A divided federal appeals court Tuesday ordered a new trial in a $12.6 million insurance “bad faith” case stemming from a 2008 Florida traffic accident.
A panel of the 11th U.S. Circuit Court of Appeals overturned a lower-court verdict in favor of Direct General Insurance Co.
The case involved injuries suffered by motorcyclist Dustin Brink, who was struck by a car driven by Juan Ruiz Pereles, who was covered by a Direct General policy, according to court documents.
Brink filed a lawsuit against Pereles and Pereles’ father, who was the policyholder, and ultimately was awarded more than $12.6 million in a jury trial. Brink later filed a bad-faith lawsuit against Direct General to try to collect the money.
Generally, bad-faith lawsuits contend that insurers didn’t address claims properly. Brink’s lawyers contended that Direct General acted in bad faith because it didn’t settle the accident claim and did not properly communicate and advise the policyholders, according to Tuesday’s majority opinion.
A jury ruled in favor of Direct General, but Brink’s attorneys argued that a district judge had given improper jury instructions. The appellate panel, in a 2-1 decision, agreed Tuesday.
The majority opinion, written by Judge Britt Grant and joined by Judge Jill Pryor, said “we express no view on the merits of Brink’s argument that Direct General acted in bad faith by failing to advise its insureds (the policyholders).
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All we hold is that when a party properly argues a theory of liability grounded in state law, a district court abuses its discretion if it causes prejudice by failing to instruct the jury on that theory.”
Judge R. Lanier Anderson dissented, writing that he had “no doubt” that the district court’s rejection of a proposed jury instruction by Brink’s attorneys “did not cause Brink prejudicial harm.”