Eli Villareal Alvarez – a Progressive insured – crashed into Heather Eres’s vehicle in May 2007, causing the latter’s vehicle to collide with an oncoming train. Eres suffered permanent injuries, while her son was killed and Villareal later pled guilty to DUI manslaughter.
Progressive was notified of the collision four days after it occurred and the next day the insurer offered its full bodily injury limits of $10,000 to both Eres and her son’s estate. Eres’s attorney informed Progressive that she was not yet ready to accept the payments until Villareal’s criminal proceedings had concluded, and the representative of the son’s estate was determined. Progressive constantly followed up throughout the criminal proceedings, saying that it was “ready to distribute the checks at [Eres’s counsel’s] direction.”
Almost two years later, Progressive received word from Eres’s new attorney, Peter Macaluso, regarding a settlement order, which made several requests. These requests included: that Progressive offer insurance coverage information as required by Florida law and an affidavit from Villareal indicating that he had no other insurance coverage; issuance of a reimbursement of $650 for Eres’s son’s personal effects which were lost in the crash; a release which released only Villareal and which did not contain hold-harmless or indemnity provisions.
Progressive then got in touch with Katherine Shadwick, who represents Villareal, to prepare a response to the settlement. Shadwick gave Macaluso all the requested information, payments details, and documentation, as well as a release that released only Villareal.
While Shadwick informed Macaluso that she believed Villareal and Progressive satisfied the conditions of the settlement, Macaluso found an issue. Days after the discussion, Macaluso claimed that he found a hold-harmless or indemnity agreement within the release which, he said, is a rejection of the settlement offer. Shadwick disagreed with Macaluso’s statement but agreed to drop the offending language from the release.
Eres later filed a lawsuit against Villareal in state court, winning a judgment of over $10 million. The judgment was affirmed on appeal, and the Second District Court of Appeal rejected the claim that Progressive had met all the terms of the settlement. The court concluded that while the “proposed releases do not use the terms ‘hold harmless’ or ‘indemnification,’” the language which released claims for subrogation was “in the nature of a hold harmless or indemnification agreement.”
At this point that Eres filed a lawsuit against Progressive, claiming that the insurer had acted in bad faith by failing to settle the claim within Villareal’s policy limits. However, the Eleventh Circuit disagreed, stating that Progressive had acted “quite the opposite, in fact.” It stressed that Eres focused on the release language which contradicted Florida’s “totality of the circumstances” test, which required that the court consider Progressive’s actions before and after Shadwick sent the release.