Hodges v. Southern Farm Bureau Cas. Ins. Co.

• Decision Date: 23 May 1983
• Docket Number: No. 82-C-1314,82-C-1314
• Citation: 433 So.2d 125
• Parties: Reubin K. HODGES v. SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY and Louisiana Farm Bureau Mutual Insurance Company.
• Court: Louisiana Supreme Court

Page 125

433 So.2d 125

Reubin K. HODGES v. SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY and Louisiana Farm Bureau Mutual Insurance Company.

No. 82-C-1314.

Supreme Court of Louisiana.

May 23, 1983.

Rehearing Denied June 27, 1983.

Donna W. Lee, Lee & Greenfield, Baton Rouge, for applicant.

John J. Hainkel, Jr., Porteous, Toledano, Hainkel, New Orleans, for respondent.

Robert S. Cooper, Jr., Baton Rouge, for intervenor-respondent.

BLANCHE, Justice.

The sole issue in this case is whether certain documents, withheld by the defendant insurance company, are subject to discovery. Although the trial court ordered the production of several of the documents requested by the plaintiff, it refused to direct the disclosure of the remaining papers. The court of appeal granted writs in part and ordered the defendant to produce one additional document. We granted the plaintiff's application for writs to examine the rulings of the lower courts in light of our discovery provisions, La.C.C.P. arts. 1421-1474.

This present controversy arises out of an "excess judgment" suit filed by the plaintiff, Reubin Hodges, against Louisiana Farm Bureau Mutual Insurance Company. In order to more fully appreciate the intricate nature of the discovery problem presented, however, we begin our recitation of the facts with the automobile collision involving Reubin Hodges and Lynda Leona Nichols.

Lynda Nichols was seriously injured when the car she was driving was struck by a truck operated by Reubin Hodges and owned by Prime Building Materials, Inc. The curatrix of Lynda Nichols sued Reubin Hodges and Louisiana Farm Bureau, among others, to recover for the injuries she sustained in the accident. Louisiana Farm Bureau had issued a policy providing insurance coverage to a limit of $100,000 on the truck driven by Hodges at the time of the accident. Pursuant to the terms of that policy, Louisiana Farm Bureau undertook the defense of the Nichols suit. It employed the services of an attorney, Robert Vandworker, to represent both Reubin Hodges and Louisiana Farm Bureau. The case proceeded to trial where judgment was rendered on April 11, 1979 against the defendants, in solido, for an amount exceeding $2.3 million. The judgment against Louisiana Farm Bureau was restricted to its $100,000 policy limits. This judgment was affirmed by the court of appeal and became final when this Court denied the defendants' application for certiorari on May 9, 1980. ¹

On September 16, 1980, Hodges filed a petition for "excess judgment" against Louisiana Farm Bureau. Hodges alleged that he had suffered serious economic loss as well as mental suffering due to the defendant's bad faith and/or negligence and/or breach of contractual duties by: (1) failing to adequately investigate the [Nichols] claim; (2) failing to keep petitioner informed of the progress of the action; (3) failing to communicate the offer or offers to settle within the policy limits to petitioner; (4) failing to timely settle for the policy limits; (5) failing to timely advise petitioner of the possibility of an excess judgment being rendered and the consequences thereof; (6) failing to give equal consideration of the interests of petitioner in this matter; (7) disregarding petitioner's desire to protect himself from financial loss; and (8) other acts and/or omissions to be determined at the trial of the case. Hodges prayed for a sum of over $2.45 million which included the $2.3 million judgment against him together with damages for mental pain, humiliation and embarrassment.

In connection with his suit for excess judgment, Hodges caused a subpoena and a subpoena duces tecum to issue on October 13, 1980 to two employees of Louisiana Farm Bureau. One of the employees, James Garmon, was the vice-president of claims for Louisiana Farm Bureau. The other employee, William Barker, was a district claims manager. The subpoenas and subpoenas duces tecum summoned the recipients to appear for the taking of their depositions on November 14, 1980, and ordered them to produce, at that time, the entire file and all records dated between April 9, 1976 and November 14, 1980, whether personal or belonging to Louisiana Farm Bureau, concerning their handling of the Nichols v. Hodges case.

On November 14th, Garmon and Barber appeared for the taking of their depositions accompanied by John Hainkel, the attorney representing Louisiana Farm Bureau in the excess judgment action. Hainkel informed plaintiff's counsel that he had, in his possession, Louisiana Farm Bureau's complete file, from April 9, 1976 until November 14, 1980, on the Nichols v. Hodges case. Although he agreed to produce several documents in the file, Hainkel refused to disclose those documents which he considered to be protected by the attorney-client privilege. Counsel for plaintiff objected and subsequently filed a motion to compel production of all the papers in the defendant's file which were dated between April 9, 1976 and November 14, 1980, including those documents considered privileged by Hainkel. After a hearing, the trial judge held that the attorney-client privilege was not applicable; accordingly, he ordered Louisiana Farm Bureau to make available, for inspection and copying, the documents which were requested by the plaintiff. Shortly thereafter, Louisiana Farm Bureau produced a number of the papers from its file for the plaintiff's inspection.

After an examination of the documents which had been disclosed by Louisiana Farm Bureau in compliance with the court order, counsel for plaintiff realized that several documents were obviously missing. Although the trial court had ordered the production of documents dated through November 14, 1980, none of the papers revealed to the plaintiff were dated later than December 20, 1978. Consequently, plaintiff filed another motion to compel the production of all the documents contained in the defendant's file which were dated between April 6, 1978 and November 14, 1980. Also included in this motion was a request that the defendant be held in contempt for failing to comply with the trial court's previous order to produce.

During the hearing on the motion for contempt and/or to produce documents, Hainkel submitted the documents in dispute to the trial judge for an in camera inspection. These documents, which were made a part of the record on appeal, are divided into two sets. One set contains correspondence between Garmon and another vice-president of claims for Louisiana Farm Bureau, Hartwell Bowling. The other set of documents includes correspondence between Vandaworker (counsel for Hodges and Louisiana Farm Bureau in the Nichols suit) and Louisiana Farm Bureau. All of the documents in both sets discuss the likelihood of an excess judgment and the possibility of entering into an agreement with the original plaintiff, Nichols, to settle all claims he had against Louisiana Farm Bureau and Hodges. The dates on the documents range from March 8, 1979 to November 11, 1980.

At the hearing on the motion, Hainkel contended that the documents withheld by Louisiana Farm Bureau only concerned its handling of the excess judgment action and not the underlying Nichols v. Hodges lawsuit. Thus, Hainkel maintained that the documents were not discoverable under C.C.P. art. 1424, for they were prepared in "anticipation of litigation", i.e. the excess judgment lawsuit. Alternatively, Hainkel argued that the documents were not relevant. The trial court accepted the position advanced by the defendant's counsel and refused to order the production of the two sets of documents, finding that they were prepared in anticipation of the excess judgment action and were not concerned with the merits or handling of the underlying suit. Plaintiff Hodges applied to the court of appeal for writs, contending that all of the documents were discoverable. The court of appeal granted writs in part, but only ordered the production of one of the documents, a letter dated May 29, 1980 from Garmon to Vandaworker. ² , ³

The problem to be resolved in this case is whether the two sets of documents withheld by Louisiana Farm Bureau can be discovered. We first will examine the history and purpose of our present discovery system and then, within the framework of the discovery provisions, address the specific question of discovery posed by this case.

SOURCE AND PURPOSE

Modern discovery procedure did not become a reality in Louisiana until 1952. Prior to 1952, the discovery system was variously described by commentators as "inadequate" and faulted in design and purpose. L. Hubert, Depositions and Discovery, 13 La.L.Rev. 173 (1953); Comment, Discovery Procedure and its Louisiana Counterparts, 2 La.L.Rev. 525 (1940). In fact, Professor Hubert expressed doubt whether a discovery system existed at all. Hubert, p. 177. Prompted by the favorable reception given to the federal rules of discovery as well as the inadequacies of the existing discovery statutes, the Louisiana Legislature adopted Act 202 in 1952. Preliminary Statement, Book 2, Title 3, Chapter 3, Louisiana Code of Civil Procedure of 1960; Hubert, p. 177. The provisions in this Act closely followed the Federal Rules of Civil Procedure of 1937 and created more effective methods for obtaining information. See Preliminary Statement; Comment, Louisiana's Discovery Articles: A Modern Appraisal, 22 Loy.L.Rev. 130 (1976). In 1976, the discovery system in Louisiana underwent a second revision with the adoption of Act 574. The discovery rules of 1952 were replaced by articles 1421 through 1474 of the Code of Civil Procedure. Patterned in large part after the 1970 revision of the federal rules of discovery, the new discovery statutes were designed to increase the effectiveness and efficiency of the discovery devices. F. Maraist, Recent Changes in Louisiana Discovery Law: An Analysis of Act No. 574 of 1976, 24 La.B.J. 161 (Dec. 1976). Because the Louisiana statutes on discovery are derived from the...