Skip to main content

Insurance Company Required to Divulge Bad Faith Discovery in a Breach of Contract Action

In SUMMIT TOWERS CONDOMINIUM ASSOCIATION, INC. v. QBE INSURANCE CORPORATION, 23 Fla. L. Weekly Fed. D191a (S.D. Fla. April 5, 2012), U.S. District Court Judge Patricia A. Seitz held that Magistrate Judge Andrea A. Simonton, who was assigned to handle discovery matters in an insurance breach of contract action, did not act contrary to law or clearly err when she ordered insurer's Rule 30(b)(6) witness to answer questions regarding financial incentives, general business practices, and bad faith.  The case also has interesting footnotes on how insurance attorneys need to be more civil in the litigation process.

The insurer supported its arguments that such discovery is not discoverable with numerous citations to state court cases that stand for the general proposition that discovery related to bad faith claims is improper in a first-party insurance breach of contract action. Nevertheless, consistent with Buckley Towers Condominium, Inc., v. QBE Insurance Corp., 2008 WL 2645680 (S.D. Fla. June 26, 2008), the Court found that the questions were relevant to whether an insurer's initial determination that damages did not exceed deductible was reasonable and also to rebut claims of fraud alleged by insurer. The Court explained "[t]hat there is some overlap with this evidence and evidence that is relevant to a bad faith claim is of no consequence where, as here, the probative value of that evidence to the breach of contract claim outweighs any prejudice to [the insurer]."

In addition, the Court found that insurance company's counsel's instructions to deponent not to answer based on relevancy and objections to form did not comply with federal rules of procedure or applicable authorities and cited Federal Rule of Civil Procedure 30, which provides, in relevant part:

"A person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation ordered by the court, or to present a motion under Rule 30(d)(3)."

Fed. R. Civ. P. 30(c)(2) (emphasis added). Because defense counsel instructed the insurer's witness not to answer deposition questions on legal bases other than those specified in Rule 30(c)(2), the Court found defense counsel's actions improper.
In addition, the Court found that an order compelling the deponent to produce information that he relied on, other than his experts, that would support insurer's affirmative defense that the Plaintiff fraudulently inflated its claims was consistent with governing rules and authorities, as discovery was relevant, calculated to lead to admissible evidence, and tailored to the issues of case. This was so held, despite the fact that Magistrate Judge Simonton indicated that “[n]ormally, the claims handling procedures are not discoverable at the breach of insurance contract stage.” The judge allowed some discovery on this issue because the insurance company had asserted as an affirmative defense that the Plaintiff fraudulently inflated its claim.

While the case delved into other discovery issues beyond the scope of this blog, what is also interesting is the Court's open admonition of the actions of defense counsel in the case . The Court openly invited the Plaintiff to file a motion for sanctions against defense counsel stating "[defense counsel's] conduct was not justified and sanctions are appropriate should Plaintiff file such a motion."

What this case reminds us is that just because Florida state court cases tell us generally that claims handling procedures and other such issues are not normally discoverable at the breach of insurance contract stage, the federal courts will look to its procedural rules to decipher what is and what is not discoverable. Rule 30 is very limited on what is not discoverable. Therefore insurers will need to be extra vigilant in the affirmative defenses it chooses to employ in defending a breach of contract action in Florida, as more than just the original contractual dispute itself may be at issue in discovery.

If you are interested in receiving a complete copy of this decision, please feel free to contact me at miamipandi@comcast.net.


Comments

  1. Being in abogado can cause some major prolems for your life. I found this article to be very informative. Help is out there and it’s easier to find if you know what you’re looking for.

    ReplyDelete
  2. California law imposes on every insurance contract a duty of good faith and fair dealing, based on fundamental fairness.If the insurance company delays or denies benefits owed under the policy in an unreasonable manner or without just cause, it acts in “bad faith,” and the law may permit you, the injured insured, to recover not only the policy benefits, but also emotional distress damages, consequential damages, attorneys’ fees, pre-judgment interest and punitive damages.
    Thanks,
    Bad Faith Insurance Claim Attorney

    ReplyDelete

Post a Comment

Popular posts from this blog

Maritime Law--U.S. Crewmember Required to Arbitrate Claims Applying Norwegian Law

In Alberts v. Royal Caribbean Cruises, Ltd., No. 15-14775 (11th Cir. Aug. 23, 2016), the U.S. Court of Appeals for the Eleventh Circuit held that a U.S. citizen, working aboard a Royal Caribbean cruise ship is required to arbitrate his claims against Royal Caribbean.
Plaintiff, a United States citizen, worked as the lead trumpeter on a passenger Royal Caribbean cruise ship. The ship is a Bahamian flagged vessel with a home port in Fort Lauderdale, Florida. Royal Caribbean, the operator of the vessel, is a Liberian corporation with its principal place of business in Florida. After plaintiff became ill while working for Royal Caribbean, he filed suit alleging unseaworthiness, negligence, negligence under the Jones Act, maintenance and cure, and seaman’s wages and penalties. Royal Caribbean moved to compel arbitration, and the district court granted the motion. This appeal presented an issue of first impression: Whether a seaman’s work in international waters on a cruise ship that calls o…

Maritime Law--Tour Boat Captain Implicated in Tragedy Off Nicaragua

As reported in the Daily Business Review on January 25, 2016, Nicaragua's police, army and navy will investigate the captain of a tourist boat and his assistant for the deaths of 13 Costa Rican passengers killed on January 23rd when the vessel capsized in bad weather. The Reina del Caribe, Spanish for "Caribbean Queen," was carrying 33 people when it went down Saturday amid rain and strong winds as it ferried between the Corn Islands, a popular tourist destination, off Nicaragua's Caribbean coast. The Daily Business Review article can be accessed here=> Daily Business Review article.

The government clarified on the 24th that the boat was carrying 25 Costa Ricans, two Americans, two British citizens, a Brazilian and three Nicaraguans. Previous reports had said there were 32 people on board, including four Americans. All the dead were Costa Ricans.

Nicaragua's naval commander for the southern Caribbean region said the boat's captain was detained because the …

Maritime Law--Lawsuits Filed Over RCCL's "Storm Cruise"

Royal Caribbean Cruises Ltd ("RCCL") faces lawsuits by passengers accusing the company of negligently endangering their lives by letting Anthem of the Seas sail into a February 7, 2016 storm.  One class action lawsuit filed in federal court in Miami specifically states that RCCL should be required to pay punitive damages to passengers on its ship for "knowingly sailing directly into" a strong winter storm with 120-mph winds. It is also alleged that people aboard the ship were "subjected to hours of sheer terror as the gigantic cruise ship was battered by hurricane-force winds and more than 30-foot waves."

The vessel reportedly encountered 100 mph winds and 30-foot waves, and RCCL said the storm was more severe than expected. RCCL later turned the ship around, and it returned to New Jersey on February 10. Anthem of the Seas’ port azipod reportedly burnt through “all four clutches” during the storm. RCCL reported four minor injuries among more than 6,000 p…