Florida Supreme Court confirms that attorney/client privilege is still applicable in first-party bad faith actions

In Genovese v. Provident Life and Accident Ins. Co., ___ So. 2d ___, 36 FLW S97a (Fla. March 17, 2011), the Florida Supreme Court approved the holdings in Liberty Mutual Fire Ins. Co. v. Bennett, 939 So. 2d 1113 (Fla. 4th DCA 2006) and XL Specialty Ins. Co. v. Aircraft Holdings, LLC, 929 So. 2d 578 (Fla. 1st DCA 2006), that the attorney/client privilege is applicable in first-party bad faith actions, despite its holding in Allstate Ins. Co. v. Ruiz, 899 So. 2d 1121 (Fla. 2005). The court stated that a possible exception may exist where the attorney was retained by the insurance company to investigate the underlying claim and to render legal advice. The product of the attorney’s investigation may constitute work product that would be discoverable under Ruiz, as opposed to a communication that would be privileged. The court noted that an in camera review would be appropriate to determine what is actually sheltered by the attorney/client privilege. Another exception may exist where the insurer relies on advice of counsel as a defense, in which case a waiver may exist.

Interestingly, the court pointed out that the Ruiz-mandated discovery of work product is required by Fla. R. Civ. P. 1.280(b)(3), which allows the discovery of work product where the party seeking the discovery has need of the privileged materials to prepare its case, and cannot, without undue hardship, obtain the substantial equivalent of the materials. It should be noted that subsection (b)(3) also requires the protection of mental impressions, conclusions, opinions and legal theories. The Supreme Court’s reliance on subsection (b)(3) may, therefore, provide a basis for further protecting work product in the first-party bad faith context, despite Ruiz’s holding. Genovese may have intentionally or unintentionally narrowed the Ruiz holding, and it should be read carefully before wholesale production of insurer work product in first-party bad faith cases.