Arko Plumbing Corp. v. Rudd

• Decision Date: 18 October 2017
• Docket Number: No. 3D16–1689,3D16–1689
• Citation: 230 So.3d 520
• Parties: ARKO PLUMBING CORP., a Florida Corporation, Appellant, v. Michael P. RUDD, Esq. and Rudd & Diamond, P.A., Appellees.
• Court: Florida District Court of Appeals

230 So.3d 520

ARKO PLUMBING CORP., a Florida Corporation, Appellant,

v.Michael P. RUDD, Esq. and Rudd & Diamond, P.A., Appellees.

No. 3D16–1689

District Court of Appeal of Florida, Third District.

Opinion filed October 18, 2017.

Weil Quaranta, P.A., Ronald P. Weil, John M. Quaranta, and Marguerite Snyder, for appellant.

Rumberger, Kirk, & Caldwell, P.A., M. Stephen Smith, and Michael R. Holt, for appellees.

Before ROTHENBERG, C.J., and SCALES and LUCK, JJ.

LUCK, J.

Under Florida's absolute litigation privilege, a defendant can slander the plaintiff and lie to her and the court, and still be absolutely immune from a later lawsuit for defamation, tortious interference with a business relationship, and even violations of federal consumer protection statutes, as long as the slander and lies were made in the courtroom or during the formal discovery process and had some relation to the case. The trial court in this case extended the absolute privilege to (1) the defendants accessing the plaintiff's password-protected vehicle tracking system, and (2) their questions to the plaintiff's customers during an examination under oath, and granted summary judgment for the defendants. We agree with the plaintiff that the absolute privilege cannot be stretched that far, reverse summary judgment, and remand to the trial court.

BACKGROUND FACTS AND PROCEDURAL HISTORY

In 2010, plaintiff Arko Plumbing Corporation was providing homeowners with "video colonoscopies" of their cast-iron drain pipes to locate cracks in the damaged pipes. Arko would identify the cracks, assist homeowners in filing claims under their insurance policies, and then replace the damaged cast-iron pipes (an expensive fix which required digging through a home's flooring into the concrete pad to remove the old, damaged pipes).

Bascuas v. Citizens Property Insurance Corp. Defendants Michael Rudd and his law firm, Rudd & Diamond, P.A., represented insurance companies on claims that they breached homeowner's insurance policies by not covering Arko's repairs to the homeowners' damaged pipes. In 2013, Rudd and his firm were defending Citizens Property Insurance Corporation in the breach of property insurance case brought by the Bascuases. On February 26 and 27, 2013, Rudd and his firm, with the help of a former Arko employee, John Collucci, used Collucci's still-active password to access Arko's MotoMon Global Positioning System account. MotoMon is an internet-based computer program which provided historical and real-time access to the location of Arko's service vans. On the MotoMon program, Rudd and his firm, with Collucci's password, accessed the historical location information for eighteen Arko clients, including the Bascuases. Rudd and his firm then issued subpoenas to Arko for its Motomon information, including information related to location of Arko service vans at the Bascuas residence.

Calejo v. State Farm Florida Insurance Co. In March 2013, Rudd and his firm also defended State Farm Florida Insurance Company in the breach of homeowner's policy claim filed by the Calejos. The Calejos insurance policy with State Farm required that they answer the company's questions at an examination under oath. The examination was held on March 8, 2013, and included the following exchange:

Rudd: Did you have any kind of—and I think we talked about this, but you never met with anybody at Arko at any time before this loss, right?

Ms. Calejo: No sir, not that I recall. I know I've called plumbers before but I don't think that he was one of the ones that ever came to my house.

Rudd: So, he didn't come out to y'all about a year in advance and say you need to clean this house up before we can make an insurance claim?

Ms. Calejo: Oh, my God, no.

Rudd: He did not do that?

Ms. Calejo: No ...

Rudd: And you never met with Joe or anybody associated with Arko at any time in advance of this loss to discuss committing insurance fraud?

Ms. Calejo: Oh, no.

The complaint. Arko filed its fifth amended complaint against Rudd and his firm, and various other defendants, including Citizens, State Farm, Stephen Andris (a State Farm employee), former Arko employee Collucci, and Maria Fonnegra (Collucci's girlfriend). The complaint alleged that Rudd and his firm engaged in: a civil conspiracy with the other defendants (count one); deceptive and unfair trade practices (counts four and five); theft of trade secrets (counts nine and ten); defamation (counts fifteen and sixteen); and intentional interference with business relationships (counts twenty-two and twenty-three).

Summary judgment. By the time of the summary judgment motion in this case, Arko's claims against Rudd and his firm were focused on accessing the MotoMon account in the Bascuas case, and the questions during the examination under oath in the Calejo case. Rudd and his firm moved for summary judgment based, in part, on the litigation privilege and because the information on the MotoMon program was not a trade secret under Florida law. The trial court granted the motion for summary judgment, explaining:

Okay. As to both Rudd and Rudd & Diamond I do find that whether it's the litigation privilege or the qualified privilege, that it absolutely does apply, including under the facts and circumstances in this case and, therefore, I grant summary judgment across the board for Rudd and Rudd & Diamond in this case.

Arko moved for rehearing on the summary judgment for Rudd and his firm. In denying the rehearing motion, the trial court, again, explained:

Under the facts of this case, the way the complaint is framed, [Arko's] customer list is not a trade secret. Absolute litigation privilege applies; even if it were only qualified privilege, Arko didn't carry its burden of proving malice as to these defendants.

STANDARD OF REVIEW

"The standard of review of a summary judgment order is de novo and requires viewing the evidence in the light most favorable to the non-moving party." Sierra v. Shevin, 767 So.2d 524, 525 (Fla. 3d DCA 2000). Whether the litigation privilege applies to Rudd and his firm's conduct is a pure question of law, and is also reviewed de novo. DelMonico v. Traynor, 116 So.3d 1205, 1211 (Fla. 2013).

DISCUSSION

Florida's litigation privilege affords absolute immunity "to any act occurring during the course of a judicial proceeding ... so long as the act has some relation to the proceeding."

Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So.2d 380, 384 (Fla. 2007) (omission in original) (quoting Levin, Middlebrooks, Mabie, Thomas, Mayes Mitchell, P.A. v. U.S. Fire Ins. Co., 639 So.2d 606, 608 (Fla.1994) ). The absolute privilege does not apply "where an attorney steps outside of both the courtroom and the formal discovery process to investigate a claim." DelMonico v. Traynor, 116 So.3d 1205, 1218 (Fla. 2013). Instead, a "qualified privilege" applies "to statements made by attorneys as they undertake informal investigation during pending litigation and engage in ex-parte, out-of-court questioning of nonparty witnesses, ‘so long as the statements are relevant to the subject of inquiry’ in the underlying suit." Id. (quoting Levin, 639 So.2d at 607 ). If the court determines that the qualified privilege applies, the burden is on the plaintiff to "prove the additional element of express malice." Id. at 1219.

Arko contends the trial court erred in granting summary judgment for Rudd and his firm because: the litigation privilege did not apply to accessing Arko's MotoMon account and the examination under oath; even if it did, Rudd and the firm acted with express malice, thereby overcoming the qualified privilege; and the information in Arko's MotoMon account was a trade secret, and thus, subject to Florida's trade secret act. Arko's appeal raises three issues: (1) does the litigation privilege extend to Rudd and his firm's accessing Arko's MotoMon account (no); (2) does the absolute or qualified privilege apply to Rudd's questions at the examination under oath (qualified); and (3) was the information on Arko's MotoMon account a trade secret (yes).

1. Does the litigation privilege extend to Rudd and his firm's accessing Arko's MotoMon account?

While the absolute and qualified litigation privilege applies to statements and acts that have some relation to a judicial proceeding, a review of the Florida Supreme Court's litigation privilege decisions shows that the statements and acts must be communicative. Every Florida Supreme Court decision that has applied the privilege has done so where the statement was made or act was done while communicating during a pending case or as part of an investigation.

In Myers v. Hodges, 53 Fla. 197, 44 So. 357 (1907), the Florida decision adopting the litigation privilege, the privilege was applied to a civil complaint alleging the president of a corporation was "a tricky, dishonorable, unscrupulous and conscienceless man." Id. at 358 (quoting from the complaint). In Fridovich v. Fridovich, 598 So.2d 65 (Fla. 1992), the privilege was applied to statements made to law enforcement officers, so the officers would falsely charge a family member with murder. Id. at 66. In Levin, the Court applied the privilege to an insurance company's attorney who falsely certified that opposing counsel would be a witness in the case. Levin, 639 So.2d at 607. In Echevarria, the Court applied the privilege to letters sent by a law firm to defendants in foreclosure cases that falsely represented the amount of money the defendants owed for title searching services. Echevarria, 950 So.2d at 381. And in DelMonico, the Court applied the qualified privilege to false statements about one of the parties made during informal interviews with potential witnesses in an ongoing litigation. DelMonico, 116 So.3d at 1209.

In each of these litigation privilege cases, the privilege was applied to communications made to another (the court, parties, law enforcement officers, and witnesses) during an investigation or as part of judicial proceedings. Whatever the ...