A Florida appellate court recently swam against a tide of decisions that have eroded the attorney-client privilege in bad faith litigation. In Progressive Express Insurance Co. v. Scoma, No. 2D06-2294 (Fla. 2d DCA May 4, 2007), the injured third party sued the tortfeasor’s insurer for bad faith and sought to discover confidential communications between the tortfeasor, the insurer, and their counsel in the underlying tort litigation. The insurer objected based on attorney-client privilege. When the trial court overruled its objections and ordered it to produce the documents, the insurer sought certiorari review.
The Second District Court of Appeal quashed the discovery order, finding that, although an injured third party can “stand in the shoes” of the insured to pursue a bad faith claim against the insurer, absent an assignment from the insured, the third party is not entitled to discover privileged communications between the insured, the insurer and their counsel.
The court held that the insurer’s attorney-client privilege with counsel it retained to represent its own interest is not waived or abrogated in a subsequent bad faith action brought by a third party. It then considered whether the insurer could maintain a privilege as to communications with joint counsel, and determined that an insurer’s ability to claim such a privilege should hinge on (i) whether the communications were made to joint counsel on a “matter of common interest,” such that the insurer could rely upon the confidentiality of the communications as to third parties; and (ii) whether the third party “stood in the shoes” of the insured, such that she had access to the insured’s communications with joint counsel. If so, then the third party would also have access to the insurer’s communications with joint counsel.
The Scoma court then reasoned that a third party could overcome the insured’s rights to attorney-client privilege under section 90.502, Florida Statutes, only when the third party was the insured’s “successor” or “assignee.” Since Scoma was neither, she was not entitled to discover the insured’s confidential communications with joint counsel, and thus was not entitled to the insurer’s confidential communications with joint counsel.
In reaching this conclusion, the second district disagreed with Dunn v. National Security Fire & Casualty Co., 631 So. 2d 1103 (Fla. 5th DCA 1993) and Continental Casualty Co. v. Aqua Jet Filters Systems, Inc., 620 So. 2d 1141 (Fla. 3d DCA 1993), which held that a third party, bringing a bad faith action, is entitled to discover all materials in the insurance company’s claim file up to the date of the judgment in the underlying tort suit because the third party “stands in the shoes” of the insured. The Scoma court noted that these cases interpreted Boston Old Colony v. Gutierrez, 325 So. 2d 416 (Fla. 3d DCA 1976) and Stone v. Travelers Ins. Co., 326 So. 2d 241 (Fla. 3d DCA 1976) without considering the impact of section 90.502, Florida Statutes, which codified the attorney-client privilege and became effective after the underlying litigation in Boston Old Colony and Stone had concluded.
The Scoma court held:
[P]ermitting a third party who brings a bad faith claim to abrogate the attorney-client privilege previously held by the insured and insurer would seem to undermine the policy reasons for having such a privilege, such as encouraging open and unguarded discussions between counsel and client as they prepare for litigation.
The court remanded the case for the trial court to conduct an in camera inspection to determine whether (i) the requested documents were confidential attorney-client communications and (ii) the documents between the insured, the insurer and their joint counsel resulted from the representation of common interest.
