By Jose Pagan, Esq.
Jose Pagan, Esq. Courtesy, Walton, Lantaff, Schroeder & Carson
While there has been much litigation over this issue, Florida Courts have consistently ruled that materials contained within an insurance company’s claims and underwriting files are protected from discovery in a breach of contract action. Recently, in Avatar Prop. & Cas. Ins. Co. v. Mitchell, 314 So. 3d 640 (Fla. 3d DCA 2021), the Third District Court of Appeal expounded further on the issue. Concluding that the materials constitute work product, and are therefore protected, the Third DCA explained the reasoning used by it and other Florida courts to continue preventing such discovery.
First, the District Court explained the purposes behind the protection preventing disclosure of work product, which includes protecting “against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.” Fla. R. Civ. P. 1.280(b)(4); Id. Accordingly, Courts may only provide such disclosure upon a showing of “exceptional need”. Thus, when a request for such materials is presented, a Court must make an inquiry as to the relevance of the requested materials, the party’s exceptional need for the materials, and (even in the event of such exceptional need) whether a disclosure of such materials would constitute impermissible “cat out of the bag” material which would prejudice a party’s case moving forward. Id.
Florida Courts have long recognized that such materials within an insurance company’s files are irrelevant to a breach of contract action. While such information may be relevant in a subsequent first-party bad faith action, it is irrelevant in a breach of contract action – that is, until the liability under the contract and amount is determined and a first-party bad faith action accrues. “There is an abundance of case law that holds that a first-party bad faith claim does not accrue until there has been a final determination of both liability and damages in an underlying coverage claim.” (See State Farm Mut. Auto. Ins. Co. v. O’Hearn, 975 So. 2d 633, (Fla. 2d DCA 2008) (Citing to Vest v. Travelers Ins. Co., 753 So.2d 1270, 1276 (Fla.2000)) “Further, as liability for coverage remains in dispute, the report, housed within the claim file, is irrelevant, hence, not yet ‘otherwise discoverable,’ within the meaning of Florida Rule of Civil Procedure 1.280(b)(4).” Avatar, infra., citing to Ill. Nat’l Ins. Co. v. Bolen, 997 So. 2d 1194, 1196 (Fla. 5th DCA 2008) (“[A]n insurer’s claims file … is not subject to discovery until the insurer’s obligation to provide coverage and benefits is determined.”). Id. Since a bad faith action is not at issue, such information is irrelevant.
Comparably, Florida Courts have previously held that forcing a company to disclose underwriting material similarly results in a prohibited disclosure. See State Farm Mut. Auto. Ins. Co. v. O’Hearn, 975 So. 2d 633, (Fla. 2d DCA 2008) (“These items, all of which are contained within either State Farm’s underwriting file or claim file, are not discoverable until the issues of State Farm’s liability for UM coverage and the amount of O’Hearn’s damages are finally determined.”) See also Homeowners Choice Prop. & Cas. Ins. Co. v. Mahady, 284 So. 3d 582, 583 (Fla. 4th DCA 2019) (granting writ of certiorari as an order requiring disclosure of the insurer’s underwriting and claims file prior to a determination of liability for coverage and damages departed from the essential requirements of law). Because such improper disclosures result in an irreparable injury to an insurance company, Florida Courts have routinely held that a court departs from the essential requirements of law when it forces an insurance company to produce its claims or underwriting files prior to the determination of a breach of contract action. See Owners Ins. Co. v. Armour, 303 So. 3d 263, 267 (Fla. 2d DCA 2020) (finding a trial court departs form the essential requirements of law by compelling disclosure of an insurer’s claim where the issue of coverage remains in dispute); see also Homeowners Choice Prop. & Cas. Ins. Co. v. Mahady, 284 So. 3d 582, 583 (Fla. 4th DCA 2019) (granting writ of certiorari as an order requiring disclosure of the insurer’s underwriting and claims file prior to a determination of liability for coverage and damages departed from the essential requirements of law); See also Gen. Star Indem. Co. v. Atl. Hosp. of Fla., LLC, 93 So. 3d 501, 503 (Fla. 3d DCA 2012) (granting a petition for certiorari where order compelled production of work-product documents before coverage was determined); and State Farm Mut. Auto. Ins. Co. v. O’Hearn, 975 So. 2d 633, 637-38 (Fla. 2d DCA 2008).
Accordingly, the Avatar Court reversed the lower court and ruled that it erred in compelling disclosure of the privileged claim and underwriting file materials until the remaining coverage issue is resolved. While not a change in law, it clarified the long-standing case law in Florida protecting disclosure of protected work product in a breach of contract action.
Jose Pagan is a partner with the Walton, Lantaff, Schroeder & Carson law firm. He handles first-party and third-party claims, focusing on insurance defense and regulatory matters, at both the trial and appellate levels. His 25 years in the insurance industry includes work as an insurance agent, investigator for the old Department of Insurance, and in-house counsel for a commercial property insurance company. You can reach him at the firm’s Tallahassee office at 850-701-1781 or by email at [email protected]
LMA Newsletter of 10-18-21
