11th Circ. Revives $50M Bad Faith Suit Against Progressive

Posted on October 02, 2020

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Law360 (October 1, 2020, 9:57 PM EDT) —

A Progressive unit must face a suit alleging it is responsible for a judgment of over $50 million against a policyholder who caused a car crash that severely injured a Florida woman and her four children, the Eleventh Circuit ruled Thursday, saying there is sufficient evidence that the insurer failed in bad faith to settle the family’s claims.

Reversing a Florida federal judge, a panel of the appeals court said a jury should decide whether Progressive American Insurance Co. is obligated to cover the massive judgment against its insured, Nathan Pyles, who was found at trial to be liable for the 2013 collision that injured Yolanda Aldana and her four minor children.

Senior U.S. District Judge James S. Moody Jr. had granted summary judgment to Progressive in the Aldanas’ bad faith suit last year, based on his holding that the insurer never had a legitimate opportunity to settle the family’s claims against Pyles within the $500,000 limit of Pyles’ auto policy. The Eleventh Circuit panel disagreed, saying a reasonable jury could find that Progressive failed to take proactive steps to reach a settlement with the Aldanas and avert the possibility that Pyles would be hit with a judgment exceeding the policy limits.

“We conclude that there is sufficient, competent evidence, construed in the light most favorable to the Aldanas, to support a verdict in their favor,” the panel wrote. “Accordingly, we vacate the grant of summary judgment and remand for further proceedings.”

According to court documents, Pyles plowed his car into the back of Yolanda Aldana’s vehicle in December 2013 while she was stopped at a red light in Ocala, Florida. The force of the crash caused Aldana’s vehicle to surge forward and slam into a minivan driven by Jaron Ang, filings said.

The collision caused severe injuries to Aldana and her children, who ranged in age from two to 12. Aldana and the three older children suffered various broken bones and internal injuries, while the 2-year-old suffered a brain injury that rendered him a paraplegic, according to court documents. Meanwhile, Pyles and his passenger suffered only minor injuries, and Ang reported some soft tissue damage and neck and leg pain, filings indicated.

Progressive launched an investigation and quickly concluded Pyles was “completely liable” for the crash, according to court filings. A little over two weeks after the accident, the insurer contacted attorneys for the Aldanas and Ang, seeking a global settlement with all six injured victims within the $500,000 limit of Pyles policy. Progressive asked the lawyers to respond to the offer by early January 2014, court documents said.

But the Aldanas’ original attorney, J. Ross Davis, told Progressive it would be “virtually impossible” to divide up the policy benefits by the January 2014 deadline, and indicated his clients’ damages were likely to reach well beyond the $500,000 cap and into the millions of dollars. Davis asked for a postponement of the global settlement conference so he could obtain further information on Pyles’ finances — to gauge Pyles’ ability to pay damages over $500,000 — and Progressive and Ang agreed, according to court documents.

But Pyles never responded to Davis’ request for financial affidavits, and a global settlement never materialized, filings said. In August 2014, the Aldanas changed counsel and then sued Pyles in Florida state court. A jury returned a verdict in the Aldanas’ favor in February 2017, and the trial court later entered a judgment against Pyles in excess of $50 million.

Following the verdict, Pyles assigned the Aldanas his rights to pursue claims under the Progressive policy. The family proceeded to sue Progressive for bad faith in Florida state court in spring 2018, and the insurer removed the case to federal court shortly thereafter.

In July 2019, Judge Moody issued his decision granting Progressive summary judgment, determining the insurer had “no reasonable opportunity” to settle with the Aldanas within Pyles’ policy limit. The judge noted that, among other things, the Aldanas’ original attorney, Davis, never responded to Progressive’s request to reschedule the global settlement conference and did not produce medical records regarding the Aldanas’ injuries. After Judge Moody rebuffed their reconsideration bid, the Aldanas appealed to the Eleventh Circuit.

In flipping Judge Moody’s ruling, the appellate panel pointed to multiple pieces of evidence that could support the Aldanas’ bad faith claim.

For one, Yolanda Aldana has testified that, if Progressive had offered Pyles’ full $500,000 limit to settle her claims and those of her children — rather than pursuing a global settlement that also encompassed Ang — they would have accepted that sum. Progressive argued this testimony contradicts Davis’ past statements that the Aldanas would not engage in settlement talks until they had Pyles’ financial data and other information, but the Eleventh Circuit was unconvinced.

“This testimony is not ‘directly contradictory’ to Davis’ prior statements to Progressive, such that no reasonable jury could believe it, for the simple reason that Progressive never offered the policy limits solely to the Aldanas and the Aldanas never responded to that offer,” the panel wrote.

In addition, the panel pointed to the testimony of the Aldanas’ insurance expert, George Vaka, who opined that Progressive failed to act “with any haste” to try to resolve the Aldanas’ claims — which Vaka described as a “ticking financial time bomb” — after it became clear the global settlement strategy was not working.

“Progressive suggests that it satisfied its good-faith duty by offering to globally settle and that it was then incumbent on Davis and the Aldanas to respond with a reasonable opportunity to settle,” the panel wrote. “But Progressive’s duties are not a “mere checklist” that, once satisfied, will absolve it of liability; rather, ‘the critical inquiry … is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.'”

In an emailed statement, Stephen F. Rosenthal of Podhurst Orseck PA, who represents the Aldanas, told Law360 his clients are happy with the decision.

“Today’s reversal validates that appellate review of a summary judgment is not toothless in the Eleventh Circuit and reaffirms the importance of the right to trial by jury,” Rosenthal said.

Rosenthal’s co-counsel, Stephen Anthony Marino Jr. of Ver Ploeg & Marino PA, added, “the Aldanas are very pleased that the Eleventh Circuit confirmed their right to a jury trial based on the clear principles of law articulated by the Florida Supreme Court.”

A Progressive spokesman did not immediately respond to a request for comment.

U.S. Circuit Judges Adalberto Jordan, Robin S. Rosenbaum and Kevin Newsom sat on the appellate panel.

The Aldanas are represented by Stephen Anthony Marino Jr. and Michal Meiler of Ver Ploeg & Marino PA and Stephen F. Rosenthal of Podhurst Orseck PA.

Progressive is represented by Daniel A. Martinez, Weslee Leigh Ferron and Jennifer Worden of Martinez Denbo LLC.

The case is Yolanda Aldana et al. v. Progressive American Ins. Co., case number 19-12950, in the U.S. Court of Appeals for the Eleventh Circuit.

–Editing by Amy Rowe.