Bad Faith - West Virginia Supreme Court Announces Rules Governing Discovery Of Reserves Information In Bad Faith Litigation
Last week, in State ex rel. Erie Ins. Prop. & Cas. Co. v. Mazzone, No. 33209 (June 7, 2004), the West Virginia Supreme Court of Appeals refused to grant a writ of prohibition to an insurer seeking relief from an
order requiring production of reserves information in a bad faith action. Although the court denied the writ on the basis that the reserves information was set in the ordinary course of business, the court also held that when
individual case reserves information is set by an attorney or by a non-lawyer representative with the primary intent of preparing for litigation, and when aggregate reserves documents are compiled for specific litigation either by
a lawyer or by a non-lawyer representative, such reserves information is subject to protection from discovery as opinion work product.
The original negligence claim in Mazzone was brought by Murfitt against a driver whose auto insurer was Erie Insurance Property & Casualty Company (“Erie”). After the negligence action was settled,
Murfitt filed an amended complaint alleging that
In ruling upon the writ, the court noted initially that to be protected from disclosure under the work product doctrine as set forth in Rule 26(b)(3) of the West Virginia Civil Procedure Rules, the primary motivating purpose behind
creating the document must be to assist in pending or probable future litigation. The court also explained the distinction between fact and opinion work product, noting that fact work product includes any documents or tangible
things prepared by a party or a party’s representative in anticipation of litigation, while opinion work product encompasses those documents or tangible materials which contain the mental impressions, conclusions, opinions,
or legal theories of any attorney or representative concerning the litigation. The court also noted it had ruled in prior cases that insurers defending third party bad faith claims may invoke work product protection for certain
information in claim files.
With that backdrop, the court ultimately ruled, on a question it described as previously “unanswered” in West Virginia, that individual case reserves information set by an attorney or by a non-lawyer representative
with the primary intent of preparing for litigation, and aggregate reserves documents compiled for specific litigation either by a lawyer or by a non-lawyer representative, are subject to protection from discovery as opinion work
product. The court concluded, however, that there was nothing in the limited record before it to show that Erie set the reserves in the case for reasons other than the ordinary course of business, and thus, that Erie had failed
to meet its burden of proving that the materials qualified as either fact or opinion work product.