11th Circuit Opinion Reins in Bad-Faith Claims: No Bad Faith Where the Demand Fails to Settle all Claims within Policy Limits – by J. Robb Cruser

In Linthicum v. Mendakota Ins. Co., the 11th Circuit affirmed the grant of summary judgment to an insurer in the bad-faith, failure to settle context confirming that “[a]n insurer is not liable for failing to respond to a time-sensitive offer to settle for policy limits when the offer does not resolve fully the claim against its insured.” Id.

In Linthicum, the claimant demanded the policy limits for the wrongful death claim only. The estate claim was not part of the demand and remained outstanding against the insured. Given this incomplete demand, the 11th Circuit reasoned that the demand “was not an offer to fully settle a claim within the policy limits” and therefore the insurer’s duty to respond to a time-sensitive offer was not triggered. The 11th Circuit concluded, “Mendakota Insurance was not obligated to accept the Linthicums’ offer to settle only the ‘wrongful death claim’ or to continue negotiations because the offer would have exceeded the policy limits.” Id.

This is an important victory to insurers given its potential applicability to other situations including derivative or vicarious liability claims.

11th Circuit Opinion: Linthicum v. Mendakota Ins. Co.