The vast majority of construction disputes do not begin with the filing of formal litigation. In fact, Florida Statute § 558.004 protects against any “first-notice” lawsuits by requiring that notice and an opportunity to cure any alleged defect be given prior to the pursuit of formal litigation. Of course, as part of any pre-suit investigation, a conscientious insurance carrier or claims handler will generate material for inclusion within a formal claims file, including impressions of the validity of the claim, possible liability and damages exposure, and resolution strategy.
In Zirkelback Construction, Inc. v. Rajan, 37 Fla. L. Weekly D1793a, Florida’s Second District Court of Appeals has again expressed that such claims file materials, so long as litigation was “foreseeable” when they were prepared – are generally protected by the “work product” privilege, and that this represents the “majority view” within this State. In Zirkelback, an insurance carrier’s multi-year inspection and evaluation of a design/construction defect claim was held to be protected by this privilege, and that the production of the claims file could not be compelled by the trial court, absent a specific evidentiary showing of need by the claimant. Ostensibly, this would allow a carrier to validly claim privilege over all file material prepared after notice of a claim or potential claim was submitted.
However, the court also recognized that Florida’s Fourth District Court of Appeals – covering Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee counties – follows a substantially different standard. Specifically, the Fourth DCA holds that, in order for claims file materials to be considered privileged work-product, the threat of litigation must be “substantial and imminent.” See e.g. Liberty Mut. Fire Ins. Co. v. Bennett, 883 So.2d 373, 374 (Fla. 4th DCA 2004). While the Fourth DCA does not require that actual litigation be pending in order to protect materials as “work-product,” it does require an actual, present and imminent threat of litigation. See id. While not lending itself to a bright-line rule, this is clearly less protection than offered throughout the rest ofFlorida. Accordingly, a carrier investigating a pre-suit claim within the Fourth DCA does run a somewhat greater risk of having a portion of its claims file forcibly produced.
Luckily, a relatively simple solution does present itself. If counsel is retained at an early stage and serves as the coordinator of investigative activity and as a conduit of information, the separate (and more stringent) attorney-client privilege can be used to protect communications made even before the likelihood of litigation is “substantial and imminent.” Accordingly, it would behoove any carrier that wishes to ensure maximum protection of its pre-suit investigative material – in construction or any other type of claim – to timely identify and retain counsel to evaluate that claim. The alternative can be the forced disclosure of highly sensitive and prejudicial documents.