Opinion
C.A. No. 01C-11-001 HLA.
Submitted: June 12, 2003.
Decided: July 31, 2003.
DECLARATORY JUDGMENT COMPLAINT.
NON-ARBITRATION CASE.
JURY TRIAL OF TWELVE DEMANDED.
UPON PLAINTIFFS' MOTION TO COMPEL DISCOVERY RESPONSES FROM DEFENDANT TRAVELERS INDEMNITY COMPANYDENIED.
ORDER
On this 31st day of July 2003, upon consideration of the Motion to Compel Discovery Responses from Defendant Travelers Indemnity Company filed by Williams Union Boiler and Liberty Mutual Insurance Company ("Plaintiffs"), Travelers Indemnity Company's ("Defendant") Opposition to the Motion, oral argument held June 12, 2003, and the record it appears to the Court that:
(1) This is a Declaratory Judgment action, filed on November 1, 2001, which was amended on November 21, 2002, to add counts of bad faith and breach of contract, brought by Plaintiffs seeking liability insurance coverage from Defendant. Williams Union Boiler was an additional insured named under a policy for commercial general liability insurance written by Travelers Indemnity Company to Corrado-American, Inc. The liability coverage is being sought by Plaintiffs in connection with a bodily injury claim being made by Richard Manley.
Richard Manley v. Willaims Union Boiler, et. al., C.A. No. 01C-01-095-FSS.
Defendant did not accept coverage on behalf of Plaintiffs and therefore refused to defend the claim. Plaintiffs allege that Defendant's decision to deny coverage to Plaintiffs is based on a legal opinion given by Travelers' coverage counsel, Storm Wilkins, Esquire. Plaintiffs have requested a copy of the coverage opinion letter authored by Ms. Wilkins, as well as a copy of all documentation relied upon by her in formulating her opinions. Plaintiffs have also noticed the deposition of Ms. Wilkins and Defendant has objected to the deposition and has not produced a copy of the coverage opinion letter and supporting documents based on the attorney/client privilege and work product doctrine. Hence, Plaintiffs' have filed the present Motion to Compel Discovery Responses.
(2) A party cannot force an insurer to waive the protections of the attorney-client privilege by merely bringing a bad faith claim. However, where an insurer makes factual assertions in defense of a claim which incorporate, expressly or implicitly, the advice and judgment of its counsel, it cannot deny an opposing an opportunity to examine the foundation for those assertions in order to contradict them. Plaintiffs must meet exacting standards for a determination that Defendant implicitly waived the attorney-client privilege. With regard to the attorney-client privilege in insurance bad faith cases, where an insurer makes factual representations which implicitly rely upon legal advice as justification for non-payment of claims, the insurer cannot shield itself from disclosure of the complete advice of counsel relevant to the handling of the claim. Waiver of the attorney-client privilege does not automatically relinquish the protection provided by the work product doctrine. Superior Court Civil Rule 26(b)(3) provides that a party may obtain discovery of certain documents which are considered work product only upon a showing of substantial need of the materials. Any party that shows a substantial need with an inability to obtain the substantial equivalent elsewhere can gain access to non-opinion attorney work product. Tackett holds that in order for a party to obtain the mental impressions under Rule 26(b)(3) the mental impressions must be directed to the pivotal issue in the current litigation and the need for the material must be compelling. Tackett went on to find a pivotal issue and a compelling need because the Defendant insurance company had rejected its outside counsel's advice and thus created critical evidence supporting a claim for bad faith. Additionally, in Tackett the defendant insurer alleged a routine handling of the plaintiff insured's claim and suggested that any delay was attributable to inaction on the part of the plaintiff. Thus, the Court found that Plaintiff was able to challenge those allegations only with a full showing of the facts contained in the claim file which was discoverable because of these unique facts.
Tackett v. State Farm Fire and Casualty Insurance Company, 653 A.2d 254, 259 (Del.Supr. 1995) (citing Hoechst Celanese Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 623 A.2d 1118, 1125 (Del.Super.Ct. 1992).
Tackett v. State Farm Fire and Casualty Insurance Company, 653 A.2d 254, 259 (Del.Supr. 1995) (citing Friction Div. Products v. E.I. duPont de Nemours, 117 F.R.D. 535, 538 (D.Del. 1987).
Tackett v. State Farm Fire and Casualty Insurance Company, 653 A.2d 254, 259 (Del.Supr. 1995).
Id. at 260.
Id. citing Hercules Inc. v. Exxon Corp., 434 F. Supp. 136, 156 (D.Del. 1977).
Tackett v. State Farm Fire and Casualty Insurance Company, 653 A.2d 254, 262 (Del.Supr. 1995).
Id.
Id.
Id.
(3) Plaintiffs contend that they are entitled to the coverage opinion letter, all documents reviewed and relied upon by counsel and a deposition of Defendant's counsel based on the substantial need test set forth in Tackett. However, Plaintiffs fail to state a substantial need, other than the fact that they allege bad faith. Plaintiffs maintain that Defendants' decision to deny coverage to Plaintiffs was based on a legal opinion given by Defendant's coverage counsel, Storm Wilkins, Esquire, pursuant to the deposition of Patricia K. Loomis, Defendants' representative. Plaintiffs state that confirming the actual opinions given by Ms. Wilkins and determining how she arrived at her decisions are directly related to the pivotal issue in this declaratory judgment action; i.e., did Defendant act in bad faith and without reasonable justification for denial of coverage to Plaintiffs.
(4) Defendant, however, objects to the above requests for production as protected by the attorney/client privilege and work product doctrine. Defendant first states that Plaintiffs mischaracterize the testimony of Defendants' representative, Patricia Loomis. Rather than testifying that Defendant's decision to deny coverage to Plaintiffs was based on a legal opinion by Defendant's coverage counsel, Ms. Loomis stated that she merely relied upon that coverage opinion to support the coverage decision that she had already made. Thus, Defendants maintain that Plaintiffs have not shown that the mental impressions of its counsel are directed to a pivotal issue in this case, nor that there is a compelling need for an opinion letter that merely supported a decision made by Defendants' claim handlers.
(5) The Court finds that Tackett can be distinguished from the instant case as, Defendant here did not reject its own counsel's advice in rejecting the claim. In Tackett this act created a pivotal issue or a compelling need for Plaintiffs to obtain the record. Plaintiffs have not exhibited a compelling need requiring the Court to compel discovery of the documents requested. Additionally, the proposed deposition of coverage counsel would pervade into areas of the work product doctrine. The Court is loathe to permit the deposition of coverage counsel. In the instant case, Plaintiffs have not shown that counsel's mental impressions, opinions and thought processes are directed to a pivotal issue and therefore they not discoverable. As such, Plaintiffs' Motion to Compel Discovery Responses as it pertains to Defendant's Coverage Counsel's deposition and coverage opinion letter and supporting documents must be DENIED.
Superior Court Civil Rule 26(b)(3).