VICTOR

v.

SCOTTSDALE INSURANCE COMPANY

ORDER DENYING DEFENDANT’S MOTION TO STAY AND/OR BIFURCATE

PATTERN AND PRACTICE DISCOVERY¹

THIS MATTER came before the Court upon Defendant’s Motion to Stay and/or Bifurcate Pattern and Practice Discovery [DE 31] (“Motion”). I have reviewed the Motion, the Response [DE 33] and Reply [DE 36] thereto, and all other pertinent portions of the record.

A. Background

In this action, Plaintiffs bring a statutory bad faith claim against Defendant pursuant to sections 624.155 and 626.9541 of the Florida Statutes. In the Amended Complaint [DE 20], in addition to alleging that Defendant acted in bad faith in connection with their individual claim, Plaintiffs allege that Defendant’s actions related to Plaintiffs’ individual claim are indicative of Defendant’s general business practices. [DE 20] ¶ 57. Plaintiffs previously pursued a breach of contract claim against Defendant, were issued an appraisal award, and obtained confirmation of that appraisal award and a final judgment in their favor in state court.

Therefore, as the District

Defendant acted in bad faith in connection with Plaintiffs’ individual claim. If such discovery is not stayed, Defendant contends that Plaintiffs are required to post the costs of discovery under section 624.155 of the Florida Statutes.

B. Relevance of Discovery Regarding Defendant’s General Business Practices As discussed in this section, the Court finds, as a general matter, that Defendant’s general business practices – related to the types of acts alleged in the Amended Complaint² – are relevant for purposes of discovery. Defendant begins the argument section of its Motion by stating that “Plaintiffs have not established a viable cause of action pursuant to section 624.155, Florida Statutes. It necessarily follows then, that as of the date of this Motion, Plaintiffs have not shown that they are entitled to discovery into Scottsdale’s general business practices.” Motion at 5. This argument, however, is unavailing given that the District Court has already denied Defendant’s motion to dismiss the Amended Complaint. See [DE 25]. In fact, the District Court did so prior to Defendant’s filing of the instant Motion, and in its Order [DE 25], the District Court specifically found that the Amended Complaint “satisfies the requirements of Rule 8(a)(2) of the Federal Rules of Civil Procedure” and “properly asserts a claim for bad faith under section 626.9541 of the Florida Statutes with the requisite specificity.”

§ 624.155(8), Fla. Stat.⁵ Thus, in order to obtain an award of punitive damages, in addition to satisfying subsection (a), (b), or (c), Plaintiffs will be required to prove that “the acts giving rise to the violation[s] [in this case] occur with such frequency as to indicate a general business practice” of Defendant. Id. As such, Defendant’s general business practices are relevant here. In arguing otherwise, Defendant attaches three orders (from cases in the Middle District of Florida) to its Motion, asserting that the type of relief Defendant seeks in the Motion was granted in those cases.

However, in the first order attached to the Motion, the court only bifurcated the issues – (1) bad faith in the individual plaintiff’s underlying case and (2) defendant’s general business practices – for purposes of trial, not discovery. See [DE 31-1].6 The Court did not, as Defendant contends, “reject[] allowing such premature discovery” regarding general business practices. Motion at 7 (emphasis added). In fact, earlier orders in the case reveal that the court (“Plaintiffs have asserted a claim for damages under section 624.155. To the extent that Plaintiffs seek any pattern and practice discovery to support Plaintiffs’ claim for extracontractual or punitive damages . . . .”). Since Defendant’s Motion treats the Amended Complaint as a pleading that includes a prayer for punitive damages, I do the same.

3 (M.D. Fla. Nov.¹, 2013); see also First Coast Energy, L.L.P. v. Mid-Continent Cas. Co., No. 3:12-CV-281-J-32MCR, Dkt. No. 54 (M.D. Fla. May 15, 2013). While Defendant’s characterization of the first order attached to its Motion is partially inaccurate (for the reasons noted in the preceding paragraph), Defendant is correct that the second and third cases it has identified effectively stayed or bifurcated discovery regarding general business practices, requiring the parties to proceed with discovery regarding the individual bad faith claims of the plaintiffs before turning to discovery regarding the insurer’s general business practices.

Nonetheless, the second order and third order attached to the Motion provide limited explanation regarding this specific issue. See [DE 31-2], [DE 31-3]. Defendant, however, emphasizes the following portion of the third order:

Material to determining bad faith is whether the insurer acted with reasonable diligence and ordinary care with regard to the insured’s interest. Thus, the manner in which the Defendant may or may not have handled other claims is not relevant to this case because each claim is a factual matter that must be handled in [sic] case by case method.

[DE 31-3] at 7-8. Although I agree with Defendant that its general business practices would generally not be relevant to a bad faith claim standing alone, the fact that Plaintiffs seek punitive damages and that they have included allegations in the Amended Complaint putting Defendant’s general business practices at issue make Defendant’s general business practices relevant here.⁷ I am not alone in so finding; other persuasive case law, including cases in this district, have similarly found discovery regarding an insurer’s general business practices to be relevant in this context. See Woolbright v. GEICO Gen. Ins., Co., No. 12-21291-CV, 2012 WL 12864931, at *9-10 (S.D. Fla. Nov. 16, 2012); Sandalwood Ests. Homeowner’s Ass’n, Inc. v. Empire Indem. Ins. Co., No. 09- 80787-CIV, 2010 WL 11505988, at *1-2 (S.D. Fla. Oct. 20, 2010); Hurley Mayfair House Ass’n, Inc. v. QBE Ins. Corp., No. 09-80359-CIV, 2010 WL 472827, at *4 & n.4 (S.D. Fla. Feb.⁵, 2010).

With the foregoing in mind, this Order should not be construed to permit Plaintiffs to pursue general business practices discovery without limitation. After all, the rules place other limitations, beyond relevance, on discovery (with the concept of proportionality being of paramount importance).

See Fed. R. Civ. P. 26(b); see also First Coast Energy, L.L.P., 2013 WL 5928970, at *2-3 (placing certain limits on discovery regarding general business practices). At this time, all that the Court is ordering is that it will not impose a blanket prohibition or stay on general business practices discovery.

C. Whether Plaintiffs Must Post the Costs of Discovery Before Obtaining Discovery Regarding Defendant’s General Business Practices

The punitive damages subsection of section 624.155 provides that “[a]ny person who pursues a claim under this subsection shall post in advance the costs of discovery” and that “[s]uch costs shall be awarded to the authorized insurer if no punitive damages are awarded to the plaintiff.” § 624.155(8). Defendant contends that the foregoing portion of section 624.155 applies

I find the rationale, and the analysis of the Erie⁸ factors, in First Coast Energy to be persuasive. Succinctly, the court explained in that case, inter alia, that the statute is not in direct collision with the Federal Rules of Civil Procedure, and that although the statute is procedural in part, it is also substantive in part, especially (and significantly) insofar as it requires a plaintiff to forfeit the cost bond the plaintiff is required to post if the plaintiff is unsuccessful in recovering punitive damages. See First Coast Energy, L.L.P., 286 F.R.D. at 632-35. In addition to arguing that the cost bond requirement applies, Defendant states that Plaintiffs should not be permitted to serve general business practices discovery at this time given that Plaintiffs have not posted a discovery bond. Although I agree with Defendant that the bond requirement applies in this case, I do not agree with Defendant’s argument that Plaintiffs should be prohibited from serving general business practices discovery until they post a bond. That is because posting a bond now would be premature. An appropriate bond can only be determined after Plaintiffs serve their requests and after Defendant determines the costs associated with

D. Conclusion

For the foregoing reasons, it is ORDERED and ADJUDGED that the Motion [DE 31] is DENIED.’ DONE AND ORDERED in Fort Lauderdale, Florida this 18th day of April 2023.

United States Magistrate Judge

Defendant’s request that Plaintiffs be required to post a discovery bond is denied without prejudice.