Owners Ins. Co. v. Armour

• Decision Date: 09 September 2020
• Docket Number: Case No. 2D18-4385
• Citation: 303 So.3d 263
• Parties: OWNERS INSURANCE COMPANY, Petitioner, v. James A. ARMOUR, individually and as Trustee of the Bay Shore Road Trust U/A/D October 1, 2008; 4449 Holdings, LLC; The Stucco Company of Idaho; Preferred Contractors Insurance Risk Retention Group, LLC; and MQ Windows, Inc., Respondents.
• Court: Florida District Court of Appeals

303 So.3d 263

OWNERS INSURANCE COMPANY, Petitioner,

v.James A. ARMOUR, individually and as Trustee of the Bay Shore Road Trust U/A/D October 1, 2008; 4449 Holdings, LLC; The Stucco Company of Idaho; Preferred Contractors Insurance Risk Retention Group, LLC; and MQ Windows, Inc., Respondents.

Case No. 2D18-4385

District Court of Appeal of Florida, Second District.

Opinion filed September 9, 2020

Robin P. Keener and John D. Russell of Stoler, Russell, Keener, Verona, P.A., Tampa, for Petitioner.

Louis D. D'Agostino of Cheffy Passidomo, P.A., Naples (withdrew after briefing); and Debbie Sines Crockett of Cheffy Passidomo, P.A., Tampa (withdrew after briefing); Matthew B. Devisse, Edmond E. Koester, and Richard D. Yovanovich of Coleman, Yovanovich & Koester, P.A., Naples, for Respondents James A. Armour, individually and as Trustee of the Bay Shore Road Trust U/A/D October 1, 2008; and 4449 Holdings, LLC.

No appearance for remaining Respondents.

KHOUZAM, Chief Judge.

Owners Insurance Company has filed a petition for writ of certiorari seeking review of the circuit court's order denying in part its motion for protective order and allowing certain discovery by James A. Armour, individually and as Trustee of the Bay Shore Road Trust U/A/D October 1, 2008; and 4449 Holdings, LLC (collectively, "Armour"). Because part of the circuit court's order appropriately limited discovery, we deny the petition in part. However, because part of the circuit court's order departed from the essential requirements of the law by allowing impermissible discovery, we grant the petition in part, quash that portion of the order, and remand for further proceedings consistent with this opinion.

The discovery order at issue was entered in a declaratory action over insurance coverage for alleged defective construction of a residential property located at 4449 Bay Shore Road in Sarasota. Armour, the current owner of the property, had filed suit alleging entitlement to insurance coverage as an additional insured under the policies issued to the subcontractors involved in constructing the residence. Owners had issued a policy to one of those subcontractors, The Stucco Company of Idaho.

Armour alleged in the operative complaint that all conditions precedent to the filing of the suit had been met and that Owners had "plainly [been] given notice of all claims which are the subject of this lawsuit." Owners denied these allegations. In an effort to rebut Owner's denial, Armour repeatedly sought discovery seeking to determine if Owners had received notice. Owners declined to produce the requested discovery, even after a magistrate granted Armour's motion to compel.

Still unsatisfied with Owners' responses to his discovery requests, Armour sought to take depositions of certain Owners employees and representatives in order to discover information regarding whether Owners had received notice. Specifically, Armour sought to depose Jennifer Howard, Owners' claims adjuster; Cliff Storr, Owners' senior attorney; Andy Corbin, Owners' director of home office claims; and Betty Carbone, Owners' assistant manager of underwriting. After an extended period of negotiations, the parties appeared to agree to certain areas of inquiry and limitations on the testimony, and the depositions were scheduled. In a March 29, 2018, letter to Armour's counsel, Owners' counsel confirmed the following topic parameters for the corporate representative depositions:

1. Mr. Storr will testify as a corporate representative on the specific coverage and denial of defense decisions made by the Company that are the subject of the Third [Amended] Complaint ....

2. Mr. Corbin will testify as corporate representative regarding the Company's standards and guidelines for the adjustment of commercial general liability claims in Florida.

3. Ms. Carbone will testify as a corporate representative about the underwriting of the specific policies referenced in the Third Amended Complaint. Her testimony will be limited to the applications submitted, the underwriting department's application review process and the underwriting decisions made in assisting the insured with procurement of the specific policies at issue in this litigation.

The letter also indicated that Howard would be produced "in her individual capacity as a fact witness," and the notice of deposition duces tecum stated that she would be questioned on various details of Owners' coverage decisions involved in the case. In the same March 29 letter, however, Owners demanded a consent protective order be signed and filed with the court before the depositions proceeded. When Armour declined to agree to the protective order, the depositions were cancelled. Owners later amended the motion for protective order so that it sought to completely prevent Armour from deposing any of the witnesses, arguing that the testimony was prohibited under Florida law because it would invade and seek discovery of the claims file.

A hearing was held before a magistrate, who entered a recommended order directing the depositions to go forward with limitations on the scope of inquiry. Corbin's and Carbone's depositions would be allowed on the topics set forth in the March 29 letter, based on the magistrate's conclusion that "[g]iven the agreement of Owners" reflected in the letter these notices were "not problematic." The magistrate also noted that Armour was "entitled to depose Cliff Storr in his capacity as a corporate representative on the topics previously agreed upon in the March 29, 2018[,] letter from Owners' counsel." To the extent that the deposition notices directed at Storr and Howard exceeded the type of documents permissible under Florida law, however, Armour was required to amend them to comply with the law.

Owners filed exceptions to the recommended order. The circuit court overruled the exceptions and ratified the recommended order. The court did question the magistrate's finding that the deposition notices for Corbin and Carbone were "not problematic" based on the March 29 letter. "But it seems that what [the magistrate] really did is ... apply the law to the facts of this case to narrow what Mr. Armour could seek at deposition given that this is a notice case where they do have ... an ability to seek evidence regarding receipt of service of certain documents," the court ultimately concluded.

In its petition in this court, Owners argues that the circuit court departed from the essential requirements of law by allowing discovery into topics prohibited by Florida law and that Owners will suffer irreparable harm if this improper information is produced. "The Florida Supreme Court has explained that certiorari is the appropriate remedy when a discovery order departs from the essential requirements of law, causing material injury to the petitioner throughout the remainder of the proceeding in the trial court, effectively leaving no adequate remedy on appeal." Am. Home Assur. Co. v. Vreeland, 973 So. 2d 668, 671 (Fla. 2d DCA 2008). A discovery order improperly compelling production is reviewable by certiorari. See State Farm Fla. Ins. Co. v. Desai, 106 So. 3d 5, 6 (Fla. 3d DCA 2013).

As both the magistrate and circuit court acknowledged, Second District case law is replete with opinions holding that "[a] trial court departs from the essential requirements of the law in compelling disclosure of the contents of an insurer's claim file when the issue of coverage is in dispute and has not been resolved." Seminole Cas. Ins. Co. v. Mastrominas, 6 So. 3d 1256, 1258 (Fla. 2d DCA 2009) ; see also State Farm Mut. Auto. Ins. Co. v. O'Hearn, 975 So. 2d 633, 637 (Fla. 2d DCA 2008) ("[A] party is not entitled to discovery of an insurer's claim file or documents relating to the insurer's business policies or practices regarding the handling of claims in an action for insurance benefits combined with a bad faith action until the insurer's obligation to provide coverage has been established." (quoting Old Republic Nat'l Title Ins. Co. v. HomeAmerican Credit, Inc., 844 So. 2d 818, 819-20 (Fla. 5th DCA 2003) )); Vreeland, 973 So. 2d at 671-72 ("[T]o the extent that the trial court's order requires production of American Home's claims files while the parties are engaged in a coverage dispute, the order causes irreparable injury by allowing discovery of material protected by the work-product privilege. Deposition testimony by a corporate representative on these privileged matters is likewise prohibited." (citations omitted)); GEICO Gen. Ins. Co. v. Hoy, 927 So. 2d 122, 125 (Fla. 2d DCA 2006) ("When a litigant files claims for both coverage and bad faith in the same action, the insurer's claim file is not discoverable until...