2023 Ohio 3921
Ohio2023Background
- Scott Fetzer (successor to Indiana company Kingston) faced EPA enforcement and a Michigan Superfund remediation and sought coverage under historical liability policies allegedly issued to Kingston, including four policies tied to Travelers’ predecessor.
- Scott Fetzer sued Travelers (and others) for declaratory relief, breach of contract, and insurer bad faith for failure to provide coverage or a final coverage determination.
- Travelers asked to bifurcate and stay discovery on the bad-faith claim; the trial court bifurcated but did not stay discovery and ordered in-camera review of disputed documents claimed as attorney-client privileged or work product.
- Travelers argued choice-of-law required applying Indiana or Michigan law (which would protect the asserted privileges); Scott Fetzer argued Ohio law applies and that claim file materials probative of bad faith are not privileged under Ohio precedent.
- An administrative judge and the Eighth District applied Ohio law under Restatement (Second) of Conflict of Laws §145 (tort most-significant-relationship test) and ordered production/redaction as appropriate; the Ohio Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Scott Fetzer) | Defendant's Argument (Travelers) | Held |
|---|---|---|---|
| Which choice-of-law rule governs an insurer bad-faith claim? | Bad-faith is a tort; apply Restatement §145 (most-significant-relationship to the tort) — Ohio law applies. | Bad-faith arises from the insurance contract; apply Restatement §193 (insurance-contract choice-of-law) — Indiana/Michigan law should govern. | §145 governs: bad-faith claims sound in tort and §145 controls choice-of-law; Ohio law applies to the discovery dispute. |
| Are insurer claim-file/attorney-client materials protected from discovery in a bad-faith suit? | Under Ohio law (Boone/Hoskins), claim-file materials probative of bad faith are not privileged and must be produced. | Privilege under Indiana/Michigan law may bar production; choice-of-law dispute matters. | Applying Ohio law, materials probative of good/ bad faith are not protected; some documents must be produced (with limited redactions). |
Key Cases Cited
- Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272 (Ohio 1983) (recognizes insurer’s duty of good faith; bad-faith cause of action sounds in tort)
- Ohayon v. Safeco Ins. Co. of Illinois, 91 Ohio St.3d 474 (Ohio 2001) (distinguishes contract vs tort for choice-of-law; adopts Restatement contract provisions)
- Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506 (Ohio 2008) (reaffirms insurer bad faith as actionable tort)
- Boone v. Vanliner Ins. Co., 91 Ohio St.3d 209 (Ohio 2001) (claims-file materials showing insurer’s lack of good faith are not privileged)
- Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339 (Ohio 1984) (adopted Restatement §§6, 145 for tort choice-of-law inquiries)
- Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St.3d 453 (Ohio 2018) (every contract imposes an implied duty of good faith and fair dealing)