Source: https://insuranceclaimsbadfaith.typepad.com/insurance_claims_badfaith/2011/06/florida-first-party-insurer-bad-faith-attorney-client-privilege.html
Timestamp: 2019-04-25 18:15:56+00:00

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Claims and Bad Faith Law Blog: Florida First-Party Insurer Bad Faith: Attorney-Client Privilege.
Florida First-Party Insurer Bad Faith: Attorney-Client Privilege.
The Supreme Court of Florida has done some "receding" from its previous decisions in recent years. In one case, the "receding" was out loud, express, and explicit. In the other case, the "receding" was totally obvious and completely silent.
The Court's express recession came first. In 1989 in its decision in Kujawa v. Manhattan Nat'l Life Ins. Co., 541 So. 2d 1168, 1169 (Fla. 1989) (first-party bad faith case)(authorized password required to access this case on Westlaw), the Florida Supreme Court wrote in order to affirm certain rules of discovery. The Florida Supreme Court affirmed application of the Attorney-Client Privilege in qualified first-party bad faith cases, among other discovery rules.
In 2005, in another first-party bad faith case, the Florida Supreme Court wrote to recede in part from its Kujawa decision and, apparently, from the attorney-client privilege. In Allstate Indemnity Co. v. Ruiz, 899 So. 2d 1121 (Fla. 2005)(authorized password required to access this case on Westlaw), Download Allstate Indemnity Co. v. Ruiz (Fla. Opinion Filed April 7, 2005) PUBLIC ACCESS, the Court was faced with a question of work product privilege in a first-party bad faith case. However, the Court went ahead and also addressed generally the issue of attorney-client privilege in all kinds of Insurer Bad Faith actions including those not before it.
In Ruiz, the Supreme Court of Florida "conclude[d] that it is necessary to recede from our decision in Kujawa because it has unnecessarily produced the application of artificial and disparate discovery rules to first- and third-party bad faith actions.... There simply is no basis upon which to distinguish between first- and third-party cases with regard to the rationale of the discoverability of the claim file type material." Allstate Indem. Co. v. Ruiz, 899 So. 2d at 1129.
Today, however, we reconsider the wisdom of our decision in Kujawa and a fresh look at such decision convinces us that any distinction between first- and third-party bad faith actions with regard to discovery purposes is unjustified and without support under section 624.155 and creates an overly formalistic distinction between substantively identical claims.... [S]ection 624.155 very clearly provides first-party claimants, upon compliance with statutory requirements, the identical opportunity to pursue bad faith claims against insurers as has been the situation in connection with third-party claims for decades at common law. The Legislature has clearly chosen to impose on insurance companies a duty to use good faith and fair dealing in processing and litigating the claims of their own insureds as insurers have had in dealing with third-party claims. Thus, there is no basis to apply different discovery rules to the substantively identical causes of action.... We conclude the claims of protection at issue in this case may only be applied consistently with the rationale we have established in identical situations in the third-party context.
A Federal Court in Florida applied the Ruiz Court's dictum in 2010. In The Ruiz holding was extended to compel production of other insureds' claims files in Mayfair House Association v. QBE Insurance Corp., 2010 WL 472827 (S.D. Fla. February 5, 2010))(authorized password required to access this case on Westlaw) Download , Mayfair House Association v. QBE Insurance Corp. (S.D. Fla. Opinion Filed Feb. 5, 2010) PUBLIC ACCESS. The Federal Court held that Ruiz supported compelled production of other insureds' claims file documents. The Federal case centered on a one-Count claim of statutory Bad Faith alleged under Section 624.155, on account of a denial of windstorm coverage for Hurricane damages. Parenthetically, the Federal plaintiff included allegations in his claim of first-party bad faith, that the defendant insurance company violated several provisions of Florida's Unfair Claim Settlement Practices Act, Fla. Stat. § 626.9541(1)(i). Id. at *2.
The Federal Court in that case was confronted with a request for production which included “the claim files of other insured condominium associations who also litigated windstorm damage claims against QBE arising out of Hurricane Wilma.” Id. The U.S. District Court compelled the production of other insureds' claims file documents in that case, relying largely on the supposed 'elimination' of the attorney-client privilege by the Florida Supreme Court in Ruiz, holding that "the Florida Supreme Court effectively eliminated the attorney client privilege as a discovery shield in bad faith insurance litigation between an insured and its insurance company with respect to all materials generated prior to resolution of the underlying disputed matter.” Id. at *3.
Therefore, although we held in Ruiz that attorney work product in first-party bad faith actions was discoverable, this holding does not extend to attorney-client privileged communications. Consequently, when an injured party brings a bad faith claim against its insurer, the insured may not discover those privileged communications that occurred between the insurer and its counsel during the underlying action.
Although we conclude that the attorney-client privilege applies, we recognize that cases may arise where an insurer has hired an attorney to both investigate the claim and render legal advice. Thus, the materials requested by the opposing party may implicate both the work product doctrine and the attorney-client privilege. Where a claim of privilege is asserted, the trial court should conduct an in camera inspection to determine whether the sought-after materials are truly protected by the attorney-client privilege. If the trial court determines that the investigation performed by the attorney resulted in the preparation of materials that are required to be disclosed pursuant to Ruiz and did not involve the rendering of legal advice, then that material is discoverable.
Id. at *4. [Italics by the Supreme Court of Florida.] This decision was followed immediately by a Florida State intermediate appellate court in another case involving similar discovery issues. State Farm Fla. Ins. Co. v. Puig, 2011 1008266 *2 - *3 & *2n.1 (Fla. 3d DCA March 23, 2011))(authorized password required to access this case on Westlaw), Download State Farm Florida Insurance Co. v. Puig (Fla. 3d DCA Case No. 3D10.2104, Opinion Filed March 23, 2011)(PUBLIC ACCESS, STATED NOT FINAL).
Under the apparently now-settled view in Florida Insurance Law, followed by most if not all Courts in Florida, the attorney-client privilege still applies in first-party insurance bad faith lawsuits, just as it applies in other actions in Florida.
In a perspective including additional research and analysis, these issues are also the topic of Dennis J. Wall, "Discovery of Claims File Materials in Bad Faith Cases: The Florida Experience" 33 Insurance Litigation Reporter 181 (2011), available at no charge under the "Publications" tab on www.dennisjwall.com.

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