42
Fla. L. Weekly D2591aTop of Form

Torts
— Legal malpractice — Discovery — Attorney-client privilege — Malpractice
exception — Insurance — Malpractice action by insurance company against its
former lawyer — Malpractice exception to attorney-client privilege applies
only to communications between client and lawyer being sued — Malpractice
exception does not compel a lawyer’s former client to disclose confidential
information with that client’s other lawyers simply because such information
may be relevant to the former lawyer’s defense of the client’s malpractice case
against the lawyer — While the insured is the attorney’s client when an
attorney is hired by an insurance company to represent an insured in a
liability case, the communications between the insurer and the lawyer hired to
protect the insured’s interests are protected by attorney-client privilege because
the insurer and insured share a common interest in the outcome of the case —
Insurer’s fiduciary obligation to its insured, and the common interests of the
insured and insurer, continue even after the insured notifies the insurer of a
potential bad faith claim — Insurer’s communications with both its own lawyers
and with the lawyer insurer hired to represent its insured are protected by
attorney-client privilege, and the malpractice exception is inapplicable

UNITED SERVICES AUTOMOBILE
ASSOCIATION, et al., Petitioners, v. LAW OFFICES OF HERSSEIN AND HERSSEIN,
P.A., etc., et al., Respondents. 3rd District. Case Nos. 3D17-1457, 3D17-1500
& 3D17-1527. L.T. Case No. 15-15825. December 13, 2017. 3D17-1457 &
3D17-1500: Writs of Certiorari to the Circuit Court for Miami-Dade County,
Beatrice Butchko, Judge. 3D17-1527: An Appeal from the Circuit Court for
Miami-Dade County, Beatrice Butchko, Judge. Counsel: Shutts & Bowen LLP,
and Suzanne Y. Labrit (Tampa), Frank A. Zacherl and Patrick G. Brugger; Law Offices
of Charles M-P George, and Charles M-P George; Wadsworth Law, LLP, and
Christopher W. Wadsworth and Katya H. Rehders, for petitioners. Herssein Law
Group, and Reuven Herssein; Beighley, Myrick, Udell & Lynne, P.A., and
Maury L. Udell, for respondents.

(Before SUAREZ, LAGOA and SCALES,
JJ.)

(SCALES, J.) United Services
Automobile Association (“USAA”), the defendant/counter-plaintiff below, and
non-party the Wadsworth Huott, LLP law firm (“Wadsworth”), each filed a
certiorari petition with this Court seeking to quash trial court discovery
orders compelling petitioners to disclose information protected by Florida’s
attorney-client privilege. We consolidated the petitions, and grant them both
because, under the unique facts of this case, the implied waiver of the
privilege asserted by respondent, Law Offices of Herssein & Herssein, P.A.
(“Herssein”), is inapplicable.

FACTS
AND RELEVANT BACKGROUND

In July 2008, USAA entered into a
legal services contract with Herssein whereby Herssein agreed to defend USAA,
USAA’s affiliates and USAA’s insureds. As relevant here, Herssein agreed to
defend liability claims made against homeowners insured by USAA.1

In 2011, a claimant sustained
personal injuries when the claimant fell after an encounter with dogs owned by
Colleen Brennan, a USAA insured. The claimant made a pre-suit demand for the
$100,000 policy limit of Brennan’s insurance policy. USAA accepted the demand
and tendered its check for the policy limits. Rather than cashing USAA’s
settlement check, the claimant, in March 2013, filed a personal injury action
against Brennan and others in the Palm Beach County Circuit Court (“Claimant’s Case”).
Pursuant to the 2008 legal services contract, USAA appointed Herssein to defend
Brennan in Claimant’s Case.

Herssein did not seek to enforce
USAA’s settlement agreement with the claimant; instead, in May 2013, Herssein
withdrew the pre-suit policy limit tender. During the course of the ensuing
litigation, in October 2013, the claimant served Brennan with a proposal for
settlement, again offering to settle the claimant’s claim for Brennan’s policy
limits. Following Herssein’s advice, Brennan rejected the claimant’s renewed
policy-limit demand, and served the claimant with a $65,000 counter-proposal
for settlement, which the claimant rejected.

In August 2014, the trial court in
Claimant’s Case entered a partial summary judgment for the claimant, finding Brennan
was strictly liable for the claimant’s personal injuries. Sometime later,
Brennan hired a separate lawyer, Stephen Maher, who, on February 23, 2015,
advised USAA in a letter that Brennan would pursue a bad faith action against
USAA, and a malpractice action against Herssein, if Brennan was exposed to a
judgment in Claimant’s Case in excess of Brennan’s $100,000 policy limits.
Noting the ensuing conflict of interest created by Mr. Maher’s February 23,
2015 letter, Herssein immediately withdrew as Brennan’s counsel in Claimant’s
Case.

USAA then appointed Wadsworth to
succeed Herssein in representing Brennan in Claimant’s Case, which went to
mediation on May 19, 2015. At the mediation, USAA was represented by David
Lichter, one of USAA’s in-house lawyers, and outside bad faith counsel, Frank
Zacherl. Wadsworth and Brennan’s own private counsel, Fred Cunningham, also
attended the mediation conference on behalf of Brennan. Claimant’s Case was
settled at this mediation for an amount in excess of USAA’s policy limits.2 Claimant’s Case was dismissed on June
30, 2015.

Shortly after the mediation,
settlement and dismissal of Claimant’s Case, on July 1, 2015, USAA purported to
terminate its legal services agreement with Herssein, and, two weeks later, on
July 13, 2015, Herssein brought the instant lawsuit against USAA in the
Miami-Dade Circuit Court. Herssein generally alleges that USAA violated its
legal services agreement with Herssein by, inter alia, failing to appoint
Herssein to a sufficient number of PIP defense cases. Herssein’s lawsuit seeks
in excess of $20,000,000 in damages.

In February 2017, USAA filed a
counterclaim against Herssein alleging, in one of the counterclaim’s five
counts, that USAA suffered damages as a result of Herssein’s allegedly
negligent handling of Claimant’s Case. On March 7, 2017, Herssein propounded
interrogatories on USAA regarding USAA’s malpractice claim involving Claimant’s
Case, including the following interrogatory relevant here:

INTERROGATORY
NO. 15. Whose advice did USAA take to settle
[Claimaint’s Case] and pay over the insured’s policy limits, if that is what
occurred?

USAA objected to this interrogatory
based on the attorney-client privilege, and Herssein moved to compel USAA to
answer the interrogatory. The trial court held a hearing on Herssein’s motion
on May 23, 2017, and entered an order compelling USAA to answer the
interrogatory.

On March 27, 2017, Herssein served
Wadsworth with a non-party subpoena seeking information related to Wadsworth’s
representation of Brennan in Claimant’s Case. The subpoena sought the following
documents:

1. Any and
all correspondence, emails, notes, documents, or electronic version of any
correspondence, emails, notes, letters, documents by or between any person
including you or your firm and any person or party involved [in Claimant’s
Case], including USAA, of any kind.

2. Any
emails, notes, letters, documents or electronic version of any correspondence,
emails, notes, letters, document[s] regarding Herssein Law Group or Reuven
Herssein from January 2015 to date.

Wadsworth objected to the subpoena
based on the attorney-client privilege and, on May 30, 2017, the trial court
entered an order requiring Wadsworth to produce the documents to the court for
an in camera inspection.3 4

USAA seeks certiorari review of the
trial court’s May 23, 2017 order, and Wadsworth seeks certiorari review of the
trial court’s May 30, 2017 order. We consolidated the two petitions and grant
same.

STANDARD
OF REVIEW

“Certiorari review extends to
discovery orders which depart from the essential requirements of law, cause
material injury to a petitioner throughout the remainder of the proceedings,
and effectively leave no adequate remedy on appeal.” Coyne v. Schwartz,
Gold, Cohen, Zakarin & Kotler, P.A., 715 So. 2d 1021, 1022 (Fla. 4th
DCA 1998). “Orders compelling production of matters claimed to be protected by
the attorney-client privilege . . . present the required potential for
irreparable harm.” Id.

ANALYSIS

1. Florida’s Attorney-Client Privilege and the “Malpractice
Exception”

Florida’s attorney-client privilege
is codified in section 90.502(2) of the Florida Statutes (2017), which provides
that “[a] client has a privilege to refuse to disclose, and to prevent any
other person from disclosing, the contents of confidential communications when
such other person learned of the communications because they were made in the
rendition of legal services to the client.” A “communication” between a lawyer
and a client is “confidential” if the communication is not intended to be
disclosed to third persons. See § 90.502(1)(c), Fla. Stat. (2017).

The “malpractice exception” to the
privilege is codified in section 90.502(4)(c), which provides that “[t]here is
no lawyer-client privilege . . . when . . . [a] communication is relevant to an
issue of breach of duty by the lawyer to the client or by the client to the
lawyer, arising from the lawyer-client relationship.”

2. USAA’s Petition — Case Number
3D17-1457

At first blush, it may seem that
Herssein’s interrogatory seeks only the identity of a USAA lawyer, rather than
any confidential communication between USAA and its lawyer. Generally, such
identity information is not protected by the attorney-client privilege. See
Coffey-Garcia v. S. Miami Hosp., Inc., 194 So. 3d 533, 537-38 (Fla. 3d
DCA 2016) (recognizing that because the lawyer-client privilege set forth in
section 90.502 “protects only communications to and from a lawyer,” the
plaintiff in a malpractice action could be compelled to answer deposition
questions regarding “the names of the attorneys whom she consulted with” in
pursuing her claim). After all, who attended the mediation conference in
Claimant’s Case on behalf of USAA is certainly no secret to the parties; and,
that USAA settled Claimant’s Case is no secret either. But, the wording of the
interrogatory seeks the identity of the lawyer who advised USAA to settle
the case at the mediation. There is no practical difference, then, between
this interrogatory question and asking USAA to divulge the content of the legal
advice each attorney attending the mediation provided to USAA. Plainly, then,
the subject interrogatory seeks confidential communications between USAA and
its lawyers and is protected by the attorney-client privilege. See id.
at 538-39 (finding that while the plaintiff could be compelled to reveal “the
names of the attorneys whom she consulted with” in pursuing a medical
malpractice claim, “the reasons why she sought out legal counsel and any
subsequent counsel” was protected by the attorney-client privilege).

The trial court concluded, however,
that the “malpractice exception” to the privilege applies to the subject
communications and ordered USAA to answer the interrogatory. We find the trial
court erred for the following reasons. The trial court determined that Herssein
was entitled to know who advised USAA to settle Claimant’s Case for an amount
in excess of policy limits at mediation — if that was, in fact, what happened
— as USAA claimed that Herssein committed malpractice by advising Brennan
against settling Claimant’s Case for policy limits. The trial court explained:
“I can’t see how [Herssein can] defend the malpractice case without this
information.”

Nevertheless, while the contents of
the confidential communications between USAA and its mediation counsel may have
some relevancy regarding whether Herssein’s settlement advice breached a legal
duty owed to USAA and its insured5, we are persuaded by our sister
court’s rationale that the “malpractice exception” applies only to
communications between the client and the lawyer being sued. See Coyne,
715 So. 2d at 1022-23. Just as the Fourth District did in Coyne, we
decline to extend the “malpractice exception” to compel a lawyer’s former
client to disclose confidential communications with that client’s other lawyers
simply because such information may be relevant to the former lawyer’s defense
of the client’s malpractice case against the lawyer. Id. at 1023; see
also Coates v. Akerman, Senterfitt & Eidson, P.A., 940 So. 2d
504, 509 (Fla. 2d DCA 2006) (citing Coyne, stating “[t]he possibility
that the disputed documents may be relevant to or may assist the lawyers in
their defense or in their third-party claims, or may perhaps assist in the
lawyer’s efforts to impeach the clients, does not create a waiver of the
privilege”).

We, therefore, grant USAA’s
petition, and quash the trial court’s May 23, 2017 order requiring USAA to
answer interrogatory 15.

3. Wadsworth’s Petition — Case
Number 3D17-15006

As mentioned above, USAA appointed
Wadsworth to represent Brennan when Herssein withdrew from representing Brennan
in Claimant’s Case. After USAA sued Herssein for Herssein’s alleged malpractice
in representing Brennan, Herssein served Wadsworth with a non-party subpoena
seeking communications regarding Wadsworth’s representation of Brennan in
Claimant’s Case. Again, relying on the “malpractice exception,” the trial court
overruled Wadsworth’s objections and compelled Wadsworth to produce the
documents — except for any communications between Wadsworth and Brennan — for
an in camera inspection by the trial court.

As we did with USAA’s petition, we
find here that the “malpractice exception” is applicable only to communications
between the client and the lawyer being sued for malpractice. See Coyne,
715 So. 2d at 1022-23. The “malpractice exception,” therefore, is inapplicable
to communications between USAA and Wadsworth.

Interestingly, though, Herssein
suggests that Wadsworth and USAA did not have an attorney-client relationship.
Herssein argues that Wadsworth’s actual client in Claimant’s Case was not USAA,
but rather, only Brennan. Herssein additionally argues that once Brennan’s
private counsel, Mr. Maher, notified USAA of Brennan’s intention to sue USAA
for bad faith on February 23, 2015, USAA and Brennan’s interests were no longer
aligned so that any imputed attorney-client relationship between USAA and
Wadsworth was destroyed. Therefore, Herssein argues, any communications between
Wadsworth and USAA are not protected by the attorney-client privilege.

These arguments are unpersuasive.
While the insured is the attorney’s client when an attorney is hired by an
insurance company to represent an insured in a liability case,7 it is well settled that
communications between an insurer and the lawyer hired by the insurer to
protect the insured’s interests are protected by the attorney-client privilege
because the insurer and insured share a common interest in the outcome of the
case. See Liberty Mut. Fire Ins. Co. v. Kaufman, 885 So. 2d 905,
908 (Fla. 3d DCA 2004) (“[W]hen an insurer accepts the defense obligations of
its insured, certain interests of the insured and the insurer essentially
merge.”). Similarly, an insurer’s fiduciary obligation to its insured, and the
common interests of the insured and insurer, continue even after the insured
notifies the insurer of a potential bad faith claim. See id. at
908, 909 (stating that “a liability insurer has a continuing duty to use the
degree of care and diligence a person would exercise in the management of his
or own business when it undertakes to defend it insured,” finding that where “
‘[t]he relationship between [the parties] evolved from fiduciary to
adversarial, or a combination of the two, with no clear line of demarcation
separating them,’ ” that the attorney-client privilege still applied (quoting Fla.
Sheriff’s Self-Insurance Fund v. Escambia Cty., 585 So. 2d 461, 463 (Fla.
1st DCA 1991))); Cone v. Culverhouse, 687 So. 2d 888, 893 (Fla. 2d DCA
1997) (recognizing “that ‘common interest’ can exist, even if some conflict is
present or stands between the clients”).

Indeed, notwithstanding Mr. Maher’s
February 23, 2105 bad faith letter to USAA, at all times relevant, the
interests of both USAA and Brennan were common and aligned in defending against
Claimant’s Case. Thus, the confidential communications between USAA and
Wadsworth remain protected by the attorney-client privilege from discovery by
Herssein. See Progressive Express Ins. Co. v. Scoma, 975 So. 2d
461, 467 (Fla. 2d DCA 2007) (“[T]he confidential communications between the
insured, the insurer, and any counsel representing them regarding the matter of
common interest are protected by the attorney-client privilege from discovery
by third parties.”).

We, therefore, grant Wadsworth’s
petition, and quash the trial court’s May 30, 2017 order.

CONCLUSION

In sum, USAA’s communications with
both of its own lawyers, and with Wadsworth, the lawyer USAA hired to represent
Brennan, are protected by the attorney-client privilege, and, given this case’s
unique situation, the “malpractice exception” is inapplicable to those
communications.

We grant both petitions, quash the
challenged orders, and dismiss as moot, Wadsworth’s appeal.

__________________

1While not relevant to the issues
before us, we note that the agreement between USAA and Herssein is memorialized
by several documents, various extensions, amendments, et cetera.

2The settlement amount is
confidential.

3The hearing transcripts reflect that
the trial court had already determined that the requested communications were
not privileged, but ordered the in camera inspection to prevent the disclosure
of irrelevant material.

4The trial court’s order expressly
states that Wadsworth is not required to produce any communications between
Wadsworth and Brennan.

5Because we find the “malpractice
exception” inapplicable in this case, we express no opinion on the relevancy of
such communications.

6Because Wadsworth is a non-party to
the lawsuit between USAA and Herssein, the trial court’s May 30, 2017 order
compelling Wadsworth to respond to Herssein’s non-party subpoena is, indeed, a
final order as to Wadsworth. See Fla. House of Representatives v. Expedia,
Inc., 85 So. 3d 517, 520 (Fla. 1st DCA 2012) (finding that an order
compelling discovery by third parties was final because it “adjudicates the
legal rights of nonparties and because it otherwise meets the general test of
finality”). Hence, in addition to filing the instant petition for writ of
certiorari, Wadsworth also filed an appeal of the trial court’s order. We
assigned case number 3D17-1527 to this appeal. See Fla. R. App. P.
9.030(b)(1)(A); Office of the Public Defender v. Lakicevic, 215 So. 3d
112 (Fla. 3d DCA 2017) (treating an order denying the public defender’s motion
for a protective order from a third-party subpoena duces tecum for deposition
as a final order reviewable on appeal, rather than via a petition for writ of
certiorari). We consolidated Wadsworth’s appeal with the two petitions, and,
because we are quashing the subject order, we dismiss, as moot, Wadsworth’s
appeal in case number 3D17-1527. We need not, and therefore do not, reach the
perplexing issue of whether it is a better practice for a non-party to seek
appellate, rather than certiorari, review of a final discovery order.

7see Marlin v. State Farm Auto. Ins. Co., 761 So. 2d 380,
381(Fla. 4th DCA 2000) (holding that where the insurer retains an attorney to
represent the insured pursuant to an insurance policy, the attorney “acts in
the capacity of an independent contractor” for the insured)

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