Bad Faith - Florida Appellate Court Rules That Third Party Bringing Bad Faith Claim Cannot Abrogate The Attorney-Client Privilege Held By Insurer And Insured
Recently, in Progressive Express Ins. Co. v. Scoma, No. 2D06-2294 (May 4, 2007), Florida’s Second District Court of Appeal granted a writ of certiorari to an insurer seeking relief from an order requiring it to produce
confidential communications in a third party claimant’s bad faith suit. The court ruled that the attorney-client privilege protects communications between an insurer and its private counsel, and that in the absence of
a waiver or an assignment, communications between the insured and its counsel are also protected.
The underlying case arose out of a car accident involving Courtney, who had an automobile liability policy with Progressive Express Insurance Company (“Progressive”) with limits of $10,000. Following failed settlement
negotiations, Scoma, the personal representative, filed suit against Courtney. Courtney was represented by attorney Perkins. Ultimately, Scoma obtained a judgment of $1,050,000 against Courtney and then filed suit against
Progressive, claiming that Progressive acted in bad faith by failing to settle her claim with Courtney. In discovery, Scoma sought Progressive’s claim documents, and argued that because she stood in the shoes of Courtney,
the attorney-client privilege did not apply to any confidential communications between Courtney, Progressive, and their respective counsel. Over Progressive’s objections, the trial court ruled that the attorney-client
privilege did not apply and ordered the documents be produced. Progressive then filed for certiorari review.
The court noted at the outset that the attorney-client privilege is codified in the Florida Statutes, section 90.502(2), which states “[A] client has a privilege to refuse to disclose, and to prevent any other person from disclosing,
the contents of confidential communications when such other person learned of the communications because they were made in the rendition of legal services to the client.” With respect to Progressive’s claims of
attorney-client privilege, the court ruled that while it was unclear whether Progressive’s privilege log contained communications from Progressive’s own separate counsel, because such communications would be barred
from discovery in a bad faith action brought by an insured, they were clearly barred from discovery in a third party’s bad faith action.
In considering Progressive’s communications with attorney Perkins, who was retained to represent Courtney, the court noted that the record strongly suggested that Perkins jointly represented both Courtney and Progressive. The court reasoned that Progressive’s ability to claim the privilege for communications with Perkins may hinge on the ability of Courtney to claim the same privilege. On that point, the court stated that even though Scoma might be a third-party beneficiary to the insurance policy or have a statutory right to bring a bad faith claim, she did not obtain Courtney’s attorney-client statutory rights under section 90.502. The court ruled that while such rights may be “claimed” through assignment, there had been no assignment, and no waiver by Courtney or Progressive. The court added that “[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 public reasons for having such a privilege.” Accordingly, the court granted the petition and quashed the trial court’s order.