34 Fla. L. Weekly D1023a

NOT FINAL VERSION OF OPINION
Subsequent Changes at 34 Fla. L. Weekly D1278a

Insurance — Uninsured motorist — Discovery — Order compelling production of insurer’s claim file constituted departure from essential requirements of law where extent of damages incurred by insured as result of underlying accident had not been fully determined, and bad faith claim had not fully accrued — Bad faith claim is premature where there has been no determination of damages claimed by insured — Offer and acceptance of policy limits under uninsured motorist policy did not determine the amount of damages that must be established as a condition precedent to litigating the potential bad faith claim

WITHDRAWN at 34 Fla. L. Weekly 1278a

ALLSTATE INDEMNITY INSURANCE COMPANY, Petitioner, v. KATHLEEN NELSON, Respondent. 2nd District. Case No. 2D08-4584. Opinion filed May 22, 2009. Petition for Writ of Certiorari to the Circuit Court for Hillsborough County; Sam D. Pendino, Judge. Counsel: Charles W. Hall and Mark D. Tinker of Banker Lopez Gassler, P.A., St. Petersburg, for Petitioner. Susan B. Morrison of Law Offices of Susan B. Morrison, P.A., Tampa; Mac A. Greco, Jr. and Mac A. Greco, III of Mac A. Greco, Jr., P.A., Tampa; Guy W. Spicola of Law Offices of Guy W. Spicola, Tampa; and Michael S. Rywant of Rywant, Alvarez, Jones, Russo & Guyton, P.A., Tampa, for Respondent.

(DAVIS, Judge.) Allstate Indemnity Insurance Company seeks certiorari review of the trial court’s order granting Kathleen Nelson’s motion to compel production of the insurance company’s claim file. The discovery order was stayed pending this court’s review. Because the extent of the damages incurred by Nelson as a result of the underlying accident have not been finally determined and the bad faith claim has not fully accrued, we grant Allstate’s petition for writ of certiorari and quash the order granting the motion to compel.Underlying Facts

Nelson suffered serious injuries as a result of an accident with a third party. Through negotiation, she sought and obtained a settlement agreement for policy limits from Allstate, her uninsured motorist carrier. The policy limits of $250,000 were tendered to Nelson by Allstate prior to any litigation. However, by separate letter, Allstate also requested that Nelson execute a release that would absolve Allstate of any further claims, including bad faith.

Nelson then filed a three-count complaint against Allstate. In count one, Nelson asked for enforcement of the settlement agreement, which she maintained did not include executing a release of any future claims; in count two, Nelson sought more than $15,000 in excess damages resulting from the accident; and in count three, she alleged bad faith pursuant to section 624.155(1)(b), Florida Statutes (2004). In prosecuting her bad faith claim, Nelson made a discovery demand for Allstate’s claim file.

Prior to trial, the trial court granted Nelson’s motion for summary judgment as to count one, finding that the settlement agreement did not include the condition that Nelson execute a release extinguishing her bad faith claim. The trial court also denied Allstate’s motion to dismiss the bad faith claim, rejecting its argument that the claim was premature because the claim for excess damages in count two was still pending. Additionally, the trial court overruled Allstate’s objection to the request for production of its claim file and ordered that Allstate produce the file. Allstate now seeks certiorari review of the order requiring production.Scope of Review

The quashing of a discovery order by a writ of certiorari is appropriate where the order departs from the essential requirements of law causing material injury to the petitioner and there is no adequate remedy on appeal. State Farm Mut. Auto. Ins. Co. v. O’Hearn, 975 So. 2d 633, 635 (Fla. 2d DCA 2008). In order to determine whether a trial court erred in ordering discovery of a claim file, district courts must consider the nature of the claim between the parties, the issue on which discovery is sought, and the cause of action involved. See Allstate Ins. Co. v. Am. S. Home Ins. Co., 680 So. 2d 1114 (Fla. 1st DCA 1996). In this case, Allstate argues that the bad faith claim is premature and that the trial court departed from the essential requirements of the law by requiring the production of the file as discovery in a premature bad faith claim. Allstate further maintains that it will suffer irreparable harm by disclosing privileged information from its claim file to Nelson while still in the process of litigating, pursuant to count two of Nelson’s complaint, the amount of damages she incurred from the accident.

Normally, the trial court’s denial of Allstate’s motion to dismiss the bad faith claim would not be subject to our review until the underlying litigation is resolved. However, this court previously has held that during certiorari review of an order requiring production of a claim file, in order to determine whether the trial court departed from the essential requirements of law and whether the insured can show irreparable harm, we must necessarily review the trial court’s ruling on the motion to dismiss. See O’Hearn, 975 So. 2d 636-37. Regardless of whether a trial court has incorrectly denied a motion to dismiss a premature bad faith claim or whether such denial is ripe for review, the fact that the action actually is premature remains a viable basis on which to establish a privilege to prevent disclosure of insurance claims files. GEICO Gen. Ins. Co. v. Hoy, 927 So. 2d 122, 126 (Fla. 2d DCA 2006) (“[W]hen a claimant who has obtained a determination of coverage seeks an additional benefit amount in conjunction with a bad faith suit against the insurer, ‘discovery of the insurer’s claim file is not permissible.’ ”) (quoting Am. Bankers Ins. Co. of Fla. v. Wheeler, 711 So. 2d 1347, 1348 (Fla. 5th DCA 1998)).Ripeness of Bad Faith Claims

A bad faith claim may not proceed until there is a determination of both liability and the extent of the damages claimed by the injured party. State Farm Mut. Auto. Ins. Co. v. Brewer, 940 So. 2d 1284, 1286 (Fla. 5th DCA 2006); see also Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289, 1291 (Fla. 1991) (“Absent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff’s damages, a cause of action cannot exist for a bad faith failure to settle.”). Such a determination need not be limited to a jury’s verdict or an arbitrator’s determination. That is, a settlement by the parties without litigation may determine liability and establish the amount of damages, thereby providing the requisites necessary to prosecute a bad faith claim. Brookins v. Goodson, 640 So. 2d 110 (Fla. 4th DCA 1994), disapproved of on other grounds, State Farm Mut. Auto Ins. Co. v. Laforet, 658 So. 2d 55, 62 (Fla. 1995).

In the instant case, liability is not at issue. Whether this bad faith claim is premature depends only on whether the offer and acceptance of the policy limits under the uninsured motorist policy is a sufficient determination of the amount of damages that must be established as a condition precedent to litigating the potential bad faith claim. If Allstate is correct and the bad faith claim has yet to accrue, then the order to produce should be quashed. However, if Nelson is correct that the offer of the $250,000 policy limits determined the liability and damages requisite to file the bad faith action but that she also may pursue additional damages¹ along with the bad faith claim, the request for a writ of certiorari should be denied.Analysis In resolving this question, we start by recognizing that count two of Nelson’s complaint, wherein she is seeking damages related to her injuries in excess of the amount of the settlement, is still pending. At the hearing on the motions, the trial court specifically declined to establish the $250,000 policy limit as the “value” of damages. Counsel for Allstate argued that to proceed with the bad faith claim would mean that Nelson’s damages on the claim against the uninsured third party would be limited to $250,000. The trial court, however, responded: “Your proposal, if Plaintiff will agree that the value of her injury claim has been determined by her acceptance of Allstate’s $250,000, you’re interjecting another step. Don’t do that. I don’t — I don’t make that determination.” Accordingly, the facts presented to this court for review show that the total amount of damages related to the injuries received in the accident have not been fully determined.

Nelson argues that this case is controlled by Brookins, 640 So. 2d 110, which appears to interpret the holding in Blanchard somewhat broadly. In that case, the trial court dismissed the first-party claim for bad faith “because the underlying litigation . . . was settled without a trial.” Brookins, 640 So. 2d at 111. The court pointed to the Florida Supreme Court’s decision in Imhof v. Nationwide Mutual Insurance Co., 643 So. 2d 617 (Fla. 1994), which repeated the principle that to plead a first-party bad faith claim, one must allege that there has been a determination of damages. Brookins, 640 So. 2d at 112. However, the Fourth District observed that Imhof did not require that the damages determination be made by litigation, that the pleadings allege a specific amount of damages, or even that damages were in excess of the policy limits. Id. Thus, according to Nelson, Brookins stands for the proposition that upon the payment of policy limits, the requisite determination of damages has been made, even though she is still entitled to seek excess damages related to the accident.

We do not agree. Subsequent to the Brookins decision, the Florida Supreme Court reiterated the necessity of determining the amount of the damages related to an accident prior to prosecuting a bad faith claim. See Vest v. Travelers Ins. Co., 753 So. 2d 1270 (Fla. 2000). After discussing Blanchard and Brookins, the Vest court “continue[d] to hold in accord with Blanchard that bringing a cause of action in court for violation of section 624.155(1)(b)1 is premature until there is a determination of liability and extent of the damages owed on the first party insurance contract.” Id. at 1276. Under Vest, the final determination of the amount of damages related to the accident that Nelson might be entitled to as a part of a bad faith recovery has not been fully determined, and Nelson’s bad faith claim is therefore premature.Conclusion

Because Nelson’s claim for further damages still exists, the bad faith claim is premature and the trial court departed from the essential requirements of law by granting Nelson’s motion to compel production. See O’Hearn, 975 So. 2d at 637. While there is no doubt that Allstate has paid the policy limits in the instant case, the pendency of claim two of the complaint leaves a remaining damages claim stemming from the accident against which Allstate must still potentially defend itself. As such, a privilege exists at least until such time as liability and damages are fully resolved. Under O’Hearn, requiring Allstate to produce the claim file in light of this privilege is not an error that can be remedied on appeal. We accordingly grant the petition for writ of certiorari and quash the order granting the motion for production.

Granted. (SILBERMAN, J., and DAKAN, STEPHEN L., ASSOCIATE SENIOR JUDGE, Concur.)

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¹In count two, Nelson seeks to establish additional damages related to injuries resulting from the accident, as well as costs related to the mishandling of the uninsured motorist coverage claim as alleged in count three. On appeal, although Nelson’s argument rests on her suggestion that the coverage issues are fully resolved, she also points to section 627.727(10), Florida Statutes (2004), as allowing damages related to the accident in excess of the policy limits to be included in damages awarded for bad faith. Accordingly, Nelson admits that Allstate’s total potential exposure for damages related to the accident is still the subject of the litigation in count two of her complaint.