First Coast Energy, L.L.P. v. Mid-Continent Casualty Company

Filing 54

ORDER granting in part and denying in part 45 Motion to Compel. Signed by Magistrate Judge Monte C. Richardson on 5/15/2013. (MOH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION

FIRST COAST ENERGY, L.L.P.,
Plaintiff,
v.

Case No: 3:12-cv-281-J-32MCR

MID-CONTINENT CASUALTY
COMPANY,
Defendant.
/
ORDER
THIS CAUSE is before the Court on Plaintiff's Motion to Compel (Doc. 45) filed
April 24, 2013. In the Motion, Plaintiff seeks an Order compelling Defendant to respond
to several of its requests for production. In lieu of that, Plaintiff asks the Court to compel
Defendant to file a more definite privilege log and/or conduct an in camera review.
Defendant filed a response in opposition to this motion (Doc. 53) on May 10, 2013.
Accordingly, the matter is now ripe for judicial review.
I. BACKGROUND
On March 14, 2012, Plaintiff filed this first party bad faith action against
Defendant pursuant to Florida Statutes §624.155. According to Plaintiff, it obtained a
judgment in state court finding coverage following Defendant’s denial of a claim for
clean-up costs for petroleum contamination at one of Plaintiff’s gas stations. (Doc. 3).
The final judgment was entered in Plaintiff’s favor on September 28, 2010. Thereafter,
the First District Court of Appeal affirmed the trial court’s finding of liability against
Defendant and issued its mandate on November 2, 2011.

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Plaintiff served Defendant with its first request for production of documents in the
instant bad faith action on August 28, 2012. According to Plaintiff, there are eight
requests still at issue (Requests Numbers 1, 3-4, 10-11, and 16-18). Defendant argues
that it has properly objected to these requests on the basis that they seek information
protected by the attorney-client privilege and the work product doctrine and/or do not
seek relevant information.
II. ANALYSIS
Motions to compel disclosures and other discovery under Rule 37(a) are
committed to the sound discretion of the trial court. Commercial Union Insurance Co. v.
Westrope, 730 F.2d 729, 731 (11th Cir. 1984). The trial court's exercise of discretion
regarding discovery orders will be sustained absent a finding of abuse of that discretion
to the prejudice of a party. See Westrope, 730 F.2d at 731.
The overall purpose of discovery under the Federal Rules is to require the
disclosure of all relevant information so that the ultimate resolution of disputed issues in
any civil action may be based on a full and accurate understanding of the true facts.
See United States v. Proctor & Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986-87
(1958). Discovery is intended to operate with minimal judicial supervision unless a
dispute arises and one of the parties files a motion requiring judicial intervention.
Furthermore, “[d]iscovery in this district should be practiced with a spirit of cooperation
and civility.” Middle District Discovery (2001) at 1.
In the instant case, Plaintiff argues Defendant’s objections are improper for
several reasons: (1) Defendant waived its right to claim attorney-client privilege by
placing the advice of its counsel at issue in this case, (2) the documents being withheld

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by Defendant are not protected by either the attorney-client privilege or the work product
doctrine and (3) the legal invoices it seeks are discoverable. In the alternative, Plaintiff
asks the Court to compel Defendant to provide a more definite privilege log and/or to
conduct an in camera inspection of the documents at issue. The Court will address
each of Plaintiff’s contentions separately.
A.

Waiver of the Attorney-Client Privilege

Plaintiff alleges Defendant waived its right to assert the attorney-client privilege
by placing the advice of its counsel at issue in this case. Specifically, Plaintiff claims
Defendant is relying on the legitimacy of its coverage defenses to support its denial of
Plaintiff’s claim. Defendant responds that at no time did it ever raise advice of counsel
as a defense. Instead, as its Motion for Summary Judgment (Doc. 39) demonstrates,
Defendant is taking the position that based on the record evidence, including expert
testimony, it acted in good faith in raising valid policy provisions and exclusions which
supported its decision to deny Plaintiff’s claim.
The Court agrees with Defendant that it has not placed the advice of its counsel
at issue and therefore, has not waived the attorney-client privilege. The Court is not
aware of and Plaintiff has not pointed to any examples of Defendant relying on any
communications or advice from its counsel to support its decision to deny coverage.
Without such reliance, Defendant has not placed the advice of its counsel at issue. The
mere fact that there may exist communications from Defendant’s counsel either
supporting Defendant’s decisions or pointing out faults in the decisions is not enough to
constitute a waiver. As such, the undersigned finds Defendant has not waived the
attorney-client privilege.

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B.

Whether the Attorney-Client Privilege or Work Product Doctrine Apply
Next, Plaintiff argues that neither the attorney-client privilege nor the work

product doctrine apply to the documents at issue. Specifically, Plaintiff notes that
Defendant has withheld entire claims files on the grounds that they are protected by
either the attorney-client privilege or the work product doctrine. Plaintiff argues that the
Florida Supreme Court case of Allstate Indemnity Co. v. Ruiz, 899 So.2d 1121 (Fla.
2005) stands for the proposition that all documents in a claims file that were created “up
to and including the date of the resolution of the underlying disputed matter and pertain
in any way to coverage, benefits, liability, or damages,” should be produced in a bad
faith action. Plaintiff appears to believe this is true for both work product materials and
those arguably covered by the attorney-client privilege.
In response, Defendant points to Genovese v. Provident Life and Accident Ins.
Co., 74 So.3d 1064 (Fla. 2011), in which the Florida Supreme Court held that its prior
decision in Ruiz, permitting the discovery of work product in first-party bad faith actions,
did not apply to attorney-client privileged communications in the first-party bad faith
context. Genovese, 74 So.3d at 1067. The Genovese decision took an in-depth look at
the attorney-client privilege and determined that based on the differences between the
work product doctrine and the attorney-client privilege and the reasons for permitting the
discovery of work product in the bad faith context, attorney-client communications were
not discoverable even though work product was. Accordingly, Plaintiff’s attempts to
argue that documents contained in the claims files, which were produced up to the date
of resolution of the underlying dispute, must be produced regardless of whether they
would ordinarily be protected by the attorney-client privilege is unavailing.

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Turning to Defendant’s claims of protection based on work product, Defendant
appears to attempt to get around the holding in Ruiz by arguing that issues regarding
work product are governed by federal law. (Doc. 53, p. 12). Defendant takes the
position that Plaintiff has failed to satisfy the burden under Rule 26(b)(3) of the Federal
Rules of Civil Procedure of showing: (1) a substantial need for the materials and (2)
undue hardship in obtaining the substantial equivalent. As this Court observed in
Cozort v. State Farm Mut. Auto Ins. Co, 233 F.R.D. 674, 676 (M.D. Fla. 2005):
The work product at issue in the underlying coverage
litigation was created with respect to the then pending state
court case. As the coverage litigation was initiated, litigated,
and resolved solely in state court, Rule 26 of the Federal
Rules of Civil Procedure does not apply to any work product
relating to that litigation. Any work product protection that
attaches to documents created in connection with state court
proceedings must necessarily flow from state law. Here, that
law is set forth in Ruiz. The documents must be produced.
(emphasis in original). Similarly, in the instant case, Rule 26 does not apply and instead
Ruiz controls and dictates that all material in both the claims files and the litigation files1
prepared up to and including the date of resolution of the underlying coverage dispute
must be produced. Accordingly, Defendant is directed to produce any documents
previously withheld on the basis of work product contained in the claims files at issue in
this case prepared up to and including the date of resolution of the underlying coverage
dispute.

1

Although Defendant attempts to distinguish the litigation file from the claims file, “Ruiz
specifically subsumes ‘related litigation file material’ within the claim file material with the
category of insurer claim files subject to blanket discovery in the insurance bad faith context.”
Mayfair House Assoc., Inc. v. QBE Ins. Corp., No. 09-cv-80359, 2010 WL 472827, *3 (S.D. Fla.
Feb. 5, 2010). The Court does, however, agree with Defendant that it need only produce the
litigation file in the underlying claim.

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Additionally, Defendant is directed to produce any material previously withheld on
the basis of work product contained in any other insureds’ claims files, which relate to
and/or illuminate the manner in which Defendant handles other Pollution Liability and
Environmental Damage claims in the general course of business. Defendant’s handling
of the other claims files is “an issue directly bearing on [Defendant’s] punitive damage
liability exposure under statutory language authorizing recovery of such damages where
[Defendant’s] bad faith claims practices occur ‘with such frequency as to indicate a
general business practice.’” Mayfair House Assoc., 2010 WL 472827, at *3. The
Mayfair House court held that the reasoning of Ruiz applied to permit discovery of other
insured claims file material sought in an effort to establish an insurance company’s
general claims handling practices for purposes of punitive damages in the same manner
as the insured’s own claim file. Defendant shall produce these materials no later than
Friday, May 24, 2013.
While the Court agrees with Defendant that pursuant to Genovese, documents
representing attorney-client communications may still be protected, the Court’s inquiry
cannot end there. Instead, the Florida Supreme Court in Genovese recognized that
often the insurer has hired an attorney to both investigate the underlying claim and to
render legal advice. Genovese, 74 So.3d at 1068. In such situations, the materials
requested by the opposing party may implicate both the work product doctrine and the
attorney-client privilege. Accordingly, the court held:
where a claim of privilege is asserted, the judge should
conduct an in camera inspection to determine whether the
sought-after materials are truly protected by the attorneyclient privilege or whether the materials pertain to the
investigation or evaluation of the underlying claim. To the
extent that the materials would implicate the work product

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rule and not the attorney-client privilege, the rationale of Ruiz
would apply and those portions of the materials would be
discoverable.
Genovese, 74 So.3d at 1070 (Pariente, J., concurring). Accordingly, the undersigned
directs Defendant to produce the documents it claims are protected by the attorneyclient privilege for an in camera inspection. Defendant should have the documents
hand delivered to the undersigned’s chambers no later than Thursday, May 30, 2013. 2
In addition to providing the documents, Defendant shall provide the Court and Plaintiff
with a revised privilege log only referencing the documents being withheld on the basis
of the attorney-client privilege. The Court will then enter an order regarding its findings
on the documents and whether any portion of them should be produced to Plaintiff.
C.

Whether the Legal Invoices are Discoverable

Finally, Plaintiff argues that Defendant has improperly failed to produce legal
invoices. Plaintiff believes these invoices are discoverable and Defendant responds
that they are not relevant and even if they were relevant, they are protected by the
attorney-client privilege or the work product doctrine.
Rule 26(b)(1) of the Federal Rules of Civil Procedure provides that “[p]arties may
obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim
or defense . . .” Courts construe relevancy “broadly to encompass any matter that
bears on, or that reasonably could lead to other matter[s] that could bear on, any issue
that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351,
98 S.Ct. 2380 (1978) (citing Hickman v. Taylor, 329 U.S. 495, 501, 67 S.Ct. 385
(1947)). Relevant information is discoverable even if it is not admissible at trial, “if the
2

Counsel for Defendant should include with the documents an indication as to whether the
Court should return the documents to counsel after the inspection or should destroy them.

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discovery appears reasonably calculated to lead to the discovery of admissible
evidence.” Rule 26(b)(1), Fed.R.Civ.P. The Federal Rules of Civil Procedure strongly
favor full discovery whenever possible. Moore v. Armour Pharmaceutical Co., 927 F.2d
1194, 1197 (11th Cir. 1991).
“Thus, although the undersigned is aware that the threshold for determining
whether discovery is relevant is relatively low, the ‘proponent of a motion to compel
discovery [still] bears the initial burden of proving that the information sought is
relevant.’” Diamond State Ins. Co. v. His House, Inc., No. 10-20039-CIV, 2011 WL
146837, *5 (S.D. Fla. Jan. 18, 2011) (quoting Peacock v. Merrill, No CA 05-0377-BH-C,
2008 WL 176375, *8 (S.D. Ala. Jan.17, 2008)). Here, Plaintiff has not met that burden
with respect to this request. The Court does not believe and Plaintiff has not set forth
any argument supporting its claim that the legal invoices are relevant to the instant
litigation. Therefore, the Court will deny Plaintiff’s request for production of legal
invoices.
Accordingly, after due consideration it is hereby
ORDERED:
Plaintiff's Motion to Compel (Doc. 45) is GRANTED in part and DENIED in part.
Defendant is directed to provide copies of all documents previously withheld on the
basis of work product contained in either the claims files at issue in this case or any
other insureds’ claims files, which relate to and/or illuminate the manner in which
Defendant handles other Pollution Liability and Environmental Damage claims in the
general course of business, no later than Friday, May 24, 2013.

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Additionally, Defendant shall provide the Court with copies of the documents
being withheld on the basis of the attorney-client privilege from both Plaintiff’s claim file
and any other insureds’ claims files which relate to and/or illuminate the manner in
which Defendant handles other Pollution Liability and Environmental Damage claims in
the general course of business no later than Thursday, May 30, 2013. At this time,
Defendant will also provide the Court and Plaintiff with a revised copy of its privilege log
showing only those documents being withheld on the basis of attorney-client privilege.
DONE and ORDERED in Jacksonville, Florida this 15th day of May, 2013.

Copies furnished to:
Counsel of Record

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