Alberta S. Ellison v. Randy Willoughby

Supreme Court of Florida
____________

No. SC2021-1580
____________

ALBERTA S. ELLISON,
Petitioner,

vs.

RANDY WILLOUGHBY,
Respondent.

November 2, 2023

MUÑIZ, C.J.

This case presents a certified question about whether a

personal injury damages award must be reduced by a payment the

plaintiff received to settle a bad faith claim against his uninsured

motorist insurance carrier. 1 Ellison v. Willoughby, 326 So. 3d 214

(Fla. 2d DCA 2021). Two of Florida’s setoff laws are at issue,

sections 768.041(2) and 768.76(1), Florida Statutes (2012). 2 The

1. We have jurisdiction. Art. V, § 3(b)(4), Fla. Const.

2. Throughout the period relevant to this case, the text of the
statutes involved did not change. The parties and the Second
District Court of Appeal have cited varying editions of the Florida
former appears in a statutory section titled “Release or covenant not

to sue”; the latter in a section titled “Collateral sources of

indemnity.” We will discuss these statutes, and the ways they

differ, in some detail later.

The basic facts are straightforward. Respondent/plaintiff

Randy Willoughby was badly injured in a car crash. After the

accident, he sued Petitioner/defendant Alberta Ellison, bringing a

vicarious liability claim based on Ellison’s co-ownership of the other

car in the crash. Willoughby also sued his own uninsured motorist

insurance carrier to recover policy benefits and for statutory bad

faith damages. 3 Willoughby and his insurer settled before trial for

$4 million. The subsequent trial against Ellison resulted in a $30

million jury verdict for Willoughby. Ellison then asked the trial

Statutes, and the issue appears not to be of any consequence. All
statutory citations in this opinion will be to 2012, the year the
accident occurred.
3. Section 624.155(1)(b)1. authorizes first-party bad faith
actions. In such an action, “the insured is also the injured party
who is to receive the benefits under the policy.” McLeod v. Cont’l
Ins. Co., 591 So. 2d 621, 623 n.3 (Fla. 1992), superseded by ch. 92-
318, § 79, Laws of Fla., as recognized in Fridman v. Safeco Ins. Co.
of Ill., 185 So. 3d 1214, 1221 (Fla. 2016).
-2-
court to set off the $4 million insurance settlement against the

damages award, but the court denied the motion.

In the decision under review, the Second District Court of

Appeal affirmed the denial of the setoff request. It also certified this

two-part question as one of great public importance:

Is a settlement payment made by an uninsured motorist
insurer to settle a first-party bad faith claim subject to
setoff under section 768.041(2) or a collateral source
within the meaning of section 768.76?

Ellison, 326 So. 3d at 224. The court answered no to both parts of

the question, holding that neither statute authorized a setoff in this

case. The Second District explained that, writing on a blank slate,

it would have found Ellison entitled to a setoff under section

768.041(2), but it decided that this Court’s case law precluded that

result. Id. at 219.

Based on the parties’ arguments and our own review of the

record, we have determined that Ellison did not ask the trial court

for a setoff under section 768.041(2). That issue was therefore

unavailable for appellate review; the Second District should not

have ruled on it, and neither should we. So, without answering the

-3-
first part of the certified question, we quash the part of the district

court’s decision addressing section 768.041(2).

Next, we rephrase the second part of the certified question to

state more precisely the issue presented to the trial court and

passed on by the district court:

Is a settlement payment made by an uninsured motorist
insurer to settle a first-party bad faith claim a collateral
source within the meaning of section 768.76(2)(a)2.?

We agree with the Second District that the answer to the rephrased

certified question is no. 4

I.

As he did before the Second District, Willoughby argues that

Ellison did not preserve the section 768.041(2) setoff issue for

appellate review. We agree.

The test that governs here is well established: the party

seeking appellate review must show that it raised in the tribunal of

first instance the “specific legal ground upon which a claim is

based.” See Aills v. Boemi, 29 So. 3d 1105, 1109 (Fla. 2010)

4. Ellison asks that we also take up alleged trial court and
district court errors outside the certified question. Consistent with
this Court’s typical practice, we decline to do so.

-4-
(quoting Chamberlain v. State, 881 So. 2d 1087, 1100 (Fla. 2004));

see also 2 Philip J. Padovano, Fla. App. Prac. § 8:1 (2023 ed.) (“A

legal argument must be raised initially in the lower tribunal by the

presentation of a specific motion or objection at the appropriate

stage of the proceeding.”). This is not a “magic words” test.

Williams v. State, 414 So. 2d 509, 512 (Fla. 1982). But the

argument presented must be “sufficiently specific to inform the trial

judge” of the issue to be decided. Id. Appellate courts’ faithful

enforcement of this preservation rule promotes accuracy, efficiency,

and fairness in adjudication.

The record below shows that, in the trial court, Ellison did not

seek a setoff under section 768.041(2); instead, she relied entirely

on section 768.76. Ellison filed a pretrial “Motion to Determine

Collateral Source Set Off” “[p]ursuant to Florida Statutes Section

768.76.” Her posttrial legal memorandum supporting that motion

invoked only section 768.76. And, at the posttrial hearing on the

setoff motion, Ellison told the court that the insurance settlement

“fits within the collateral source statute [i.e., section 768.76]”—

again making no argument about section 768.041(2). Finally, the

trial court’s order denying the setoff motion does not show that the
-5-
court understood itself to be ruling on a section 768.041(2)-based

claim.

Whether a setoff is available under section 768.041(2) presents

an issue distinct from the issue whether a setoff is available under

section 768.76. Although both statutes govern the reduction of

damage awards, comparing the text of each provision leaves no

doubt that they are substantively different. Section 768.041(2)

appears within a statutory section titled “Release or covenant not to

sue.” It says:

At trial, if any defendant shows the court that the
plaintiff, or any person lawfully on her or his behalf, has
delivered a release or covenant not to sue to any person,
firm, or corporation in partial satisfaction of the damages
sued for, the court shall set off this amount from the
amount of any judgment to which the plaintiff would be
otherwise entitled at the time of rendering judgment and
enter judgment accordingly.

This provision comes from chapter 57-395, section 2, Laws of

Florida. A four-section law, chapter 57-395 was titled “AN ACT to

permit the releasing of one tort-feasor without its effect being to

release all tort-feasors, and providing for set-off in actions against

other tort-feasors.” See also Atl. Coast Line R.R. Co. v. Boone, 85

-6-
So. 2d 834 (Fla. 1956) (showing the legal background against which

the Legislature enacted chapter 57-395).

Compare that with section 768.76(1), which appears in a

statutory section titled “Collateral sources of indemnity.” Section

768.76(1) says, in relevant part:

In any action to which this part applies in which liability
is admitted or is determined by the trier of fact and in
which damages are awarded to compensate the claimant
for losses sustained, the court shall reduce the amount of
such award by the total of all amounts which have been
paid for the benefit of the claimant, or which are
otherwise available to the claimant, from all collateral
sources; however, there shall be no reduction for
collateral sources for which a subrogation or
reimbursement right exists.

The next provision, section 768.76(2)(a), defines “collateral sources”

in detail. Those definitions show that, broadly speaking, the

“collateral sources” referred to in the statute are government

benefits and insurance and insurance-like payments. Adopted in

1986, see chapter 86-160, section 55, Laws of Florida, section

768.76 embodies the Legislature’s decision to cut back on the

common law “collateral source rule.” See Paradis v. Thomas, 150

So. 2d 457, 458 (Fla. 2d DCA 1963) (describing the collateral source

rule as providing that “total or partial compensation for an injury

-7-
received by the injured party from a collateral source wholly

independent of the wrongdoer will not operate to lessen the

damages recoverable from the person causing the injury”) (quoting

15 Am. Jur. Damages § 198 (1938)).

The Second District acknowledged that Ellison “never

specifically cited section 768.041(2)” in the trial court, but it found

the issue preserved for appellate review anyway. Ellison, 326 So. 3d

at 219. The district court waved off Willoughby’s preservation-

based argument: “this issue was thoroughly litigated in the trial

court, and both the parties and the trial court relied on case law

analyzing setoff of [uninsured motorist] settlements under both

sections 768.041(2) and 768.76(1).” Id. Ellison now echoes this

position and adds that, in the trial court, she made clear her view

that Florida law does not allow Willoughby to be compensated twice

for the same damages.

We cannot agree that Ellison preserved the section 768.041(2)

setoff issue for appellate review. A trial court called upon to apply

sections 768.041(2) and 768.76 would quickly see that each statute

presents distinct issues of interpretation. If Ellison wanted the trial

court to consider a setoff under both statutes, she had the
-8-
obligation to present both issues to the trial court. Ellison did not

do that—she relied entirely on section 768.76. And the Second

District cited no authority, and we are aware of none, for the notion

that the trial court’s mere awareness of case law discussing section

768.041(2), without any accompanying argument, put that statute

in play for preservation purposes.

Because the Second District should not have ruled on Ellison’s

section 768.041(2) claim, we quash the portion of the district

court’s decision addressing that statute. We do so without passing

on the correctness of the district court’s statement that the

meaning of section 768.041(2) is “plain and unambiguous”—a

conclusion that the court supported only by discussing section

768.041(2) in isolation from the rest of chapter 57-395. See id. at

219. Nor do we express a view on the district court’s analysis of

this Court’s case law addressing section 768.041(2). Id. at 217

(“How can a trial court apply a statute meant to prevent plaintiff

windfalls when higher court precedent authorizes double recovery

in all but the ‘perfect’ case?”).

-9-
II.

We now consider the availability of a setoff under section

768.76. A preliminary point: although Willoughby sued his

uninsured motorist insurance carrier both for the $10,000 limit

allowed under his policy and for bad faith damages, his $4 million

insurance settlement was undifferentiated (as to claims and

categories of damages). Like the parties’ briefing, our analysis here

will focus on whether section 768.76 required setoff of any bad faith

damages portion of the settlement, i.e., at least $3.99 million.5

Recall that, subject to certain exceptions, section 768.76(1)

mandates damage award reductions for sums that the plaintiff has

received from “collateral sources.” Recall further that section

768.76(2)(a) defines “collateral sources” in detail. In her setoff

request to the trial court, Ellison relied on the collateral source

definition in section 768.76(2)(a)2. She maintained that

5. The Second District held that any portion of the settlement
attributable to Willoughby’s policy benefits is subject to subrogation
and therefore excluded from setoff under the text of section
768.76(1). Ellison’s briefing here does not challenge this aspect of
the district court’s analysis.
- 10 -
Willoughby’s insurance settlement qualified as a payment by or

pursuant to:

automobile accident insurance that provides health
benefits or income disability coverage; and any other
similar insurance benefits, except life insurance benefits
available to the claimant, whether purchased by her or
him or provided by others.

§ 768.76(2)(a)2. The trial court denied setoff.

The Second District affirmed that decision, concluding that the

bad faith damages portion of the settlement agreement did not meet

the definition of “collateral source” in section 768.76(2)(a)2. The

district court reasoned that “[a]n extracontractual payment on a

bad faith claim does not appear to meet this definition because it is

not a payment of ‘benefits.’ ” Ellison, 326 So. 3d at 222. The

district court further observed that “ ‘[b]enefits’ in the automobile

casualty insurance context traditionally means the amount an

insurer must pay on account of an insured’s injuries that fall within

the scope and limits of coverage.” Id.

Ellison now argues that the Second District’s analysis is

wrong, for two reasons. 6 She says that bad faith damages fit within

6. Ellison also asks us to conclude that the insurance
settlement meets the “collateral source” definitions in sections
- 11 -
the term “benefits” because they would not be available absent an

underlying insurance contract. Ellison also maintains that this

Court should interpret the text of section 768.76 in a way that

furthers the (asserted) statutory purpose of preventing plaintiffs

from receiving windfalls consisting of a double recovery of

(assertedly) the same damages.

We agree with the Second District that bad faith damages are

not “benefits” for purposes of the collateral source definition in

section 768.76(2)(a)2. First-party bad faith claims like Willoughby’s

are a creature of statute, not of the underlying insurance contract

between the parties. In particular, the damages recoverable in an

uninsured motorist insurance bad faith claim are set out in section

627.727(10): “the total amount of the claimant’s damages, including

the amount in excess of the policy limits, any interest on unpaid

benefits, reasonable attorney’s fees and costs, and any damages

caused by a violation of a law of this state.”

768.76(2)(a)3. and (2)(a)4. Ellison did not present those arguments
to the trial court, and the Second District’s decision does not
address them. We will limit our analysis and decision to what was
both argued and passed on below.
- 12 -
Our Court has characterized these statutory bad faith

damages as “in substance, a penalty.” State Farm Mut. Auto. Ins.

Co. v. Laforet, 658 So. 2d 55, 61 (Fla. 1995). We drew that

conclusion because section 672.727(10) exposes insurers to liability

for damages that they did not cause. Id. at 60-61. This Court also

has said that statutory bad faith damages are “extracontractual.”

Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So. 2d 1278 (Fla.

2000). By “extracontractual,” we meant that first-party bad faith

damages are over and above “the amount owed pursuant to the

express terms and conditions of the policy after all of the conditions

precedent of the insurance policy in respect to payment are

fulfilled.” Id. at 1283.

We do not think it would be reasonable to interpret the term

“benefits” as encompassing a statutory penalty of this kind. Such a

penalty does not fit within the ordinary meaning of the word

“benefit.” See, e.g., Webster’s Third New International Dictionary

204 (1993 ed.) (defining “benefit” as “a cash payment or service

provided for under an annuity, pension plan, or insurance policy”).

Nor does the penalty square with the definitions of “benefit” found

in insurance-focused dictionaries. See, e.g., Harvey W. Rubin,
- 13 -
Dictionary of Insurance Terms (Barron’s Business Guides) 52 (4th ed.

2000) (“monetary sum paid or payable to a recipient for which the

insurance company has received the premiums”); Lewis E. Davids,

Dictionary of Insurance 30 (2d ed. 1962) (“[s]um of money provided

in an insurance policy to be paid for certain types of loss under the

terms of an insurance policy”).

Ellison’s argument that we should “apply a definition that

accomplishes the purpose of the statute,” i.e., “to prevent windfalls

to plaintiffs,” is similarly unpersuasive. Statutory purpose, if it is

knowable and capable of being defined with sufficient specificity,

can be an important ingredient in statutory interpretation. But the

goal of giving effect to a law’s purpose cannot justify a reading that

stretches the language of a statute beyond its breaking point.

III.

To sum up: We decline to answer the first part of the certified

question, because the defendant did not preserve the section

768.041(2) issue for appellate review. Our answer to the second

part of the certified question, as rephrased at the beginning of this

opinion, is no: a settlement payment made by an uninsured

motorist insurer to settle a first-party bad faith claim is not a
- 14 -
collateral source under section 768.76(2)(a)2. We quash the portion

of the Second District’s decision addressing section 768.041(2).

And we approve the rest of the district court’s decision to the extent

it is consistent with our decision here.

It is so ordered.

CANADY, LABARGA, COURIEL, GROSSHANS, and FRANCIS, JJ.,
concur.
SASSO, J., did not participate.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION
AND, IF FILED, DETERMINED.

Application for Review of the Decision of the District Court of Appeal
Certified Great Public Importance/Direct Conflict of Decisions

Second District – Case No. 2D19-1961

(Hillsborough County)

Paul L. Nettleton and Jeffrey A. Cohen of Carlton Fields, Miami,
Florida,

for Petitioner

Brent G. Steinberg, Daniel L. Greene, and Jacob M. Schuster of
Swope, Rodante P.A., Tampa, Florida,

for Respondent

Patrick M. Chidnese and Frieda C. Lindroth of Bickford & Chidnese,
LLP, Tampa, Florida; and Kansas R. Gooden of Boyd & Jenerette,
PA, Miami, Florida,

for Amicus Curiae Florida Defense Lawyers Association
- 15 -
Bryan S. Gowdy of Creed & Gowdy, P.A., Jacksonville, Florida,

for Amicus Curiae Florida Justice Association

- 16 -