After a long, arduous journey, Marisela Otaola and her family received justice this year when they resolved their case against Cusano’s Bakery in the wake of a favorable decision from the Third District Court of Appeal. The underlying, tragic case involved the wrongful death of Omar Otaola, age 34, who was an avid cyclist. Omar, riding his bicycle across Bear Cut Bridge on Key Biscayne (the site of several tragic cycling deaths), was run down and killed by a Cusano’s Bakery truck on a Saturday morning in February, 2006. Omar was survived by his wife Marisela and their two young daughters. Cusano’s had two insurance policies. The underlying policy, with Allstate Insurance Company, was for $1 million, and there was an excess policy of an additional $1 million with AIG. Within a short time after the Otaola’s attorney sent his notice of representation letter, Allstate tendered its $1 million limits with a cover letter. No release was requested or provided. Allstate was fully aware of the excess coverage, as was Cusano’s Bakery. All parties were aware that AIG was attempting to negotiate its claim and had not yet agreed to tender its policy. Nevertheless, Allstate tendered, arranged for a structured settlement, and never requested or required a release. The Allstate settlement was approved by the probate and guardianship court Judge.

Soon thereafter, once negotiations with AIG were at an impasse, Cusano’s moved to dismiss the case seeking an order that, by virtue of the settlement approved by the probate and guardianship court, the entire case was settled. Cusano’s demanded either a return of the settlement proceeds or a voluntary dismissal with prejudice. Ms. Otaola added Ratzan Law Group and The Boldt Law Firm, to her team. Ms. Otaola and her attorneys contested the motion, and demanded an evidentiary hearing to present evidence to the trial court of the parties’ intentions. They intended to prove that Allstate intended to tender without a release in order to fulfill its obligations pursuant to the insurance bad faith laws of Florida.

The trial court granted the defense motion and dismissed Ms. Otaola’s wrongful death case, even though there was no release. The trial court rejected Ms. Otaola’s request for an evidentiary hearing. Mrs. Otaola, appealed the adverse ruling to the Third District Court of Appeal.

The Third District reversed the trial court, finding, among other things, that it was “obvious that Allstate had its own motivation to tender and pay policy limits immediately, whether with or without a complete release. Florida’s bad faith statute and case law can expose a tortfeasor’s insurer to liability beyond policy limits if the insurer, for example, imposes overreaching requirements in the language of a release and other settlement terms. See, e.g., United Auto. Ins. Co. v. Estate of Levine, 87 So. 3d 782 (Fla. 3d DCA 2011), review denied, 92 So. 3d 215 (Fla. 2012).”

The court also recognized that “for an insurer that gives proper consideration to the grieving, financially-impacted survivors in a family devastated by the loss of a parent and provider in the wake of a tragic death such as this, there is also the salutary goal of providing proceeds and structured payments to the survivors immediately rather than years later.”

The Court concluded: “It is therefore appropriate to view the prompt settlement documented by the adjuster and brought to the probate judge for approval as a settlement that is in substance between Ms. Otaola, as guardian of the minors, and Allstate, rather than a settlement of all claims in the then-unfiled wrongful death case against Cusano’s that included claims by not only the children but also by Mrs. Otaola individually.”

With that, the Third District reversed the Trial Court, finding that the $1 million settlement with Allstate did not settle the entire case, that the $1 million payment would serve only as a credit to Cusano’s in the ongoing litigation in the event of a jury verdict against it, and remanded the case for further proceedings. Within a short time, the case settled. The Otaola opinion solidifies the obligation on the part of insurance companies to tender policy limits when a claim threatens to exceed those limits. This obligation cannot be alleviated or excused by insistence upon a release, nor will the tender imply the imposition of a release of all claims.