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Aircraft Holdings, LLC v. XL Specialty Insurance Co.

SC06-1303

ALL RISE.
HEAR YE, HEAR YE, HEAR YE.
THE SUPREME COURT IN THE
STATE OF FLORIDA IS NOW IN
SESSION.
ALL WHO HAVE BUSINESS BEFORE
THIS COURSE, DRAW NEAR, GIVE
ATTENTION, AND YOU SHALL BE
HEARD.
GOD SAVE THESE UNITED STATES,
THE GREAT STATE OF FLORIDA
AND THIS HONORABLE COURT.
>> GOOD MORNING.
LADIES AND GENTLEMEN, THE
FLORIDA SUPREME COURT.
PLEASE BE SEATED.
>> GOOD MORNING, FRIENDS AND
WELCOME TO THE ORAL ARGUMENT
DOCKET FOR WEDNESDAY
MARCHth.
FIRST DAYS ON THE DOCKET IS
AIRCRAFT HOLDINGS vs. XL
SPECIALITY INSURANCE.
MR. SHIPMAN.
>> MAY IT PLEASE THE COURT
I'M GARY SHEUPLMAN.
I HAVE THE PLEASURE OF
REPRESENTING AIRCRAFT
HOLDING.
I'M HERE ON A APPEAL FROM
THE FIRST DISTRICT
CONCERNING THE RUEZ DECISION
JUDGE HOLESTEIN WHERE HE
BELIEVED RUES ACCIDENT COVER
ATTORNEY CLIENT PRIVILEGE
AND CERTIFIED A QUESTION OF
THIS COURT.
I WOULD SAY THE CERTIFIED
QUESTION REQUESTED YOU
WHETHER OR NOT ATTORNEY
CLIENT PRIVILEGE MATERIAL IS
COVERED UNDER RUIS AND I
THINK I SHOULD BE ATTORNEY
MATERIAL.
BECAUSE THE FIRST ISSUE WE
ADDRESS IS WHETHER OR NOT AN
ATTORNEY CLIENT PRIVILEGE
EXIST IN THE CASE OF AN
INSURANCE.
ATTORNEY CLIENT PRIVILEGE
EXISTS BY REASON OF STATUTE.
>> THERE IS A STATUTE
PROVIDED.
>> IT'S A MATTER OF
SUBSTANCE OF LAW.
SWRAO WELL, I'M AFRAID
ADIG -- DISAGREE WITH YOU ON
THAT.
AND THE REASON I DO IS
BECAUSE 90.502 WHICH
PROVIDES FOR ATTORNEY CLIENT
PRIVILEGE IN THE STATE WAS
COTFIED BY THE LEGISLATURE
IN 1973.
THREE YEARS LATER IT BECOME
LAW AFTER THE SUPREME COURT
ADOPTED IT.
SUPREME COURT FULLY ADOPTED
ONLY IF IT'S POERL IN
NATURE.
IN 2002 THE SUPREME COURT
ADOPTED AN AMENDMENT TO
90.502 ON THE ISSUE OF
WAIVER OF ATTORNEY CLIENT
PRIVILEGE OF 11:00 SECTION 6
IN WHICH THAT ADOPTION THE
SUPREME COURT ITSELF
SPECIFICALLY SAID THAT THEY
WERE ONLY ADOPTING
AMENDMENTS THAT WERE
PROCEDURAL IN NATURE.
SO NO, I DON'T AGREE THAT
ALL OF ATTORNEY CLIENT
PRIVILEGE UNDER 90.502 IS
SUBSTANTIVE LAW.
I BELIEVE AT LEAST A PORTION
MUST BE PROCEDURAL,
CERTAINLY THE ISSUE OF
WAIVER BECAUSE THE SUPREME
COURT --
>> YOU SAID SO -- THE ISSUE
HAS NOT BEEN PRESENTED AS
ONE OF WAIVER; CORRECT?
IT'S WHETHER THE ATTORNEY
CLIENT PRIVILEGE EXISTS OR
AN INSURER WHERE THERE IS A
CLAIM MADE FOR BAD FAITH.
I THINK IT'S ACTUALLY BOTH
JUSTICE WELLS.
I THINK THE FIRST ISSUE AND
THERE ARE MANY ROADS TO GET
TO THE TAYLOR DECISION THAT
I BELIEVE THE MAJORITY WENT
TO IN RUIZ.
THE FIRST IS WHETHER THE
ATTORNEY CLIENT PRIVILEGE
EXISTS THE BASE IS UNDER
90.052 ACCORDING FOR
ATTORNEY CLIENT PRIVILEGE
YOU MUST HAVE A REASONABLE
EXPECTATION THAT THE
COMMUNICATION WILL BE MADE
CONFIDENTIAL AND NOT
DISCLOSED TO OTHER PARTIES.
WHEN 624.155 WAS ENACTED BY
THE LEGISLATURE, IT IMPOSED
ON AN INSURANCE COMPANY AN
ABSOLUTE FIRSTRY DUTY
TO -- FIDUCIARY DUTY TO ACT
IN UPMOLD -- MOST LOYALTY
AND TO TREAT AN INSURED IF
IF ITS ITS OWN BUSINESS.
>> WELL, SINCE THAT ADOPTION
THIS COURT CAME OUT WITH A
CASE CAN CUDULLO CASE IN
WHICH IN RESPECT TO ATTORNEY
GENERAL ATTORNEY CLIENT
PRIVILEGE IT UPHELD THE
PRIVILEGE BE -- WITH RESPECT
TO INSURANCE COMPANIES
STPHRBGT CORRECT IN A FIRST
PARTY BAD FAITH.
>> SINCE CUJILLO THE COURT
CAME OUT WITH THE RUIZ
DECISION.
>> INSOFAR WHETHER THERE'S A
REASONABLE EXPECTATION.
THE ONLY CASE OUT THERE THAT
DEALS WITH ATTORNEY CLIENT
PRIVILEGE IS CUJALLA.
>> IN THE JUCALLA CASE THEY
WERE IN DIRECT CONFLICT WITH
THE TAYLOR CASE IN THE RUIZ
DECISION THE COURT
SPECIFICALLY STATED THAT THE
COURT WAS ADOPTED THE
ANALYSIS OF THE TAYLOR CASE
WHEN YOU SUCCEEDED FROM
CAJALLA.
WHICH ROAD OF THE MANY
COURTS THE COURT WENT DOWN
TO GET TO DAY -- TAYLOR
WHETHER IT WAS NO ATTORNEY
CLIENT PRIVILEGE EXISTS OR
WHETHER 90.052 WE DEAL WITH
PROCEDURE ISSUES NOT
SUBSTANTIVE LAW AS TO
WHETHER OR NOT AN ATTORNEY
CLIENT PRIVILEGE EXCEPTION
OR WAIVER EXISTS, I DON'T
KNOW OR WHETHER THE COURT
WENT DOWN THE ROAD OF SAYING
THAT THE EXCEPTION WHICH IS
CLEARLY I THINK YOUR POWER
TO INTERPRET OF 4-E WHICH IS
THE COMMONALITY OF INTEREST
BECAUSE AN INSURANCE COMPANY
UNDER 604155 HAVING THE
ABSOLUTE DUTY TO TREAT THE
INSUREDS INTEREST AS IF IT
WAS HIS OWN CREATES A
COMMONALITY OF INTEREST.
AND THEREFORE YOU FALL UNDER
THE EXCEPTION.
I DON'T KNOW WHICH OF THOSE
OCCUR.
OR WHETHER THE COURT WENT
DOWN THE ROAD OF SAYING THAT
THE INSURANCE COMPANY IN
HAVING A NONDELABLE DUTY AND
INVOLVE THE COUNSEL
IN -- WHERE IT WAS NOT
ACTING OR ALLEGEDLY NOT
ACTING IN BAD FAITH WAS
FALLING UNDER THE -- A FRAUD
CLAIM UNDER SECTION 4-A OF
90.502.
I DON'T KNOW IF YOU WENT
DOWN THAT ROAD.
>> IS THERE ANY OTHER AREA
OF LAW WHERE WE HAVE SAID
WE'RE JUST NOT GOING TO
APPLY THE ATTORNEY CLIENT
PRIVILEGE?
OTHER THAN THE EXCEPTIONS
THAT ARE ENUMERATED IN THE
STATUTE, FRAUD AND THOSE
KINDS OF THINGS, IS THERE
ANY OTHER AREA WHERE WE SAID
THE ATTORNEY CLIENT
PRIVILEGE DOESN'T APPLY
HERE?
>> I THINK JUST CANTERO
THAT'S A DIFFICULT QUESTION
TO ANSWER SINCE IT IS THE
COURT ITSELF THAT PRIOR TO
1974 WAS THE ENTITY THAT WAS
CREATING THE ATTORNEY CLIENT
PRIVILEGE AND SINCE 1970 OR
1972 -- 1976 BECOME THE
ENTITY THAT WAS INTERPRETING
WHAT 90.502 MEANT AND WAS
APPLYING WHETHER OR NOT
WAIVERS EXISTED.
I CAN'T ANSWER THAT
QUESTION.
>> LET ME ASK THE FINALITY
OF BANK HAVE TRUST OFFICES.
THERE'S FIDUCIARY
RELATIONSHIPS BETWEEN THE
TRUST DEPARTMENT OF A BANK
AND THEIR CLIENT.
I ASSUME, THOUGH THAT THE
BANK HAS AN ATTORNEY AND THE
ATTORNEY IS GIVING ADVICE TO
THE BANK TRUST
OFFICE -- OFFICERS.
IS THERE ANY CASE LAW THAT
SAYS THAT THE BENEFICIARY
HAS AN ACTION AGAINST THE
TRUST OFFICERS OR THE BANK
SOMEHOW THE ATTORNEY CLIENT
PRIVILEGE IS WAIVED IN THAT
SITUATION?
EVEN THOUGH THEIR EXIST A
FIDUCIARY RELATIONSHIP.
>> IT WOULD UNDER 4-A IN THE
EVENT IF THE TRUST OFFICER
WERE ATTEMPTED TO COMMIT
SOME TYPE OF CRIME OF FRAUD
LIKE EMBEZZLING THE MONEY.
OR IN THE I BELIEVE IT WAS
ANOTHER CASE THERE WAS SOME
DISCUSSION ABOUT 4-E WHERE
YOU HAVE A COMMONALITY OF
INTEREST.
IN OTHER WORDS WITH -- IF
THE TRUST OFFICER IS SEEKING
ADVICE OF COUNSEL FOR THE
BENEFIT OF THE TRUST THE
TRUST BENEFICIARY THEY WERE
THE DE FACTO CLIENT AND TO
THE TRUST BIN FISHARY IT
WOULDN'T BE PRIVILEGE.
WHICH IS EXACTLY THE
ARGUMENT HERE.
THE INSURANCE COMPANY IS
SUPPOSED TO -- WHATEVER IT
DOES -- BE ACTING ONCE YOU
DECIDED THEY WERE FIDUCIARY
AND NOT AN ADVERSARIAL
RELATIONSHIP WHICH IS WHAT
RUIZ SAY, IS ALWAYS ACTING
FOR THE BENEFIT OF THE
INSURED.
IN THIS CASE IT SEEMS THAT
THE JUDGE.
>>> IN THIS CASE IT SEEMS
THAT THE JUDGE JUST BROADLY
SAID HERE'S THE FILE.
IS THERE A -- SO THERE WAS
NEVER AN INCAMERA INSPECTION
OF THE DOCUMENT.
>> YES, MA'AM.
MY CONCERN IS THAT -- LET'S
ASSUME -- I MEAN THE
ATTORNEY CLIENT PRIVILEGE
MAY ATTACH TO CERTAIN
DOCUMENTS AND MAY NOT ATTACH
TO OTHER DOCUMENTS.
FOR EXAMPLE THERE'S AN
ASSERTION THAT SOME OF THE
DOCUMENTS RELATE TO THE
STRATEGY OR DEFENSE OF THE
BAD FAITH CLAIM.
AND THE PROBLEM THAT OCCURS
IN THESE -- IN THE FIRST
PARTY SITUATION IS THAT YOU
FILED YOUR CLAIM FOR THE
DAMAGES FOR COVERAGE AT THE
SAME TIME YOU FILED YOUR BAD
FAITH CLAIM.
SO COULD YOU ADDRESS THE
BREADTH OF THE TRIAL COURT'S
ORDER IN TERMS OF SAYING
EVERYTHING THAT WAS IN THAT
LOG WAS PRODUCED WHEN
THERE'S ASSERTIONS THAT
THERE ARE DOCUMENTS THAT MAY
RELATE TO THE STRATEGY AND
THE BAD FAITH CLAIM AND
SHOULD THERE BE A
DISTINCTION BETWEEN WHERE,
FOR EXAMPLE, YOU HAVE A
GENERAL COUNSEL OR THERE ARE
LAWYERS THAT IN FACT
EXISTING IN THE HANDLING OF
THE CLAIM AND THAT, THAT'S
WHAT THEY ARE DOING.
VERSUS GIVING LEGAL ADVICE
ON THE EVALUATION OF THE BAD
FAITH CLAIM.
>> YES, MA'AM.
AND, IN FACT, FRANKLY IN
THIS CASE THERE ARE THREE
DIFFERENT ENTITIES THAT HAD
FILES WE WERE SEEKING, WHICH
WAS THE CAPARELLA FILE,
WILLY FILE AND THE GENERAL
COUNSEL FILE.
I BELIEVE THAT THE TRIAL
COURT DID ERR -- ERR IN NOT
REVIEWING AND EXCLUDING
ADVICE ON BAD FAITH LAWSUIT.
>> YOUR NOT SEEKING THOSE
DOCUMENTS AT ALL.
>> NO, SIR.
>> I DO, HOWEVER, BELIEVE
THAT WE ARE ENTITLED TO THE
DOCUMENTS IN EVERYONE'S FILE
CONCERNING THE REFUSAL OF XL
TO INVESTIGATE, ANALYZE, AND
PROCESS ITS CLAIM.
>> LET ME ASK YOU JUST AS TO
WHAT KIND OF DOCUMENTS YOU
ARE REQUESTING ON.
WHEN I THINK OF A CLAIM FILE,
I THINK OF THE INSURANCE
COMPANIES, FILE ALL THE
ADJUSTER CLAIM FILES
ADJUSTED, WHAT THE INSURED
WANTED, AND WHAT THE
DOCUMENTS WERE SUPPORTING
THAT CLAIM AND WHAT
IS -- HIS IMPRESSIONS WERE,
THOSE KINDS OF THINGS.
YOU ARE SAYING THAT A CLAIM
FILE INCLUDES NOT ONLY THAT,
BUT ALSO CORRESPONDANCE
BETWEEN COUNSEL AND THE
INSURANCE COMPANY AS TO
WHETHER THE CLAIM MUST BE
PAID AND DO YOU ALSO CLAIM
THAT IT INCLUDES THE OUTSIDE
COUNSEL'S FILES ON THE CASE,
IMPRESSIONS, MEETINGS
BETWEEN PARTNERS AND
ASSOCIATES, MEMORANDA THAT
ASSOCIATES HAVE DRAFTED, ALL
THOSE KINDS OF THINGS TO YOU
ARE THE CLAIM FILE.
>> JUSTICE CANTERO IN, IN
PARTICULAR CASE I ABSOLUTELY
BELIEVE THIS.
BECAUSE IN THIS CASE XL
ACTUALLY HAD NO EMPLOYEES
INVOLVED.
NO ONE TOUCHED THIS FILE
OTHER THAN A LAWYER.
THEY HAD THE BEVERLY
HILLS --
>> IF WE ARE GOING TO MAKE
THE LAW IN THIS AREA AND WE
HAVE TO INCLUDE MORE THAN
YOUR CASE I'M TRYING TO
UNDERSTAND WHAT YOUR
POSITION IS IN THE NORMAL
CASE I WOULD SAY I DON'T
KNOW IF THAT'S THE NORMAL OR
NOT NOW.
WHEN I WAS PRACTICING IT WAS
NORMAL THERE WAS AN
INSURANCE COMPANY FILE THEN
THERE WAS A SEPARATEOUT SIDE
DOWN -- COUNSEL.
ARE YOU SAYING THOSE FILES
ARE ALSO ALL OF THEM
PRODUCEABLE.
>> TO THE EXTENT THAT THE
INSURANCE COMPANY INVOLVED
THEM IN THEIR NONDELIGIBLE
IN DETERMINING WHETHER OR
NOT TO HONOR THEIR CONTRACT
AND TO PROCESS THE CLAIM AND
USE THEM TO INVEST IN
PROVIDING ADVICE ON
INVESTIGATING AND ANALYZING
AND FORMING THE CLAIM,
ABSOLUTELY.
SO THAT WOULD INCLUDE
CORRESPONDANCE AND NOTES UP
TO THE DETERMINATION OF
WHETHER TO PEYTON CLAIM
ACCORDING TO YOUR STATEMENT
JUST NOW THAT WOULD NOT
INCLUDE ANY DOCUMENTS FILED
AFTER LITIGATION HAS
COMMENCED BECAUSE THEY MADE
THE DECISION TO DENY
COVERAGE.
>> IN THIS PARTICULAR CASE
THERE WAS NOT A COVERAGE
DENIAL.
THIS CASE WAS WHERE
INSURANCE COMPANY SIMPLY
REFUSED TO INVESTIGATE IT'S
OWN CLAIM.
WELL, AT THE POINT, I
THINK -- WE'VE GOT TO GET
SOME PARAMETERS.
AT THE POINT THEN THAT'S WHY
I SAID IN THE FIRST PARTY
CASE YOU HAVE THE UNIQUE
SITUATION OF THE TWO CLAIMS
BEING FILED AT THE SAME
TIME.
WHICH IS NOT WHAT IT WOULD
OCCUR IN THE 30 PARTY.
FIRST OF ALL, DO YOU AGREE
THAT YOU DID TO THAT?
>> THAT'S HAPPENED.
SO WE HAVE SOMETHING THAT IS
THAT UNDERLYING ESSENCE OF
THE CLAIMS WE HAVE HELD ARE
ABSOLUTELY THE SAME.
THAT IS DUTY TO ACT IN GOOD
FAITH.
>> YES, MA'AM.
WE DO HAVE DIFFERENT
PROCEDURAL POSTURES.
SO IN THIS CASE YOU FILED
BOTH, WAS THE BAD FAITH
CLAIM ABATED?
>> YES, MA'AM.
>> AT THIS CASE IT WAS AT
THE POINT SUMMARY JUDGMENTS
GRANTED ON WHATEVER ISSUE;
IS THAT THE POINT THEN AFTER
THAT YOU THEN PROCEEDED TO
ACTIVELY PROSECUTE YOUR BAD
FAITH CLAIM.
>> YES, MA'AM.
>> SO FOR THIS CASE IS THAT
THE POINT AFTER THAT FOR
SURE ANYTHING ANY
CORRESPONDANCE WOULD BE
PROTECTED UNDER THE ATTORNEY
CLIENT PRIVILEGE AS IT WOULD
IN A DIFFERENT POINTS IN A
THIRD-PARTY CASE.
>> YES, MA'AM.
I BELIEVE THE DEMARCATION
LINE IS WHEN THE COURT RULED
FOR THE POLICY HOLDER
AIRCRAFT HOLDINGS ON SUMMARY
JUDGMENT ON THE BREACH OF
CONTRACT.
>> BUT EVEN -- BUT EVEN
THERE, COULDN'T THERE BE
CORRESPONDANCE BEFORE THAT
POINT -- BECAUSE YOU SAY YOU
HAVE A GENERAL COUNSEL WHO
MAY BE ACTING AS THE AGENT,
YOU KNOW AS AN EMPLOYEE.
I'M NOT SURE WHAT THE LAW
IS.
BUT THAT MAY BE IF THEY ARE
EMPLOYED AS GENERAL COUNSEL
AND NO ONE MADE A QUESTION
OF THAT DISTINCTION AS TO
WHETHER THAT IS EVEN WITHIN
THE ATTORNEY-CLIENT
PRIVILEGE FOR THIS CASE.
BUT COULD THERE BE AND I
THINK CORRESPONDANCE, MEMOS
EVEN UP TO THAT POINT THAT
STILL WOULD BE ON THE
VALUATION OF THE BAD FAITH
CLAIM AS OPPOSED TO THE
INVESTIGATION OF THE CLAIM
THAT WOULD BE PRIVILEGED.
>> YES, MA'AM.
I BELIEVE THAT TO THE EXTENT
THERE ARE DOCUMENTS
PERTAINING TO THE DEFENSE OF
THE BAD FAITH, BE IT BEFORE
OR AFTER THE ENTRY OF
SUMMARY JUDGMENT ON THE
BREACH OF CONTRACT I AGREE.
I BELIEVE THOSE ARE
PRIVILEGED.
>> MR. SHIPMAN.
LET ME -- AS I HAVE ALWAYS
UNDERSTOOD THE REASON BEHIND
THESE PRIVILEGES WHETHER IT
BE A PHYSICIAN PRIVILEGE A
SPOUSAL PRIVILEGE OR THE
ATTORNEY CLIENT PRIVILEGE
WAS SO THAT A CLIENT OR A
PATIENT OR A SPOUSE CAN FEEL
OPEN TO DISCUSS MATTERS WITH
THE OTHER -- WITH THE LAWYER
OR DOCTOR OR SPOUSE.
AND IF TO FACILITATE
LEARNING WHAT -- IN THE CASE
OF A LAWYER WHAT THE LAW IS.
NOW, IF WE OPEN UP
ATTORNEY-CLIENT PRIVILEGE
ON -- AND SAY THAT THERE'S
NO ATTORNEY-CLIENT PRIVILEGE
TO THE UNDERLYING CLAIM,
THEN THE INSURANCE COMPANY
DOESN'T HAVE ANY RIGHT TO
GET AN UNFETTERED OPINION
FROM LAWYER; CORRECT?
>> JUST -- JUSTICE WELLS
WHEN 624.155S ENACTED THE
INSURANCE COMPANY IS NOT
SUPPOSED TO BE DOING
ANYTHING THAN -- THAT IS NOT
IN THE INTEREST OF ITS
INSURED.
AND, THEREFORE, THE INSURED
IS, IN FACT, THE DE FACTO
CLIENT.
SO FOR AN INSURANCE COMPANY
TO THINK THAT TO THE EXTENT
IT SEEMS OUR -- OR INVOLVES
AN ATTORNEY AND ITS CLAIMS
INVESTIGATION, ANALYSIS OR
HANDLING PROCESS OR SEEKS
ADVICE OF THE ATTORNEY AND
THAT PROCESS THAT SOMEHOW
THAT IT -- THAT THEY HAVE
THE REASONABLE EXPECTATION
THAT, THAT WOULD NOT BECOME
INFORMATION THAT'S AVAILABLE
TO THE INSURED I DON'T
UNDERSTAND THAT.
NO DIFFERENT THAN --
>> WHAT'S THE EXAMPLE --
>> YOU'RE WELL INTO YOUR
REBUT PHYSICAL YOU WANT TO
RESERVE YOUR TIME.
IT'S CERTAINLY YOUR TIME TO
USE.
YOU CAN USE IT AS YOU WANT.
BUT YOU IN YOUR REBUTTAL.
I WANT TO ALERT YOU TO YOUR
TIME.
YES.
I WILL SIT DOWN AND RESERVE
THE REST OF FOR REL.
>> MAY IT PLEASE THE COURT
I'M TOM FINDLEY I REPRESENT
XL SPECIALITY.
YOU CORRECT 90.052 AND THE
ATTORNEY GENERAL
CLIENT -- ATTORNEY CLIENT
PRIVILEGE IN FLORIDA IS
SUBSTANTIVE LAW IN FLORIDA.
ITS SUBSTANTIVE STATUTE.
IT HAS BEEN HELD BACK BY THE
FLORIDA SUPREME COURT IN THE
CASE OF HOLLY VERSUS ALT
THAT DEAL WITH PEER REVIEW
MEDICAL COMMITTEE RELATING
TO THAT.
IN THAT CASE THIS COURT HELD
THAT INEVITABLY SUCH A
DISCOVERY PRIVILEGE WILL
IMPING UPON THE RIGHT OF
SOME CIVIL LITIGANTS THE
DISCOVERY OF INFORMATION
WHICH MIGHT BE HELPFUL OR
EVEN ESSENTIAL.
TO THEIR CAUSES.
WE MUST ASSUME THAT THE
LEGISLATURE BALANCE THIS
POTENTIAL DETRIMENT THEN THE
COURT GOES ON TO SAY IT'S
PREPRECISELY THIS SORT OF
POLICY JUDGEMENT WHICH IS
EXCLUSIVELY THE PROVINCE OF
THE LEGISLATURE RATHER THAN
THE COURT.
>> MR. FINDLEY, LET ME ASK
YOU A QUESTION.
THERE'S DIFFERENCES BETWEEN
THIRD AND FIRST PARTY
CERTAINLY ON RELATIONSHIPS.
YOU KNOW A THIRD PARTY BAD
FAITH SITUATION WHERE
THERE'S NO STATUES INVOLVED
AT ALL AND THERE'S A
DISCUSSION WITH REGARD TO AN
ESSENTIAL PART OF THE BAD
FAITH ACTION, AND IT'S
BETWEEN THE LAWYER AND THE
INSURANCE COMPANY DOES NOT
REALLY GO TO THE DIRECT
DEFENSE.
OF THE INSURED.
IN THAT THIRD PARTY CONTEXT.
IT'S REALLY A COMMUNICATION,
REALLY ABOUT COVERAGE OR
JUST REALLY ON THE INSURANCE
COMPANIES ONLY INTEREST.
IS THAT PROTECTED IN THIRD
PARTY BAD FAITH CONTEXT?
AND IF NOT, WHY IS THAT ANY
DIFFERENT AND IF SO WHY
SHOULD THAT NOT SAME APPLY
WHEN IT'S IN THAT CONTEXT?
I'M TALKING ABOUT -- I'M
SEPARATING OUT DEFENSE OF
THE INSURED.
THAT'S A DIFFERENT CONTEXT.
BUT WHEN WE TALK BETWEEN
LAWYER AND INSURANCE
COMPANIES THE ONLY INSURANCE
COMPANY'S INTEREST.
COULD YOU ANSWER THAT?
>> I THINK THE KAUFMAN COURT
ANSWERED THAT AND THE DCA
OPINION DID.
IT WAS A THIRD PARTY BAD
FAITH CASE AND THE COURT
SAID OKAY WITH RESPECT TO
THE LAWYER THAT THE
INSURANCE COMPANY HIRES TO
REPRESENT THE INSURED.
>> RIGHT.
>> THEN, OBVIOUSLY WHEN THE
JUDGEMENT CREDITOR STEPS
INTO THE SHOES OF THE
INSURED, THEY ARE ENTITLED
TO THEIR OWN ATTORNEY'S
RECORDS.
THAT'S NOT AN EXCEPTION TO
THE ATTORNEY CLIENT
PRIVILEGE.
THAT'S APPLICATION OF THE
ATTORNEY CLIENT PRIVILEGE.
TY CASE I BELIEVE YOU'RE
DESCRIBING WHEN IN THAT
THIRD-PARTY CASE THE
INSURANCE COMPANY HAS THEIR
OWN LAWYER AS WELL.
>> NO.
NO I'M TALKING ABOUT THE
SAME LAWYER.
>> THE SAME LAWYER SHOULDN'T
BE DOING THAT.
I WOULD SAY THAT'S A
PROBLEM.
THAT'S NOT AN EXCEPTION TO
THE ATTORNEY CLIENT
PRIVILEGE.
THAT LAWYER HAS A DUTY TO
THAT INSURED.
AND WHEN THE JUDGMENT
GET -- CREDITOR STEPS IN HE
CAN GET ALL THE RECORDS OF
THAT LAWYER BECAUSE HIS
LAWYER.
SO I SAY THAT'S NOT AN
EXCEPTION IN THAT'S NOT A
JUDICIAL EXCEPTION TO THE
ATTORNEY CLIENT PRIVILEGE
STATUTE.
THAT IS A NONAPPLICATION OF
THE ATTORNEY CLIENT
PRIVILEGE.
>> ISN'T THAT WHAT DAY ARE
SAYING IN THIS CASE?
IS THAT IN A THIRD PARTY
CASE EVEN IF THERE IS NO
ASSIGNMENT, THIRD PARTY
BENEFICIARY STILL GETS THAT
UNDERLYING CORRESPONDANCE UP
UNTIL THE POINT THAT THERE'S
A JUDGMENT.
AND WHAT HERE THE PETITIONER
IS SAYING HERE IN THIS
SITUATION IS THAT BECAUSE
THERE'S THE SAME DUTY TO ACT
IN GOOD FAITH AND
THERE'S -- THERE'S
NO -- THERE WEREN'T TWO
LAWYERS HIRED ONE TO LOOK AT
THIS AND ONE TO LOOK AT
THAT.
AT THAT POINT, IT NEVER
ATTACHES.
AND THAT'S WHAT I WOULD
LIKE -- IF YOU COULD ADDRESS
IN TERMS OF THIS CASE TO YOU
SEE A DIFFERENCE BETWEEN,
AGAIN, GENERAL COUNSEL
ADVISING AS TO THE
INVESTIGATION OF THE CLAIM,
THE DETERMINATION OF
COVERAGE VERSUS THE TACTIC
AS TO SOMETHING YOU KNOW
ABOUT -- WELL THEY ALSO
RAISED A BAD FAITH CLAIM AND
WHAT DO YOU THINK THE
CHANCES OF THEM GETTING BAD
FAITH AND THE EVALUATION OF
THE ACTUAL CASE.
IS THERE -- OR IS IT JUST
ACROSS THE BOARD.
NONE OF IT GETS PRODUCED.
>> I THINK WHAT YOU HAVE TO
DO IN EACH SITUATION WHETHER
THIRD OR FIRST PARTY IS TAKE
THE STATUTE OUT 90.052 AND
ATHE EPLT TO APPLY IT.
AND IN A THIRD PARTY CASE,
YOU'VE GOT A SITUATION WHERE
WHETHER ASSIGNED OR NOT WHEN
THAT PERSON IS BECOMES A
PLAINTIFF AGAINST THE
INSURANCE COMPANY HE BY LAW
BY OPERATION OF THIS COURT'S
LAW HAS STEPPED INTO THE
SHOES OF THE INSURED.
SO THAT'S A NONAPPLICATION
OF THE ATTORNEY CLIENT
PRIVILEGE.
YEAH HERE THEY ARE THE SAME
PERSON.
IN OTHER WORDS WHAT THE
LEGISLATURE HAS SAID WE
EXPECT OUR OWN INSURANCE
COMPANY.
>> UH-HUH.
>> THAT -- THAT WE PAID A
PREMIUM TO TO ACT IN GOOD
FAITH TO US.
>> RIGHT.
>> WHAT YOU ARE SAYING, WELL,
AND THAT'S -- THAT'S WHERE I
GUESS THIS CONTEMPLATE SEPIAL
DIFFERENCE IF YOU READ WHAT
JUDGE FARMER SAID IN THE
FOURTH DISTRICT CASE VERSUS
THAT IT DOESN'T ATTACH AND
THAT'S -- I'M NOT SURE WHERE
IT WILL CAUSE PURPOSES IF
YOU DON'T GET TO SAY WHY
ISN'T IT THE SAME CONCEPT
THAT IS -- BECAUSE THEY HAVE
TO ACT IN GOOD FAITH TOWARDS
THE INSURED, THERE IS NO
SUCH THING AS AN
ATTORNEY-CLIENT PRIVILEGE
BECAUSE THERE'S NO SEPARATE
CLIENT.
>> I DON'T THINK YOU CAN GO
THAT FAR.
YOU CAN LOOK AT 624.155 AND
SAY OKAY THE LEGISLATURE
WANTS TO HAVE A BAD FAITH
CAUSE OF ACTION IN FIRST
PARTY CASES AS WELL AS THIRD
PETER CASES.
BUT WHEN THE -- 624.155
THERE'S NO DISCUSSION AT ALL
OF AN ATTORNEY CLIENT
PRIVILEGE I DON'T THINK YOU
CAN TAKE THAT NEXT STEP AND
IMPORT EVERYTHING THAT GOES
ALONG WITH THIRD PARTY CASES
THE FIRST PARTY CASES WHEN
THEY ARE DISTINGUISHABLE IN
TERMS OF THE RELATIONSHIP AM
THE ATTORNEYS.
WHAT I UNDERSTOOD YOU SAYING
AN ANSWER TO TO JUSTICE
PARIENTE'S QUESTION IT'S
DIFFERENT WHEN YOU IN A
THIRD AND FIRST PARTY
SITUATION IS THIRD PARTY
SITUATION, THE INSURANCE
COMPANY HAS HIRED THE LAWYER
FOR THE INSURED.
THAT'S NOT TRUE IN A
FIRST-PARTY SITUATION.
>> THAT'S NOT TRUE IN A
FIRST-PARTY SITUATION.
AND THAT LEADS TO DIFFERENT
APPLICATION.
SAME STATUTE, SAME RULES
APPLY TO BOTH FIRST-PARTY
AND THIRD PARTY.
IT'S JUST WHEN THE INSURANCE
COMPANY HIRES THE LAWYER IN
A THIRD-PARTY CASE YOU HAVE
DIFFERENT RELATIONSHIPS AND
THEREFORE DIFFERENT RESULTS
UNDER THE STATUTE.
THE ATTORNEY CLIENT
PRIVILEGE SIMPLY DOESN'T
APPLY.
WHEREAS IT DOES IN THE FIRST
PARTY CASE WHEN OUR FIRM HAS
NEVER REPRESENTED AIRCRAFT
HOLDINGS THE ATTORNEY CLIENT
PRIVILEGE APPLIES --
>> KWAETS THE RESULT OF YOUR
THEORY IN LEGAL A -- WHAT'S
YOUR RESULT OF YOUR THEORY
IN LEGAL ANALYSIS TAKING US
TRUE STEP-BY-STEP IF THE
INSURANCE COMPANY VERY
SIMILAR TO THIS ONE THEY
TURN IT OVER TO A LAWYER AND
SAID WE GIST RELIED ON A
LAWYER.
>> FIRST OF ALL THERE WAS --
>> LET'S ASSUME.
OR HIDING BEHIND OR NOT
HIDING.
THEY ARE SAYING WE LEFT IT
UP TO LAWYER.
TWO THINGS.
>> WHAT HAPPENS THEN?
>> THAT THE COURT -- THAT
COURT HAS ALREADY ADDRESSED
IN SOUTHERN BELL VERSUS
DEASON.
THEY SAY IF A LAWYER -- EVEN
THE LAWYER IF THEY ARE
ACTING IN THEIR CAPACITY AS
A BUSINESS ADVISOR, AS
OPPOSED TO A LEGAL ADVISOR
THAT'S NOT PRIVILEGE.
AND WE AGREE WITH THAT.
IN THIS CASE, FIRST OF ALL,
THERE WAS SOMEONE FROM XL
SPECIALITY MR. RYAN GOLD
WHO'S DEPOSITION THEY TOOK.
>> THEY COME UP AND SAY WE
JUST RELIED ON OUR LAWYER.
THAT'S IT.
CAN YOU DISCOVER ANYTHING OR
NOT?
>> YES, YOU CAN.
WHAT COULD YOU DISCOVER?
>> YOU CAN DISCOVER THINGS
THAT RELATE TO THE ADJUST TO
CLAIM.
THINGS THAT THE LAWYERS DID
THAT WAS BUSINESS ADVICE AS
OPPOSED TO LEGAL ADVICE.
AND THAT'S WHAT WE TRIED TO
DO --
>> WHERE DO YOU DRAW THE
LINE?
ISN'T THAT TOUGH TO DRAW?
>> NO.
I THINK THE COURT DRAW THAT
LINE IN SOUTHERN BELL VERSUS
DEASON.
IF COURT SAID IF THE LAWYER
ACTS AS A BUSINESS ADVISOR
THAT'S PRODUCEABLE.
SO THERE IS A LINE THERE.
I DON'T KNOW --
>> COULD YOU DRAW IT FOR ME.
>> IT VARIES FROM TYPE OF
CASE TO TYPE OF CASE.
>> MY UNDERSTANDING THE
FIRST DISTRICT DEFINED THAT.
LET'S SAY IN THE DEFENSE OF
THE FIRST PARTY INSURER IS
MY LAWYER THAT MADE ME DO IT,
THEN THAT IS A WAIVER.
THAT'S CORRECT.
THAT DIDN'T HAPPEN HERE.
THAT WAS THE FIRST QUESTION
THAT JUDGE GOLDSTEIN
ASK -- ED A IS ADVISED THE
DOWN -- -- DID HE ADVICE
THE COUNSEL OF THE DEFENSE?
>> THE FIRST THINGS ARE
DISKOF RAABLE.
IF IT'S BUSINESS ADVICE
ADJUSTMENT OF THE CLAIM AS
OPPOSED TO LEGAL ADVICE,
THEN --
>> LET'S BE STRAIGHT UP ON
THAT.
THAT REALLY -- YOU KNOW.
WE'VE ALL DONE THESE THINGS
FOR 30 YEARS.
AND I MEAN WHERE DOES THAT
LINE CROSS?
IT'S ALL ON WHAT DO WE DO
WITH THIS CLAIM?
THAT'S THE NATURE OF THE
RELATIONSHIP.
>> I WOULD AGREE IT'S HAZY.
THAT'S THE LINE -- THAT'S
HOW THE COURT DESCRIBED IT
IN SOUTHERN BELL vs. DEASON.
IF I WANTED TO DESCRIBE THAT
BETTER.
>> I WILL DESCRIBE IT THE
WAY WE DID IT.
AS WE DID PRODUCE THOUSANDS
OF PAGES OF DOCUMENTS TO
THEMMEN SOME OF WHICH WERE
DRAFTED BY PEOPLE THAT HAD A
JD.
AND WHAT WE KID WAS IF IT
RELATED TO THIS WAS A CASE
THAIN INVOLVED AN AIRPLANE
THAT LANDED WITH THE GEAR
UP.
>> RIGHT.
>> AND NO ONE WAS HURT AND
THERE WAS A DISPUTE OVER THE
EXTENT OF THE DAMAGE.
WE CLAIMED IT WAS NOT TOTE
I.
>> THE -- SO IF IT RELATED
TO DAMAGE TO THE AIRCRAFT,
IF IT WAS A REPORT -- IF
THERE WAS -- WE DID SEND
INVESTIGATORS DOWN TO
KINGSTON BEFORE MY
INVOLVEMENT TO GET THE
RECORDS OF THE TO APRAISE
THE DAMAGE, WE GAVE THEM TO
THE OTHER SIDE WE GAVE THEM
COMMUNICATION WITH THOSE
INVESTIGATORS ANYTHING THAT
RELATED TO DOLLARS THAT WE
ESTIMATED IN TERMS OF DAMAGE,
WE GAVE TO THEM, THAT TYPE
OF THING.
BUT IF IT WAS.
>> DID YOU GIVE DOCUMENTS AS
TO WHY PAYMENT WAS NOT MADE?
>> I DON'T KNOW THAT THERE
WERE ANY THAT WERE THAT
SPECIFIC.
THERE WERE -- OUT WHAT WE
WITH HELD.
>> HOW SPECIFIC WERE THEY?
>> WELL, I MEAN.
YOU TALKING ABOUT LEGAL
DOCUMENTS.
THOSE HAVEN'T BEEN
DISCLOSED.
>> ARE YOU TALKING ABOUT
LEGAL ADVICE?
>> I THINK WE NOT OUGHT TO
SPAR OVER SOMETHING LIKE
THAT.
WE WILL SET THE LAW FOR THE
REST OF THE STATE.
IN THIS CASE IT WILL COME
OUT.
WHAT CAN WE DO WITH THERE.
WE MUST HAVE SOMETHING
THAT'S NOT SO NEBULOUS LIKE
JELL-O.
EVERY TIME IT SQUEEZES IT
GOES SOMEWHERE ELSE.
>> I AGREE WITH THAT.
I THINK IT'S VERY HAZY.
BUT IF IT RELATES TO
BUSINESS ADVICE OR ADJUST TO
CLAIM THEN THE PROPER METHOD
SHOULD BE SUBMIT THOSE
DOCUMENTS TO THE TRIAL COURT
AND HAVE THEM DO AN INCAMERA
INSPECTION.
>> I'M SORRY?
>> SORRY.
THE WAY I UNDERSTAND YOUR
ANSWER TO JUSTICE WELLS'
QUESTION IS IF YOUR POSITION
IS WE JUST HAD OUR COUNSEL
INVESTIGATE AND WE RELIED ON
WHAT OUR COUNSEL ADVISES US
TO DO REGARDLESS OF ANY
LEGAL VERSUS BUSINESS
DISTINCTION IF THAT'S YOUR
DEFENSE, YOU HAVE TO PRODUCE
THOSE DOCUMENTS.
BECAUSE YOU'VE ESSENTIALLY
WAIVED ANY ATTORNEY CLIENT
PRIVILEGE.
YOU'VE SAID I RELIED ON
COUNSEL.
YES.
BUT THOSE -- THAT WASN'T A
DEFENSE IN THIS CASE.
>> UNDERSTAND THAT.
BUT TO ANSWER -- I MEAN YOU
ANSWER SKWROEFT WELLS'
QUESTION ALSO ANSWERED THE
CHIEF JUSTICE QUESTION IN
THE SENSE IF YOU RELY ON
ADVICE OF COUNSEL FOR
DENYING THE CLAIM THE
BUSINESS DISTINCTION
DISAPPEARS.
>> I UNDERSTAND.
I WOULD AGREE WITH THAT.
THAT'S NOT WHAT HAPPENED
HERE, THOUGH.
WHAT HAPPENS IN THE CONTEXT
WHERE THE QUESTION OF WHAT
THE INSURANCE COMPANY KNEW?
WHAT HAPPENS TO THOSE?
ARE THOSE DOCUMENTS
DEBATABLE?
>> NOT IF THEY ARE ATTORNEY
CLIENT PRIVILEGE.
THE LAWYER TELLS THEM
SOMETHING ABOUT THIS IS
REALLY A TOTAL LOSS AND
THAT'S NOT DISKOF RA --
DISKOFABLE.
I WOULD SAY NOT.
>> IN THE STATUTE, UNDER THE
STATUTE THERE'S NO
REAL -- THERE'S NOT
DISTINCTION BETWEEN FIRST
AND THIRD PARTY.
IT SIMPLY SAYS THAT THE
INSURANCE COMPANY HAS TO
DEAL WITH THE INSURED.
AND IN RUIZ WE USED SOME
LANGUAGE TO THE EFFECT THAT
THESE ARE ESSENTIALLY THE
IDENTICAL KINDS OF CLAIMS.
SO I'M STILL TROUBLED BY WHY
WE WOULD HAVE THESE TWO
DIFFERENT RULES WITH
ESSENTIALLY THE SAME KIND OF
CLAIMS.
IF I'M A THIRD PARTY I CAN
GET ALL THIS INFORMATION TO
PURSUE MY BAD FAITH CLAIM
BUT I'M THE FIRST PARTY, THE
PERSON THAT YOU REALLY OWE
THE DUTY TO, I'M GOING TO
HAVE A PROBLEM GETTING SOME
OF THE INFORMATION THAT I
MAY NEED TO PURSUE MY CLAIM.
>> WELL, THERE ARE TWO
DIFFERENT RULES.
IN RUIZ THIS COURT ADDRESSED
THE WORK PRODUCT DOCTRINE.
AND THIS COURT CAN GO
FASHION THE NEW WORK PRODUCT
DOCTRINE IN THE FLORIDA
RULES OF CIVIL PROCEDURE.
THIS COURT COULDN'T GO AND
CHANGE THE STATUTE ON
ATTORNEY CLIENT PRIVILEGE
90.052.
THERE'S A BIG DIFFERENCE.
IN TERMS OF YOUR QUESTION
ABOUT NEED FOR THE MATERIALS,
NEED FOR MATERIALS HAS
ALWAYS BEEN A TEST UNDER THE
WORK PRODUCT THAT DOCTRINE.
AND I THINK WHAT THE COURT
DID WAS IN RUIZ IS SAY THIS
NEED IS SO HIGH IN THE
INSURANCE CONTEXT THAT WE'RE
WILL SAY INSURANCE COMPANIES
NEVER OVERCOME -- OR WILL
ALWAYS HAVE TO PRODUCE
DOCUMENTS OVER A WORK
PRODUCT OBJECTION.
BUT WE COULDN'T SAY THAT.
>> IS THAT HERE?
THAT SAME NEED DOESN'T EXIST
EXIST IN THE FIRST PARTY?
>> IT MAY.
BUT THAT'S A WORK PRODUCT
ANALYSIS.
IT'S NOT AN ATTORNEY CLIENT
PRIVILEGE ANALYSIS.
THERE'S BEEN BEEN A NEEDS
TEST OR AN UNDO HARDSHIP
TEST OR RELEVANCE TEST IN
TERMS OF THE ATTORNEY CLIENT
PRIVILEGE.
IN THE CASE I JUST CITED,
HOLLY vs.S ALT THE COURT
SAID EVEN IF SUCH DOCUMENTS
WERE ESSENTIAL TO THE OTHER
CASE THAT'S WITHIN THE
PREROGATIVE OF THE
LEGISLATURE.
ANYTIME YOU STEEL -- DEAL
WITH DISCOVERY STATUTORY
PRIVILEGE, THAT'S THE LAW.
DID YOU DEAL WITH THE CASES
THAT REALLY HAVE USED THE
WORD "ADVERSARIAL," TO
CONTINUE INVOKE THE
LAWYER-CLIENT PRIVILEGE.
>> YES.
>> THAT IS THAT WITH THE
SIMPLICITY SAYING, WELL, WE
HAVE TWO PARTIES THAT
CONTRACTED WITH EACH OTHER,
BUT IF THEY GET IN A DISPUTE,
THEY HAVE AN ADVERSARIAL
RELATIONSHIP AND THEREFORE
THE LAWYER CLIENT PRIVILEGE
ATTACHES TO BOTH ENDS OF
THAT AND THEY CONTINUE TO
HAVE THAT LAWYER CLIENT
PRIVILEGE.
YES.
>> AND THEN COMPARE THAT
WITH THE FACT THAT THE
LEGISLATURE NOW HAS
APPARENTLY CHANGED THAT
RELATIONSHIP.
THAT'S PART OF WHAT WE
ACKNOWLEDGED IN RUIZ WAS
THAT WE HAVE ESSENTIALLY
SAID NO, THAT REALLY THAT
THIS IS A DIFFERENT
RELATIONSHIP NOW.
IN TERMS OF THE SPECIAL AS
OPPOSED TO ORDINARY
CONTRACTING PARTIES THE
INSURANCE RELATIONSHIP WITH
THE INSUREDS IS A SPECIAL
RELATIONSHIP THAT WE WILL
RECOGNIZE.
AND HOW THAT IMPACT SORT OF
THIS FOUNDATION DISTINCTION
THAT THE LOT OF THE CASE LAW
IS USED BY ADVERSARIAL.
IT'S NOT -- NO LONGER
ADVERSARIAL.
NOW THERE'S THIS DUTY OF
GOOD FAITH AND THERE'S A
FIDUCIARY RELATIONSHIP AS
OPPOSED TO ANED A INVESTOR
SIRRIAL RELATIONSHIP,
HELP -- ADVERSARIAL
RELATIONSHIP, HELP US WORK
THROUGH WITH THAT.
I DON'T THINK THE
ADVERSARIAL DISTINCTION IS
HELPFUL.
FIRST OF ALL IT'S NOT IN THE
STATUTE 90.052 WHICH IS THE
GUIDE THE RULE ON
ATTORNEY-CLIENT PRIVILEGE.
THE MANDATE ON THE
ATTORNEY-CLIENT PRIVILEGE.
I THINK THAT, THAT
DISTINCTION HAS LED TO
UNNECESSARY CONFUSION.
I THINK JUSTICE BELLS'
QUESTION ABOUT THE BANK
TRUST OFFICER DIRECTLY HITS
ON THE POINT THAT WE TRIED
TO MAKE IN OUR BRIEF.
THAT IS THERE ARE MANY, MANY
CASES WHERE SOMEONE IS IN
LITIGATION WITH SOMEONE THAT
HAD A FIDUCIARY OBLIGATION
TO THAT PERSON.
THAT DOESN'T OVERRIDE THE
ATTORNEY-CLIENT PRIVILEGE.
I DON'T THINK THAT'S
HELPFUL.
I THINK THAT SHOULD BE PUT
ASIDE AND WE SHOULD JUST
TAKE A LOOK AT 90.502, THE
STATUTE AND APPLY IT.
AND THERE CAN'T BE ANY
JUDICIAL EXCEPTIONS TO THE
STATUTE.
>> I WOULD LIKE TO JUST
FOLLOW-UP ON -- IT'S
EASECIER FOR ME TO THINK OF
LET'S SEE A DOCUMENT.
ARE THE DOCUMENTS -- I KNOW
THERE'S A LOG.
YOU SAID YOU PRODUCED A LOT
OF DOCUMENTS.
DO WE HAVE IN THE COURT FILE
THE DOCUMENTS UNDER SEAL
THAT YOU HAVE NOT PRODUCED?
>> NO.
AND THE REASON WAS THAT
JUDGE CLARK DID
NOT -- DIDN'T REVIEW ANY
DOCUMENTS.
THERE WAS NO INCAMERA
INSPECTION.
SECONDLY YOU SAID YOU HAVE A
LOG.
THAT LOG IS NOT THE CORRECT
LOG EITHER.
THAT LOG IS IN THE PA
DIVISION -- PETITIONERS
APPENDIX FROM A MOTION TO
COMPEL THAT WAS FILED IN
WHEN THE BAD FAITH CASE WAS
PENDING.
THERE WAS A QUESTION EARLIER
ABOUT ABATEMENT.
THE CASE WASN'T ABATED.
THE BAD FAITH CASE WE TRIED
TO ABATE IT.
WE OPPOSED THAT.
I WASN'T ABATED UNTIL A
MONTH 1/2 BEFORE TRIAL.
THE PRIVILEGED LOG IN THAT
IS FROM THE EARLIER MOTION
TO COMPEL WHERE WE WERE
RESPONDING NOT JUST WITH
THIS ARGUMENT BUT ALSO WITH
THE ARGUMENT THAT IS
PREMATURE.
WELL, THEN MY QUESTION IS WE
DON'T HAVE THE DOCUMENT, YOU
SAID THAT IF THE GENERAL
COUNSEL OR ATTORNEY SAID I
THINK IT IS A TOTAL LOSS
BECAUSE THIS IS A TOTAL LOSS
THAT YOU SAID TO JUSTICE
LEWIS THAT, THAT WOULD BE
NOT ADJUSTMENT OF THE CLAIM
OR BUSINESS ADVICE, LEGAL
ADVICE.
I THINK IS WHERE I'M HAVING
THE DIFFICULT OF SAYING
HOW -- ISN'T THAT RELATED TO
THE EVALUATION OF THE CLAIM.
I MEAN THAT DOESN'T TAKE ANY
PARTICULAR LEGAL ADVICE
AS -- AND SO THAT'S WHERE I
THINK WE WILL HAVE THE
TROUBLE IF WE SAY WELL,
THERE IS SOME ATTORNEY
CLIENT PRIVILEGE BUT IT
DOESN'T ATTACK -- ATTACH TO
CORRESPONDANCE WHERE THEY
ADJUST THE CLAIM OR
INVESTIGATE, BUT IT'S
RELATES TO LEGAL ADVICE.
HOW DOES AN EVALUATION THAT
IS TOTAL LOSS, HOW IS THAT
NOT IN YOUR -- AGAIN IN YOUR
ATPHAL SEUTS THE BUSINESS
ADVICE -- ANALYSIS THE
BUSINESS TYPE OF EXCEPTION
OR NEVER ATTACHES TO THE
ATTORNEY CLIENT PRIVILEGE.
>> WELL, I THINK THAT THE
THING THAT THE -- THIS COURT
SHOULD DO IS REMAND FOR
INCAMERA INSPECTION WITH
INSTRUCTIONS AND I THINK
MAYBE YOUR TRYING TO DECIDE
WHAT TYPE OF INSTRUCTION TO
GIVE.
AND IN TERMS OF THAT THERE
COULD BE DOCUMENTS THAT TRY
TO QUANTIFY WHAT THE DAMAGE
WAS IN TERMS OF WHAT AN
EXPERT MIGHT EVALUATE, AN
EXPERT IN APRAISING AIRCRAFT
DAMAGE MIGHT SAY.
THAT I WOULD SUBMIT IS
DISKOF RAABLE AND THAT WOULD
BE PRODUCED.
IF THERE'S AN ATTORNEY THAT
LOOKS AT THE WHOLE CLAIM AND
SAYING AND THIS IS
HYPOTHETICAL AND THIS IS
AING YOU OUGHT TO PAY THIS
CLAIM, IT'S TERMINOLOGY, BUTuz AN EVALUATION OF THE
CASE THEY SAY YOU BETTER PAY
THIS CLAIM BECAUSE THERE MAY
BE A BAD FAITH CASE IF YOU
DON'T.
YOU KNOW, THAT'S ATTORNEY
ADVICE.
IN MY OPINION.
>> WOULD YOU HIT ONE MORE
LICK.
BECAUSE YOUR TIME IS QUICKLY
RUNNING OUT.
JUST HOW WE WOULD APPLY THIS
BUSINESS ADVICE vs. LEGAL
ADVICE PIPELINE THE JURY IS
URGING US TO DRAW HERE.
WE ACCEPT YOUR PROPOSITION
BECAUSE I'M HAVING A LOT OF
DIFFICULT WITH HOW WE MIGHT
DO THAT.
A HYPOTHETICAL FOR ME WOULD,
FOR INSTANCE, WOULD BE OFTEN
BUSINESS IS ASSOCIATED WITH
ECONOMICS AND THE LARGER THE
CLAIM FOR INSTANCE AND THE
MORE LIABILITY OR
RESPONSIBILITY OF THE
COMPANY THE MORE THE COMPANY
IS GOING TO BE SEEKING
ADVICE ABOUT HOW TO AVOID
IT.
>> RIGHT.
>> AND SO IF THEY WRITE A
LETTER OR MAKE A CALL TO THE
LAWYER, THAT, OH, MY GOSH,
IT WILL WIPE US OUT, YOU
FIND US SOME LEGAL WAY TO
AVOID PAYMENT OF THIS CLAIM.
IS SOMETHING LIKE THAT GOING
TO BE DISCOVERABLE WHEN THE
LAWYER COMES BACK AND SAYS
IF I ACKNOWLEDGE YOUR
REQUEST TO TRY TO FIND YOU
SOME WAY NOT TO PAY THIS
CLAIM -- RIGHT.
>> HERE'S MY VIEW OF IT.
>> FIRST OF ALL, THIS IS NOT
MY TEST.
I'M NOT TRYING TO PROPOSE A
NEW TEST TO THE TEST.
SOUTHERN BELL VERSUS DEASON
HAS BEEN THROUGH THIS.
AND THE CORPORATE LAWYER
CONTEXT.
AND THE DISTINCTION THAT
THIS COURT CAME UP WITH WAS
BUSINESS ADVICE THE NOT
LEGAL ADVICE.
I THINK THAT'S CONSISTENT
WITH 90.052 WHICH ONLY
PROTECTS ABSOLUTELY
PROTECTS -- THIS COURT
DOESN'T HAVE DISCRETION TO
TAKE THAT AWAY.
>> WHAT DO YOU DOUGH --
>> YES.
AND SO I THINK THERE'S
ALWAYS GOING TO BE ECONOMICS
INVOLVED IN BOTH THE
CALCULATION OF DAMAGE AND
WHETHER -- HOW HUSH YOU
SHOULD PAY FOR THE RAEUPL.
BECAUSE HOW MUCH YOU SHOULD
PAY FOR THE CLAIM MAY HAVE
SOMETHING TO DO, ALSO WITH
HOW MUCH IN LEGAL FEES WILL
WE RUN UP.
WHAT OTHER EXPOSURE COULD
THERE BE IN A SECONDARY
CAUSE OF ACTION SUCH AS A
BAD FAITH CASE, ALL SORTS OF
THINGS.
I THINK IT'S -- I AGREE IT'S
VERY DIFFICULT.
I'M TRYING TO APPLY WHAT THE
COURT APPLIED IN SOUTHERN
BELL VERSUS DEASON.
THAT'S ABOUT THE BEST I CAN
DO.
IF IT'S RELATED TO WHAT WE
TRIED TO DO IF IT'S RELATED
TO THE ADJUSTMENT OF THE
CLAIM, CALCULATION OF THE
TKAL, WE PROVIDED THAT.
IF IT RELATES TO LAWYER
ADVICE, ABOUT THE CLAIM OR
THE SUIT, THAT'S PROTECTED.
AND I DON'T THINK THERE'S
ANYTHING THE COURT CAN DO TO
CHANGE THAT STATUTE.
YOU'RE OUT OF TIME.
FOR THE BENEFIT OF ALL US IN
THE PROCEDURAL ASPECT OF THE
TRIAL JUST GO THROUGH
IN -- AND ENLIGHTEN US WITH
REGARD TO THE MOTION AS
FILED FOR THESE DOCUMENTS.
>> IF YOU OBJECT THE BURDEN
IS ON YOUR SIDE TO
SUBJECTING TO CREATE THE LAW
AND GIVE IT TO THE JUDGE.
OR IS IT THE OBLIGATION ON
THE OTHER SIDE?
AND WHO OBLIGATION TO ASK
FOR THE INCAMERA INSPECTION
AND HOW DID THAT UNFOLD IN,
IN CASE.
>> UNFOLDED THE SAME WAY I
WOULD SUGGEST IT SHOULD
UNFOLD.
THAT'S THE WE COMPILE THE
MATERIALS DATE STAMP THEM DO
A PRIVILEGE LOG AND PROVIDED
THEM TO THE TRIAL COURT.
WE DID HAVE ONE OF THOSE.
>> WE REQUESTED AN INCAMERA
INSPECTION.
AND THE COURT DECLINED TO DO
THAT.
>> OKAY.
SO THAT LAW EXISTS IN THE
COURT FILE SOME PLACE.
>> IT DOES.
I DOES.
IT'S IN 2005, THOUGH.
IT'S NOT BACK IN 2004 WHEN
WE WERE STILL HAGGLING OVER
THE BAD FAITH SUIT.
IN THE RECORD WE HAVE HERE.
I DON'T KNOW.
I DON'T THINK IT'S IN THE
RECORD.
AND THE REASON IS BECAUSE
THE JUDGE DECLINED TO DO AN
INCAMERA INSPECTION.
>> BUT THE DOCUMENTS ARE IN
SOME RECORD SOME PLACE.
>> THEY ARE IN THE TRIAL
COURT.
>> SO WE COULD ASK FOR
SUPPLEMENTATION OF THAT.
>> OKAY.
>> WE COULD?
>> I WOULD THINK SO.
>> I WOULD THINK YOU COULD.
THANK YOU VERY MUCH.
>> MR. SHIPMAN WOULD YOU
ADDRESS AS YOU GO THROUGH
THIS.
DON'T ASSUME ANY CASE
ALREADY CONTROLS THIS.
WOULD YOU ADDRESS THE
CONCEPT OF THE DIFFERENT
RELATIONSHIPS FOR THE FIRST
PARTY RELATIONSHIP AND THE
THIRD PARTY RELATIONSHIP.
YOU ARE RECOGNIZED -- YOU
RECOGNIZE THERE'S A
DIFFERENCE.
WERE THE LAWYERS HIRED TO
REPRESENT AN INSURED AGAINST
THE CLAIM IT'S A LITTLE BIT
DIFFERENT.
HOWEVER YOU WANT TO DO.
WOULD YOU APPROACH THAT AND
HOW THE ANALYSIS IN THE CASE,
A LEGAL ANALYSIS RIDING ON A
CLEAN SLATE OUGHT TO DEVELOP
IT?
>> THAT'S THE FIRST THING ON
LIST IN REBUTTAL.
I GUESS I HAD A GOOD
QUESTION, THEN.
>> IN A 30-PARTY BAD FAITH
SUIT THERE'S NOTHING IN
90.052 THAT ADDRESS THE
THIRD PARTY BATH -- BAD
FAITH SUIT IN THAT
PARTICULAR SECTION OF THE
STATUTE.
WHAT HAS HAPPENED IS THAT
THE COURT HAS CREATED
THROUGH IT, I GUESS
PROCEDURAL AUTHORITY THE
LEGAL FICTION THAT THERE IS
AN ASSIGNED OFWAYER OF
CONFLICT THERE THE INSURED
FOR THE THIRD PARTY.
FOR PURPOSES OF PURSUING A
BAD-FAITH CLAIM AGAINST THE
INSURANCE COMPANY.
SOMETHING THAT I BELIEVE IS
NO DIFFERENT THAN THE
FIRST-PARTY BAD FAITH CASE
THAT THIS COURT HAS THE
AUTHORITY IF YOU CHOOSE TO
FILE -- I CALL IT THE
DELAWARE FORMAT.
THE DELAWARE WAS THE FIRST
STATE TO ADDRESS THIS ISSUE
AND THAT'S HOW THEY
BASICALLY ADDRESSED IT IS
THAT BECAUSE IF INSURED IS
THE DE FACTO BENEFICIARY OF
AN INSURANCE COMPANY BE IT
IN FIRST PARTY OR THIRD
PARTY AND THE THIRD PARTY
ONLY COMES IN THE -- INTO
PLAY BECAUSE IN THE PERSONAL
INJURY ARENA THEY ARE THE
THIRD PARTY BENEFICIARY OF
THE INSURED BENEFITS, YOU
HAVE A DE FACTO WAIVER
CREATED OF THE ATTORNEY
CLIENT PRIVILEGE.
THERE IS NO ACTUAL
OBLIGATION IN A THIRD PARTY
BAD FAITH CASE FOR THE
INSURED TO SAY HERE THIRD
PARTY HERE'S MY SIGNEDWAYER
OF ATTORNEY CLIENT PRIVILEGE,
GO TALK TO THE LAWYER FOR ME
AND THE INSURANCE COMPANY.
THAT DOESN'T HAPPEN.
WHAT HAPPENS IN THE
ASSIGNMENT CONTEXT WHERE YOU
GET THESE AND THOSE THINGS.
IF THERE'S NO ASSIGNMENT YOU
SAY IT'S NO DIFFERENT.
IT'S NOT DIFFERENCE.
FOR YOU TO SAY THERE'S A DE
FACTO WAIVER OR YOU SAYING
THERE THAT YOU BELIEVE THAT
THE LEGISLATURE BY CREATING
THE FIRST PARTY GOOD FAITH
ON -- OBLIGATION AND BAD
FAITH CAUSE OF ACTION HAS
CREATE THATWAYER I BE
CHANGING THE RELATIONSHIP
BETWEEN THE INSURANCE
COMPANY AND THE INSURED.
IS THAT WHERE THE WAIVER
COMES IN?
>> WHAT I'M SAYING IS THE
LEGISLATURE WHEN ACTED
6.4.155 FOR THE FIST AND
THIRD PARTY BAD-FAITH ACTION
WILL BE THE SAME.
>> THERE'S NO DIFFERENCE.
THE ACTUAL -- DE FACTO
WAIVER WAS CREATED BY THE
COURT LONG BEFORE 90.052 WAS
ENACTED AND IT CONTINUED
SINCE 90.052.
>> ACTUALLY, WHERE THAT CAME
FROM WAS IN THE BOSTON CASE.
WHICH IS COURT THERE IN THE
THIRD DISTRICT RECOGNIZED
THAT THE LAWYER WAS THE
LAWYER FOR THE INSURANCE
COMPANY AND THE INSURED.
AND THAT, THEREFORE, THERE
WAS NO AN ATTORNEY CLIENT
RELATIONSHIP SOLELY WITH THE
INSURANCE COMPANY.
THAT'S WHERE THAT CAME FROM.
>> AND YET AFTER BOSTON OLD
COLONY WE HAD 90.052
ADOPTED.
AND THERE'S NO PROVISION
90.052 THAT SAYS THERE'S AN
EXCEPTION TO ATTORNEY CLIENT
PRIVILEGE WHEN IT'S A
THIRD-PARTY BAD FAITH CASE
OR THERE'S AN EXCEPTION TO
THE PRIVILEGE BECAUSE THE
LEGISLATURE CREATED
THIRD-PARTY BAD FAITH.
>> JUSTICE WELLS' POINT THAT
YOU DON'T NEED AN EXCEPTION
IF YOU SAY THAT THE
RELATIONSHIP BETWEEN THE
INSURED AND THAT LAWYER THAT
THE INSURANCE COMPANY IS
PAYING FOR IS THE LAWYER FOR
THE INSURED.
THEREFORE, YOU CANNOT
VIOLATE ANY PRIVILEGE.
BY FORCING THE DISCLOSURE OF
THAT LAWYER'S RECORDS OR
WHATEVER.
THAT IS THAT AS A MATTER OF
FACT AND LAW THAT LAWYER HAS
THE OBLIGATION TO THE
INSURED IN THAT CONTEXT.
THEY MIGHT BE GETTING PAID
BECAUSE OF THE CONTRACTUAL
PROVISIONS OF THE INSURANCE
POLICY BY THE INSURANCE
COMPANY BUT THERE IS
NO -- THE PRIVILEGE THAT
EXIST IS A PRIVILEGE TO THE
INSURED.
THAT'S DIFFERENT THAN IN THE
FIRST PARTY SITUATION.
>> I THINK IF YOU ARE GOING
TO TAKE THE POSITION THAT
90.052 IS SUBSTANTIVE LAW,
THAT YOU AS A COURT DON'T
HAVE THE POWER TO CREATE
WAIVER, WHICH I DON'T KNOW
HOW YOU DO THAT SINCE 2002
YOU ADOPTED AWAIVER
SAYING --
>> WHY WOULD IT BE A WAIVER
IN THE THIRD-PARTY CONTEXT
IF YOU SAYING IT'S THE
INSURED THAT IS THE CLIENT
OF A LAWYER.
THAT'S NOT A WAIVER IS IT?
>> THAT THE RELATIONSHIP IS
DIFFERENT.
THE THIRD PARTY IS NOT THE
INSURED.
AND THE THIRD PARTY IS THE
ONE THAT'S GETTING THE
RECORD FROM THE LAWYERS SO
ABSENT A REQUIREMENT THAT
YOU ARE SAYING THE FIRST
PARTY HAS TO ASSIGN, IS
WAIVER OF ATTORNEY CLIENT
PRIVILEGE THERE'S NO WAY TO
GET THERE WITHOUT SAYING
THERE'S A DE FACTO WAIVER.
>> WITH OUR HELP WE HAVE
EXHAUSTED THE TIME.
AND I WANT TO THANK BOTH
SIDES.
YOU'VE HAD WONDERFUL
ARGUMENTS THIS MORNING.
AND I MAY BE A QUESTION OF
FIRST IMPRESSION.
WE WILL HAVE TO REALLY GET
INTO AND TRY TO SEPARATE
OUT.
WE DO THANK YOU BOTH FOR
YOUR GOOD CANDOR AND
ARGUMENTS.
WE APPRECIATE IT.
>>