Lender Processing Servs., Inc. v. Arch Ins. Co., 1D14–4161.

• Decision Date: 22 April 2015
• Docket Number: No. 1D14–4161.,1D14–4161.
• Citation: 183 So.3d 1052
• Parties: LENDER PROCESSING SERVICES, INC., Petitioner, v. ARCH INSURANCE COMPANY, Respondent.
• Court: Florida District Court of Appeals

183 So.3d 1052

LENDER PROCESSING SERVICES, INC., Petitioner,

v.ARCH INSURANCE COMPANY, Respondent.

No. 1D14–4161.

District Court of Appeal of Florida, First District.

April 22, 2015.

James D. Gassenheimer and Elaine Johnson James of Berger Singerman, LLP, Boca Raton, for Petitioner.

Jeptha F. Barbour and Edward L. Birk of Marks Gray, P.A., Jacksonville, for Respondent; Jay Shapiro of White and Williams, LLP, New York, NY, pro hac vice.

Ronald L. Harrop of Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Orlando, for Ace American Insurance Company and Endurance American Specialty Insurance Company; Joseph T. Kissane and Brian J. Aull of Cole, Scott & Kissane, P.A., Jacksonville, for Axis Insurance Company; Laura Besvinick and Catherine S. Dorvil of Hogan Lovells US, LLP, Miami, for Executive Risk Indemnity, Inc.; Lisa J. Augspurger and Maria D. Torsney of Bush & Augspurger, P.A., Orlando, for National Specialty Insurance Company; Steven L. Brodie and Leigh A. Esposito of Carlton Fields, P.A., Miami, for National Union Fire Insurance Company of Pittsburg PA.; Stephen H. Johnson of Lydecker Diaz, Miami, for Navigators Insurance Company.

LEWIS, C.J.

Petitioner, Lender Processing Services, Inc., petitions this Court for a writ of certiorari and argues that the trial court departed from the essential requirements of the law in overruling its assertions of attorney-client privilege as to questions posed to two of its witnesses during the hearing addressing the motion to enforce settlement agreement filed by Respondent, Arch Insurance Company, and Petitioner's motion to strike Respondent's motion to enforce. For the reasons that follow, we deny the certiorari petition.

In May 2012, Petitioner, a provider at the time of mortgage processing, loan servicing, and default management services to the mortgage lending industry, filed its First Amended Complaint against several insurance companies, including Respondent. In the "insurance coverage dispute," Petitioner sought "enforcement of the defendants' obligations under a directors and officers liability insurance program." Petitioner alleged that Respondent, the primary insurer, "unjustifiably has denied that it has any obligation to pay the substantial costs that [Petitioner] has incurred in connection with defending against two putative class actions alleging securities law violations due to purported financial disclosure deficiencies, and two companion derivative actions...." Count I was a declaratory judgment action against Respondent wherein Petitioner asserted that Respondent was contractually obligated to indemnify it for "Loss, including Defense Costs" incurred in connection with the underlying claims. A mediation in the underlying suits against Petitioner occurred in January 2013.

In July 2013, Respondent filed a motion to enforce a settlement agreement that it allegedly entered into with Petitioner in the coverage lawsuit. According to Respondent, the parties reached a settlement on January 30, 2013, "agreeing upon the settlement's material terms which included [a certain payment amount by Respondent to Petitioner] in exchange for [Petitioner's] agreement to forego any future rights [it] might otherwise have to demand further amounts from [Respondent] under the Arch Policy." Respondent asserted that despite the fact that the parties' explicit agreement was memorialized in email correspondence, Petitioner had "attempted to unilaterally and materially alter the terms of the settlement to which it already had agreed" and "in a post hoc effort to secure more favorable consideration ... [wa]s only willing to provide [Respondent] with a substantially more limited claim release." Respondent further asserted that Petitioner's in-house counsel, Robert Pinder, was involved in the settlement negotiations and that Petitioner could not in good faith unilaterally alter the terms of the agreed-upon settlement in its favor.

Respondent attached several emails to its motion to enforce. A January 10, 2013, email from Petitioner's counsel in the coverage lawsuit to Respondent's counsel "constitute[d] a demand [from Petitioner] for contribution from [Respondent], as well as a settlement demand, the payment of which would satisfy [Respondent's] obligation to contribute." A January 30, 2013, email from Respondent's counsel to Petitioner's counsel in the coverage lawsuit set forth in part, "I'm writing to respond to Bob Pinder's settlement proposal conveyed in our call yesterday afternoon, which I have forwarded to [Respondent]." After conveying the proposed settlement amount, Respondent's counsel wrote, "[Respondent] appreciates Bob's willingness to conclude the process of incremental moves and to define the parties' respective endpoints." Respondent then proposed a lesser settlement amount. In a subsequent January 30, 2013, email, Petitioner's counsel in the coverage lawsuit stated that Mr. Pinder, whom he had spoken with, "very much appreciates the spirit with which [Respondent] made the offer and your prompt response." Petitioner rejected the settlement amount proposed by Respondent and proposed a greater amount. Later that day, Respondent's counsel replied via email, stating in part, "[Respondent] has asked me to advise you that [Respondent] accepts this offer, and is prepared to move on to the settlement documentation step." Respondent "appreciate[d] Bob Pinder's constructive and thoughtful contributions to the settlement negotiation process." Respondent's draft agreement included signature lines for itself, Petitioner, and Petitioner's officers and directors. In a subsequent email, Petitioner's counsel in the coverage lawsuit wrote that Petitioner "will represent it has authority to enter into the settlement on behalf of the individual insureds [officers and directors], so only [Petitioner] will be signing." Petitioner's draft settlement agreement included a signature line for Petitioner "on behalf of itself and on behalf" of its officers and directors. The signature lines for the officers and directors that were included in Respondent's draft were crossed through.

In September 2013, Petitioner moved to strike Respondent's motion to enforce. In November 2013, Petitioner filed a written opposition to the motion to enforce. Therein, Petitioner argued that without express authority from its officers and directors to release their coverage under Respondent's policy, the "purported agreement [Respondent] seeks to enforce could not have been formed" and that Respondent "did not assert, and could not in good faith have asserted, that [Petitioner's] directors and officers participated in the negotiations with [Respondent] and authorized [Petitioner] or [its] counsel to agree to a settlement that included a policy release." It further contended:

The individual Insured Persons were not part of the negotiations between [Petitioner] and [Respondent]; they did not interact with [Respondent's] counsel and thus could not have "given the appearance of an agency relationship" with [Petitioner's] counsel. [Petitioner] never represented that it was negotiating on their behalf, and [Respondent] had actual notice through its own Policy that [Petitioner] could not bind these Insured Persons....

[Respondent] is trying to concoct an agreement with [Petitioner]. [Respondent's] concoction is sheer fiction; it also is a legal and factual impossibility because [Petitioner] and its counsel were not authorized to release the rights of [Petitioner's] directors and officers under [Respondent's] policy. Accordingly, [Respondent's] Motion should be denied.

In support of its motion to strike and written opposition, Petitioner relied upon Robert Pinder's November 2013 affidavit wherein he represented that he "had authority only to resolve the claims brought by the plaintiff for the prospective class" in one of the underlying suits, that he had "never ... represented to [Respondent] or any of its counsel that either [Petitioner] or [he] had the authority to settle the Coverage Lawsuit on behalf of any of the officers or directors of [Petitioner], who are named as defendants ..., nor [had he] authorized [Petitioner's] outside counsel to make such a representation to [Respondent] or its counsel." Mr. Pinder also averred that he "never ... represented to [Respondent] or its counsel that the Insured Persons would release their rights to coverage by the insurance policy issued by [Respondent] to [Petitioner] for the 2010–2011 term in order to settle the Coverage Lawsuit, nor [had he] authorized [Petitioner's] outside counsel to make such a representation to [Respondent] or its counsel." Mr. Pinder declared that prior to February 1, 2013, "[Petitioner], its directors and its officers had not determined on what terms they would be willing to settle the Coverage Lawsuit, and had not authorized [him] to settle that suit on their behalf."

During the hearing on the parties' motions, Petitioner called Kimberly Loverich, the vice-president of risk management for Fidelity National Financial, the entity which, according to Loverich, had purchased Petitioner. After discussing director and officer liability coverage, Ms. Loverich was asked on cross-examination whether she was involved in any settlement negotiations between the parties, to which she replied, "Just with Bob Pender [sic] and with the broker...." Respondent's counsel then asked, "Did you have any conversations with Bob Pender [sic] in January or February of 2013 or at any time in the first quarter of 2013, January, February, March, concerning settlement of the coverage action of this lawsuit with the [officers and directors]? " Petitioner's counsel objected, stating in part, "I have no problem with the witness answering whether she did or [did] not have conversations. I would object that the conversations would constitute attorney/client communication and would assert the company's attorney/client privilege...." In response, Respondent's counsel argued that Mr. Pinder had...