Bad Faith Judgements & Settlements are Punishment not Damages
Barry Zalma
Nov 8, 2023
Read the full article at https://lnkd.in/g5_pZzvP and see the full video at https://lnkd.in/gTvWeDRX and at https://lnkd.in/g7Ps4sUD, and at https://zalma.com/blog plus more than 4650 posts.
The Florida Supreme Court was asked to resolve a certified question from a lower court about whether a personal injury damages award must be reduced by a payment the plaintiff received to settle a bad faith claim against his uninsured motorist insurance carrier.
In Alberta S. Ellison v. Randy Willoughby, No. SC2021-1580, Supreme Court of Florida (November 2, 2023) the Supreme Court answered the questions posed.
FACTS
Respondent/plaintiff Randy Willoughby was badly injured in a car crash. After the accident, he sued Petitioner/defendant Alberta Ellison, bringing a vicarious liability claim based on Ellison’s co-ownership of the other car in the crash. Willoughby also sued his own uninsured motorist insurance carrier to recover policy benefits and for statutory bad faith damages. Willoughby and his insurer settled before trial for $4 million. The subsequent trial against Ellison resulted in a $30 million jury verdict for Willoughby. Ellison then asked the trial court to set off the $4 million insurance settlement against the damages award, but the court denied the motion.
The Second District Court of Appeal affirmed the denial of the set off request. It also certified this two-part question as one of great public importance.
1. Is a settlement payment made by an uninsured motorist insurer to settle a first-party bad faith claim subject to set off under section 768.041(2) or
2. a collateral source within the meaning of section 768.76?
The court answered no to both parts of the question, holding that neither statute authorized a set off in this case. The Second District explained that, writing on a blank slate, it would have found Ellison entitled to a set off under section 768.041(2), but it decided that the Supreme Court’s case law precluded that result.
Based on the parties’ arguments and the Supreme Court’s review of the record, the Supreme Court determined that Ellison did not ask the trial court for a set off under section 768.041(2) and refused to consider the issue.
The Supreme Court rephrased the question posed to it to read: “Is a settlement payment made by an uninsured motorist insurer to settle a first-party bad faith claim a collateral source within the meaning of section 768.76(2)(a)2.?”
Although Willoughby sued his uninsured motorist insurance carrier both for the $10,000 limit allowed under his policy and for bad faith damages, his $4 million insurance settlement was undifferentiated (as to claims and categories of damages). Subject to certain exceptions, section 768.76(1) mandates damage award reductions for sums that the plaintiff has received from “collateral sources.”
The Supreme Court noted that bad faith damages are not “benefits” for purposes of the collateral source definition in section 768.76(2)(a)2.
First-party bad faith claims like Willoughby’s are a creature of statute, not of the underlying insurance contract between the parties. In particular, the damages recoverable in an uninsured motorist insurance bad faith claim are set out in a statute to be “the total amount of the claimant’s damages, including the amount in excess of the policy limits, any interest on unpaid benefits, reasonable attorney’s fees and costs, and any damages caused by a violation of a law of this state.”
The Florida Supreme Court characterized statutory bad faith damages as a penalty. By “extracontractual,” the Supreme Court meant that first-party bad faith damages are over and above the amount owed pursuant to the express terms and conditions of the policy after all of the conditions precedent of the insurance policy in respect to payment are fulfilled.
The Supreme Court answered its rephrased question with a “no” and concluded that a settlement payment made by an uninsured motorist insurer to settle a first-party bad faith claim is not a collateral source and the judgment could not be offset.
ZALMA OPINION
The $30 Million verdict was not offset by the $4 Million bad faith settlement. Randy Willoughby was entitled to collect, if possible, the full $34 million in damages and punishment damages. The Supreme Court wisely concluded that punishment damages were not damages for bodily injury and could not be used to reduce the trial court’s verdict in the bodily injury suit.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to substack at https://lnkd.in/gcZKhG6g;
Go to Barry Zalma videos at Rumble.com at https://lnkd.in/g7-xSs2; Go to the Insurance Claims Library – https://lnkd.in/gwEYkxD.
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Denial Of Mental Health Diversion And Probation Condition Were Affirmed
Posted on October 9, 2026 by Barry Zalma
Post 4860
In The People v. Nicholas Daniel Stiles, A173483, A173646, California Court of Appeals, First District, Second Division (September 29, 2026) Nicholas Daniel Stiles pleaded no contest to one count of insurance fraud arising from his purchase of automobile insurance after a June 2021 collision, and to grand theft arising from an April 2024 incident at a 7-Eleven.
In both cases, the trial court suspended imposition of sentence and placed him on two years’ probation. Before the pleas, Stiles sought mental health diversion in both matters and filed a written motion seeking substitute appointed counsel. The diversion applications were denied, and the court never held a hearing on the motion.
LAW
Penal Code section 1001.36 permits pretrial mental health diversion when a defendant is eligible and suitable and the proposed treatment will meet the defendant’s specialized needs; denial is reviewed for ...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
