November 30th, 2015
By Molly A. Chafe, Esquire
In Florida, communications between a lawyer and a client are “confidential” and, barring exception, not subject to disclosure. See Fla. Stat. § 90.502. One exception is the “joint client” exception to attorney-client privilege. See Fla. Stat. § 90.502(4)(e). The exception applies only when an attorney represents two parties “in common” who later are opponents in a civil action.
An attorney may represent clients jointly, so long as the joint representation does not entail a conflict of interest and the clients request or agree to the joint representation. This often comes into play in the insurance context, when a liability insurer hires an attorney to defend a policyholder; this relationship is called a “tripartite relationship” (insurer, insured and insured’s counsel). Despite having three parties to this relationship, parties to this relationship can assert attorney-client privilege and work-product.
However, when an insurer denies coverage, asserts a defense to coverage, or issues a reservation of rights under an insurance policy, the interests of the insurer and insured are in direct conflict. Univ. of Miami v. Great Am. Assur. Co., 112 So. 3d 504, 507 (Fla. 3d DCA 2013). Under such circumstances, both parties need their own counsel and an attorney generally may not represent both the insurer and the insured.Id. Thus, the tripartite relationship is broken.
However, the United States District Court for the Southern District in Maplewood Partners, L.P. v. Indian Harbor Ins. Co., 2011 WL 3918597 *1 (S.D. Fla. Sept. 6, 2011), held that an insurer was entitled to discovery of otherwise protected attorney client communications and attorney work product from the underlying case because of the existence of a common interest between the insurer and the insured and because the insured put defense counsel work product “at issue” by challenging the insurer’s allocation assessment.
The insured initiated coverage litigation against the insurer for breach of a D&O policy, disputing the insurer’s allocation between covered and uncovered amounts with respect to the defense and settlement of four separate lawsuits. Id. at *1. The insurer sought discovery of all communications between the insured and its defense counsel concerning the underlying matters and assessments made by the insured or defense counsel concerning the insured’s liability and the settlement value of the litigation. Id. The insured objected to this discovery, arguing that the information sought was protected by Florida’s attorney client privilege and federal law’s attorney work product doctrine. Id.
The Southern District rejected the insured’s argument after a hearing on a motion to compel, finding that the applicability of the work product doctrine in this case turned on federal law notwithstanding that the documents at issue were prepared in connection with state court litigation. Id. at *2. Thus under federal law, the court determined that the insured waived the protection afforded by the doctrine with respect to defense counsel’s assessment of liability and damages in the underlying litigation by putting that assessment “at issue.” Id. at *5. The court held that because the insured brought suit against the insurer, the insured could not preclude the discovery of information that was vital to the insurer’s defense that its allocation method was appropriate as compared to the allocation method pressed by the insured. Id.
Next, the court held that the insurer was entitled to the discovery of information that otherwise would be protected from disclosure by the privilege afforded attorney-client communications under Florida law. Id. at *5. According to the court, the insured could not claim this privilege as to the insurer because of the existence of a common interest between the insured and insurer with respect to the underlying litigation.Id. Specifically, the court found that the insured and insurer “shared a common interest in defeating liability in the underlying proceedings.”Id. Specifically, the court rejected the insured’s arguments that there was no common interest here because the insurer did not have a duty to defend under the policy and because the insurer had issued a reservation of rights letter. Id. at *6.