Can the Insurer Refuse to Settle a Claim If An Uninsured Motorist Is Not Liable to the Insured for Damages Arising from An Accident ?
In Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So. 2d 1289 (Fla. 1991) this Court held:
If an uninsured motorist is not liable to the insured for damages arising from an accident, then the insurer has not acted in bad faith in refusing to settle the claim.
Thus, an insured's underlying first-party action for insurance benefits against the insurer necessarily must be resolved favorably to the insured before the cause of action for bad faith in settlement negotiations can accrue.
It follows that an insured's claim against an uninsured motorist carrier for failing to settle the claim in good faith does not accrue before the conclusion of the underlying litigation for the contractual uninsured motorist insurance benefits.
Absent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff's damages, a cause of action cannot exist for a bad faith failure to settle. 575 So. 2d at 1291.
In Imhof v. Nationwide Mutual Insurance Co., 643 So. 2d 617 (Fla. 1994) this Court followed by stating:
On appeal, the First District Court affirmed, finding that the complaint did not state a cause of action because it did not allege that there had been a determination of the extent of Imhof's damages.
The court found that this was a requirement under Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So. 2d 1289 (Fla. 1991), to bring an action for insurer bad faith. Imhof, 643 So. 2d at 619-20.
However, the court certified the question of whether a failure to allege that there has been a determination of damages barred an action for bad-faith damages under section 624.155(1)(b)1. Id. at 618-19.
We find that we answered the question presented in Blanchard and again answer in the affirmative.
. . . In the instant case, Imhof failed to allege in his complaint that a determination of his damages had been made. Thus, the trial court correctly dismissed the complaint for failure to state a cause of action. Id. at 618.
This Court's decisions in Blanchard and Imhof were followed by the Fourth District's decision in Brookins v. Goodson, 640 So. 2d 110 (Fla. 4th DCA 1994).
In Brookins the issue was whether a settlement constituted the "determination of damages" required by Blanchard and Imhof. the Fourth District stated:
The supreme court has recently held that to state a cause of action for first party bad faith there must be an allegation that there has been a determination of the insured's damages. Imhof v. Nationwide Mut. Ins. Co., 643 So. 2d 617, 19 Fla. L. Weekly S257, 1994 WL 178132 (Fla. May 12, 1994).
The court did not, however, require that the damages be determined by litigation, that there be an allegation of a specific amount of damages or that the damages be in excess of the policy limits.
The court was not faced with the circumstance presented here where the policy limits are subsequently tendered by the insurer.
The insured in Imhof received an award of damages through arbitration of an amount less than the policy limits.
The amount or extent of damages was held not to be determinative of whether an insured could bring a first party bad faith claim; the purpose of the allegation concerning a determination of damages was to show that "Imhof had a valid claim." Id.
We hold that the payment of the policy limits by the insurer here is the functional equivalent of an allegation that there has been a determination of the insured's damages. It satisfies the purpose for the allegation--to show that the insured had a valid claim.
Neither in Blanchard nor more recently in Imhof does the supreme court suggest that the required resolution of the insured's underlying claim must be by trial or arbitration. . . . However, as noted in Blanchard, a resolution of some kind in favor of the insured is a prerequisite. . Id. at 112-13.