in Re: Hallmark County Mutual Insurance Company
2016 Tex. App. LEXIS 12694
| Tex. App. | 2016Background
- Decedent Gerardo Gutierrez died in an explosion while sleeping in a tractor-trailer; his estate obtained a >$6M judgment against Arca Trucking (insured by Hallmark).
- Hallmark paid Arca’s first-party property claim but denied Arca’s tender for defense on the wrongful-death/ liability claim and later intervened to recover its property payment.
- The estate and assignees (Real Parties in Interest) sued Hallmark alleging breach of duty to defend/settle, bad faith and Insurance Code/DTPA claims.
- During discovery they sought: Hallmark’s intervention pleading, the intervention claim file, communications with Hallmark’s attorney who filed the intervention, and all petitions/complaints in the past ten years against Hallmark for denial of coverage/defense.
- Trial court granted the motion to compel production; Hallmark petitioned for mandamus to vacate that discovery order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Discoverability of other suits (10-year petitions/complaints about denial of coverage/defense) | Needed to show pattern/practice of defense denials and to develop further discovery | Request is overbroad, irrelevant; a fishing expedition not likely to produce probative evidence about duty to defend here | Denial of production was warranted; ordering such broad third-party claim files is an impermissible fishing expedition and an abuse of discretion |
| Discoverability of Hallmark’s intervention documents and communications re: intervention | Relevant to Hallmark’s handling and could show related conduct | Intervention related to a first-party property claim distinct from liability/duty-to-defend; documents/testimony irrelevant | Documents and depo testimony about the intervention are not probative of the duty-to-defend issue and are not discoverable; trial court abused discretion |
| Privilege concerns over communications with counsel about intervention | (Real Parties did not primarily press privilege) | Hallmark asserted privilege over communications with counsel if otherwise implicated | Court found it unnecessary to reach privilege issue after concluding the materials are irrelevant |
| Adequacy of appeal as a remedy for erroneous discovery order | Real Parties would argue discovery orders reviewable on appeal | Hallmark argued mandamus necessary because compelled production of irrelevant, burdensome materials causes undue harm | Mandamus appropriate: no adequate remedy on appeal when trial court compels patently irrelevant, overbroad discovery (particularly 10-year sweep) |
Key Cases Cited
- In re National Lloyds Insurance Company, 449 S.W.3d 486 (Tex. 2014) (discovery of unrelated claim files to show differential treatment is an impermissible fishing expedition)
- In re CSX Corp., 124 S.W.3d 149 (Tex. 2003) (scope of discovery broad but trial court must impose reasonable limits; abuse of discretion to order overly broad discovery)
- Texaco, Inc. v. Sanderson, 898 S.W.2d 813 (Tex. 1995) (discovery may not be used as a fishing expedition)
- In re Olshan Foundation Repair Co., LLC, 328 S.W.3d 883 (Tex. 2010) (abuse of discretion occurs when trial court fails to correctly analyze or apply law)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (trial court has no discretion in determining what the law is)
- In re Deere & Co., 299 S.W.3d 819 (Tex. 2009) (mandamus appropriate when trial court compels overly broad or irrelevant discovery)