Eleventh Circuit Affirms Summary Judgment For UIM Insurer In Alabama Bad Faith Case

• Published date: 27 September 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Butler Snow LLP
• Author: Mr A. David Fawal

In a recent unpublished opinion, the 11^th Circuit upheld summary judgment for an auto insurer on claims of breach of contract, bad faith and outrage stemming from an underinsured motorist (UIM) claim. Voss v. State Farm Mut. Auto. Ins. Co., No. 22-10243 (11^th Cir. Aug. 17, 2022). The case arose from Alabama's unique UIM case law allowing a UIM insurer to "front" or advance an alleged tortfeasor's settlement offer, forcing the UIM insured to prove entitlement to UIM policy proceeds, through showing liability by the tortfeasor and the amount of damages.

In Voss, after noting a dispute as to liability, State Farm followed the procedure dictated by the Alabama Supreme Court in Lambert v. State Farm Mut. Auto. Ins. Co., 576 So. 2d 160 (Ala. 1991), fronted the other driver's low limits offer, and forced Voss to proceed to trial against the tortfeasor to prove liability. The case went to trial and resulted in a $1.9 million verdict in favor of Voss. State Farm promptly paid its UIM limits after the verdict.

Voss sued State Farm anyway, claiming State Farm should not have forced him to try the case against the tortfeasor before paying its UIM limits, and moreover, that State Farm failed to properly investigate the UIM claim before deciding to "front" the tortfeasor's settlement offer. The District Court disagreed, granted summary judgment for State Farm on all counts, and the 11^th Circuit affirmed in full.

The 11^th Circuit opinion noted the Alabama requirement that a UIM insured must be "legally entitled to recover from the driver of the underinsured vehicle" before being entitled to UIM benefits. (Slip op. at 7). The Court ruled that "Voss did not prove that he was legally entitled to recover from [the alleged tortfeasor] until after trial - at which point State Farm paid him." Id. The 11^th Circuit concluded that the District Court properly granted summary judgment to State Farm because State Farm did not breach the contract. There is an alternative method for a...