United States District Court, M.D. Florida, Orlando Division
ANTOON II United States District Judge.
Madison Cawthorn (Cawthorn) filed a personal injury lawsuit
in Florida circuit court against his friend Bradley Ledford
(Ledford) arising from Ledford's negligent operation of
his automobile. Cawthorn settled his claim with Ledford. As a
part of that settlement, Ledford assigned to Cawthorn his
right to sue his insurance carrier-Auto-Owners Insurance
Company-for failing to initiate timely settlement
negotiations with Cawthorn. Cawthorn now sues Auto-Owners
seeking damages, claiming Auto-Owners' failure
constituted bad faith. Auto-Owners moved for Summary Judgment
(Doc. 74) and Cawthorn filed a Response (Doc.
The existence of an excess judgment or the functional
equivalent thereof is an element essential to a third-party
bad faith claim. Cunningham v. Standard Guar. Ins.
Co.. 630 So.2d 179, 181 (Fla. 1994) ("[T]he essence
of a third-party bad faith cause of action is to remedy a
situation in which an insured is exposed to an excess
judgment . . . ."). Because Cawthorn fails to present a
cognizable third-party bad faith claim under Florida law,
Auto-Owners' Motion for Summary Judgment must be granted.
April 3, 2014, Cawthorn and his friend were returning home to
North Carolina from a spring break vacation in Florida.
Ledford was driving on Interstate 4 near Daytona Beach,
Florida, in a 2007 BMW X3 owned by his father's (Ledford
Sr.) business, Bob Ledford's RV & Marine, Inc.
("Bob's RV"). In route, Ledford fell asleep and
crashed the car into a concrete barrier. Ledford was not
injured. But Cawthorn, who was asleep in the passenger seat
with his feet on the dashboard, was not so fortunate.
Emergency personnel airlifted Cawthorn from the scene of the
accident to Halifax Hospital trauma center in Daytona Beach.
(Ex. 6 to Pitman Dep., Doc. 56). Cawthorn suffered serious
injuries resulting in paralysis from the waist down. When the
accident occurred, Cawthorn was 18 years old and Ledford was
time, Auto-Owners insured Bob's RVwith a $1 million
Garage Liability Policy and a $2 million Commercial Umbrella
Policy. (Ex. 13 to Pitman Dep.). Ledford was a
scheduled driver under the Garage Liability Policy.
Auto-Owners' Pre-Suit Contact with Ledford and
received notice of the accident on April 4 in the
company's South Carolina office, and on April 7 that
office transferred the claim to Pamela McLean, the
company's adjuster in Ocala, Florida. (Exs. 59 & 60
to McLean Dep., Doc. 57). The next day, McLean placed a
telephone call to Ledford Sr. but got no answer, and because
the phone mailbox was full, McLean could not leave a message.
(Ex. 2 to Pitman Dep.).
April 17, McLean sent a letter to Cawthorn requesting that he
sign an enclosed form authorizing the release of his medical
bills and records. (Doc. 81-24). The letter stated:
"Please fill this form out and return it to our office
in the enclosed envelope so we can retrieve any information
we need to help process your claim We look forward to working
with you toward an amicable conclusion." (Id.
That same day, McLean received a police report describing the
accident, causing her to conclude that Bob's RV and
Ledford were at fault for Cawthorn's injuries. (McLean
Dep. at 132:9-25; Exs. 2 & 5 to Pitman Dep. at 31-35,
63-65). On April 21, McLean increased the reserve to $250,
000. (McLean Dep. at 150:23-151:19).
spoke to Ledford Sr. and his girlfriend by telephone on April
28. During that conversation, Ledford Sr. described some
injuries to McLean. Ledford Sr. reported that Cawthorn was
"paralyzed with a spinal cord compromise at T-11, "
had a fractured pelvis and two broken ankles, and had lost a
kidney. (McLean Dep. at 156:13-157:12). Ledford Sr. told
McLean there was a social media page called "Prayers for
Madison 2014" that included updates on Cawthorn's
condition. (Ledford Sr. Dep., Doc. 58, at 39:14-40:13; Doc.
62-12). That same day, McLean emailed Melinda Pitman at
Auto-Owners' home office, reciting the details of her
conversation with Ledford Sr. At that point, McLean opened a
reserve of $3 million, the policy limits. (Pitman Dep. at
106:10-20, 120:7-10; Doc. 62- 12).
father (Cawthorn Sr.) claims that he received McLean's
April 17 letter with the enclosed consent form to release
medical information on April 29. (Cawthorn Sr. Dep., Doc. 55,
at 68:24-70:4; Ex. 65 to McLean Dep.). Cawthorn Sr. signed
Cawthorn's name and indicated his relationship to
Cawthorn as "parent" and returned it to McLean.
McLean telephoned Halifax Hospital to request Cawthorn's
medical records on May 7, 2014, but the hospital refused to
release the records until Cawthorn was discharged. (McLean
Dep. at 189:7-190:4). The next day-May 8-Halifax Hospital
transferred Cawthorn to Shepherd Center in Atlanta, Georgia.
(Cawthorn Sr. Dep. At 79:11-16). McLean again contacted
Halifax Hospital on May 14, this time faxing the medical
release signed by Cawthorn Sr. with a cover letter. (Ex. 66
to McLean Dep.). The cover letter stated:
Please let me know when these records are ready so that I can
pick them up. If we need to prepay, let me know so that we
can bring a check with us. I appreciate your help. We are
trying to get this young man some help and need the records
as soon as possible to do so.
(Id.). McLean's plans to pick up the records
were unsuccessful. On May 15, Halifax again told McLean it
could not release Cawthorn's medical records, this time
explaining that because Cawthorn was an adult, his father
could not authorize consent on Cawthorn's behalf. (Ex. 66
to McLean Dep.; McLean Dep. at 194:14-195:3).
27, 2014, McLean, having reason to believe that damages might
exceed the $3 million policy limits, renewed her effort to
obtain the medical records by writing a letter to
Cawthorn's parents, again requesting that Cawthorn
execute an attached consent to release medical records. (Ex.
12 to Pitman Dep.). She explained that her earlier efforts to
get the records had been frustrated, and she assured them
Mr. Ledford carries quite a bit of insurance coverage that
would no doubt benefit your family in this very difficult
time. As soon as I am able to obtain the records, we will be
able [to] bring the insurance portion of this matter to a
Sr. telephoned McLean on June 11, 2014. During this
conversation, McLean mentioned that on May 27 she had again
sent a consent form for Cawthorn's signature. (Doc. 74 at
6; McLean Dep. at 211:2-19). She also told Cawthorn Sr. she
would email him another consent form. (Id). Cawthorn
Sr. recalled that during the telephone conversation McLean
gave him "the runaround" and never answered his
questions as to the amount of the check he would receive.
(Cawthorn Sr. Dep. at 82:23-24). Cawthorn Sr. did not
describe any further requests or demands he made to McLean
during this conversation that led him to conclude he had
received "the runaround." (Cawthorn Sr. Dep. at
83:3-10; 86:18-87:22). According to Cawthorn Sr., McLean also
told him not to hire an attorney because "they'll
take most of it, or part of it, or half of it." (]d,
83:8-10, 83:21-22). But McLean denied that she suggested that
Cawthorn Sr. not hire a lawyer, stating that she would never
make such a statement to a claimant and offering that her
husband and father were lawyers. (McLean Dep. at 213:3-6).
McLean also denied that Cawthorn Sr. ever asked for the
amount of money that Auto-Owners would pay in exchange for a
release of the Ledfords, stating "I don't believe he
ever asked me that in a conversation." (McLean Dep. at
the conversation ended, McLean emailed Cawthom Sr. the new
consent form with copies of the May 27 correspondence and her
cell phone number. McLean added:
It was a pleasure speaking with you this morning regarding
your son's accident. Attached is the letter we discussed
with the medical authorization included.
Upon receipt of the signed release, I will obtain the records
from the hospital so that we can bring this matter to a
(Ex. 67 to McLean Dep.). This message began a series of
emails between Cawthorn Sr. and McLean the same day. Cawthorn
Sr. wrote, asking questions and letting McLean know there
would be more bills coming:
I see that this letter states "we will be able to bring
the insurance portion of this matter to a conclusion."
Not sure what is meant by that. My son will have bills from
other places, doctors, surgeons, therapist and others from
Florida and here in Georgia. Also for his long term care for
years to come.
So I would think there will be a lot more bills to be paid.
Again, the conclusion part of what?
(Id.). McLean answered, explaining: "The
payment that we make would be in a lump sum for a release of
our insured. It would be for you to disperse. The payment
would be made to your son for use at his discretion."
(Id.) Cawthorn Sr. then asked, "How much would
the check be for?" and McLean replied, "There is $3
million in coverage." (Id.).
Sr. later testified in his deposition that based on this
exchange with McLean, he believed that Auto-Owners intended
to pay only the Halifax Health bills and nothing else.
(Cawthorn Sr. Dep. at 82:1-87:22). He said, "It sounded
like to me, she just wanted to pay the bills that were up to
date, and then release her client, and Auto-Owners and the
Ledfords would be free and clear." (Id. at
79:25-81:25). Cawthorn provides no details supporting this
conclusion. Based on his interpretation of his father's
conversation with McLean, Cawthorn decided that from that
point on-June 11, 2014-he was not willing to settle for the
policies' limits. (Cawthorn Dep., Doc. 63, at
94:10-98:9). And neither Cawthorn Sr. nor anyone else
provided McLean or Auto-Owners with a properly executed
authorization to release medical records.
12, a Cawthorn family friend contacted a lawyer, Joseph
Kalbac, on Cawthom's behalf. Days later, Kalbac flew to
Atlanta to meet Cawthorn, and Cawthorn hired Kalbac to
represent him. Without submitting medical records, making a
demand, or even providing notice to Auto-Owners that he had
been retained, Kalbac sued Ledford and Bob's RV in
Florida state court on June 26. (Kalbac Dep., Doc. 53, at
McLean continued her pursuit of an executed medical release
from Cawthorn. On June 27, Optum, Inc.-a health services
company retained by Cawthom's insurer to pursue recovery
of medical benefits-provided Auto-Owners notice of a health
care lien on any payment to Cawthorn but did not include the
amount of the lien in the notice. (Doc. 81-27). On June 30,
McLean sent Cawthorn Sr. an email reminding him that she
still had not received a properly executed release from
Just wanted to send you a quick note regarding the medical
authorization that I sent to you. As soon as I receive that I
will be able to get the medical records from Halifax Medical
(Ex. 68 to McLean Dep.). She again received no response. On
July 14, 2014, Auto-Owners learned for the first time that
Cawthorn was represented by a lawyer who ...