NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
OWNERS INSURANCE COMPANY, )
)
Petitioner, )
)
v. ) Case No. 2D18-4385
)
JAMES A. ARMOUR, individually and )
as Trustee of THE BAY SHORE ROAD )
TRUST U/A/D OCTOBER 1, 2008; )
4449 HOLDINGS, LLC; THE STUCCO )
COMPANY OF IDAHO; PREFERRED )
CONTRACTORS INSURANCE RISK )
RETENTION GROUP, LLC; and MQ )
WINDOWS, INC., )
)
Respondents. )
___________________________________)
Opinion filed September 9, 2020.
Petition for Writ of Certiorari to the Circuit
Court for Sarasota County; Andrea McHugh,
Judge.
Robin P. Keener and John D. Russell of
Stoler, Russell, Keener, Verona, P.A.,
Tampa, for Petitioner.
Louis D. D'Agostino of Cheffy Passidomo,
P.A., Naples (withdrew after briefing); and
Debbie Sines Crockett of Cheffy Passidomo,
P.A., Tampa (withdrew after briefing);
Matthew B. Devisse, Edmond E. Koester,
and Richard D. Yovanovich of Coleman,
Yovanovich & Koester, P.A., Naples, for
Respondents James A. Armour, individually
and as Trustee of the Bay Shore Road Trust
U/A/D October 1, 2008; and 4449 Holdings,
LLC.
No appearance for remaining Respondents.
KHOUZAM, Chief Judge.
Owners Insurance Company has filed a petition for writ of certiorari
seeking review of the circuit court's order denying in part its motion for protective order
and allowing certain discovery by James A. Armour, individually and as Trustee of the
Bay Shore Road Trust U/A/D October 1, 2008; and 4449 Holdings, LLC (collectively,
"Armour"). Because part of the circuit court's order appropriately limited discovery, we
deny the petition in part. However, because part of the circuit court's order departed
from the essential requirements of the law by allowing impermissible discovery, we
grant the petition in part, quash that portion of the order, and remand for further
proceedings consistent with this opinion.
The discovery order at issue was entered in a declaratory action over
insurance coverage for alleged defective construction of a residential property located at
4449 Bay Shore Road in Sarasota. Armour, the current owner of the property, had filed
suit alleging entitlement to insurance coverage as an additional insured under the
policies issued to the subcontractors involved in constructing the residence. Owners
had issued a policy to one of those subcontractors, The Stucco Company of Idaho.
Armour alleged in the operative complaint that all conditions precedent to
the filing of the suit had been met and that Owners had "plainly [been] given notice of all
claims which are the subject of this lawsuit." Owners denied these allegations. In an
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effort to rebut Owner's denial, Armour repeatedly sought discovery seeking to determine
if Owners had received notice. Owners declined to produce the requested discovery,
even after a magistrate granted Armour's motion to compel.
Still unsatisfied with Owners' responses to his discovery requests, Armour
sought to take depositions of certain Owners employees and representatives in order to
discover information regarding whether Owners had received notice. Specifically,
Armour sought to depose Jennifer Howard, Owners' claims adjuster; Cliff Storr, Owners'
senior attorney; Andy Corbin, Owners' director of home office claims; and Betty
Carbone, Owners' assistant manager of underwriting. After an extended period of
negotiations, the parties appeared to agree to certain areas of inquiry and limitations on
the testimony, and the depositions were scheduled. In a March 29, 2018, letter to
Armour's counsel, Owners' counsel confirmed the following topic parameters for the
corporate representative depositions:
1. Mr. Storr will testify as a corporate representative on the
specific coverage and denial of defense decisions made
by the Company that are the subject of the Third
[Amended] Complaint . . . .
2. Mr. Corbin will testify as corporate representative
regarding the Company's standards and guidelines for
the adjustment of commercial general liability claims in
Florida.
3. Ms. Carbone will testify as a corporate representative
about the underwriting of the specific policies referenced
in the Third Amended Complaint. Her testimony will be
limited to the applications submitted, the underwriting
department's application review process and the
underwriting decisions made in assisting the insured with
procurement of the specific policies at issue in this
litigation.
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The letter also indicated that Howard would be produced "in her individual capacity as a
fact witness," and the notice of deposition duces tecum stated that she would be
questioned on various details of Owners' coverage decisions involved in the case. In
the same March 29 letter, however, Owners demanded a consent protective order be
signed and filed with the court before the depositions proceeded. When Armour
declined to agree to the protective order, the depositions were cancelled. Owners later
amended the motion for protective order so that it sought to completely prevent Armour
from deposing any of the witnesses, arguing that the testimony was prohibited under
Florida law because it would invade and seek discovery of the claims file.
A hearing was held before a magistrate, who entered a recommended
order directing the depositions to go forward with limitations on the scope of inquiry.
Corbin's and Carbone's depositions would be allowed on the topics set forth in the
March 29 letter, based on the magistrate's conclusion that "[g]iven the agreement of
Owners" reflected in the letter these notices were "not problematic." The magistrate
also noted that Armour was "entitled to depose Cliff Storr in his capacity as a corporate
representative on the topics previously agreed upon in the March 29, 2018[,] letter from
Owners' counsel." To the extent that the deposition notices directed at Storr and
Howard exceeded the type of documents permissible under Florida law, however,
Armour was required to amend them to comply with the law.
Owners filed exceptions to the recommended order. The circuit court
overruled the exceptions and ratified the recommended order. The court did question
the magistrate's finding that the deposition notices for Corbin and Carbone were "not
problematic" based on the March 29 letter. "But it seems that what [the magistrate]
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really did is . . . apply the law to the facts of this case to narrow what Mr. Armour could
seek at deposition given that this is a notice case where they do have . . . an ability to
seek evidence regarding receipt of service of certain documents," the court ultimately
concluded.
In its petition in this court, Owners argues that the circuit court departed
from the essential requirements of law by allowing discovery into topics prohibited by
Florida law and that Owners will suffer irreparable harm if this improper information is
produced. "The Florida Supreme Court has explained that certiorari is the appropriate
remedy when a discovery order departs from the essential requirements of law, causing
material injury to the petitioner throughout the remainder of the proceeding in the trial
court, effectively leaving no adequate remedy on appeal." Am. Home Assur. Co. v.
Vreeland, 973 So. 2d 668, 671 (Fla. 2d DCA 2008). A discovery order improperly
compelling production is reviewable by certiorari. See State Farm Fla. Ins. Co. v. Desai,
106 So. 3d 5, 6 (Fla. 3d DCA 2013).
As both the magistrate and circuit court acknowledged, Second District
case law is replete with opinions holding that "[a] trial court departs from the essential
requirements of the law in compelling disclosure of the contents of an insurer's claim file
when the issue of coverage is in dispute and has not been resolved." Seminole Cas.
Ins. Co. v. Mastrominas, 6 So. 3d 1256, 1258 (Fla. 2d DCA 2009); see also State Farm
Mut. Auto. Ins. Co. v. O'Hearn, 975 So. 2d 633, 637 (Fla. 2d DCA 2008) ("[A] party is
not entitled to discovery of an insurer's claim file or documents relating to the insurer's
business policies or practices regarding the handling of claims in an action for insurance
benefits combined with a bad faith action until the insurer's obligation to provide
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coverage has been established." (quoting Old Republic Nat'l Title Ins. Co. v.
HomeAmerican Credit, Inc., 844 So. 2d 818, 819-20 (Fla. 5th DCA 2003)));
Vreeland, 973 So. 2d at 671-72 ("[T]o the extent that the trial court's order requires
production of American Home's claims files while the parties are engaged in a coverage
dispute, the order causes irreparable injury by allowing discovery of material protected
by the work-product privilege. Deposition testimony by a corporate representative on
these privileged matters is likewise prohibited." (citations omitted)); GEICO Gen. Ins.
Co. v. Hoy, 927 So. 2d 122, 125 (Fla. 2d DCA 2006) ("When a litigant files claims for
both coverage and bad faith in the same action, the insurer's claim file is not
discoverable until the issue of coverage has been resolved."); State Farm Fla. Ins. Co.
v. Gallmon, 835 So. 2d 389, 390 (Fla. 2d DCA 2003) (quashing "a wide-ranging order to
State Farm to produce its claim files, investigative reports, adjuster notes, underwriting
files, company policies and manuals, training materials, certain personnel files, sales
brochures and marketing materials, computer manuals for operating internal software
and programs, details of rewards and bonus programs for employees, employee
incentive and compensation programs, third-party programs and correspondence about
sinkhole claims, its casualty claims manual and estimating manual, and minutes of
meetings at which sinkhole claims were discussed").
Even though "[t]he disclosure of various types of information can result in
irreparable harm, including material protected by privilege, trade secrets, or work
product," the baseline "test for discovery is always relevance" to the disputed issues of
the underlying action. Diaz-Verson v. Walbridge Aldinger Co., 54 So. 3d 1007, 1009
(Fla. 2d DCA 2010). Indeed, in American Home Assurance Co. v. Vreeland, 973 So. 2d
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668, 672 (Fla. 2d DCA 2008), this court allowed discovery of an underwriting file limited
to documents pertaining to a specific issue in the litigation—whether Aerolease of
America was the owner or lienholder of the insured aircraft—while coverage was still in
dispute. Cf. Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678,
680 (Fla. 2d DCA 2010) ("Under Florida's 'at issue' doctrine, '[w]hen a party has filed a
claim, based upon a matter ordinarily privileged, the proof of which will necessarily
require that the privileged matter be offered in evidence,' he waives his right to claim
that the matter is privileged in pretrial discovery." (alteration in original) (quoting Savino
v. Luciano, 92 So. 2d 817, 819 (Fla. 1957))). The Vreeland court further explained:
If questions are asked during a deposition requiring answers
that would violate the attorney-client privilege, then American
Home's counsel may instruct the corporate representative
not to answer. See Fla. R. Civ. P. 1.310(c) (stating that a
party may instruct a deponent not to answer "when
necessary to preserve a privilege"). If this occurs, the trial
court may be required to conduct an in-camera hearing to
determine whether the deposition questions will elicit
information protected by a privilege. See Hamilton v.
Ramos, 796 So. 2d 1269, 1270 (Fla. 4th DCA 2001).
Similarly, to the extent that American Home contends that
documents in the underwriting file may contain privileged
information, the trial court may have to conduct an in-camera
review.
Vreeland, 973 So. 2d at 672.
Here, the magistrate correctly concluded that Armour was entitled to
depose Owners' representatives on the specific issue of notice because Armour alleged
that notice had been given while Owners denied receiving notice, putting receipt of
notice at issue. The magistrate also correctly determined that the deposition notices for
Jennifer Howard and Cliff Storr "extend[ed] far beyond the notice and discovery issues
and stray[ed] into those areas of claims handling and matters otherwise prohibited by
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Florida law." Accordingly, the magistrate concluded that Armour could depose these
two witnesses on topics relevant to notice but that the deposition notices needed to be
amended to comply with Florida law and that the witnesses' testimony would be limited
to topics not precluded by Florida law.
However, as to the testimony of Andy Corbin and Betty Carbone, the
magistrate concluded that Armour was "entitled to depose these individuals in their
capacity as corporate representatives on the topics previously agreed upon in the
March 29, 2018[,] letter from Owners' counsel." The order also states that Armour was
entitled to depose Storr on the agreed-upon topics. Essentially, the magistrate appears
to have concluded that any privilege had been waived by the March 29 letter. But it is
axiomatic that an attorney cannot waive a privilege objection for a client. See Sedgwick
Claims Mgmt. Servs., Inc. v. Feller, 163 So. 3d 1252, 1254 (Fla. 5th DCA 2015) ("The
client is the holder of the privilege and is the only person who may waive it." (quoting
Charles W. Ehrhardt, Florida Evidence § 502.8 (2014 ed.))); Nova Se. Univ., Inc. v.
Jacobson, 25 So. 3d 82, 86 (Fla. 4th DCA 2009) ("The privilege belongs to the
client . . . ."). This is true even where counsel indicates an intent to produce certain
discovery but later raises a privilege objection to the production of that discovery. See,
e.g., Sedgwick, 163 So. 3d at 1254 ("[T]he trial court erred by finding that the attorney-
client privilege was waived by counsel's statement at a hearing. Although counsel
stated, upon prompting by the trial judge, that he did not anticipate objecting to the
discovery requests, this exchange was not sufficient to waive the client's objections,
which were later timely asserted in counsel's written responses to the requests."); Huet
v. Tromp, 912 So. 2d 336, 339 (Fla. 5th DCA 2005) (holding that the Huets were entitled
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to claim work product privilege despite previous waiver; waiver had been cured when
the Huets struck the witnesses at issue from their witness list); Truly Nolen
Exterminating, Inc. v. Thomasson, 554 So. 2d 5, 5-6 (Fla. 3d DCA 1989) ("A failure to
assert a work-product privilege at the earliest opportunity, in response to a discovery
motion, does not constitute a waiver of the privilege so long as the privilege is asserted
by a pleading, to the trial court, before there has been an actual disclosure of the
information alleged to be protected.").
As set forth in the March 29 letter, the parameters for questioning Corbin
and Carbone are patently overbroad because they allow for discovery of information in
the claim file and documents relating to the insurer's business policies or practices
regarding the handling of claims. See Mastrominas, 6 So. 3d at 1258; O'Hearn, 975 So.
2d at 637; Vreeland, 973 So. 2d at 671-72; Hoy, 927 So. 2d at 126; Gallmon, 835 So.
2d at 390. The letter provided that Corbin would testify broadly on "the Company's
standards and guidelines for the adjustment of commercial general liability claims in
Florida." And Carbone would testify "about the underwriting of the specific policies
referenced in the Third Amended Complaint," including "the applications submitted, the
underwriting department's application review process and the underwriting decisions
made in assisting the insured with procurement of the specific policies at issue in this
litigation." Corbin's and Carbone's testimony should be limited in the same way
Howard's and Storr's testimony was limited: their testimony should be confined to the
issue of notice, their testimony should be restricted to topics not precluded by Florida
law, and their deposition notices should be amended to comply with Florida law.
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Thus, to the extent that the circuit court appropriately limited the
witnesses' testimony according to Florida law, we deny Owners' petition for writ of
certiorari. However, to the extent that the circuit court held that Owners had waived its
privilege objections based on the March 29 letter, we grant the petition, quash that
portion of the circuit court's order, and remand for proceedings consistent with this
opinion.
Denied in part, granted in part, and remanded.
LaROSE and ROTHSTEIN-YOUAKIM, JJ., Concur.
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OWNERS INSURANCE CO. v. JAMES A. ARMOUR, INDIVIDUALLY AND AS TRUSTEE OF THE BAY SHORE RD TRUST
Combined Opinion