In Direct General Insurance Co. v. Creamer, the U.S. District Court for the Middle District of Florida determined whether the safe harbor provision of Florida Statutes section 624.155(4)(a), enacted in March 2023, applied to a bad faith claim for an excess judgment against a carrier arising from a 2019 car accident.
This matter stems from an April 2019 accident involving a vehicle insured by Direct General Insurance Co. The Direct General policy had a $10,000 limit for bodily injury. Sean Creamer, a listed driver under the policy, was injured in the accident, as was the driver of the other vehicle, Delvis Eason. Eason’s attorney reported the accident to Direct General approximately a week after it occurred and Direct General timely responded with the policy information.
Twenty-three days after the accident, and after reviewing the police report, Direct General tendered its $10,000 policy limit to Eason. However, Eason’s attorney returned the check and indicated he would submit a formal demand. In September 2019, Direct General reissued the $10,000 check to Eason’s attorney in a good faith effort to resolve the claim. Eason’s attorney responded that Eason would consider accepting the policy limit on condition of Creamer completing a financial affidavit.
Eason eventually filed suit against Creamer in November 2019, after which efforts to negotiate with Eason’s counsel were unsuccessful. On March 29, 2023, a jury returned a verdict in favor of Eason for $1.25 million. A final judgment was entered in August 2023. Following entry of final judgment, Eason filed a motion to add Direct General as a party to the final judgment for the excess amount. Specifically, Eason’s claim was based on Direct General allegedly acting in bad faith by not attempting to resolve the claim prior to judgment.
In response to Eason’s claim, Direct General filed a declaratory action against Eason and Creamer, seeking a declaration that it acted in good faith and fully discharged its obligations in handling the claim. Direct General argued that the safe harbor provision of section 624.155(4)(a) of the Florida Statutes applied. The safe harbor provision provided that “[a]n action for bad faith involving a liability insurance claim, including any such action brought under the common law, shall not lie if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim.” The version of section 624.155(4)(a) that Direct General relied on, however, was enacted on March 24, 2023, nearly four years after the accident. Eason therefore countered Direct General’s argument on the ground that the bill enacting section 624.155(4)(a) “shall apply to causes of action filed after March 24, 2023.” As the accident occurred in 2019, and the effective date of the policy was prior to March 24, 2023, Eason argued that the safe harbor provision did not apply to his claim and could not be applied retroactively. Eason also relied on a provision in the legislative bill stating “[t]o the extent that this act affects a right under an insurance contact, this act applies to an insurance contract issued or renewed after the effective date of this act.”
Direct General later moved for summary judgment that the safe harbor provision applied to Eason’s claim for excess judgment and the district court granted the motion, declaring that the safe harbor provision applied to and effectively barred Eason’s claim. Significantly, the court noted it was not applying the safe harbor provision retroactively. The court did not look at the date of the accident or the effective date of the relevant policy. Instead, citing other rulings from the district court, the court looked at when the final judgment was entered. As the final judgment was entered in August 2023, several months after enactment of the provision, the court reasoned this was the date Eason’s claim accrued. In other words, Eason had no claim for bad faith against Direct General until the final judgment was entered.
Addressing Eason’s argument that the effective date of the policy is the relevant date for purposes of determining whether the safe harbor provision applied, the district court noted that Eason had no rights under the Direct General policy until the final judgment was entered. Eason was neither a party to the policy, nor an assignee of any rights under the policy. Thus, the court found the effective date of the policy had no bearing on Eason’s bad faith claim for the excess judgment.
