## Facts

- Flor Torres Osterman was killed when struck by a vehicle owned by Deana Dessanti and driven by Arnold Blair Dale, a permissive user insured under Dessanti’s liability policy with U.S. Security Insurance Company.
- Dale was intoxicated, drove at a high rate of speed, and fled the scene; he faced criminal charges arising from the incident.
- Osterman’s estate, through its representative Carmen Maria Contreras, demanded payment of the policy limits in exchange for releasing Dessanti (and the insurer) but not Dale, to preserve claims against Dale personally.
- U.S. Security tendered the policy limits only on the condition that Contreras execute a general release discharging both Dessanti and Dale.
- Contreras refused to release Dale, and settlement failed.
- Contreras sued Dessanti and Dale for wrongful death; a jury awarded compensatory damages against both and punitive damages against Dale, resulting in an excess exposure beyond policy limits.
- Dessanti filed bankruptcy; her potential third-party bad-faith claim against U.S. Security was treated as an estate asset and assigned to Contreras.
- Contreras, as assignee, brought a third-party bad-faith action alleging U.S. Security failed to settle within limits when it could and should have done so to protect Dessanti.
- The trial court directed a verdict for U.S. Security and entered a cost judgment against Contreras, reasoning the insurer faced a “no-win” conflict between insureds and could not be liable for insisting on a global release.

## Issues

1. Whether an insurer acts in bad faith toward one insured by refusing a policy-limits settlement that would fully release that insured, solely because the claimant refuses to release another insured covered under the same policy.
2. Whether the insurer’s handling of competing duties to multiple insureds can be resolved as a matter of law by directed verdict, or must be decided by a jury based on the totality of the circumstances.

## Decision

- The appellate court reversed the directed verdict for U.S. Security and reversed the cost judgment.
- The court held a reasonable jury could find U.S. Security breached its duty of good faith to Dessanti by rejecting a policy-limits offer that would have fully protected her, even though it did not protect Dale.
- The court rejected the trial court’s view that the presence of multiple insureds created an automatic “no-win” shield from bad-faith liability.
- The case was remanded for a new trial on the bad-faith claim.

## Legal Principles

- Under Florida third-party bad-faith law, an insurer must use the same degree of care and diligence a reasonably prudent person would use in managing its own affairs, and must settle when, under all the circumstances, it could and should do so to protect the insured from an excess judgment.
- When a policy covers multiple insureds, the insurer owes good-faith duties to each insured; those simultaneous duties do not categorically excuse rejecting a reasonable settlement that would fully protect at least one insured.
- Whether an insurer acted in good faith is generally a fact question for the jury; a directed verdict is improper if the evidence would allow a reasonable jury to find bad faith based on the insurer’s settlement handling.

## Conclusion

The court held that an insurer’s insistence on a global release for multiple insureds does not, as a matter of law, preclude bad-faith liability where the claimant offers to settle within limits and fully release one insured; the insurer’s good faith in responding to such an offer is ordinarily for the jury to decide.


Contreras v. U.S. Sec. Ins. Co., 927 So. 2d 16 (Fla. 4th DCA 2006)