Appellate Update – Fifth District Allows Evidence of a Prior Settlement in Limited Circumstance to Disprove Liability

September 13, 2016 by on News

Florida Statute § 90.408 generally precludes all evidence of settlements and offers, as well as any conduct or statements made during the course of those negotiations, to prove liability or the absence thereof.  Such evidence is viewed as irrelevant.  However, this type of evidence may be admissible in some limited situations.

For instance, in Tower Hill Signature Ins. v. Speck, 2016 Fla. App. LEXIS 12167 (Fla. 5th DCA Aug. 12, 2016), the Fifth District Court of Appeal held that evidence of a prior settlement relating to a claim may be admissible if it is relevant to a party’s liability – particularly when the claim occurred before the instant one. The Specks filed a claim for sinkhole damage.

Through its investigation, Tower Hill discovered that the home had unrepaired damage which was not disclosed on the application.  The Specks had made a claim for sinkhole damage to the same home to their previous insurer ten years prior. At that time, the insurer’s engineer recommended $166,000 in below ground repairs and $64,000 in above ground repairs. The claim settled for $260,000.  Of that $260,000, the Specks spent $15,000 on repairs and used the rest to pay off their mortgage.

As a result, Tower Hill rescinded the policy.  The Specks sued Tower Hill for breach of the insurance contract.

At trial, Tower Hill sought to show that the initial sinkhole damage was never fully repaired. Tower Hill proffered testimony from Mr. Speck that he received $260,000 from his initial claim to repair the sinkhole damage and only used $15,000 for that purpose. The trial court excluded the testimony as irrelevant. The jury ultimately found Tower Hill breached its insurance contract and was liable for $164,080 in damages. Tower Hill appealed.

On appeal, the Fifth District held that the trial court abused its discretion in excluding Tower Hill’s proffered testimony and reversed and remanded for a new trial. The Court explained:

While the amount of a settlement for a prior injury is generally properly excluded as irrelevant to a current claim, evidence of the amount of settlement may be relevant to the defendant’s liability or to the amount of damages when the evidence speaks to an element of the plaintiff’s claim, such as whether some or all of the claimed damages pre-existed the event allegedly giving rise to liability.

The proffered testimony demonstrated the claimed damages pre-existed the event allegedly giving rise to liability. The Court rejected the Specks’ argument that the testimony was confusing, prejudicial, and akin to a collateral source payment. The Court found little risk that a jury would confuse the issues because the amount of the settlement was directly related to the issue of the Specks’ misrepresentation to Tower Hill regarding the unrepaired sinkhole damage.

If you have any questions about this case or would like to refer an appellate matter, please contact our appellate attorneys.

Kansas R. Gooden
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Kathleen A. Carlson
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