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COA reverses motion allowing for release of documents

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The Indiana Court of Appeals today reversed an order from Lake Superior Court that granted a motion to compel the production of documents from the appellant-defendant Allstate Insurance Company. The trial court found that by raising an advice of counsel defense, the insurance company had waived the attorney-client privilege, and therefore the documents could be produced.

In Allstate Insurance Company v. Timothy Clancy, et al., No. 45A03-0910-CV-498, regarding a May 27, 2002, accident between a truck and a motorcycle, an attorney for Allstate had offered a $100,000 policy-limit settlement to Dianna Goad, who was hit by driver Tim Clancy, who was insured by Allstate.

She refused the settlement because her husband, who was driving a separate motorcycle and witnessed the accident and resulting injury, was not also offered a $100,000 policy-limit settlement for his emotional distress claim.

At trial in 2005, a jury found that the Goads should receive $11 million - $10 million for Dianna’s personal injury claim and $1 million for her husband’s emotional distress claim. The Indiana Court of Appeals affirmed that decision in 2006.

“Following the jury verdict, Clancy assigned his claims against Allstate to the Goads who, on May 30, 2007, filed a complaint alleging, among other things, that Allstate’s decision not to offer a $100,000 policy limit to Mr. Goad in addition to $100,000 for Mrs. Goad was made in bad faith. In its answer, Allstate stated the following affirmative defense: [t]he emotional distress claim(s) of Robert Goad in cause No. 45D11-0209-CT-200 and whether insurance coverage existed for such claims is fairly debatable. Appellant’s App. at 76,” Judge James S. Kirsch wrote in today’s opinion.

During discovery, Allstate withheld 44 pages of communication between the company and the attorney who was hired to seek declaratory relief in District Court regarding the meaning of the per-person limit language contained in the policy held by Clancy.

Because Allstate counsel said the emotional distress claim was “fairly debatable,” which Allstate used in its affirmative defense, the Goads claimed Allstate therefore waived its attorney-client privilege. The trial court agreed, but the Court of Appeals disagreed.

“We hold that the ‘fairly debatable’ defense, absent any other connection to reliance upon advice of counsel, is tantamount to a good faith defense and insufficient in and of itself to waive attorney-client privilege. Accordingly, we reverse the trial court’s order compelling discovery of the challenged documents,” Judge Kirsch wrote.

However, Judge Margret G. Robb wrote in her dissent that “when an insurer asserts that a claim is ‘fairly debatable’ refers to a legal issue, it necessarily relies on advice of counsel and waives the attorney-client privilege.”

“… Insurers might more clearly indicate when they have relied on an attorney’s legal conclusion to deny coverage – and therefore put an attorney’s advice at issue to waive the attorney-client privilege – and alternatively when they have not relied on the advice of counsel but determined that the facts of a particular case led to denial of coverage. In future cases this application of the law might clarify the substantive issues in dispute and when the attorney-client privilege is waived,” she added.
 

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  2. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  3. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  4. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  5. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

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