Contreras v. U.S. Security Insurance Company

927 So. 2d 16 (2006)

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Nature of the Case

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Facts

Flor Torres Osterman, was walking on the side of a road in a residential area when she was hit and killed by a car owned by Deana Dessanti and driven by Arnold Blair Dale. Dale was driving Dessanti's car with her knowledge and permission. Dale was driving at a high rate of speed and had consumed alcoholic beverages. He was charged with DUI manslaughter and leaving the scene of an accident with injuries. Dessanti's vehicle was insured with D which provided bodily injury coverage. Dale, although not a named insured, was an additional insured by virtue of being a permissive user of Dessanti's vehicle. Dessanti reported the accident to D. The claims adjuster, Marlene Plasencia received a letter from P's attorney, Carlos Velasquez, notifying her of his representation of Flor's estate. On August 5, 1992, Velasquez made a demand of D to tender the policy limits of up to $10,000 per person and $20,000 per accident. On August 13, 1992, Plasencia sent Velasquez a letter tendering the policy limits along with a general release form discharging both Dessanti and Dale and all others who might have claims against them as a result of this accident. Velasquez rejected the offer of the policy limits due to the inclusion of Dale and all others on the release. Velasquez offered to accept the policy limits in exchange for a release of Dessanti and D, but not Dale. Through its attorney, Mike Nuzzo D responded and claimed it must act in good faith to all of its insureds. Therefore you can understand why U.S. Security cannot enter into a release that operates to fully exonerate one insured while not releasing the second insured. P filed a wrongful death suit against Dale and Dessanti which ultimately was tried by a jury in December 1994, resulting in a judgment for compensatory damages against Dessanti and Dale for $1,000,000, as well as a punitive damage judgment against Dale in the amount of $110,000 which was later remitted to $5,000. In addition to the final judgment of $1,000,000 entered against Dessanti and Dale, a cost judgment in the amount of $13,143.05 was also entered against Dessanti. This judgment was affirmed. Dessanti had filed for bankruptcy. Dessanti's trustee in bankruptcy, Kenneth A. Welt, executed an assignment to P of Dessanti's cause of action for bad faith against D. After obtaining the assignment, Contreras filed the bad faith claim and proceeded to trial. At the close of P's presentation, D moved for and was granted a directed verdict. It accepted the argument that D was obligated to act in good faith to both Dessanti and Dale as covered insureds. P’s offer to D was a Hobson’s choice. The court held that the offer immediately placed D in a Hobson's choice. If they don't agree to that, they're sued for bad faith, and if they do agree to it, they're sued for bad faith. P appealed.