THE BEGRUDGED "INSURANCE BAD-FAITH-SUIT"
EXCEPTION TO THE ATTORNEY-CLIENT PRIVILEGE

By: John J. Pappas

This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 22, #26 (May 20, 2008). © 2008

What constitutes the insurance claim file? If an insurer has a continuing duty to review and pay valid claims even after it is sued, does the claim file continue through the litigation?¹ Does it continue through the appeal? Are all attorney-client communications contained in such claim files that were thought to be confidential now discoverable because the insurer lost the underlying first-party claim, litigation, or appeal?²

The sanctity of the attorney-client privilege is so great that such communications cannot be forcibly disclosed even to provide evidence of a felony or the identity of a serial killer or rapist who is presently terrorizing the community.³ Yet, due to sloppy jurisprudence and ignorance of the nature of first-party insurance claims, we have courts ordering disclosure of attorney-client privileged communications to assist an insured in its prosecution of an insurance "bad-faith" claim for extra-contractual damages against its insurer.⁴ Is there any wonder why insurance companies are paranoid and distrustful of our civil justice system? The rights of a serial killer are given greater protection and respect than those of an insurance company.

There are few exceptions to the "absolute" protection afforded by the attorney-client privilege. Apparently some courts believe there is yet another exception – "the insurance-bad-faith-suit" exception. One of the problems is that some courts do not understand there are material differences between a first-party claim and third-party claim.

Actually there are fundamental differences between a first-party and third-party claim. First, the first-party claim defines a relationship between the insured and its insurer that from inception is a debtor-creditor relationship. It is not a fiduciary relationship.⁵ Moreover, the attorney representing the insurance company is not at any time representing the insured.

In contrast, a third-party claim from inception has a fiduciary relationship between the insured and the insurer and the mutually acceptable defense counsel. The insurer and defense counsel are contractually and ethically obligated to defend the insured and represent the insured in such a defense. None of the communications defense counsel has with the insurer can ever be protected as privileged from the insured. This is because a mutually acceptable defense counsel is first and foremost the attorney for the insured. After all, it is the insured who defense counsel is defending. Everything that attorney knows, certainly his or her legal opinions and recommendations, the insured is entitled to receive, and, indeed, should receive. In a third-party triumvirate relationship all defense counsel's opinions and mental impressions are for the benefit of the insured. The "client" in such a relationship is from the onset the insured. All this the insured is entitled to pursuant to a liability carrier's "duty-to-defend" the insured.

In a first-party claim there is no "duty-to-defend" the insured and the insurance company's attorney is never representing the insured and never sharing any of their legal analysis, opinions, and mental impressions with the insured. Such written communications were and are kept confidential as maintained only between the insurance company and its legal counsel, clearly never intended to be shared with the insured.

Thus, in a third-party excess judgment bad-faith case there really is no need to seek waiver of attorney-client privilege. The insured prosecuting the bad-faith suit for the excess judgment, as well as presumably the claimant as assignee of such a claim, is the "client" in the "attorney-client" relationship and should have been provided such attorney-client privileged communications to begin with. In a third-party bad-faith claim it is difficult to imagine a basis an insurer can prevent its insured from reading the attorney-client communications it received from the insured's own attorney acting as the mutually acceptable defense counsel to that insured.⁶

A first-party claim and claim file, however, is completely different. An insured has no entitlement to the first-party insurer's claim file and is certainly not the "client" or intended beneficiary of the attorney-client communications between the insured and its coverage counsel. Once, however, the underlying first-party claim is finally resolved in favor of the insured, as the insured subsequently sues for bad-faith, the insured can seek discovery of materials, typically the claims file, to assist in proving knowledge, intent, and motive of the insurer in the handling of the claim. The insured argues that to the extent such documents constitute work-product, the insured has "substantial need" and cannot obtain such information by any other reasonable means, therefore the insured is entitled to an exception to the qualified protection known as "work-product." Note, many courts commonly refer to the "work-product-doctrine" as a privilege. Such erroneous references result in sloppy jurisprudence. The "work-product-doctrine" is not a privilege.⁷ It is a protection afforded by the courts, not by statute, that is not an "absolute" right or privilege, such as the attorney-client privilege.⁸ Why do I burden you with such pontification? Well, once again, Florida courts, both Federal and State, have caused unnecessary chaos.⁹

On April 9, 2008, a Federal United States District Court issued an Order compelling production of documents in the case of Adega v. State Farm.¹⁰ The Honorable Court wrote in an "Order regarding Motion to Compel Production" dated April 9, 2008 as follows:

The case of Allstate Indemnity Company v. Ruiz, 899 So. 2d 1121 (Fla. 2005) squarely addressed the question of discovery in a bad faith case, and in so doing dispensed with the differences between third party and first party claims. See id. at 1129-30. It is not in dispute that in doing so, it rendered the opinion that work product from the underlying case is discoverable in the subsequent bad faith litigation. Id. The question that is disputed by some courts is whether this includes materials protected by the attorney-client privilege. Compare Fidelity & Casualty Ins. Co. of New York v. Taylor, 525 So. 2d 908 (Fla. 3d DCA 1987) (quoted with approval in Ruiz), with XL Speciality Ins. Co. v. Aircraft Holdings, LLC, 929 So. 2d 578 (Fla. 1st DCA 2006) review granted 935 So. 2d 1219 (2006) and Liberty Mutual Fire Ins. Co. v. Bennett, 939 So. 2d 1113, 1114 (Fla. 4th DCA 2006).

Begrudgingly, after carefully reviewing the language in Ruiz, this Court agrees with the conclusion of Judge Moreno in the case of Nowak v. Lexington Ins. Co., No. 05-21682-CIV-MORENO, 2006 WL 3613760, at *1 (S.D. Fla. June 22, 2006) where the court stated:

Absent a decision from the Florida Supreme Court on an issue of state law, this Court is bound to follow the decisions of the state's intermediate courts, unless there is some persuasive indication that the highest court of the state would decide the issue differently . . . There is some 'persuasive indication' that the Supreme Court would differ with XL Speciality and find the attorney-client privilege does not protect attorney-client material from discovery in a subsequent first-party bad faith suit.

The reason for the use of the word 'begrudgingly' is because the analysis that appears in the Ruiz decision and those cases following it, addressing whether it includes attorney-client protected materials in its decision allowing discovery. While the Florida courts have discussed, at length, the discovery that should be permitted in a bad faith case, there has been precious little analysis of the sanctity of the attorney-client privilege - - a cornerstone of the entire judicial/legal system in this country. Even in XL Speciality, which ruled that Ruiz did not intend that discovery include attorney-client protected documents, there is precious little discussion about the privilege itself, and even less in Bennett.

The attorney-client privilege has been around a lot longer than bad faith litigation. Indeed said privilege probably existed before the advent of insurance in this country - - a necessary prerequisite to any bad faith claim. 'The attorney-client privilege is the oldest of the privileges known to the common law.' . . . It is 'older than the proverbial hills' and long recognized in our judicial system . . . The privilege is founded upon the necessity, in the interest and administration of justice, of the aid of persons having knowledge of the law and skilled in its practice, which assistance can only be safely and readily availed of when free from the consequences of the apprehension of disclosure' . . . Likewise, it has long been recognized as applicable when the client is a corporation . . .

Interestingly, in the recent publication of Litigation - - the Journal of the Section of Litigation of the American Bar Association, the Chair of that section, in looking back over the Canons of Ethics adopted by the ABA 100 years ago, notes that they effect the very concept of the trial lawyer. She states in pertinent part, 'the lawyer must maintain the confidentiality of the client, defending the privileged conversations between lawyer and client against all attempts to invade the sanctity of that special relationship.' . . .

Having stated these reservations, this Court concludes that the language in Ruiz 'all materials including documents, memoranda, and letters, contained in the underlying claim and related litigation file material that was created up to and including the date of resolution of the underlying disputed matter and pertaining in any way to coverage, benefits, liability or damages [are discoverable]' (emphasis added) certainly suggests that this includes materials normally considered to be protected by the attorney-client privilege. 899 So. 2d at 1130. This is particularly so in view of the Supreme Court's favorable agreement with the language in Taylor that 'the pertinent issue is the manner in which the company has handled the suit including its consideration of the advice of counsel so as to discharge its mandated duty in good faith.' 899 So. 2d at 1129 (quoting Taylor, 525 So. 2d at 909-10) (emphasis added). It is but the tiniest of jobs to recognize that one cannot examine 'consideration of the advise of counsel' without crossing the bridge of the attorney-client privilege.

Therefore, and the court being otherwise fully advised in the premises, it is hereby Ordered and Adjudged that said motion be and the same is hereby Granted, to the extent that defendant shall produce all materials . . . contained in the underlying claim and related litigation file . . . up to and including the date of resolution of the underlying disputed matter and pertaining in any way to coverage, benefits, liability or damages. The Court recognizes that XL Specialty is under review and has been since August, 2006. It is hoped that whatever decision is made, the appropriate consideration is given to the sanctity of the attorney-client privilege. (Emphasis supplied).

Respectfully, this Federal Court was not legally obligated to interpret Ruiz as requiring disclosure of attorney-client privileged communications. Obviously, this good Judge did not think such should be the law, given the sanctity of the attorney-client privilege, but "begrudgingly" felt that the Supreme Court of Florida in the Ruiz case required such a ruling. I respectfully disagree. I am not alone.

In the case of Liberty Mutual Fire Insurance Company v. Bennett,¹¹ the Florida Fourth District Court of Appeal did not believe it was legally obligated by Ruiz to order discovery of attorney-client privileged communications. The Florida Fourth District Court of Appeal stated:

In Allstate Indemnity Company v. Ruiz, 899 So. 2d 1121 (Fla. 2005), the Florida Supreme Court held that the work product privilege did not protect from discovery the insurer's file in a statutory first-party bad faith claim, and the trial court accordingly correctly applied Ruiz in holding the work product privilege inapplicable. We agree with Liberty Mutual, however, that the attorney-client privilege, which is not in Ruiz, does not apply. XL Speciality Ins. Co. v. Aircraft Holdings, LLC, 929 So. 2d 578 (Fla. 1st DCA 2006) (holding that Ruiz did not do away with the attorney-client privilege in first-party bad faith cases); United Service Auto Ass'n v. Buckstein, 891 So. 2d 1153 (Fla. 4th DCA 2005) (upholding the attorney-client privilege in a first party bad faith case before the Supreme Court decided Ruiz). (Emphasis supplied).

Even Justice Polen's dissent in Bennett noted that "Ruiz did not expressly deal with the applicability of attorney-client privilege to first-party bad-faith discovery requests." Unfortunately, he also erroneously concluded:

[n]umerous courts have addressed this issue and have found that in a bad faith action, no attorney-client privilege extends to protect documents that were created before the date of the judgment that gave rise to such claim. Dunn v. Nat'l Sec. Fire & Cas. Co., 631 So. 2d 1103 (Fla. 5th DCA 1993); see also Allstate Indemnity v. Oser, 893 So. 2d 675 (Fla. 1st DCA 2005); Superior Ins. Co. v. Holden, 642 So. 2d 1139 (Fla. 4th DCA 1994); Liberty Mutual Fire Ins. Co. v. Kaufman, 885 So. 2d 905 (Fla. 3d DCA 2004). The holding in Ruiz necessarily requires a finding that the rationale in these decisions would apply to a first-party bad faith claim as well as a third-party bad faith claim. Therefore, plaintiff is entitled to all materials contained in Defendant's claims and litigation file up to, until and including the date of judgment in the underlying action. (Emphasis supplied).

The fallacy upon which Judge Polen "supports" such argument is that the cases of Dunn, Oser, Holden, and Kaufman, are all "third-party" bad-faith cases. As previously stated, an insured, who is being defended by mutually acceptable counsel retained by the third-party liability carrier, is the client in that relationship who actually owns the "attorney-client" privilege. This is not the case in a first-party claim.

In the case of XL Specialty Ins. Co. v. Aircraft Holdings, LLC,¹² yet another Florida Appellate Court expressly stated that "Ruiz does not eliminate the attorney-client privilege." The Florida Fourth District Court of Appeal stated that "the trial court should have conducted an in camera inspection of the documents at issue and excluded attorney-client privileged documents relating to the defense of the bad faith claim from its order compelling production." (emphasis supplied). There is a possibility Aircraft Holdings only protects the attorney-client privilege as it may address bad-faith issues but not coverage or breach of contract issues. Let's hope not.

The Aircraft Holdings court stated,

[t]he holding of Ruiz applies only to work product - - not attorney-client privileged documents. . . In reaching its decision, the court [Ruiz] receded from the portion of its decision in Kujawa v. Manhattan National Life Insurance Co.,¹³ regarding work product. Ruiz, 899 So. 2d at 1131 (stating, 'we believe that a portion of our decision in Kujawa is both legally and practically in tenable;' 'We also clarify, and to the extent necessary, recede from our decision in Kujawa as explained herein.'). . .'because the court in Kujawa held that the attorney-client privilege applies to discovery in a bad faith action, it does not eliminate it, and the court in Ruiz did not recede from that portion of the opinion, we continue to apply the portion of Kujawa relating to attorney-client privilege as controlling precedent. Therefore, we hold that the trial court erred by compelling production of attorney-client privileged documents.

Aircraft Holdings went on to hold that the Florida Bad Faith Statute¹⁴ in no way eliminates the statutorily provided attorney-client privilege.¹⁵ This Florida Appellate Court did note however that:

[a]n insurance company may choose to defend its action by proving it followed the advice of its lawyer when it acted on the claim. If the company defends on that basis, it places the attorney-client communications at issue and thereby waives the privilege. . . . In this case, it is undisputed that XL is not defending on that basis, and therefore did not waive its privilege. . . [t]here is no exception provided for communications between the insurance company and its lawyer in the event a bad faith action is filed. . . Because the legislature did not provide an exception to the attorney-client privilege for a bad faith action in its list of exceptions, we decline to create one. . . [t]herefore, the trial court erred by not giving Section 90.502, the attorney client privilege, full effect.

Notwithstanding these Florida Appellate decisions the Federal Court in Adega felt compelled by "Florida common law" to hold otherwise. This Court was not alone.

In the Federal case of Nowak v. Lexington Insurance Co.,¹⁶ again the Federal Court in the Southern District of Florida stated:

While the Defendant is correct that the Supreme Court is Ruiz did not address the precise issue, the Florida Supreme Court did use sweeping language to suggest that it would allow documents traditionally protected by attorney-client privilege to be discoverable in bad-faith litigation once the underlying coverage case was completed. Id. 899 So. 2d at 1127-28.

In comparing first-party to third-party bad faith cases, where the attorney-client privilege has been dissolved, this Federal Court quoted the Florida Supreme Court by stating:

Any distinction between first-party and third-party bad-faith actions with regard to discovery purposes is unjustified and without support under § 624.155 and creates an overly formalistic distinction between substantively identical claims. Thus, there is no basis to apply different rules to substantially identical causes of action.

Hence, our present problem. We have the Supreme Court of Florida in dicta erroneously stating there are no differences between a first-and-third-party bad-faith claims, at least not in the context of protecting the insurer's work-product and attorney-client privilege. Then in its holding it uses "sweeping language" that may include attorney-client privileged documents although attorney-client privilege was never at issue.

Nevertheless, some, more cynical than I, may wonder why these federal trial courts seem to go out of their way to make the Florida Supreme Court "suffer" for its sloppy jurisprudence.¹⁷ This is especially so when, as noted above, the Florida Appellate Courts have not done so, but rather, have interpreted their own Florida Supreme Court as not compelling disclosure of an insurer's attorney-client privilege communications.

It is also important to note that we are addressing the forcible disclosure of an insurer's attorney-client communications. We are not addressing waiver. That is, any party may waive the confidentiality protections afforded by its attorney-client privilege. Certainly an insured does so in a third-party bad-faith claim. In some, if not most, first-party bad-faith claims, an insurer may make the strategic decision that its best defense is to waive its attorney-client privilege and have its coverage counsel be one of its "star" witnesses in the defense of the bad-faith, whether or not it actually raises "advice-of-counsel" as a defense. Adega and Nowak, however, had nothing to do with waiver, estoppel, or "advice-of-counsel." These federal district trial judges are simply choosing to interpret the Florida Supreme Court decision of Ruiz as requiring forceable disclosure of such attorney-client privilege communications of an insurer if contained within the "claim-file in a first-party bad-faith lawsuit." As Bennett and Aircraft Holdings expressly hold, such an interpretation of Ruiz is erroneous.

All of this brings us to the Ruiz decision. Interestingly, the Florida Supreme Court in Ruiz did note that "[i]n defending personal injury litigation, an insurance company participates not only on behalf of itself, but also on behalf on its insured. Since the plaintiff/judgment creditor stands in the same posture as the insured, entitlement to all materials and documents up to and including the date of judgment, is extended to him." Ruiz then noted:

By contrast, the rule permitting discovery of materials contained in claim type files in third-party bad-faith actions has been inconsistently applied in first-party bad-faith actions. It appears that this inconsistency has resulted from and been engendered by a misdescription of the nature of the party's relationship in first-party actions as being totally adversarial, an outdated pre-statutory analysis, as opposed to applying the responsibilities that have traditionally flowed in the third-party context, which are now codified for first-party actions. The Legislature has mandated that insurance companies act in good-faith and deal fairly with insureds regardless of the nature of the claim presented, whether it be a first-party claim or one arising from a claim against an insured by a third-party. . . The Legislature has clearly chosen to impose on insurance companies a duty to use good faith and fair dealing in processing and litigating claims of their own insureds as insurers have had in dealing with third-party claims. Thus, there is no basis to apply different discovery rules to the substantively identical causes of action.¹⁸

From this the Florida Supreme Court in Ruiz held that the first-party claim file was discoverable by the insured in its first-party bad-faith action. There is nothing in Ruiz to suggest that because the insured in a third-party bad-faith action is entitled to his own attorney's files that Ruiz somehow requires the forcible disclosure to an insured in a first-party bad-faith claim of the insurance company's confidential privilege communications with its own coverage counsel who were never the attorneys acting in behalf of that insured. Of course, one of the problems is the "sweeping language" of the Ruiz holding:

. . . We hold that in connection with evaluating the obligation to process claims in good faith under § 624.155, all materials, including documents, memoranda, and letters, contained in the underlying claim and related litigation file material that was created up to and including the date of resolution of the underlying disputed matter and pertaining in any way to coverage, benefits, liability, or damages, should also be produced in the first-party bad-faith action. Further, all such materials prepared after the resolution of the underlying disputed matter and initiation of the bad-faith action may be subject to production upon a showing of good cause or pursuant to a order of the court following an in camera inspection. (Emphasis supplied).

In Ruiz itself Justice Wells, in a concurring in part and dissenting in part opinion, stated: "I emphasize that the only issue being decided in this case is the discovery of work-product in the claims file pertaining to the underlying insurance claim." (Emphasis supplied). Yet, notwithstanding the sanctity of the attorney-client privilege, the lack of clarity in the Ruiz decision, Justice Well's caveat in Ruiz, and the Bennett and Aircraft Holdings Florida Appellate decisions, we have Federal trial courts in Florida holding otherwise: that an insurer's attorney-client privileged communications contained in a first-party claims file must be produced to the insured in a first-party bad-faith claim.

Obviously, the Ruiz decision is sloppy jurisprudence. However, why certain federal courts feel compelled to go out of their way to embarrass the Florida Supreme Court is a question for another commentary. I suspect, for the most part, it's the federal courts overwhelming desire to have its civil diversity jurisdiction docket reduced or eliminated, one way or the other.

Nevertheless, respectfully, I suggest we take a deep jurisprudential breath and return to these issues refreshed with the invigorating oxygen of common sense and the urgency to "right-the-ship" before it actually flounders. We can accomplish this, that is the courts can accomplish this, by expressly recognizing a few fundamental legal concepts:

1. Third-party bad faith claims are materially different than first-party bad faith claims, at least in the context of who holds the "attorney-client" privilege;
   
   
2. The insured owns the attorney-client privilege in a third-party case vis'-a-vis' defense counsel (not the insurer's coverage counsel);
   
   
3. The insurer owns the attorney-client privilege in a first-party or coverage case;
   
   
4. Work-product is a doctrine, not a privilege;
   
   
5. The attorney-client privilege, regardless of who owns it, should be protected from forcible disclosure with few exceptions;
   
   
6. An insurance claim file, even if protected by the insurance company's work-product protection, can be discovered in a first-party bad-faith action, at least in part, if the insured shows "substantial need" and an inability to obtain the equivalent evidence through other reasonable means. But, even if such is allowed, the courts may need to abate causes of action¹⁹ and conduct in camera inspections to ensure an unfair prejudice does not occur; and
   
   
7. Absent the few exceptions to the attorney-client privilege and absent waiver of such privilege, attorney-client privilege communications between an insurer and its counsel that has been kept confidential between the two, even if contained in a "claims file" are not discoverable (to the extent Adega, Nowak, Ruiz, and other courts have held otherwise, such common law should be repudiated).

Folks, forgive my advocacy, but I simply do not believe that the public policy of the State of Florida, or any other state, holds the attorney-client privilege of a free and presently dangerous killer in higher esteem then it does an insurance company's attorney-client privilege. Then again, maybe not.²⁰

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ENDNOTES

1. John J. Pappas and Andrew L. Patten, "Litigation Conduct As Evidence Of Bad Faith And The Standard Of Deceit," Mealey's Litigation Report: Insurance Bad Faith, Vol. 17, #22 (March 24, 2004) ("The issue is really not whether such conduct can be admissible, but rather which conduct is admissible."); John J. Pappas, "The Walrus And The Carpenter," Mealey's Litigation Report: Insurance Bad Faith, Vol. 21, #10 (September 18, 2007) ("Defendants and their attorneys must act in fear that their litigation conduct may actually be referenced and characterized by the trial court in such a way as to support an award of punitive damages. "Chilling effect" would be a euphemistic description. Nothing good can come out of such a doctrine yet much bad can and will occur.")

2. John J. Pappas, "Bad Faith Discovery: Are There No Limits?," Mealey's Litigation Report Insurance Bad Faith, Vol. 16, #14 (November 20, 2002) ("For many reasons, the scope of discovery in "bad-faith" cases is out of the control – that is, without limits.")

3. People v. Gardner, 165 Cal. Rptr. 415 (Cal. App. 1980) (written confession of killer erroneously admitted as evidence because protected by the attorney-client privilege); In The Matter of Nackson, 534 A.2d 65 (N.J. App. Ct. 1987) (ordering attorney to divulge whereabouts of his fugitive client was erroneous based on attorney-client privilege).

4. John J. Pappas, "Bad-Faith Should Be Difficult To Prove," Mealey's Litigation Report: Insurance Bad Faith, Vol. 19, #22 (March 21, 2006) ("As we attempt to instruct other countries on how they should determine what is just, shouldn't settlements in America be calculated based upon merit and not the fear of injustice?").

5. John J. Pappas, "First-Party Bad-Faith," PLRB/LIRB 2005 Claims Conference, April 17-20, 2005 (San Antonio, Texas) ("First-party insurers are not fiduciaries.")

6. John J. Pappas and David B. Krouk, "Time Bombs," Mealey's Litigation Report: Insurance Bad Faith, Vol. 16, #12 (October 23, 2002) (Third-party bad-faith is the consequence fo the liability carrier's failure to settle within policy limits when it had the opportunity to do so.)

7. See Federal Civil Judicial Procedure and Rules, 2008 Ed. Rule 26 annotated, page 151, subdivision (b)(3) - Trial Preparation: Materials. In this annotation reference and discussion is made to the work-product doctrine as initially espoused in the case of Hickman v. Taylor, 329 U.S. 495 (1947). The annotation clearly notes that this is a qualified immunity and a doctrine. At no time does it refer to the work-product doctrine as a privilege.

8. The Florida Evidence Code recognizes only nine privileges. 90.5015 (journalist's privilege); 90.502 (lawyer-client privilege); 90.503 (psychotherapist-patient privilege); 90.5035 (sexual assault counselor-victim privilege); 90.5036 (domestic violence advocate-victim privilege); 90.504 (husband-wife privilege); 90.505 (privilege with respect to communications to clergy); 90.5055 (accountant-client privilege). Note, there is no "work-product" privilege. Also note that there are only six stated exceptions to the attorney-client privilege, the most notable is the crime-fraud exception (90.502(3)(4)(a)). All such exceptions, however, are very limited in scope and application.

9. John J. Pappas, "A State In Crisis," Mealey's Litigation Report: Insurance Bad Faith, Vol. 20, #20 (February 20, 2007) ("the property insurance crisis in Florida has been slowly gaining traction for the pasty twenty-five years and has less to do with Mother Nature than it has to do with Human Nature and the law of unintended consequences.")

10. 2008 WL 1009719 (S.D. Fla. 2008).

11. 939 So. 2d 1113 (Fla. 4th DCA 2006).

12. 929 So. 2d 578 (Fla 1st DCA 2006).

13. 541 So. 2d 1168 (Fla. 1989).

14. Fla. Stat. § 624.155.

15. Fla. Stat. § 90.502.

16. 2006 WL 3613760 (S. Dist. Fla. 2006).

17. This is not the first time the Federal Court in the Southern District of Florida has ignored Florida judicial interpretation of Florida law. See, John J. Pappas, "Federal Florida," Mealey's Litigation Report: Insurance Bad Faith, Vol. 20, #6 (July 18, 2006) (a Federal District Court erroneously interpreted Florida law allowing a first-party "bad-faith" claim to proceed against the insurer before determination that the insurer was obligated to pay more to its insured.")

18. John J. Pappas, "Florida's First-Party Bad-Faith Law," Mealey's Litigation Report: Insurance Bad Faith, Vol. 18, #12 (October 20, 2004) ("In 1982 the Florida Legislature enacted Fla. Stat. § 624,155 referred to as the "Civil Remedy Statute," which the Florida courts have interpreted to authorize first-party 'bad-faith' legal actions").

19. John J. Pappas, "Bifurcating Bad-Faith," Mealey's Litigation Report: Insurance Bad Faith, Vol. 19, # 2 (May 17, 2005) ("in the absence of bifurcation and stay of the 'bad-faith' action, such disclosure of the mental impressions and internal confidential communications between insurer and coverage counsel will, by definition, prejudice the insurer's defense on the coverage case.")

20. John J. Pappas, "What Every Insurer Should Know About Defending A 'Bad-Faith' Case," Mealey's Litigation Report: Insurance Bad Faith Vol. 19, #8 (August 16, 2005) ("'bad-faith' cases can be difficult.")

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