INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Huge battle waged over paltry limits
A three-vehicle accident initiated a drawn-out dispute. Diana Guevara (Guevara) was the operator of a truck that was the final and most serious element of the multi-vehicle incident. It began with an SUV driven by Roxanne Morina and carrying five other passengers, including Katherine Martinez (Martinez).
Morina’s vehicle, while attempting a U-Turn, was struck by a pickup, forcing the SUV into an avenue’s opposite lane. It was at that point that Guevara crashed into the SUV, causing several serious injuries (including injuries to two persons that required airlift services to receive treatment).
When the loss occurred in February 2009, Guevara’s truck was insured under a GEICO automobile policy with $10,000 per-person and $20,000 per-accident limits. Several days later, when the accident was reported to GEICO, the insurer assigned the claim to one of its adjusters. Further, it also recognized and advised Guevara that there would likely be a coverage issue.
An initial concern was that, when the accident occurred, the pickup was not listed on the GEICO policy. Due to the insurer’s claim investigation effort, it discovered that Guevara purchased the pickup via a private sale the day before the crash. It took several additional weeks for GEICO to receive copies of the sales documents.
Besides determining the eligibility of Guevara’s vehicle, GEICO spent considerable time identifying all injured parties and the extent of their injuries, and coordinating communication among crash victims, the insured and various legal representatives. The insurer came to the conclusion that it would need to pay out its policy limits and that it should be executed via a global conference involving all relevant parties, including Martinez.
During the conference, the insurer shared that it decided to split its available per-accident limits of $20,000 evenly between Martinez and one other accident victim. Martinez did not accept that offer. Instead, she decided to sue Guevara and two other parties.
Over a period of eight years, Martinez and GEICO discussed settlement. The insurer would not agree to settling for an amount in excess of their policy limit. However, it finally did agree to allow Guevara to enter into an excess judgment of $2 million (this was a stipulated amount, not an award). Martinez then secured an assignment of Guevara’s rights to pursue GEICO for the excess amount.
GEICO countered by seeking a summary judgment after the lawsuit’s discovery phase was completed. The district court submitted the matter to a magistrate judge. The latter agreed with the insurer’s argument that the bad faith complaint was unsupported by evidence. The magistrate judge recommended approving GEICO’s motion. Martinez appealed after the district court accepted the magistrate’s report and ruled in favor of the insurer.
The higher court’s focus was to resolve the single issue of whether GEICO performed in a manner in which a jury could find it did so in bad faith. It first addressed several distinct areas that Martinez alleged as demonstrating bad faith. They included charges of investigation delays, GEICO’s offer to settle, and the insurer’s conduct after Martinez’s settlement offers.
In the court’s opinion, GEICO’s various activities appeared reasonable. The insurer opened a claim file and assigned an adjuster immediately after notification of their insured’s accident. The insurer promptly secured the information necessary to determine that the pickup involved in the accident was owned by the insured at the time of the accident. The policyholder was notified of the initial coverage concern as well as of the likelihood that the loss would exceed policy limits.
The court found that it was logical for the insurer to find out all needed information regarding injured persons and their medical charges in order to determine how the policy’s proceeds should be distributed. The use of a global conference aligned with the number of claimants and the severity of injuries. The court did not find fault with the insurer’s hesitancy in agreeing to settling in excess of their policy limits.
Individually and in totality, the court found that Martinez did not offer sufficient evidence that a jury could consider to possibly find GEICO to have acted in bad faith. The district court’s decision in favor of the insurer was affirmed.
Katherine Martinez v. GEICO Casualty Ins. Co.—U.S. Court of Appeals for the 11th Circuit.—No. 24-10641—September 23, 2025.
