Boozer v. Stalley, ___ So. 3d ___, 39 Fla. L. Weekly D1907 (Fla. 5th DCA September 5, 2014)

The plaintiff, in a wrongful death case arising from a motor vehicle collision, sued the tortfeasor’s liability insurance carrier for bad faith after recovering an excess judgment.  During the bad faith case, the plaintiff deposed the lawyer retained by the insurance company to defend the insured tortfeasor, but “he refused to answer any question or produce any documents related to his direct representation of [the insured].”  Defense counsel and the insured then filed a petition for certiorari challenging the trial court’s denial of their motion for protective order “to prevent the forced disclosure of attorney-client privileged information.”  The Fifth District Court of Appeal, in an en banc decision, sua sponte receded from its earlier decision in Dunn v. National Security Fire & Casualty Co., 631 So. 2d 1103 (Fla. 5th DCA 1993), and granted the petition.  Dunn “rejected the insurer’s claim of work product and attorney client privilege” “when the plaintiff in a third-party bad faith claim sought the insurer’s claim and litigation file.”  Subsequent decisions, however, caused the court to reconsider Dunn insofar as the attorney-client privilege was concerned.  For instance, in Allstate v. Ruiz, 899 So. 2d 1121 (Fla. 2005), the Florida Supreme Court eliminated the distinction between first and third party bad faith cases, and in Genovese v. Provident Life & Accident Insurance Co., 74 So. 3d 1064 (Fla. 2011), the Florida Supreme Court held that attorney-client communications were not discoverable in a first party bad faith case.  In Progressive Express Insurance Company v. Scoma, 975 So. 2d 461 (Fla. 2d DCA 2007), the Second District Court of Appeal “conclude[d] that although [the plaintiff in a third party bad faith case] may ‘stand in the shoes’ of [the insured] for the purposes of standing to bring a bad faith action, that position does not permit her access to otherwise privileged communications between [the insured] and his counsel in the wrongful death action, at least in the absence of a waiver of the privileged by [the insured] or his written assignment of the bad faith claim.  A person does not waive or otherwise lose an attorney-client privilege merely because a third party is authorized to file a lawsuit against the person’s insurance company.”  In Maharaj v. GEICO Casualty Company, 289 F.R.D. 666 (S.D. Fla. 2013), a federal magistrate concluded that the reasoning in Genovese was equally applicable to third party bad faith cases.  After reviewing these decisions, the Fifth District Court of Appeal decided in the present case that it “should adopt the holdings of Scoma and Maharaj and recede from Dunn to the extent it allows the unqualified discovery of attorney-client protected material.  The fact that [the plaintiff] may stand in [the tortfeasor’s] shoes, or have an independent right to bring a bad faith action under section 62[4].155, does not mean that [the tortfeasor] gave up her statutory attorney-client privilege, codified in section 90.502, Florida Statutes (2009).  There is no indication that [the plaintiff] obtained an assignment from [the tortfeasor], and it is clear that their interests are adverse.”  Based upon its “[r]ecogni[tion] of the uncertainty of the law in this important area,” the court certified to the Florida Supreme Court as a question of great public importance whether the decisions in Ruiz and Genovese “shield attorney-client privileged communications from discovery in third-party bad faith litigation.”

[Editor’s Note:  This reader disagrees with the court’s decision.  First, the court fails to recognize that Ruiz intended to expand discovery in first party bad faith cases rather than to contract discovery in third party bad faith cases.  Second, Genovese reasoned that “the purpose of the [attorney-client] privilege is to ‘encourage full and frank communication’ between attorney and client,” and this “goal . . . would be severely hampered if an insurer were aware that its communications with its attorney, which were not intended to be disclosed, could be revealed upon request by the insured.”  This reasoning shows that although first party and third party bad faith cases should be treated the same for the purposes of the work product doctrine, significant differences exist for the purposes of the attorney-client privilege.  In a first party case, the insurance company’s lawyer does not represent the insured.  In a third party case, the insurance company selects the insured’s lawyer and this lawyer may represent both the insured and the insurer.  Therefore, the insurer does not have a reasonable expectation of privacy in communications with insurance defense counsel, which is why insurance companies often retain their own lawyers to represent their own interests.  Genovese recognizes the right of an insurance company in a first party case to keep secret from the insured the insurer’s communications with the insurer’s own lawyer.  In a third party case, the insurance company does not have a corresponding right to keep secret from the insured the communications that the insurance company had with the lawyer the insurance company retained to defend the insured; an insurance company may not keep secret from the insured the insurance company’s communications with the insured’s own lawyer merely because the insurance company retained that lawyer for the insured.  Third, the court was incorrect in stating that the interests of the plaintiff and the insured were clearly adverse.  The plaintiff and the tortfeasor share common interests in the bad faith case.  If the plaintiff prevails, the excess judgment will be satisfied, and the insured’s debt will be eradicated.  In fact, the ethical propriety of insurance defense counsel’s participation in the motion for protective order and the petition for certiorari is debatable.  Was the insured provided with independent counsel to evaluate whether opposition to the plaintiff’s discovery was actually in the best interests of the insured, who had a judgment against her for $10 million in excess of her policy limits?  Would it not be in the insured’s best interests for the plaintiff in the bad faith case to prevail so that this debt could be satisfied by the insurance company?]