the Seventh Circuit in Hughes.

CONCLUSION

The decision by the Supreme Court of Florida,

which held that there was no sufficient evidence from

which any reasonable jury could have found bad faith

on the part of Boston Old Colony, had the effect of

denying Petitioner his right of due process of law by

arbitrarily ignoring the evidence presented at trial.

Not only was the evidence demonstrating bad faith in

refusing to settle substantial, it was overwhelming —

and properly convinced a jury and the reviewing district

court of appeal.

The district court correctly identified evidence in

the record relating to bad faith which, as the jury

found, was competent and substantial to support a

verdict of bad faith. To allow the highest court of this

state to ignore the overwhelming weight of the evidence

and to substitute its judgment for that of the jury

mocks the very process of trial by jury and

unconstitutionally denies Petitioner due process of law.

Accordingly, Petitioner requests this Court to issue

a Writ of Certiorari to the Supreme Court of Florida,

instructing it to quash its decision and reinstitute the

decision of the district court of appeal.

Respectfully submitted,

SIMON, SCHINDLER & TRIPP, P.A.

1492 South Miami Avenue

Miami, Florida 33130

Tel: (305) 358-8611

By: /s/

TOBIAS SIMON

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy

of the foregoing Petition for Writ of Certiorari was

hand-delivered to JAMES E. TRIBBLE, ESQ., Blackwell,

Walker, Gray, Powers, Flick & Hoehl, Attorneys for

Petitioner Boston Old Colony Insurance Company, at

2400 First Federal Building, One Southeast Third Avenue,

Miami, Florida 33131, and was filed by U.S. Mail with

the CLERK OF THE SUPREME COURT OF THE

UNITED STATES, First and Maryland Avenue, N.E.,

Washington, D.C. 20543, pursuant to Supreme Court

Rule 28.2, by depositing it in a United States Post

Office, Return Receipt Requested, with first-class postage

prepaid, this 8th day of December, 1980.

/s/

TOBIAS SIMON

30A

Appendix

APPENDIX

Page

Boston Old Colony Co. v. Gutierrez,

re EE AG Re Pecesncicnspisisncsenstvosescesonesecsenconsees App. 2

Boston Old Colony Insurance Co. v. Gutierrez,

360 So.2d 464 (Fla. 3d DCA 1978).......ssessseeeeees App. 13

Florida Supreme Court Order dated September 4,

1980, denying Petition for Rehearing................. App. 24

App. 1

BOSTON OLD COLONY INSURANCE

COMPANY, Petitioner,

Raul GUTIERREZ, Respondent.

No. 54769.

Supreme Court of Florida.

April 10, 1980.

Rehearing Denied Sept. 4, 1980.

Individual who had been injured in motor vehicle

collision with insured and who obtained judgment against

him brought action against the latter’s automobile insurer

alleging bad faith because of failure to settle within

policy limits. The Circuit Court, Dade County, Donald

E. Stone, J., rendered judgment against insurer. The

District Court of Appeal affirmed, 360 So.2d 464, and

question was certified. The Supreme Court held that

automobile insurer did not act in bad faith so as to be

subject to liability for personal injury judgment in

excess of policy limits where insured expressly requested

insurer not to settle because he was pursuing a

counterclaim against tort plaintiff, insured executed

“hold harmless” agreement assuming responsibility for

excess judgment and after settlement of counterclaim

prior to trial insurer offered to settle for policy limits,

which offer was refused by plaintiff.

Decision of district court quashed and cause

remanded for new proceedings.

App. 2

Alderman, J., concurred specially with an opinion,

with which McDonald, J., concurred.

Adkins and Boyd, J.J., dissented.

1. Insurance — 514.5(1)

In some circumstances, the Thompson rule may

authorize a bad-faith action by an injured party against

a tort-feasor’s insurer when the insurer has refused to

settle the claim at the express direction of the insured

who obtains a settlement of his own claim and the

insurer thereafter offers to settle for policy limits before

trial. (Per curiam opinion of three Judges with two

Judges concurring specially.)

2. Insurance — 514.2

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.

3. Insurance — 514.2

When an insured has surrendered to the insurer

all control over the handling of the claim, including all

decisions with respect to litigation and settlement, 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.

App. 3

4. Insurance — 514.2

The duty of good faith obligates an 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.

5. Insurance — 514.2

An 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.

6. Insurance —- 514.2

Since the duty of good faith involves diligence and

care in the investigation and evaluation of claims against

the insured, negligence is relevant to the question of

the insurer’s good faith.

7. Insurance —514.5(3)

Question of insurer’s failure to act in good faith

with due regard for the interests of the insured in the

handling of claims against him is for the jury.

8. Insurance — 514.4

Automobile insurer did not act in bad faith so as to

be subject to liability for personal injury judgment in

excess of policy limits where insured expressly requested

insurer not to settle because he was pursuing a

App. 4

counterclaim against tort plaintiff, insured executed

“hold harmless” agreement assuming responsibility for

excess judgment and after settlement of counterclaim

prior to trial insurer offered to settle for policy limits,

which offer was refused.

9. Insurance — 514.3

An insurer cannot escape liability for breach of

duty of good faith by acting on what it considers to be

its interests alone; an insurer with control over defense

and settlement must at all times act in good faith, and

it may not insulate itself from a bad-faith excess judgment

by simply obtaining a hold harmless agreement from

the insured.

James E. Tribble of Blackwell, Walker, Gray, Powers,

Flick & Hoehl, Miami, for petitioner.

Murray Sams, Jr. and Francis W. Sams of Sams,

Gerstein & Ward, Miami, for respondent.

PER CURIAM.

[1] We have for review the decision of the District

Court of Appeal, Third District, in Boston Old Colony

Ins. Co. v. Gutierrez, 360 So.2d 464 (Fla.3d DCA 1978).

That court has certified the following question as passing

upon a question of great public interest: “Does the law

as enunciated in Thompson v. Commercial Union Ins.

Co. of New York, 250 So.2d 259 (Fla.1971), authorize a

bad faith action against an insurance company when

that company has refused to settle a claim at the express

direction of its own insured who obtains a settlement

of his claim and the insurance company thereafter offers

App. 5

to settle for its policy limits before trial?” Although we

hold that Thompson may, in some circumstances, authorize

such a suit, we find the evidence in this case legally

insufficient to show bad faith on the part of Boston Old

Colony Insurance Company.

Brown and Gutierrez were involved in a head-on

collision. Both men claimed that they had been travelling

east and that the other’s car, headed west, crossed the

center line of the highway and caused the collision. The

officer who investigated at the scene concluded that

Brown was responsible. Gutierrez brought an action

against Brown for his injuries which action was defended

by Brown’s liability insurance carrier, Boston Old Colony.

Brown's liability policy covered him up to a limit of

$10,000.

In view of Brown’s version of the facts and some

corroborating evidence, Boston Old Colony retained an

accident reconstruction expert. The expert examined

the accident site and the wrecked vehicles and concluded

that Brown’s account was correct, that Gutierrez was

west-bound and on the wrong side of the road at the

point of impact.

Despite this favorable e t opinion evidence,

Boston Old Colony’s adjustor bandFiners was a question

of liability. He knew also that Gutierrez’s injuries were

extensive and that there was a possibility of an excess

judgment. He warned Brown of these matters and

suggested an offer to settle for the policy limits. Brown

was opposed to a settlement. He had counterclaimed

against Gutierrez for his own injuries and apparently

did not want to make the admission of fault implied by

an offer to settle. So Boston Old Colony asked for, and

App. 6

Brown executed, a “hold harmless” agreement, in which

Brown assumed responsibility for any excess judgment.

Before the trial, with the claim and the counterclaim

pending, Gutierrez offered to take the policy limits in

settlement of his claim against Brown. Boston Old Colony

responded by denying liability. Subsequently, Brown

reached a settlement of his counterclaim against Gutierrez

and his insurer. With the counterclaim no longer pending,

Boston Old Colony offered Gutierrez the policy limits

in settlement. By this time, however, Gutierrez preferred

to proceed to trial. The trial resulted in a judgment for

Gutierrez against Brown for $1,400,000. Gutierrez then

brought the present action against Boston Old Colony,

alleging bad faith on the part of the insurance company

because of its failure to settle the claim for the policy

limits when it had the opportunity. Gutierrez prevailed

and obtained a judgment against Boston Old Colony for

$1,400,000.

On appeal, Boston O!d Colony argued that its motion

for a directed verdict should have been granted since

the evidence showed that Brown at all times contested

liability and had evidence to support his position; that

he requested that his insurer not settle the suit since

he was pursuing his counterclaim against Gutierrez;

and that after settlement of the counterclaim, Boston

Old Colony offered the policy limits before trial. The

district court affirmed, holding that there was sufficient

evidence upon which a jury could base a verdict of bad

faith failure to settle.

Boston Old Colony contends that Gutierrez, the

injured tort plaintiff, should not be allowed to bring

this action directly against it for its alleged bad faith in

App. 7

failing to settle his claim against Brown, its insured.

We previously rejected a similiar contention in Thompson

v. Commercial Union Ins. Co. of New York. The fact

that such an action may be brought does not mean,

however, that Gutierrez is entitled to an excess judgment.

He must first establish by legally sufficient evidence

that the insurance company acted in bad faith.

[2-7] This brings us to Boston Old Colony’s second

contention that there was no evidence sufficient to

support the jury’s finding of liability for bad faith in

not settling the claim. 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. Auto Mutual Indemnity

Co. v. Shaw, 134 Fla. 815, 184 So. 852 (1938). 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. Liberty Mutual Ins. Co. v.

Davis, 412 F.2d 475 (5th Cir. 1969). 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. Ging v. American Liberty

Ins. Co., 423 F.2d 115 (5th Cir. 1970). 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. Government Employees Ins. Co.

App. 8

v. Grounds, 311 So.2d 164 (Fla. lst DCA 1975), cert.

discharged, 332 So.2d 13 (Fla.1976); Government

Employees Ins. Co. v. Campbell, 288 So.2d 513 (Fla. 1st

DCA 1973), quashed, 306 So.2d 525 (Fla.1974); Baxter v.

Royal Indemnity Co., 285 So.2d 652 (Fla. lst DCA 1973),

cert. discharged, 317 So.2d 725 (Fla.1975). Because the

duty of good faith involves diligence and care in the

investigation and evaluation of the claim against the

insured, negligence is relevant to the question of good

faith. American Fidelity and Casualty Co. v. Greyhound

Corp., 258 F.2d 709 (5th Cir. 1958); DeLaune v. Liberty

Mutual Ins. Co., 314 So.2d 601 (Fla. 4th DCA 1975). The

question of failure to act in good faith with due regard

for the interests of the insured is for the jury. Campbell

v. Government Employees Ins. Co., 306 So.2d 525

(Fla.1974).

[8] The evidence presented in the present case

demonstrates that Boston Old Colony fufilled all these

obligations. We hold that under the facts of this case,

Thompson does not require the result reached by the

district court of appeal. There is no sufficient evidence

from which any reasonable jury could have concluded

that there was bad faith on the part of the insurer. The

facts in Thompson are materially different from the

facts now before us. In the present case, Brown, the

insured, at all times contested liability and had evidence

to support his position. Brown expressly requested

Boston Old Colony not to settle the claim because he

was pursuing a counterclaim against plaintiff Gutierrez.

Brown executed a “hold harmless” agreement in which

he assumed responsibility for any excess judgment.

After settlement of Brown’s counterclaim, prior to trial,

Boston Old Colony offered to settle for policy limits.

Unlike Thompson, where the insurer refused to settle

App. 9

at all times despite advice of its own counsel, here the

insurer was ready to settle, expressed its willingness

to settle, and only because of the explicit request of its

own insured did not settle. Furthermore, in the present

case, unlike Thompson, the plaintiff refused to settle

when the insurer subsequently offered to settle prior

trial.

[9] By way of caveat, we point out that the “hold

harmless” agreement in this case was not a determining

factor in our decision. An insurer cannot escape liability

for breach of the duty of good faith by acting upon

what it considers to be its interest alone. An insurer

with control over defense and settlement must at all

times act in good faith, and it may not insulate itself

from a bad faith excess judgment by simply obtaining a

hold harmless agreement from its insured.

Accordingly, we hold that Boston Old Colony’s

motion for a directed verdict should have been granted,

and we quash the decision of the district court. This

cause is remanded for further proceedings consistent

herewith.

It is so ordered.

ENGLAND, C. J., and OVERTON, SUNDBERG

and McDONALD, J.J., concur.

ALDERMAN, J., concurs specially with an opinion,

with which McDONALD, J., concurs.

ADKINS and BOYD, J.J., dissent.

ALDERMAN, Justice, concurring specially.

App. 10

I concur with the Court’s decision that the evidence

in this case is insufficient to support the jury’s verdict.

I concur specially to express my dissatisfaction

with the rule of law announced in Thompson v.

Commercial Union Ins. Co. of New York, 250 So.2d 259

(Fla.1971). I believe an injured tort plaintiff should not

be allowed to bring an action directly against a tortfeasor's

insurer for bad faith failure to settle a claim because, in

my opinion, the insurer's good faith duty to settle runs

only to its insured. Merely because an injured party

becomes a third party beneficiary under an insurance

policy does not entitle that party to invoke all the

provisions of the insurance contract or statutes which

govern the rights and duties between insurer and insured.

Wilder v. Wright, 278 So.2d 1 (Fla.1973).

In the “Alice-in-Wonderland” world created by

the Thompson rule, it is to the injured party's benefit if

the insurer breaches its duty to its insured and to his

detriment if there is no breach. This is so since, if the

insurer settles, the plaintiff will receive more than the

policy limits, but if it does not, the plaintiff may end up

with both the policy limits and an excess judgment.

Judge Carroll, in Canal Insurance Company of

Greenville, South Carolina v. Sturgis, 114 So.2d 469

(Fla. lst DCA 1959), aff'd, 122 So.2d 313 (Fla.1960),

clearly perceived the illogic of allowing an injured third

party to maintain a direct action against the insurer

for failure to settle when he said:

No one can today question the legal right of

the insured to sue the insurer for negligence

or bad faith in failing to settle a claim within

App. 11

the policy limits for, if he has had to pay a part

of the judgment, he has indeed suffered damages

because of such failure of the insurer; but,

when the judgment creditor directly so sues

the insurer for an amount above such limits, a

vastly different situation exists in the eyes of

the law. The judgment creditor has not suffered

because of the insurer's failure, but has, if

anything, gained thereby. The judgment creditor

would be in an anomalous position, for typically

he would be claiming damages for the insurer's

failure to settle the case for much less than

the verdict he himself actually won.

114 So.2d at 471. Far from encouraging settlement of

controversies, which Thompson said would result from

a rule permitting direct suits, the Thompson rule induces

a plaintiff, as in this case, not to settle.

McDONALD, J., concurs.

App. 12

BOSTON OLD COLONY INSURANCE

COMPANY, a foreign corp.,

Appellant,

Raul GUTIERREZ, Appellee.

Nos. 77-508, 77-761.

District Court of Appeal of Florida,

Third District.

July 11, 1978.

Plaintiff, injured in automobile collision with

defendant insurer’s insured, brought action against insurer

for bad faith failure to settle with plaintiff. Insurer

took consolidated appeals from final judgment against

it entered in the Circuit Court, Dade County, Donald E.

Stone, J., and from a posttrial order allowing plaintiff

an attorney's fee. The District Court of Appeal, Pearson,

J., held that: (1) evidence supported verdict against

insurer, notwithstanding that insurer had a request

from its own policyholder not to settle plaintiff's claim,

especially in view of evidence of less than open-handed

dealings with the insured, and (2) plaintiff was not

entitled to award of an attorney’s fee, absent assignment

of insured’s claim.

Final judgment affirmed and order allowing

attorney's fees to plaintiff reversed.

1. Insurance —514.5(1)

Plaintiff, injured in automobile collision with

defendant’s insured, was entitled to bring action directly

against the tort-feasor liability insurer for recovery of

judgment in excess of policy limits based upon a claim

App. 13

of fraud or bad faith on insurer in the conduct or

handling of plaintiff's suit.

2. Insurance —514.5(2)

In action by plaintiff, injured in automobile collision

with defendant insurer’s insured, for bad-faith failure

to settle with the plaintiff, evidence supported verdict

against insurer, notwithstanding that insurer had a

request from its own policyholder not to settle plaintiff's

claim, expecially in view of evidence of less than open-

handed dealings with the insured.

3. Insurance —514.5(1)

Under circumstances, injured plaintiff's action against

tort-feasor’s insurer for bad {faith in refusing to settle a

claim was maintainable notwithstanding that company

has offered to settle for its policy limits prior to trial.

4. Insurance —514.5(4)

In action by plaintiff, injured in automobile collision

with defendant insurer’s insured, for bad-faith failure

to settle with plaintiff, insurer’s requested instruction

concerning a party’s right to recover damages flowing

from consequences which that party could reasonably

have avoided was inapplicable under evidence, since

issue of whether bad faith had occurred prior to

withdrawal of plaintiff's offer to settle for policy limits

was clearly drawn.

5. Insurance —675

In action by plaintiff, injured in collision with

defendant insurer’s insured, for bad-faith failure to

App. 14

settle with plaintiff, plaintiff was not entitled to award

of an attorney's fee, absent assignment of insured’s

claim.

Blackwell, Walker, Gray, Powers, Flick & Hoehl

and James E. Tribble, Miami, for appellant.

Sams, Anderson & Ward and Murray Sams, Jr.,

Miami, for appellee.

Before HAVERFIELD, C.J., and PEARSON, J.

and CHARLES CARROLL (Ret.), Associate Judge.

PEARSON, Judge.

The first of these consolidated appeals is from a

final judgment upon a jury verdict in an action against

an insurance company by an injured plaintiff (who is

not a policyholder of the insurer) for bad faith failure to

settle with the plaintiff. The second is an appeal from a

second judgment awarding the plaintiff attorney's fees

in the same action. The principal issue presented on

the first appeal is whether the evidence supports the

judgment. On the second appeal, the issue is whether

attorney's fees may be separately assessed by the court

as an adjunct to the cause of action.

The evidence before the jury, viewed in the light

most favorable to the verdict, is that on January 1,

1973, at approximately 6:00 p.m., Boston Old Colony’s

insured Brown, and appellee Gutierrez were involved

in a head-on collision on West Flagler Street in Miami,

Florida. At the time of the accident, Brown had an

automobile liability policy with Boston Old Colony which

provided liability coverage of $10,000 per person. An

App. 15

unusual circumstance of the accident was that both

Brown and Gutierrez claimed to have been proceeding

east on Flagler Street and each claimed that the other

car was headed west on Flagler Street, came over the

center line and hit him head-on. There were three

witnesses to the accident. All three of these witnesses

gave testimony that Gutierrez was headed east on Flagler

Street when Brown, who was traveling west, crossed

the center line and struck Gutierrez’s automobile head-

on in his lane. Brown told George Heider, a senior

adjuster of Boston Old Colony, that he was proceeding

east on Flagler Street when the other automobile, heading

west on Flagler Street, came over the center line and

hit him head-on. Three witnesses provided by Brown

to his insurance company gave statements supporting

Brown's version of the accident. They lived in a trailer

park two blocks west from where the accident occurred

and said that Brown had been with them minutes before

the accident when he drove out of the trailer park and

headed east on Flagler Street. The investigating officer,

after viewing the scene and interviewing the

eyewitnesses, charged Brown with the accident.

Heider knew there was a question of liability despite

Brown's version of the accident, and he so noted in his

file. He knew that Gutierrez’s injuries were serious

and he noted in his file that Gutierrez was in South

Miami Hospital in the intensive care unit. His condition

was listed as critical. He also learned that Gutierrez

had a fractured arm, thirteen fractured ribs, a fractured

leg and was paralyzed from the waist down. Brown

could not talk due to a tracheotomy. Although Boston

Old Colony denied any liability to Gutierrez’s attorney

on January 9th and again on February 12th, Heider

App. 16

had, in fact, set up a reserve of $9,500 on Brown’s

policy of $10,000. Heider had full authority to settle

where there was a possibility of a verdict and a judgment

in excess of the $10,000 policy limits.

On January 18th, at Heider’s request, Boston Old

Colony engaged a Mr. David Plummer, a trained

professional accident reconstruction expert, to investigate

the physical evidence and to render an opinion as to

which car had been traveling east. After examining the

accident site and the wrecked vehicles, a report was

sent by Plummer to Heider on March 14th in which he

discussed the physical evidence and gave his opinion

that Brown was eastbound and Gutierrez was westbound

on Flagler Street. He further concluded that Gutierrez

was completely on the wrong side of the pavement at

the point of impact. Brown reported to Heider that he

had employed a personal attorney, Malcolm Kneale,

and was planning to make, and later did make, a claim

for his own injuries. Heider determined that because

of the seriousness of Gutierrez’s injuries and the conflict

in liability testimony, he would offer to pay the $10,000

policy limits to settle the Gutierrez claim. Before making

the offer to Gutierrez, Heider again talked with Brown.

Although there was nothing in the policy that gave

Brown the right to approve or disapprove the settlement,

Heider consulted with him because Heider knew that

Brown was represented by personal counsel and was

going to make claim for his own injuries. During the

conversation, Brown adamantly opposed offering

settlement to Gutierrez even though Heider had warned

him of a possible excess verdict. Heider asked Brown

to provide Old Colony with a hold harmless letter. The

hold harmless letter was prepared by Brown’s attorney,

Kneale, and was signed by Brown.

App. 17

There was a conflict in the testimony between

Kneale and Heider as to the circumstances leading up

to the hold harmless letter. Accepting Kneale’s testimony

at the trial, it is that some time before the execution of

the hold harmless letter, Heider had told him that

Gutierrez had no liability insurance and that Kneale

and Heider had discussed an uninsured motorist claim

by Brown against Boston Old Colony. According to

Kneale, Heider’s position had been that Boston Old

Colony would not “pay both ways;” that it would pay

either the uninsured motorists claim or Gutierrez’s

claim, but it would not pay both. Kneale also testified

that Heider told him that Brown’s uninsured motorist

claim would not receive favorable treatment unless the

hold harmless letter was prepared and that he was

relying on Heider to make immediate settlement under

the uninsured motorist claim.

In actuality, Gutierrez had a liability insurance

policy with Government Employees Insurance Company.

On March 14th, Gutierrez’s attorney wrote Heider offering

to settle the claim against Brown and Boston Old Colony

for the policy limits. On March 22nd, Heider wrote

Gutierrez’s attorney denying liability. Heider testified

that he would, at that time, have paid the policy limits

of $10,000 had he not obtained the hold harmless letter.

On March 23rd, Heider sent Brown’s attorney a copy of

Gutierrez’s attorney’s letter of March 14th offering to

settle for the policy limits.

Thereafter, suit was filed by Gutierrez against

Brown and Boston Old Colony. Boston Old Colony engaged

an attorney, George Lanza, to defend Brown and Boston

Old Colony. Attorney Lanza reported that the case

was bad and recommended settlement for the policy

limits. Although Lanza was not asked for his opinion

App. 18

on liability, he testified that if asked, he would have

stated that without considering the damage factor,

Gutierrez had a fifty-fifty possibility of recovery. On

June 13th, Brown filed a claim against Boston Old

Colony under the uninsured motorist provision of his

policy. On July 11th, Heider wrote Brown’s attorney

that Gutierrez did, in fact, have insurance.

Kneale’s law firm filed a counterclaim for Brown’s

damages in the collision. On November 13th, Gutierrez’s

attorney wrote Boston Old Colony a letter accusing it

of bad faith and withdrawing the offer to settle for the

policy limits. On December 27th, Brown settled his

claim against Gutierrez’s insurer for $5,000. Boston

Old Colony, on January 2nd, offered to settle with

Gutierrez for its policy limits. The cause between

Gutierrez and Brown proceeded on the merits and the

jury returned a verdict for Gutierrez in the amount of

$1,418,350.16

[1] The present cause against Boston Old Colony

was brought by Gutierrez charging bad faith in Boston

Old Colony’s refusal to settle his claim. Upon the law

enunciated by the Supreme Court of Florida in Auto

Mutual Indemnity Co. v. Shaw, 134 Fla. 815, 184 So.

852 (1938), and applied more recently in Thompson v.

Commercial Union Insurance Company of New York,

250 So.2d 259 (Fla.1971), Gutierrez was entitled to bring

the action directly against the tortfeasor liability insurer

for recovery of the judgment in excess of the policy

limits, based upon a claim of fraud or bad faith of the

insurer in the conduct or handling of the suit.

App. 19

Gutierrez’s claim was fully tried before a jury.

Extensive testimony was received and, except for the

testimony of Brown, who was nowhere to be found, the

facts set out were fully explored. The jury returned its

verdict for Gutierrez in the amount of $1,418,350.16,

with interest and costs. This appeal is from that judgment.

The appellant, Boston Old Colony, presents three

points directed to the judgment. The first urges that

Boston Old Colony should have been granted a directed

verdict upon its motions because: (1) The insured, Brown,

maintained at all times that he was not at fault; a

position for which he had some evidence. (2) Brown’s

independent counsel prosecuted and recovered on a

counterclaim against Gutierrez and expressly requested

that the cause not be settled. (3) After the settlement

of Brown’s counterclaim against Gutierrez, Boston Old

Colony offered to settle for its policy limits. Appellant’s

second point urges that the courts of Florida should

recede from the holding in Thompson v. Commercial

Union Insurance Company of New York, cited above,

as the basis for Gutierrez’s claim under Brown’s insurance

policy. The third point claims error upon the court’s

refusal to instruct upon the doctrine of avoidable

consequences as requested by a tendered instruction

based upon Boston Old Colony’s offer to settle for its

policy limits prior to trial. We do not discuss the second

point because we find Thompson v. Commercial Union

Insurance Company of New York to be governing.

[2] We hold that the record contains sufficient

evidence to support the verdict even though Boston

Old Colony had a request not to settle Gutierrez’s

claim from its own policyholder. We are impressed

with the testimony that the policy between Boston Old

App. 20

Colony and Brown left the insurance company free to

exercise its own judgment as to settlement. Further,

there is evidence which, if believed by the jury, could

support Gutierrez’s position that Brown’s position and

the hold harmless letter were procured without a full

disclosure of facts known to Boston Old Colony. We

realize that an insurer is ordinarily bound to act in

accordance with the wishes and the best interests of

its insured, see American Fidelity & Casualty Company

v. Greyhound Corporation, 258 F.2d 709, 716 (5th Cir.

1958), and that it has a right to rely upon his expressed

wishes concerning a settlement of his claim. In this

case, where there was evidence of less than open-handed

dealings with the insured, we think that the submission

of the cause to the jury cannot be said to be faulty as a

matter of law.

[3] The Third aspect of Boston Old Colony’s

argument for error upon the denial of its motions for a

directed verdict presents the question: Is an action for

bad faith in refusing to settle a claim maintainable

when the company has offered to settle for its policy

limits prior to trial? The jury in this case was fully

informed of the offer to settle just prior to trial. The

same jury found bad faith in the insurance company’s

dealing with its insured. The plaintiff-appellee, Gutierrez,

claimed as a third party beneficiary under Brown's

contract with the defendant, Boston Old Colony. The

jury verdict must be interpreted as finding that the

belated offer to settle, made only after bad faith had

been charged and Gutierrez’s offer to settle had been

withdrawn, reasonably resulted in the excess verdict.

We cannot now say that if bad faith had occurred, as

the jury found, that this bad faith was, as a matter of

law, wiped out by the belated offer to settle. Cf. the

App. 21

principles of law in American Fidelity & Casualty

Company v. Greyhound Corporation, 258 F.2d 709, 715-716

(5th Cir. 1958); and cf. Government Employees Insurance

Company v. Grounds, 311 So.2d 164, 167 (Fla. Ist DCA

1975).

(4) Appellant’s remaining point on its appeal from

the final judgment urges that the trial court erred in

failing to give a requested instruction.’ No attack is

made by appellee upon the wording of the instruction.

The question is whether it was applicable under the

evidence in this case. We hold that it was not because

the issue of whether the bad faith occurred prior to the

withdrawal of Gutierrez’s offer to settle for the policy

limits was clearly drawn. See Garrison v. Hertz

Corporation, 129 So.2d 452 (Fla. 3d DCA 1961).

[5] We turn to the second of the consolidated

appeals. This appeal is from a post-trial order allowing

plaintiff Gutierrez an attorney's fee in his bad faith

action. The appellee concedes that the subsequently-

filed decision of the Supreme Court of Florida in Roberts

v. Carter, 350 So.2d 78 (Fla. 1977), is governing and the

award must be reversed because there was no assignment

of the insured’s claim.

| “DEFENDANT'S REQUESTED INSTRUCTION NUMBER FOUR

“A party cannot recover damages flowing from con-

sequences which that party could reasonably have avoided.

If the insured or his counsel, by a reasonable exertion or

care, could have prevented damages resulting to the

insured by reason of the defendant's wrongful acts, it was

his duty to do so, and so far as he or his counsel could

have thus prevented the damages, the plaintiff cannot

recover.”

App. 22

Accordingly, the final judgment is affirmed and

the order allowing attorney's fees to the plaintiff Gutierrez

is reversed.

App. 23

SUPREME COURT OF FLORIDA

THURSDAY, SEPTEMBER 4, 1980

BOSTON OLD COLONY INSURANCE COMPANY,

Petitioner,

RAUL GUTIERREZ,

Respondent.

CASE NO. 54,769

District Court of Appeal,

3d District — Nos. 77-508 & 77-761

Upon consideration of the Petition for Rehearing

filed in the above styled cause by the attorney for

Respondent,

IT IS ORDERED that said Petition be and the

same is hereby denied.

SUNDBERG, C.J., OVERTON, ENGLAND,

ALDERMAN and McDONALD, JJ., concur

ADKINS and BOYD, JJ., dissent

App. 24

A True Copy

TEST:

ec: Hon. Louis J. Spallone, Clerk

Hon. Richard P. Brinker,

Clerk

(with copy for Circuit Judge)

Murray Sams, Jr., Esquire

James E. Tribble, Esquire

Sid J. White

Clerk, Supreme Court

By:

Deputy Clerk

App. 25

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