Am. Home Assurance Co. v. Sebo

• Decision Date: 05 December 2022
• Docket Number: 2D21-3270
• Citation: 350 So.3d 1283
• Parties: AMERICAN HOME ASSURANCE COMPANY, INC., Petitioner, v. John Robert SEBO, individually and as trustee under Revocable Trust Agreement of John Robert Sebo, dated November 4, 2004, Respondent.
• Court: Florida District Court of Appeals

350 So.3d 1283

AMERICAN HOME ASSURANCE COMPANY, INC., Petitioner,

v.John Robert SEBO, individually and as trustee under Revocable Trust Agreement of John Robert Sebo, dated November 4, 2004, Respondent.

No. 2D21-3270

District Court of Appeal of Florida, Second District.

December 5, 2022

Laura Besvinick and Julie Nevins of Stroock & Stroock & Lavan, LLP; and Jason Hunter Korn and Joshua A. Hajek of Dentons Cohen & Grigsby P.C., Naples, for Petitioner.

Mark A. Boyle and Molly C. Brockmeyer of Boyle, Leonard & Anderson, P.A., Fort Myers; and Christopher T. Kuleba, R. Hugh Lumpkin, and Matthew B. Weaver of Reed Smith LLP, Miami, for Respondent.

CASANUEVA, Judge.

American Home Assurance Company, Inc. (AHAC), seeks certiorari review of a pretrial discovery order entered in an action alleging bad faith filed by John Robert Sebo. AHAC asserted to the trial court and to this court that the documents at issue are protected by the attorney-client privilege and that the special magistrate applied the wrong legal standard in her recommended order. We deny the petition.

I. BACKGROUND

In an opinion addressing AHAC's previous petition for writ of certiorari, this court set forth the facts as follows:

Respondent, John Robert Sebo, purchased a home in April 2005, and AHAC provided homeowners insurance for the home. In December 2005, Mr. Sebo filed a claim with AHAC for water intrusion and other damages to the home, and AHAC denied coverage for most of the claimed losses. Mr. Sebo filed suit against a number of defendants, and in November 2009, he amended his complaint to add AHAC as a defendant, seeking a declaration that the policy provided coverage for his damages. Mr. Sebo settled his claims against a majority of the other defendants and proceeded to trial on his declaratory action against AHAC. The jurors found in favor of Mr. Sebo, and the trial court entered judgment against AHAC.

Appeals followed. Ultimately, the Florida Supreme Court affirmed the jury verdict finding that the "concurrent cause" doctrine applied. Sebo v. Am. Home Assurance Co. , 208 So. 3d 694, 700 (Fla. 2016). It is the alleged failure of AHAC to evaluate this doctrine that underpins this discovery dispute. Specifically, AHAC has admitted that it did not consider Florida law on causation prior to its retention of counsel and did not consider the concurrent cause doctrine until the issue was presented in a motion for summary judgment filed by Mr. Sebo.

Mr. Sebo commenced a first-party bad faith action against AHAC for damages arising from AHAC's wrongful denial of benefits owed under the homeowners insurance policy. For our purposes, Mr. Sebo served a request for production on AHAC which sought an extensive list of documents relating to the denial of the claim. At issue are documents created before the final judgment was entered on November 9, 2018. AHAC objected to specific categories of documents based on the work product doctrine and the attorney-client privilege. The matter was referred to a general magistrate. Mr. Sebo asserted, and the magistrate agreed, that the documents at issue constitute direct evidence on the issues framed by Mr. Sebo's pleadings. Particularly, the magistrate concluded that the requested discovery items are not protected by the work product doctrine, because they are needed to determine if AHAC acted in bad faith. The magistrate found that AHAC's objection on the basis of attorney-client privilege could not be resolved without an in-camera inspection.

Am. Home Assurance Co. v. Sebo , 324 So. 3d 977, 979 (Fla. 2d DCA 2021).

This court denied AHAC's first petition because the general magistrate properly followed the dictates of Genovese v. Provident Life & Accident Insurance Co. , 74 So. 3d 1064 (Fla. 2011), when it ruled that the objection as to attorney-client privilege could not be resolved without an in camera inspection. Am. Home Assurance Co. , 324 So. 3d at 982. The arguments raised in the current petition arise from that in camera inspection.

Each party submitted 100 documents, representing a sample of the documents at issue, to the general magistrate for her in camera review. In a recommended order, the general magistrate ruled on 39 of the documents, identifying 24 items as "Discoverable" and indicating that her ruling was intended as a guide for AHAC's counsel to determine whether the remaining documents were discoverable.

AHAC filed exceptions to the magistrate's recommended order, and Mr. Sebo filed a motion seeking clarification of the order. In its exceptions, AHAC argued that "the Magistrate's legal rulings both generally and as applied to the documents reviewed in camera are clearly erroneous" and "[t]he legal rulings show that the Magistrate improperly conflated the work-product standard and the attorney-client privilege." However, regarding the twenty-four documents that the magistrate ordered AHAC to produce, it simply stated:

A review of the Magistrate's recommendations regarding specific documents confirms the scope of the Magistrate's error. In direct contravention of Genovese ’s clear and binding mandate that "the insured may not discover those privileged communications that occurred between the insurer and its counsel during the underlying action," the Magistrate recommended that the Court hold communications between American Home and the law firms defending American Home in the coverage litigation "discoverable," notwithstanding the fact that the communications plainly involved the "rendering of legal advice." Genovese , 74 So. 3d at 1068.

....

A review of the Magistrate's recommendations regarding specific documents confirms the scope of the Magistrate's error. For example, the Magistrate recommended the production of emails between American Home's representative (Kathleen Spinella) and American Home's lead trial counsel (Scott Frank) and lead appellate counsel [(]Anthony Russo) concerning the coverage litigation with Sebo and related strategy. Such communications are at the core of the attorney-client privilege and they should be protected.

The magistrate issued a recommended order granting Mr. Sebo's request for clarification. AHAC filed exceptions to this second order of the magistrate, arguing that the magistrate erred in failing to conduct an in camera review of all 200 documents submitted by both parties.

The trial court conducted a hearing on AHAC's exceptions. At the hearing, the attorney for AHAC asked the trial court not to affirm the magistrate's ruling and further argued

that there be an in camera review required of all the documents, as we believe is required by law. And perhaps, you know, we may discuss appointment of a special master to accomplish that, subject to the appropriate legal guidance, obviously, from the Court on what the sort of rules of the road are in terms of the application of the attorney-client privilege.

....

And so I want to end by talking about that in camera review, because I think that's the practical question that confronts us. I recognize we have an advantage that Mr. Kuleba does not, which is we have seen the documents and put them next to the Magistrate's rulings on them. And I would invite Your Honor to do the same, if you have not done so yet, which is, there is no discernible rule that would tell you whether one was discoverable or one was privileged, because, as I mentioned before, there are communications between counsel and the company concerning the defense of the case, some of which are identified as being privileged, some of which are identified as being discoverable, which -- and I'll just conclude on this -- really elevates the importance of document-by-document in camera review. If you are making grand order decisions about whether something is business advice or legal advice or a draft that underlies a communication, that is a document-by-document inquiry.

After the hearing, the trial court overruled AHAC's exceptions and approved and adopted the recommended orders of the magistrate. The trial court gave AHAC twenty days to produce the twenty-four documents previously ordered to be produced, and it gave AHAC sixty days to produce other documents withheld on the bases of attorney-client privilege that were required to be produced in accordance with the order. However, the trial court also directed AHAC to "provide an updated privilege log for any documents withheld on attorney-client privilege grounds [in] accordance with this Order."

II. STANDARD OF REVIEW

When deciding whether to grant the petition for writ of certiorari, we must determine whether AHAC, as the petitioner, has established that the trial court order constitutes "(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case[,] (3) that cannot be corrected on postjudgment appeal." Hett v. Barron-Lunde , 290 So. 3d 565, 569 (Fla. 2d DCA 2020) (alteration in original) (quoting Bd. of Trs. of Internal Improvement Tr. Fund v. Am. Educ. Enters. , 99 So. 3d 450, 454 (Fla. 2012) ). "An order that compels discovery of privileged information departs from the essential requirements of law because once such ‘information is disclosed, there is no remedy for the destruction of the privilege available on direct appeal.’ " E. Bay NC, LLC v. Est. of Djadjich ex rel. Reddish , 273 So. 3d 1141, 1144 (Fla. 2d DCA 2019) (quoting Est. of Stephens v. Galen Health Care, Inc. , 911 So. 2d 277, 279 (Fla. 2d DCA 2005) ).

III. DISCUSSION

Because a discovery order departs from the essential requirements of law when it compels the discovery of privileged information, we first must determine what materials AHAC was compelled to produce. The trial court's discovery order compels the production of twenty-four documents which the magistrate reviewed in camera and found to be discoverable. The order leaves it to AHAC to determine what other documents in its possession are required to be produced in accordance with the order and to provide an updated privilege log for the...