State Ex Rel. Brison v. Kaufman

and, therefore, void as of West law, in the affirmative we answer matter Court of question of the Circuit the certified County, in the case of Delaware

Putnam Martin, Corp. Liquidation v. No.

CWC any assign Having

30985. determined prohibit malpractice

ment of

ed, validity should not determine courts case-by-case assignments on basis. such

Therefore, ques the first certified we answer Berkeley County,

tion of the Circuit Court Aitcheson, 31113, in No. Garletts

negative, remaining ques certified

tion, in affirmative. answered; questions cases dis-

Certified

missed. S.E.2d 480 Virginia ex rel. M.

STATE West and Rebecca

Andrew BRISON

Stepto, Petitioners KAUFMAN, Judge

The Honorable Tod J. of Kanawha Coun-

of the Circuit Court Falls,

ty, Administratrix and Deborah K. Falls, Jr., Lee

of the Estate of Cledith

Deceased, Respondents. ex rel.

State of West Company and Ash

Mutual Insurance

Cowder, Jr., Petitioners Kaufman, Judge of Tod

The Honorable J. County, of Kanawha Falls, K. Administratrix of

and Deborah Falls, Jr., De Lee

the Estate Cledith

ceased, Respondents. 31114, 31115.

Nos.

Supreme Appeals Virginia. March 2003.

Submitted 13, 2003. June

Decided

Concurring Opinion of Justice

Davis June Associates, Schuda, R. &

Daniel Schuda Charleston, and Re- for M. Andrew Brison Stepto, becca Petitioners. Keefer, Potter, J. Maria Marino

Barbara Lavender, MaeCorkle, Sweeney, Casey and Charleston, Insurance for Nationwide Mutual Cowder, Jr., Petitioners. Company and Ash Einreinhofer, Godfrey, Robin L. plaintiff John faith action Charleston, Falls, Respon- K. Deborah plaintiff also the wrongful the earlier dent. death ruling contends that the Circuit within Court was its discretion. Farrell, Jr., Wilson, Frame, T. Paul Ben- ninger Metheney, Morgantown, & Michael J. This it petitions Court has before Romano, Offices, Clarksburg, Romano Law thereto, prohibition, responses writs of Association, Lawyers for West Trial all exhibits arguments of counsel. Amicus Curiae. addition, has received amicus curiae briefs from Williams, Bolen, the West Trial Marc E. J. David Huddle- Association, Lawyers ston, Bolen, the Defense Research Beatty, Copen, Porter & Hunt- Institute, Virginia the West Insurance Fed- ington, Institute, for Ami- Defense Research eration, of Defense Trial Counsel West cus Curiae. Virginia and Ok Cha and Robert Collins. Jr., Crockett, Mary August, James S. M. Spilman, Battle, Thomas & for West below, expressed For the reasons Federation, Insurance Amicus Curiae. Court holds the Circuit Court exceeded jurisdiction ordering production its Jr., Henry Jemigan, W. Dinsmore & disclosure of the file and the redact- Shohl, Charleston, Lewin, Bridget Lucien G. ed of by failing the claim file Cohee, Martinsburg, M. Trial Defense peti- the correct standards to the Virginia, Counsel of West Amicus Curiae. tioners’ assertions of Aitcheson, Town, Robert D. Charles David Accordingly, doctrine. P. Greenberg, Martinsburg, for Ok Cha and production and disclosure the documents Collins, Robert Amicus Curiae. hereby prohibited pending a renewal respondent’s below of the motion for McGRAW, Justice: production and a petitioners’ renewal original proceedings, these an insurance order, protective following motion company, representative its former claims shall apply principles attorneys pro- and two of its former seek to expressed herein. hibit the enforcement pre-trial discovery order entered a “bad I. practices faith” and unfair trade action filed County, in the Circuit Kanawha FACTUAL THE BACKGROUND AND Virginia. Specifically, Mu- Nationwide DEATH WRONGFUL ACTION Company, representa- tual Insurance claims Jr., Falls, August On Cledith Lee Cowder, Jr., tive Ash M. An- Falls, respondent the son of Deborah K. was Stepto, drew Rebecca hereinafter killed in accident on State Route 39 “petitioners,” prohibit ask this Court to County riding passenger Nicholas while as a compelled production and disclosure by April in an Knight. automobile driven D. petitioners’ litigation por- file and redacted At least two other vehicles were involved file, petitioners’ tions claim both after, September the accident. Soon during which were created and maintained Falls, respondent as Administratrix of wrongful involving an earlier death action Jr., Falls, Estate of Cledith Lee filed coverage. claim underinsured motorist wrongful death action contend, petitioners they The alleged County against April Knight Kanawha D. below, protective a motion for a order denied and others. por- that the the redacted tions file are accident mo- Because the involved several vehicles, prod- proceeds and the work tor the insurance of vari- Thus, petitioners argue policies potentially uct ous available to re- were jurisdic- spondent that the Circuit Court with regard exceeded Falls to her son’s however, ordering production Falls, tion in Respondent and disclosure. death. asserted Falls, however, Respondent, Deborah K. coverage a claim for underinsured motorist II. Nation- petitioner against policy issued Company Insurance to Cledith wide Mutual THE BAD UNDERLYING Tonya Falls. Accord- stepmother, Lee Falls’ FAITH ACTION against respondent, the claim ing to the respondent Falls filed In December policy was valid because Cled- stepmother’s practices action and unfair trade “bad faith” Falls, Jr., residing in his had ith Lee been County Kanawha the Circuit Court of stepmother’s household at time Nationwide, representative claims initially disputing de- Although accident. Cowder, Jr., respon- Ash others. Nationwide, residence, dat- letter cedent’s delay in pay- alleged that Nationwide’s dent representative May claims ed ing benefits claim for underinsurance her Cowder, pro- could stated unreasonable, constituting thereby was respondent’s underinsurance for the vided of the West violation meantime, formally having been In the claim. Code, Act, W. Va. 33- Unfair Trade Practices wrongful death with notice served Cowder, seq. et 11-1 Nationwide and assigned the matter to hand, filed an and mo- on answer Brison, who filed re- M. Andrew they in which denied the tion to dismiss of Kanawha sponse in the Circuit Court complaint and allegations of asserted the right County reserving to Nationwide’s by respondent Falls signed the release W.Va.Code, 33-6-31(d) various defenses. prac- faith and unfair trade barred the bad (1998). attorney in Mr. Brison was an the to and motion dis- tices action. The answer Associates, Tinsley L. & law firm Dwane upon of Nationwide miss were filed behalf Division, Charleston, Trial Nationwide law firm com- by a Charleston Cowder separate Tinsley from L. Virginia. pletely Dwane & attorneys Stepto. Brison and Associates and 26, 2000, petition- By dated letter October 2002, January respondent In Falls filed respondent Brison stated to counsel er discovery request in and unfair the bad faith proceeds that all available insurance Falls production action of Na- practices trade applicable policies have to would file, concerned tionwide’s claim the payment paid any of underinsured be before respondent’s claim for underinsured motorist made Nation- proceeds motorist would be addition, Falls respondent In re- benefits. Similarly, subsequent in a letter to wide. quested production of the file creat- 16, counsel, January respondent Falls’ dated by petitioners Brison and ed and maintained 2001, you petitioner Cowder stated: “Once Stepto regard wrongful to with the death con- provided us with information have the Specifically, litigation file was action. the firming applicable that all limits Stepto, as generated exhausted, able to been we will then be have Associates, Tinsley employed by L. Dwane & payment under our un- to give consideration Division, following Trial service Nationwide Thereafter, pe- claim.” motorist derinsured wrongful upon of notice of the attorney replacing Mr. Stepto, an titioner response action. In to the death Associates, Tinsley Dwane L. & Brison at petitioners request, filed motion for a the Scheduling Conflict filed Notice Court protective raising the order wrongful argued trial of the the Ac- doctrine. the 2001, 30, April contin- set for death petitioners, both files cording to the evi- to continue ued. The Circuit Court refused privileged communica- denced 26, 2001, Thereafter, Na- April trial. on the and its counsel tions between Nationwide respondent, K. paid Deborah tionwide to wrongful action as during death Falls, $50,000, policy limits respondent’s claim for underinsured motorist return, claim. In re- abridged claim Consequently, the underinsurance an benefits. (with of all spondent signed respondent Falls claims release file was disclosed log”), to acci- issues of regard “privilege against Nationwide attached prod- 7,1999, regard attorney-client privilege and with to all August dent doctrine, as to both litigation file and uct negotiations in relation thereto. file, VIII, 3, portions of the claim re- the redacted Sec. The Constitution of West jurisdiction Court to Virginia. mained the Circuit decide. recognized That Appellate Rule of this Rules of Court’s Following healing and an in camera statutory provi Procedure and various in question, review of the documents W.Va.Code, (1923); sions. 51-1-3 W.Va. Circuit the order of Court entered (1933). Code, considering 53-1-2 whether denying petitioners’ motion for a grant prohibition, to relief this Court stat protective directing petitioners order and disclose, produce entirety, syllabus point ed their State ex rel. O’Brien, file and the redacted of the Vineyard v. 100W.Va. 130 S.E. ruling, claim file. so writ prohibi as follows: “The stated that the were not files only tion will issue clear cases where protections attorney-client privi- of either the without, proceeding inferior tribunal lege or the work The Cir- of, jurisdiction.” Murray excess ex rel. however, cuit primarily, Court focused Sanders, W.Va. 539 S.E.2d attorney-client privilege and concluded as (2000); State ex Barden follows: Hill, Corporation Robeson 208 W.Va. case, thorough In this after review of 166, 106, 109 (2000); 539 S.E.2d Health Man ... each document in Nationwide’s attor- Lindell, agement, Inc. file, ney file and claims finds- W.Va, also, protected that no document in the files is Code, (1923); syl. pt. 53-1-1 State ex rel. attorney-client privilege. docu- Merrifield, M. v. Steven Michael 203 W.Va. simply ments contain facts that were not (1998); syl. pt. Long Furthermore, meant be confidential. Company Compensation Flame Coal v. State the Court finds that the issue of bad faith Commissioner, 409, 111 W.Va. S.E. brought has into the advice of (1932). and, therefore, attorneys, Nationwide’s attorney-client privilege is waived. notwithstanding, The above the or 7, 2003, January of The order contained no granting discovery ders of a circuit court concerning of findings fact the nature are, requests interlocutory are in nature and attorney-client relationship Nation- between therefore, usually only, appeal reviewable Stepto. wide and Nor extraordinary rather than to reme why, did explain the order inasmuch as the orders, Discovery dies. such the order “contain facts” which documents were not us, production compel before confidential, entirety meant to be of both material, ostensibly disclosure of confidential file and the redacted however, because, atypical. is are That if the discoverable, the claim file were other mat- production such material disclosure notwithstanding. ters contained therein Fi- order, upon occurs the basis of an erroneous nally, findings the order included no of fact resulting the harm is not therefrom correct regard to the two files Thus, appeal. able Court this held doctrine. syllabus point 3 of State ex United States 6, 2003, February petitioners On Nation- Fidelity Guaranty Company Canady, wide, Cowder, Stepto peti- Brison filed (1995): 431, W.Va. S.E.2d 677 “When seeking prohibi- tions this Court relief in discovery probable order inva involves 7, regard January tion with to the order of sion of confidential ex materials 13, 2003, February 2003. On this Court is- 26(b)(1) empted discovery under Rule why to sued rules show cause relief should Virginia of the West Rules of Civil granted. Procedure, origi exercise of this Court’s jurisdiction 3, Syl. appropriate.” pt. nal is III. ex Vir rel. Medical Assurance West State

STANDARDS OF REVIEW Recht, ginia v. no. 583 S.E.2d 80 (W.Va. 2003); original jurisdiction This Court has State ex rel. Charles Town Sanders, prohibition proceedings pursuant to Hospital Art. 210 W.Va. General Here, 123-24, (2001); such a re- ex the basis of decision.” 90-91 556 S.E.2d 23, 2002, Taylor, quest was made. December Virginia State Police On rel West (1997); Nationwide, indicating that it was consider- W.Va. Hospital extraordinary syl. pt. ing filing petition ex rel. Cen- relief United Bedell, Court, 484 S.E.2d 199 ter v. this asked enter also, syl. pt. findings Mu- specific State Farm “with fact and an order Company Insurance v. Ste- tual Automobile law.” conclusions of phens, 188 W.Va. stating available to cor- prohibition “is IV. resulting from a trial

rect error clear of its court’s abuse discretion substantial DISCUSSION discovery regard orders.” reviewing order 26(b)(1) Court, Generally speaking, important Rule it is define Circuit Rules of Civil Procedure faith type bad and unfair attorney-client privilege and brought by respondent concerns the practices action trade 26(b)(3) concerns the Rule of those Rules petitioners against Falls regard, In that Med Fortunately, representative claims Cowder. Assurance, proceeding supra, original law, ical complex in this this Court area prohibition involving may rel. Allstate Insurance look to State ex doctrine, privilege and the work Gaughan, supra, for Company v. assistance. holds: observed that courts generally recognize categories two broad ruling A court’s on re- circuit bad actions insurers: faith

quests an abuse of [under] is reviewed thud-party faith standard; but, bad faith actions and bad where a circuit discretion W.Va. at 508 S.E.2d at 86. misinterpretation actions. 203 ruling turns court’s on Rules of Civil Proce- the West thúd-party In a dure, plenary. The discre- our review usually against an brought insurer lawsuit normally given tion that is to trial court’s separate plaintiff prevailed who procedural where decisions does an For against insured tortfeasor. action findings applies no the trial court makes in the case of State ex rel. example, recent wrong legal the standard. Virginia West Medical Assurance of Syl. pt. Assurance. Medical Recht, plaintiff, prevailed a supra, who had findings required of a circuit The tortfeasor, against brought an an insured court, suggested in Medical Assur above practices for unfair claim settlement action ance, critical when an otherwise interloc are company. against the tortfeasor’s insurance utory compel production and disclo order discovery prohibiting the enforcement a brought upon this Court sure before compelling production of the insur order However, in request prohibition. for relief investigative and company’s claims files ance petition right litigant to file action, Court, this the tort a case extraordinary relief in such carries Assurance, that held the Circuit Medical it circuit responsibility to ask the correctly County failed to ana Court of Ohio findings and conclusions court to forth set attorney- lyze insurer’s assertion ruling discovery As order to make the clear. doc client and the opinion in syllabus point 6 of this Court’s trine. Company v. ex rel. Allstate Insurance hand, first-party in a Gaughan, 508 S.E.2d 75 On 203 W.Va. action, usually brought party seeking to bad faith lawsuit part: “A states against or her own insur extraordinary writ insured his petition for an an this Court failing good to use interlocutory company upon non-appealable ance based court, coverage. For request settling a claim for insurance must decision of a trial Fidel findings example, United States of fact State ex rel. trial court out an order set Canady, Guaranty Company v. su- support ity of law that and form and and conclusions pro, prohibited exclusively this the enforcement Nationwide and worked order in an action an wherein Nationwide insurance matters. As in- above, brought a faith and unfair phrase insured trade dicated “Nationwide Trial practices lawsuit his own insurance appeared upon Division” the law let- firm’s company. alleged The that the in- insured terhead. of practicing Such manner law in company promptly pay him surance failed approved by West has been proceeds following fire insurance the destruc- through Lawyer State Bar tion of his residence. United States See, Disciplinary Legal Inqui- Board. Ethics Fidelity Guaranty Company and case exem- ry regard, 99-01. In that it is self-evident action, plifies type first-party bad faith attorneys practicing in “captive law described wherein the interests firms” are to the same ethical re- “presump- the insured and the insurer are sponsibilities toward them clients and to the tively in conflict.” at fn. 203 W.Va. legal profession prac- as are other at S.E.2d fn. 17. ticing in this State. Manifestly, brought by respon- the action proceedings The exhibits in these against petitioners dent Falls Nationwide fact, Stepto, demonstrate that Brison and Cowder was a bad faith and represented attorneys, rather practices unfair in- trade action wherein the merely adjusters than as insurance or em respondent petitioners terests of the See, investigators. ployee United Fi States Following were in conflict. the somewhat delity Guaranty Company, supra, contested of the decedent’s residen- W.Va. at at 690. Both filed cy, it was determined that the was decedent pleadings respondent’s wrongful in the death policy insured under the Nation- issued action, Stepto presented argument and Ms. stepmother, Tonya wide to the decedent’s pre-trial at a hearing in that action concern policy Falls. That formed the basis of the ing Thus, the scheduled trial date. Bri both respondent’s claim for underinsured motorist Stepto performed son and traditional time, coverage. From nearly year wrongful they duties death by prior payment went of the underin- standing priv had to raise the in April During surance claim ilege action, Nationwide, wrongful death rather Falls, respondent than was the client at- Moreover, purposes opinion, this torneys Stepto. Brison Accordingly, re- equivalent attorneys’ Court treats as liti- spondent pursuit Falls’ file gation portions file and the redacted claim the redacted file, sought by both of re- necessarily implicates legal representa- spondent Falls and both of which concern her tion Stepto. of Nationwide claim for underinsured motorist benefits. Therefore, petitioners’ the of assertion attor- The two not files were differentiated the ney-client privilege and the work 7, 2003, in January Circuit Court the order must in doctrine be that context. viewed analysis attorney- and this Court’s the privilege client work Nor, doc- purposes opinion, of this is it applies equally trine to both. dispositive that Stepto Brison and were “captive law members of firm” or that the attorneys file of those was included V. request respondent the Falls request addition to her for the claim file. THE ATTORNEY-CLIENT PRIVILEGE THE AND WORK PRODUCT understood, attorneys As the term is DOCTRINE Stepto

Brison “cap and were members of a because, above, although tive law firm” petitioners’ them law In view of the the asser- office, Associates, Tinsley inexorably Dwane L. & Na tions fall within traditional more Division, separate analysis Trial was in attorney tionwide of the client and office, location particular, from the Nationwide claims In the Stepto Brison paychecks any express inasmuch received them as there was never law, as its originated to third at common and has question files in release the two object principal promotion of full and attorney- the pi*otective “quasi party, less the attorney and client frank discourse between su- privilege” identified client legal advoca so to insure sound advice or as apply. pra, does not 58, 68, Rodoussakis, cy.” W.Va. 26(b)(1) the Rule Pursuant (1998). Nevertheless, in S.E.2d Procedure, dis Virginia Rules Civil Fidelity syllabus point 8 States of United covery “regarding any mat may obtained be Guaranty supra, Company, this Court ter, privileged, which is relevant to the not attorney- party may waive that “[a] held pending subject ac matter involved by asserting claims or defens client 26(b)(1), import of Rule associat tion[.]” The put attorney’s his advice in es that or her attorney-client privi traditional ed Marano, also, syl. pt. 12 issue.” Fidelity lege, was United States noted supra. Company, supra, as follows: Guaranty above, con- indicated As language, provides that “In clear Rule that, re- inasmuch as the documents cluded relevant, matters, not privileged although “facts that were viewed in camera contained rule, many this As result of discoverable. confidential,” con- not to be the entire meant very substantially could aid documents that litigation file and the redacted tents of the litigant in a lawsuit are neither discoverable of the claim were as at nor admissible evidence.” W.Va. production and disclosure. The Circuit fact, as at 687. In stated S.E.2d separately that conclusion Court treated attorney-client privi Gaughan: “Traditional attorney-client issue of from the whether virtually leged undiscoverable un material explain privilege had been but not waived did 26(b) der Rule of West Rules why documents were meant be at Civil W.Va. Procedure.” validity compelling dis- confidential. The Nevertheless, recognized at S.E.2d two closure of the entire contents of the files Fidelity syllabus point 4 of United States doubtful, following especially in view of the Guaranty Company, the burden of es petitioners: “Mr. Brison was assertion attorney-client tablishing privilege, represent Nation- Nationwide to selected matter, that exception claim made it wide’s interests it.” “always person asserting rests * * * benefits His ...[.] underinsured point 2 Bur syllabus of State v. job and render was to defend Nationwide ton, legal order advice.” The held: findings no of fact contained relationship to assert an order be- nature of the be privilege, three main elements must tween Nationwide (1) parties contemplate present: both must Stepto. attorney-client relationship does concern, however, is Of more (2) exist; sought must or will the advice conclusion of “the attorney ca- his client brought into of bad faith has issue adviser; the communi- pacity aas and, attorneys, the advice of Nationwide’s and client cation between therefore, attorney-client privilege the is must to confidential. be intended be That forth in waived.” conclusion was set 3, Syl. pt. ex Westbrook Health rel. anyone findings as to absence whether the 668, Hill, 550 209 W.Va. S.E.2d

Services v. actually waived associated with Nationwide 6, Bedell, (2001); pt. supra; syl. pt. syl. deny privilege. the Cowder 38, Jarvis, 483 S.E.2d W.Va. issue, they put respondent’s in that the (1996). they any legal re advice concerning underinsurance claim. point 11 of ceived the syllabus In Marano See, Fidelity Holland, syl. pt. States 366 S.E.2d 117 United 179 W.Va. event, any Company, supra. Guaranty importance privilege was of the address, not for exam- attorney-client Court did emphasized: “The the Circuit pie, any correspondence (including party’s attorney, consultant, whether of the re by respondent indemnitor, surety, ceived Falls from agent) only or insurer Stepto may Bríson showing or Cowder have party seeking attorney-client a waiver of the discovery constituted has substantial need the mate- Instead, privilege. sug the Circuit Court preparation rials party’s of the case gests, by ruling, its that the party and that the is unable without undue applicable matter hardship equiva- to obtain the substantial will be considered waived the event a bad by lent the materials means. suggestion faith action filed. Such a con ordering discovery of such materials when premise upon stitutes “too tenuous which to required made, showing has been any steady anchor standard law.” State protect against court shall disclosure of R.A.I., 339, 346, ex J.L.K. v. 170 W.Va. conclusions, impressions, opinions mental (1982). Rather, 294 S.E.2d legal or theories of an or other that, Court holds where the of an interests representative party concerning of a company insured and his or her insurance litigation. regard conflict with to a are claim for syllabus point As this Court held in underinsured motorist and the in Markle, 7 of In re 174 W.Va. counsel, company represented by surance (1984): 26(b)(3) Virgi “Rule of the West bringing of a related bad faith nia Rules of Civil Procedure makes a distinc by action the insured not automatically does tion opinion prod between factual and company’s result a waiver of the insurance regard necessity uct with to the level of attorney-client privilege concerning the un- discovery.” to be obtain has shown to them derinsurance claim. Assurance, Syl. pt. supra; syl. Medical Here, apply the Circuit Court failed to Wilkes, pt. Chaparro State ex rel legal correct regard standards with W.Va. 438 S.E.2d 575 As be petitioners’ attorney-client priv- assertions two, opinion tween is more Therefore, ilege. compelling pro- the order See, protected. scrupulously United States erroneous, duction and disclosure was Guaranty Fidelity Company, supra, discovery concerning litigation file and at W.Va. S.E.2d at 691. portions the redacted claim file should prohibited until by be further consideration The order of con the Circuit Court. findings no tained of fact portions file the redacted subsequently If regard claim file to the work determines that the documents in attorney-client issue, doctrine. As with the privi barred discovery concerning should those documents lege, a consideration of the work prohibited until further consideration doctrine would then be warranted. United the Circuit Court. Fidelity Guaranty Company, States su pra, 194 at at S.E.2d

Generally, oper the work doctrine VI. protect prepared

ates documents in antici CONCLUSION pation litigation. Gaughan, supra, atW.Va. at 91. The doctrine above, Upon all of the this Court holds 26(b)(3) provisions is reflected Rule County that the Kanawha of the West Rules of Civil Procedure jurisdiction ordering produc- exceeded part: states tion and disclosure of file and party may [A] obtain of docu- the redacted tangible things failing ments and otherwise dis- the correct standards (b)(1) of petitioners’ coverable under subdivision this assertions of anticipation of prepared litiga- rule and work Ac- product and by party cordingly, or trial or production tion for for another or and of the disclosure by hereby or party’s representative prohibited for documents in are

634 any by an insured respondent Falls’ there is claim whenever below pending a renewal any policy.” for under insurance and of the loss a renewal production motion for order, v. Nat’l. Ins. Co. America ex protective for a motion petitioners’ Safeco Rauch, (Mo.App.1993) 635 849 S.W.2d apply shall following which the (citation omitted). situation, an in- this expressed principles herein. a files claim for a loss he she sured granted as moulded. Writs and either denies cov- sustained the insurer unjustifiably delays payment, or erage, offers and files a DAVIS concurs Justice an amount the insured deems insufficient concurring opinion. response an in- cover the loss. Whichever J., DAVIS, concurring: places an parties makes adver- surer case, majority has concluded In this relationship. Palmer v. Farmers sarial that, against first-party Exch., in a bad faith action 261 Mont. 861 P.2d 905 Ins. insurer, attorney-client privilege (1993) (“In action, type an claimant product con- positions rule attach to documents work insurer are adverse litigation case.”). claim in an insured tained See also the outset by I decision Pickering, file. concur reached Squealer v. 530 Feeds N.W.2d 1995) (same). majority opinion. (Iowa I have chosen to write a distinction that separately to address posture As of the adversarial a result involving first-party bad courts have made claim, permit courts an insurer to loss most insurers, implica- against faith cases attorney-client privilege assert the majority’s distinction to the tions to documents con rale holding in this case. any in an claim file and tained insured’s litigation may gene have file that insurer BAD TYPES OF FIRST-PARTY TWO Ass’n v. rated.2 See United Servs. Auto. AN FAITH ACTIONS AGAINST (Alaska 1974) (claim Werley, for 526 P.2d INSURER ap to which loss first-party types of “There are different Court, Superior plies); Brown v. Ariz. by faith actions.” Palmer Diacon bad (1983) (claim P.2d 725 for loss Exch., 261 P.2d Farmers Ins. Mont. applies); which work rule is, first-party That bad Court, Superior & Co. Farm Fire Cas. may against faith action an insurer arise (1989) Cal.Rptr. Cal.App.3d First, first-party bad faith two contexts. (claim attorney-client priv loss to may arise an insurer fails to use action when Grange ilege applies); v. National Clausen by resolving a claim” good faith in “loss filed (Del.Su Co., 730 A.2d Mut. Ins. first-party type second the insured. (claim per.Ct.1997) for a loss to which attor may faith arise as a result of the bad action ney-client privilege and work rule good settling use faith in insurer’s failure to Kujawa apply); v. Manhattan Nat’l. Life third-party the insured a lawsuit (Fla.1989) (claim Co., Ins. 541 So.2d 1168 harmed, resulting judgment” an “excess attorney-client privilege and a loss to which against insured.1 apply); immunity Hartford Group, County Inc. Lake “Generally, and Fin. Park claim. insurer Servs. Loss (Ind.Ct. Bd., adversary relationship 717 N.E.2d 1232 & Recreation insured are an e.g., Co. v. In this second 1. See State ex rel. Allstate Ins. house burned down. type 75, 87 n. 370 n. the interest of the bad faith first-party (1998) ("There bad are two types first-party are actually insured insurer presumptively against action faith an insurer. One such conflict.”). actions good when insurer to use arise fails may settling a claim someone the insured generated A when, file is usually injured. context, In this the interests harmed or joins where un- insurer example, and insurer insured presumptively coverage involved, or an derinsured/uninsured However, mutual. the second type to determine whether action instituted against faith action an insurer concerns existed. brought insurer, the insured

635 (claim attorney- App.1999) initially for a loss to which held that the employs “the insurer privilege applies); client ex attorney rel. represent to the interests of Safeco Rauch, v. Nat’l. Ins. Co. America 849 both the insured and the v. insurer.” Jessen (claim (Mo.Ct.App.1993) 632 for S.W.2d (D.Mont. O’Daniel, 317, F.Supp. 210 331-32 attorney-client privilege loss to which and 1962). Longo Policyhold v. American product apply); rule Palmer v. Farm- Co., 87, 577, N.J.Super. ers’ 181 Ins. 436 A.2d Exch., 91, ers 261 Ins. Mont. 861 P.2d 895 (Law (“The Div.1981) repre 580 attorney (claim (1993) attorney- which for loss to sented both the insurer and the insured. client work product immunity Counsel owed unquali the insured the same apply); v. York Prop. Hamdan New Ins. loyalty fied he person he would had been Ass’n, 706, Underwriting 116 Misc.2d 456 retained.”).4 ally In in this situation “an (1982) (claim N.Y.S.2d 305 for a loss which to sured and his or her insurer share a common product applied to rule certain inter- interest, is, liability to limit in a tort rogatories); Evans v. United Auto. Servs. policy action to within limits.” v. Flores Ass’n, 142 N.C.App. 541 S.E.2d 782 Barretto, 99 Hawai’i 54 P.3d 451 (claim (2001) attorney- which for loss to (2002) (Moon, C.J., However, dissenting). it client product immunity and work “[f]irst-party has been observed bad Co., apply); Boone v. Vanliner Ins. 91 Ohio faith involving representation cases dual of (2001) (claim St.3d 744 N.E.2d 154 for a ten third-party arise after a claimant obtains attorney-client privilege loss to which ap- judgment policy limits excess plies); Co., Sims v. Travelers Ins. 16 P.3d insured later company sues the insurance for (claim 468 (Okl.Civ.App.2000) for a loss to policy failure to settle within limits.” Palm attorney-client privilege which applies); In Exch., er v. Farmers Ins. 261 Mont. 861 Exch., re Texas Ins. Farmers S.W.2d 337 (1993). P.2d (claim (Tex.App.1999); which loss to attorney-client pi'ivilege and work In first-party litigation arising immunity apply); ex rel. Dudek Cir- judgment against out of a insured cuit County, Court Milwaukee 34 Wis.2d limits, policy excess of most courts do not (claim (1967) N.W.2d loss permit attorney-client privilege or work to attorney-client privilege and work prevent to rule be used to an insured apply).3 rule having to access file his/her (2) judgment. litigation Excess action. When an insured Greene, for injury or harm See Fortune third-party, sued Ins. Co. So.2d 338 company provides (attorney-client and an (Fla.Dist.Ct.App.2000) insurance the in- privi- legal representation, sured with lege immunity courts ap- have and work do company duty (5) 3. company coverage; coverage "Because an insurance has a denies ordinary investigate or, imminent; (6) to course business appears coverage litigation is insureds, evaluate claims made claims actually Medaglia, M. commenced.” Elizabeth containing usually files such documents cannot al., Product, "Privilege, Discovery et Work product protection. be ly, to entitled work Normal- Litigation,” in Bad Issues Faith Tort & Ins. only company after the insurance makes a L.J. claim, respect decision with to it will be possible for to there arise a reasonable threat of "Courts commentators have failed to reach gathered so that information thereafter agreement respect to whether the insurer is might acquired anticipation be said be to states, a co-client of defense counsel. some Foods, litigation.” Pete Rinaldi’s Fast Inc. v. clients, presumed defense counsel have to two Companies, Great American Ins. 123 F.R.D. the insurer and the insured. Other have states (M.D.N.C.1988). many "While there are contrary taken a view have declared that views, differing nuances and case law exists to only policyholder is a F. client.” Michael support proposition that a will document Aylward, Insurance Ethics: The Future prepared anticipation deemed have been Tripartite Relationship, SG004 A.L.I.-A.B.A. (1) coverage litigation if it is created after: (2001) (citations omitted). State ex (2) coverage; insured tenders its claim for it Allstate Insurance Co. begins appear deny might that the insurer (1998) adopted we rights; or reserve its the insurance actually company engages coverage attorney the view that "the insurer in connec- hires claim; (4) represent tion with the insured's the insurance the insured.” 636 insurer, Co., paid or retained v. Iowa Home Mut. Cas. ply); Henke 1958) (Iowa party allows to obtain either 920 87 N.W.2d 249 Iowa to the communications related (attorney-client privilege and work claim, to the because the giving facts rise apply); Hodges v. Southern rule do not in de the insured and insurer Co., interests of 125 Ins. 433 So.2d Farm Bureau Cas. in feating third-party claim (La.1983) (work apply); product rule not does expec close that ‘no reasonable Co., sured are so Mut. Ins. v. Farm Auto. Dumas State confidentiality’ is said to exist.” tations (1971) (attorney- 43, 274 A.2d 781 N.H. 111 Rein Philadelphia Ins. North River Co. Longo v. apply); privilege does not client (D.N.J. F.Supp. Corp., 797 surance Co., 181 Policyholders’ Ins.

American omitted). 1992) (citation Div.1981) (Law N.J.Super. 436 A.2d 577 apply); does (attorney-client not (3) majority’s The limitation Co., Indem. Misc.2d v. Home Colbert holding. majority opinion appropriately The (work product immu 259 N.Y.S.2d first-party bad this case “was noted that apply); Nation nity does not ... faith action wherein the interests Schoffstall Co., D. C. 4th Ins. 38 Pa. & wide in conflict.” [insurer] were [insured] (Ct.Com.Pl.1998) (attorney- words, WL 1108681 ac first-party faith In other bad do not rule client the “loss claim” tion this case came under Exch., 112 apply). actions, also Silva v. Fire Ins. See category first-party bad faith not (D.Mont.1986) (attorney-client F.R.D. 699 judgment” category.5 The ma the “excess product immunity do not privilege and jority’s to extend the decision Auto. Farm Mut. apply); LaRocca privilege and work rule to the facts (attor (W.D.Pa.1969) Co., F.R.D. Ins. of this was consistent with rule case Chitty v. ney-client apply); not privilege does followed most courts. Co., F.R.D. Mut. Auto. Ins. Farm majority did discuss decision not (E.D.S.C.1964) (attorney-client privilege category first-party judgment” “excess apply). do not and work rule critical bad faith actions. Because usually The common interest doctrine first-party faith bad distinction between attor allowing as not cited the reason for first-party bad faith “loss claim” action and ney-client product rule privilege and work judgment” I do not “excess believe aris majority opinion interpreted should be as prior litigation. ing from a mutual interest judgment” action. applying to an “excess doctrine, when common interest “[UJnder I foregoing, In view of the concur. parties attorney acts for two different interest, have a common communi who each party

cations either to the subsequent in a necessarily privileged

not parties.” controversy two between Surplus Inc. v. International Mgmt., Waste J.A.S., Daryl IN Jean RE FRANCES Co., 144 Ill.Dec. Lines Ill.2d Ins. S., Crystal S., Nicole and David 774, 579 N.E.2d Henke R., Allen Jr. Co., Mut. 249 Iowa v. Iowa Home Cas. 30909, 30910. Nos. (1958) (“[W]hen two or 87 N.W.2d parties attorney for their more consult an Appeals Supreme Court of benefit, testimony as com mutual Virginia. attor parties or the munications between the March 2003. Submitted ney privileged that transaction is Decided June parties their such a later action between representatives.”). common interest “The recognized in the in

doctrine has been has been context when counsel

sured/insurer sought coverage. underinsured 5. The this case insured

Case Details

Case Name: State Ex Rel. Brison v. Kaufman

Court Name: West Virginia Supreme Court

Date Published: Jun 24, 2003

Citation: 584 S.E.2d 480

Docket Number: 31114, 31115

Court Abbreviation: W. Va.