"Custom in law is the established pattern of behavior that can be objectively verified within a particular social setting.” Wikipedia. Recently, the Federal Middle District Court in Florida decided a discovery dispute between a condominium association and its insurer, Nationwide, in the case Pepperwood of Naples Condo. Ass’n., Inc. v. Nationwide Mut. Fire Ins. Co., No. 2:10-cv-753, 2011 WL 3841557 (M.D. Fla. August 28, 2011). Discovery disputes arise when one party asks another to produce information, but the other party coes not comply. It is common for insurers to refuse to produce claim file materials, claiming the documents are protected by certain privileges and citing other objections. The Pepperwood case involved a situation where the condominium association sued Nationwide for bad faith damages for not promptly paying all insurance proceeds from the 2004 hurricane damages and forcing it to incur additional expenses in the claim presentation through an appraisal process.
The customary practices regarding objections to discovery can vary greatly in federal and state courts in Florida. During the discovery phase of the Pepperwood case, the condominium association served a Request for Production on Nationwide containing the following request:
Request No. 1: A copy of any and all civil remedy notices (“CRN”) and related correspondence, including Nationwide’s responses to the CRN, regarding similarly situated policy holders as Pepperwood from January 2004 until the present.
Nationwide objected because it believed the request was overbroad, vague with regard to the terms “similarly situated policyholders,” harassing, irrelevant and not likely to lead to the discovery of admissible evidence. Despite the objections to the Request, Nationwide additionally stated:
Subject to these objections and without waiver of the same, this request seeks information that is publicly available online from the Florida Department of Financial Services [FDFS], and can be obtained from that source as easily by Plaintiff as by the Defendant.
Nationwide reserved its objections to the Request, yet answered it anyway. The Court stated that “if an objection to a discovery request is raised, and then the question is answered ‘subject to’ or ‘without waiving’ the objection, this court is reluctant to sustain the objection.” The Court stated that the Federal Rules of Civil Procedure do not give a party the option of sustaining objections yet filing answers to requests. In the order, the judge stated that such objections are a waste of the time and resources of both parties and the court and that answering subject to an objection “lacks any rational basis.”
The Court ordered Nationwide to respond to the Request and provide the information related to Civil Remedy Notices of similarly situated policyholders because the information is relevant to the allegations in the complaint that Nationwide “as a general business practice, intentionally and/or in such reckless disregard for the rights of the insureds, utilizes unfair claims handling practices for financial gain and profit.” The Court was not persuaded by Nationwide’s objection that the information requested was available as public information through the Department of Financial Services’ civil remedy filings on its website. Only the civil remedy notice form is available online, and the other information requested is within Nationwide’s control and unavailable to the association.
It should be noted that the opinion is by a magistrate judge who interpreted the Federal Rules of Civil Procedure. Magistrate judges typically decide discovery disputes between parties in federal court in Florida. Some federal judges in Florida, and likely other jurisdictions, issue detailed discovery orders that prohibit the parties from objecting to discovery requests on this exact basis, and they state that parties may be sanctioned for such behavior. As reflected by this order, what may be a common objection in Florida state courts can be disfavored by our federal courts. Parties may find themselves on thin ice if they assume that the same customary practices apply.