Grange Mut. Ins. Co. v. Trude

• Decision Date: 21 October 2004
• Docket Number: No. 2003-SC-0772-MR.,2003-SC-0772-MR.
• Citation: 151 S.W.3d 803
• Parties: GRANGE MUTUAL INSURANCE COMPANY, Appellant, v. Hon. William W. TRUDE, Jr., Judge, Appellee, and Dale WILDER Real Party in Interest.
• Court: United States State Supreme Court — District of Kentucky

151 S.W.3d 803

GRANGE MUTUAL INSURANCE COMPANY, Appellant, v. Hon. William W. TRUDE, Jr., Judge, Appellee, and Dale WILDER Real Party in Interest.

No. 2003-SC-0772-MR.

Supreme Court of Kentucky.

October 21, 2004.

As Modified December 1, 2004.

Rehearing Denied January 20, 2005.

Whitney Dunlap, III, Burnam, Thompson, Weldon, Simons and Dunlap, PSC, Richmond, Counsel for Appellant.

William W. Trude, Jr., Judge, Owsley Circuit Court, Irvine, for Appellee.

M. Austin Mehr, Austin Mehr Law Offices, Wesley Brian Deskins, Lexington, Counsel for Real Party in Interest.

KELLER, Justice.

I. Introduction

The trial court ordered Grange Mutual Insurance Company ("Grange") to comply with sixteen discovery requests. Grange petitioned the Court of Appeals for a writ of prohibition, claiming that compliance with the trial court's order required burdensome production of irrelevant information and disclosure of privileged trade secrets. The Court of Appeals found that Grange failed to prove that production of the ordered discovery would result in irreparable harm and refused to grant the writ. With regard to the relevance, we find that the discovery requests are proper, albeit with a few exceptions, because they are aimed at production of relevant information and documents. And we agree that Grange failed to show irreparable harm because it did not adequately prove that compliance with the discovery requests would require disclosure of trade secrets. Therefore, we affirm in part and reverse in part.

II. Background

Dale Wilder ("Wilder") was involved in a car accident with Sid Gabbard, who was insured by Grange. Wilder submitted a personal injury claim, and Grange assigned Erica Barnes ("Barnes") to serve as the adjuster on the claim. After negotiating with Grange for six months, Wilder was dissatisfied with the way the claim was being handled and he filed suit in the Owsley Circuit Court. Wilder's lawsuit included a personal injury claim against Sid Gabbard and a bad faith claim against Grange.

The trial court bifurcated the claims, holding the bad faith claim in abeyance until after the trial on the personal injury claim. At the conclusion of the trial of the personal injury claim, the jury returned a verdict for Wilder and awarded him approximately $26,000.00.

The bad faith claim alleges that Barnes undervalued Wilder's claim during negotiations and that she had repeatedly delayed communicating with Wilder's attorney. During pretrial preparations, Wilder submitted forty-two discovery requests to Grange. Grange objected to sixteen of those requests, citing concerns about relevancy, privacy, improper motive, trade secret privileges, and the burdensome nature of the requests. The trial court overruled Grange's objections and granted Wilder's motion to compel the discovery. Grange then requested a protective order to limit the discovery allowed, or in the alternative, to prohibit public disclosure of the discovery. The trial court denied the motion without making any findings of fact. Grange again requested a protective order, specifically asking the trial court to conduct an in camera review of the materials to be produced to determine the extent of relevancy and privilege, and again in the alternative, to seal the file to prohibit disclosure of the discovery outside of the litigation. The trial court also denied this request.

Grange then filed a petition with the Court of Appeals for a "writ of prohibition barring the Owsley Circuit Court ... from compelling ... production ... of confidential business and trade secrets, burdensome and expensive historic data of limited relevance, and irrelevant information unrelated to the issues in the case, or limiting production to relevant information subject to appropriate Protective Orders." Grange also described the relief it was seeking as a request that the Court of Appeals "craft[ ] a discovery order which gives [Wilder] all discovery which is relevant to his claims, balanced against the legitimate needs of the Petitioner to be protected against unwarranted public disclosure, undue burden and expense, and profiteering," or at the very least, "[s]eal this file," prohibit Wilder from copying the discovery, and require that Wilder return the discovery at the conclusion of the case. Grange claimed that the production of the documents would cause irreparable harm and could not be adequately remedied on appeal. The Court of Appeals denied the petition because it found that while Grange would not have an adequate remedy on appeal, it had failed to prove irreparable harm. Grange now brings this appeal as a matter of right.

III. Analysis

A. Writ of Prohibition Standard

A writ of prohibition is an "extraordinary remedy and we have always been cautious and conservative both in entertaining petitions for and in granting such relief."¹ We have divided writ cases into "two classes," which are distinguished by "whether the inferior court allegedly is (1) acting without jurisdiction (which includes `beyond its jurisdiction'), or (2) acting erroneously within its jurisdiction."² Grange is not challenging the jurisdiction of the trial court, so we need not concern ourselves with an extensive discussion of the first class of cases.

Instead, Grange's claim falls under the second class. In that type of case, writs of prohibition "ordinarily ha[ve] not been granted unless the petitioner established, as conditions precedent, that he (a) had no adequate remedy by appeal or otherwise, and (b) would suffer great and irreparable injury (if error has been committed and relief denied)."³ We "have consistently (apparently without exception) required the petitioner to pass the first test; i.e., he must show he has no adequate remedy by appeal or otherwise."⁴ The petitioner must then also meet the requirements of the second test, i.e., by showing great and irreparable injury, alternately defined as "something of a ruinous nature,"⁵ before a writ will issue. "Ordinarily if this cannot be shown, the petition will be dismissed."⁶

We have also held, however, that a showing of great and irreparable harm in this second class of cases is not "an absolute prerequisite"⁷ for the issuance of a writ. The requirement may be put aside in "certain special cases ... [where] a substantial miscarriage of justice will result if the lower court is proceeding erroneously, and correction of the error is necessary and appropriate in the interest of orderly judicial administration."⁸ But these "certain special cases" are exactly that — they are rare exceptions and tend to be limited to situations where the action for which the writ is sought would violate the law, e.g. by breaching a tightly guarded privilege⁹ or by contradicting the requirements of a civil rule.¹⁰ In those rare cases, a court may peek behind the curtain, i.e., beyond the petitioner's failure to meet the great and irreparable harm test, at the merits of the petitioner's claim of error by the lower court.

B. Appellate Review Standard

Grange claims that a denial of a writ of prohibition is examined on appeal under the de novo standard of review "where the factual underpinning for application of an articulated legal rule is so wanting as to equal, in reality, a distortion of the legal rule." Grange cites Lexington Public Library v. Clark¹¹ for this standard, but it does so by taking the qualifying language in its brief — "where the factual underpinning for application of an articulated legal rule is so wanting as to equal, in reality, a distortion of the legal rule" — out of context. The language that Grange cites reads in context as follows:

Where the challenge involves matters of fact, or application of law to facts, however, an abuse of discretion should be found only where the factual underpinning for application of an articulated legal rule is so wanting as to equal, in reality, a distortion of the legal rule. Application of any lesser standard for interlocutory intervention would ignore the extraordinary nature of the writs of prohibition and mandamus.¹²

The cited language supports an abuse of discretion standard rather than de novo review. And the cited language actually relates the standard to be applied by the court hearing the initial petition when it reaches the merits of the case, i.e., after applying the "practical and convenient formula"¹³ of no adequate remedy on appeal and great and irreparable injury — not the standard applied in an appeal of the grant or denial of a writ to yet a higher court.

But we must review this matter under an appellate standard. The petition for this writ was filed in the Court of Appeals, which acted as a trial court because it heard the matter as an original action. And this case is now before us as a matter of right appeal, not an original action. Since the passage of the Judicial Article in 1976, the Court of Appeals has been the appropriate forum for the original action in a petition for a writ of prohibition applicable to a circuit court, and the Supreme Court is limited to appellate review.¹⁴ But what appellate standard — de novo, abuse of discretion, or clear error — to apply to which class of writ case is not perfectly clear because we have, unfortunately, failed to make an unambiguous distinction among the three standards in our recent writ cases.

This is perhaps a result of the fact that many of the seminal opinions on the subject of writs are from original writ actions in our predecessor Court — i.e., when there was no intermediate appellate court that would hear the original writ action and from which an appeal could be taken. Those opinions did not need to consider the standard on appeal because there was no higher court that could entertain an appeal. But it could also be that no party has framed the issue so as to require careful attention on our part as to the standard of review that we ought to apply.

By claiming that de novo is the proper standard of review, however, Grange has placed this...