Appeals court affirms $12 million judgment in fatal Keys crash; insurer sues for bad faith.

A federal appeals court this week affirmed a $12 million judgment against a gravel and waste hauling company in a horrific car crash that killed four Spanish women vacationing in the Florida Keys in 2018.

However, it is far from clear how much of that amount the families of the victims will receive. Attorneys for the plaintiffs in this case have sided with the transportation company they themselves sought, arguing that the insurance company, National Indemnity Co. of the South (NICO), acted in bad faith, failed to protect the transportation company's interests, and improperly tried to minimize payouts early in the process.

"Improper claims handling is what's at issue here," said Paul Lane of the law firm Silva & Silva in Coral Gables, which represents the heirs of the deceased women. "It's a genuine mistake that brought the carrier into this situation."

A NICO attorney denied Lane's claims, noting that the $1 million policy limit was paid and the insurer acted reasonably. Lane acknowledged that his bad faith claim likely would have been blocked under Florida's 2023 commercial law reform, which now bars such claims if the insurer pays the policy limits within 90 days of receiving notice of the claim. Plaintiffs must also prove more than mere negligent behavior by the insurer.

The tragedy of March 2018

The March 2018 tragedy unfolded as follows: four women, three of whom were attorneys in Spain, were driving on U.S. Highway 1, a busy two-lane "highway over the sea" connecting a chain of islands off the south coast of Florida. They decided to turn left onto a scenic overlook. The driver activated his turn signal, reduced his speed and prepared to turn, the 11th Circuit Court of Appeals explained in its Oct. 25 ruling. The Discount Rock & Sand truck, driven by Carlos Blanco and carrying waste from portable toilets, slammed into the back of the women's car at a high rate of speed, witnesses said. The impact threw the car into the path of an approaching motorhome in the opposite lane. The car was crushed like an accordion, Lane said, killing all four women. A witness said Blanco, who already had traffic violations, appeared to be looking down before the crash and may have been distracted.

Verdict and appeal

A jury in 2021 returned a verdict of $11.8 million, finding Discount Rock vicariously liable. The transportation company, based in Marathon, Florida, appealed. Its attorneys argued that the trial court erred in instructing the jury that typically the driver following behind is at fault in rear-end collision accidents. In addition, the transportation company argued that the judge improperly allowed visual aids to be shown to the jury in the form of a last minute accident reconstruction. An appellate panel of judges rejected all of the company's arguments.

"The circuit court did not err in denying the motion for judgment as a matter of law for Discount Rock on the issue of fiduciary duty because the jury had sufficient evidence to find that Discount Rock negligently entrusted Blanco with the modified truck," the court concluded.

In February 2020, more than a year before the lawsuit against Discount Rock began, NICO paid the $1 million policy limit to the women's heirs, releasing only the driver, Blanco, from the lawsuit. The heirs accepted the settlement, according to a separate lawsuit filed by National Indemnity, which is seeking a declaration from a judge that they acted in good faith during the claim process and trial. But Lane, the attorney for the Spanish women's heirs, argues that NICO did not act in good faith, and that their experts and company representatives were too quick to pursue the cap to avoid further liability. They also made no effort to show that other waste hauling companies also bore some of the liability, he argues.

"The separation does not benefit even Blanco (the driver), who remains at risk of a potential claim for indemnification by Discount Rock, and therefore the agreement benefits only National Indemnity," Lane wrote in his counterclaim, effectively supporting the carrier's position. "Discount Rock advised National Indemnity that its offering of the policy and exhaustion of its limits under the Blanco Settlement was an abuse of discretion because the agreement does not benefit any insured, severely damaged and weakened Discount Rock at trial, and served only to benefit National Indemnity, which was relieved of any further obligation under the policy."

NICO, a Berkshire Hathaway company, said in its filings that it tried to resolve all claims but was limited by Discount Rock's refusal to provide financial information. The insurer's bad faith lawsuit was put on hold while the $12 million appellate judgment was challenged. The case may now be heard in the U.S. District Court for the Southern District of Florida.

"Our clients are hopeful that an agreement will be reached," Lane said. "They don't care where it comes from - as long as some money comes from Discount Rock and some from NICO." The women's families have been "devastated" by the tragedy, he said.

Attorneys for Discount Rock were unavailable for comment.

Photo: the 11th District courthouse in Atlanta.