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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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  1. Don't we have bigger issues to concern ourselves with?

  2. Anyone who takes the time to study disciplinary and bar admission cases in Indiana ... much of which is, as a matter of course and by intent, off the record, would have a very difficult time drawing lines that did not take into account things which are not supposed to matter, such as affiliations, associations, associates and the like. Justice Hoosier style is a far departure than what issues in most other parts of North America. (More like Central America, in fact.) See, e.g., http://www.theindianalawyer.com/indiana-attorney-illegally-practicing-in-florida-suspended-for-18-months/PARAMS/article/42200 When while the Indiana court system end the cruel practice of killing prophets of due process and those advocating for blind justice?

  3. Wouldn't this call for an investigation of Government corruption? Chief Justice Loretta Rush, wrote that the case warranted the high court’s review because the method the Indiana Court of Appeals used to reach its decision was “a significant departure from the law.” Specifically, David wrote that the appellate panel ruled after reweighing of the evidence, which is NOT permissible at the appellate level. **But yet, they look the other way while an innocent child was taken by a loving mother who did nothing wrong"

  4. Different rules for different folks....

  5. I would strongly suggest anyone seeking mediation check the experience of the mediator. There are retired judges who decide to become mediators. Their training and experience is in making rulings which is not the point of mediation.

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