Ranger Constr. Indus., Inc. v. Allied World Nat'l Assurance Co., Civil No. 17-81226-CIV-Marra/Matthewman
| Decision Date | 05 February 2019 |
| Docket Number | Civil No. 17-81226-CIV-Marra/Matthewman |
| Parties | RANGER CONSTRUCTION INDUSTRIES, INC., Plaintiff, v. ALLIED WORLD NATIONAL ASSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
AMENDED1 ORDER DENYING DEFENDANT'S MOTION TO DISQUALIFY PLAINTIFF'S COUNSEL [DE 185]
THIS CAUSE is before the Court upon Defendant, Allied World National Assurance Company's ("Defendant") Motion to Disqualify Plaintiff's Counsel ("Motion") [DE 185]. This matter was referred to the undersigned by United States District Judge Kenneth A. Marra. See DE 188. Plaintiff, Ranger Construction Industries, Inc. ("Plaintiff") filed a response [DE 190], and Defendant filed a reply [DE 197].
The Court held an evidentiary hearing and oral argument on the Motion on January 28, 2019, and January 29, 2019. The Court made its findings in open court and orally denied the Motion on January 29, 2019. In reaching its decision to deny the Motion, the Court considered the Motion, response, reply, the sealed transcript and exhibits from the deposition of Defendant'sRule 30(b)(6) designee Christopher Finneran [DE 195], the 10 attorney-client privileged documents provided to the Court for in camera review, the parties' hearing exhibits [DEs 203, 209, 211, 212, 213], the testimony of Richard Weldy, Esq., and Walter Andrews, Esq., the argument of the parties, and the entire docket in this case. This Order is intended to adopt the Court's oral findings and rulings and elaborate on them.
Defendant initially moved for disqualification of Plaintiff's counsel, Hunton Andrews Kurth, on the basis that (1) defense counsel inadvertently disclosed seven attorney-client privileged documents—letters and emails—between Fowler White, Defendant's coverage counsel in the underlying state case and Defendant, and that (2) Plaintiff's counsel, upon receipt of those seven attorney-client privileged documents, allegedly failed to abide by Federal Rule of Civil Procedure 26 and Rule 4-4.4 of the Rules Regulating the Florida Bar. At the January 28, 2019 hearing, defense counsel explained that an additional three attorney-client privileged documents that were internal to Defendant and discussed the legal advice or legal opinions provided to Defendant by Defendant's current counsel in this federal case had also been inadvertently disclosed to Plaintiff. Thus, the Court addressed a total of 10 attorney-client privileged documents produced by Defendant to Plaintiff in regard to the Motion for Disqualification.
The Court separated the evidentiary hearing and oral argument into four issues, with Issues III and IV being deemed interrelated, as is suggested by the relevant case law. The Court made individual findings and rulings as to each of the four issues. Those findings and rulings are adopted as orally made in open court on January 28 and January 29, 2019, and they are further discussed below and elaborated upon in this Order.
The facts underlying this disqualification motion establish that, unfortunately, lawyers onboth sides of the litigation acted poorly.
At the heart of this dispute is a disappointing but obvious inability of opposing counsel in this case to talk and correspond with each other in good faith, to rely on each other's representations, and to deal honestly and squarely with one another. From its inception, this case has been replete with numerous and extensive discovery disputes, myriad motions, lengthy hearings, and finger-pointing by opposing counsel against each other for various alleged bad acts. The Court does not know if this conduct and mistrust is based upon past dealings between counsel or due to other factors, but the attorneys should be aware that their conduct is not helping their respective clients' positions in this litigation. In fact, it is downright unproductive and silly.
In specific reference to the disqualification motion, it is clear to the Court what transpired here. Defendant's counsel, rushing in advance of the upcoming 2018 Christmas holiday and certain looming discovery deadlines, inadvertently produced 10 attorney-client privileged documents out of a total of approximately 14,500 discovery documents produced on December 20, 2018. That very large discovery production was reviewed by Plaintiff's counsel over the Christmas holiday, and on December 28, 2018, just before the New Year's holiday, Plaintiff's counsel advised Defendant's counsel in writing that approximately 100 documents—which appeared to be attorney-client privileged documents between Fowler White and Defendant—had been produced by Defendant within that large production, but that Plaintiff would "assume" that those 100 or so documents were correctly produced and were, in fact, not privileged.
Plaintiff did not specifically identify the approximate 100 documents by Bates numbers, and what followed was each side telling the other side that the other side was obligated to provide the specific Bates numbers for those approximate 100 documents. In this regard, there was a level of gamesmanship exhibited by counsel on both sides, combined with the rush of the holidays—and the flu and illness of counsel on both sides—which affected the responses of both sides' counsel and exacerbated and prolonged this dispute.
This all led to an unfortunate disqualification dispute which has caused the Court to expend extensive judicial resources, including presiding over a two-day evidentiary hearing and oral argument. What the parties' counsel seem to miss in all of this is that if opposing counsel would have just picked up the phone or met in person, honestly spoken to one another, jointly and immediately identified and specified the approximate 100 documents at issue, and acted in good faith with one another like professional attorneys are supposed to do, they could have quickly resolved this matter among themselves with a simple claw-back of the privileged documents by Defendant under FRE 502(b) or other similar agreement.2 That did not happen, and now this Court will proceed to explain and analyze this dispute in greater depth and announce in writing its ruling on Defendant's Motion to Disqualify Plaintiff's Counsel.3
The Court finds that the 10 documents at issue are, in fact, covered by the attorney-clientprivilege. One argument vigorously advanced by Plaintiff in its papers and at the hearing was that the original seven documents were never previously placed on a privilege log by Defendant, and therefore any claim of privilege was waived. However, the Court rejects this argument as the evidence established without any doubt that the seven Fowler White documents were previously placed on two privilege logs—albeit with different Bates numbers than they had when they were produced on December 20, 2018—which was due to a "tagging error."
The inadvertent disclosure of Defendant's three additional internal documents reciting legal advice or legal opinions from defense counsel in this federal case was uncovered so recently that Defendant has not yet had sufficient time to place them on a privilege log.
A second argument advanced by Plaintiff in their papers and at the hearing was that the documents could not be considered to be attorney-client privileged as they were created before4 Defendant reasonably anticipated litigation. In other words, in this case involving 10 solely attorney-client privileged documents (and no claim by Defendant of work product as to the 10 documents at issue), Plaintiff argues that an insurance company simply cannot maintain attorney-client privilege over documents, if, at the time the attorney was retained or rendered a legal opinion or advice, the insurance company did not reasonably anticipate litigation. Plaintiff argues that this Court must read into an insurance company's (such as Defendant) claim of attorney-client privilege an absolute prerequisite that the insurance company must have reasonably anticipated litigation in order for the insurance company to be able to advance a claim of attorney-client privilege. Plaintiff argues that, since, in this case, Defendant's 30(b)(6) representative testified that Defendant did not reasonably anticipate litigation until the date this federal lawsuit was filed(November 7, 2017), then Defendant's claim of attorney-client privilege over the 10 documents must fail. The Court rejects Plaintiff's argument.
The Court acknowledges that there are a handful of Florida appellate cases and Southern District of Florida cases that have seemingly suggested or ruled that the attorney-client privilege only attaches in the insurance company context when the legal advice was obtained or rendered in anticipation of litigation. See, e.g., Bankers Ins. Co. v. Fla. Dep't of Ins. & Treasurer, 755 So. 2d 729, 729 (Fla. Dist. Ct. App. 2000); 1550 Brickell Assocs. v. QBE Ins. Co., 597 F. Supp. 2d 1334, 1336 (S.D. Fla. 2009); Atriums of Palm Beach Condo. Assn., Inc. v. QBE Ins., Co., No. 08-80543-CIV, 2009 WL 10667478, at *3 (S.D. Fla. June 17, 2009); Milinazzo v. State Farm Ins. Co., 247 F.R.D. 691, 697 (S.D. Fla. 2007).
Milinazzo appears to be the first federal case in this circuit to rule in this manner. That case states in relevant part:
In an insurance context, the attorney-client privilege only attaches when an attorney performs acts for an insurer in his processional [sic] capacity an [sic] in anticipation of litigation. See, e.g., Bankers Ins. Co. v. Florida Dept. of Ins., 755 So.2d 729 (Fla. 1st DCA 2000) ().
Milinazzo, 247 F.R.D. at 697. Interestingly, Bankers Ins. Co., the Florida state case relied upon by Milinazzo for this holding, does not so hold. A careful reading of the Bankers Ins. Co. case shows that it does not state that an insurance...
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