United Servs. Auto. Ass'n v. Jennings

United Servs. Auto. Ass'n v. Jennings

Opinion

 [*1258]  WELLS, J.

We review United Services Automobile Ass'n v. Jennings,  [**2]  707 So. 2d 384 (Fla. 1st DCA 1998), in which the district court certified the following question as being of great public importance:

WHETHER ] THE FACT THAT A THIRD PARTY BAD-FAITH CLAIM HAS BEEN BROUGHT PURSUANT TO A CUNNINGHAM ¹ STIPULATION RATHER THAN PURSUANT TO AN EXCESS JUDGMENT MAKES ANY DIFFERENCE WHEN ATTORNEY-CLIENT AND WORK PRODUCT PRIVILEGES ARE ASSERTED DURING DISCOVERY IN THE BAD-FAITH ACTION AS TO MATERIAL CONTAINED IN THE CLAIMS FILE?

Jennings, 707 So. 2d at 385 (footnote added). We have jurisdiction. Art. V,  [*1259]  § 3(b)(4), Fla. Const. We answer the certified question in the negative and approve the decision of the district court.

In December 1993, Christopher Broxton, the 16-year-old son of petitioner's insured, Bobby Broxton, was the driver of an insured vehicle that collided head-on with a car driven by respondent Dale Jennings. As a result of the accident, Christopher Broxton died and respondent was seriously [**3]  injured. Respondents initiated settlement negotiations with petitioner. Negotiations broke down in May 1994, and respondents sued petitioner's insured. In November 1994, respondents and petitioner's insured executed a settlement agreement that released all of respondents' claims against petitioner's insured in exchange for the right to pursue a third-party bad-faith claim against petitioner. On July 18, 1995, respondents, petitioner, and petitioner's insured executed a stipulation and agreement. "The stipulation specifically stated that it would 'serve as the functional equivalent of an excess judgment in the amount of $ 75,000,' in accordance with the Florida Supreme Court's opinion in Cunningham v. Standard Guaranty Ins. Co., 630 So. 2d 179 (Fla. 1994)." ² Jennings, 707 So. 2d at 384. In Cunningham, the purpose of finding a stipulation to be the functional equivalent of an excess judgment was to allow a bad-faith claim to be filed against an insurer that would not fail to state a cause of action because there was no allegation of an excess judgment against an insured. Cunningham, 630 So. 2d at 181-82. This Court found that "trying the bad-faith claim before the underlying [**4]  negligence action would result in a full release of the insured if no bad faith were found, thereby avoiding a time consuming and expensive trial on negligence and damages." Id. at 182. Respondents filed a statutory ³ and common-law third-party bad-faith action against petitioner. When respondents sought discovery of petitioner's claims file related to the collision, petitioner objected on grounds that the requested material was protected by attorney-client and work-product privileges. Over petitioner's objection, the trial court compelled production of the entire claims file.

 [**5]  Petitioner asked the First District Court of Appeal to quash the trial court's discovery order compelling production of the claims file. The First District denied the petition, citing Dunn v. National Security Fire & Casualty Co., 631 So. 2d 1103, 1109 (Fla. 5th DCA 1993), and Continental Casualty Co. v. Aqua Jet Filter Systems, Inc., 620 So. 2d 1141, 1142 (Fla. 3d DCA 1993), for the proposition that a third party in a third-party bad-faith action stands in the shoes of the insured and thus is entitled to discover the insurer's entire claim file for the underlying tort up to the date of an excess judgment, notwithstanding objections based on attorney-client or work-product privileges. Jennings, 707 So. 2d at 385. The First District went on to state that it saw no reason why a case involving a Cunningham stipulation should be treated differently from an excess judgment but certified the question to this Court. Id.

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