In re Mt. Hawley Insurance Company
Decision Date | 12 June 2019 |
Docket Number | Opinion No. 27892,Appellate Case No. 2018-001170 |
Court | South Carolina Supreme Court |
Parties | IN RE: MT. HAWLEY INSURANCE COMPANY, Petitioner, In Which Contravest, Inc., Contravest Construction Company and Plantation Point Horizontal Property Regime Owners Association, Inc., as assignees, are Respondents. |
C. Mitchell Brown, William C. Wood Jr., and Blake T. Williams, all of Nelson Mullins Riley & Scarborough, LLP, of Columbia; and Andrew K. Epting Jr., of Andrew K. Epting Jr., LLC, of Charleston, all for Petitioner.
Jesse A. Kirchner, Michael A. Timbes and Thomas J. Rode, all of Thurmond Kirchner & Timbes, P.A., of Charleston, for Respondents.
Gray T. Culbreath and Janice Holmes, both of Gallivan, White, & Boyd, PA, of Columbia, for amici curiae The American Property Casualty Insurance Association and The South Carolina Insurance Association.
Bert G. Utsey III, of Peters, Murdaugh, Parker, Eltzroth & Detrick, P.A., of Charleston, and J. Ashley Twombley, of Twenge & Twombley Law Firm, of Beaufort, for amicus curiae the South Carolina Association for Justice.
We are presented with a certified question from the United States Court of Appeals for the Fourth Circuit. The underlying case is an insurance bad faith action against an insurance company for its failure to defend its insured in a construction defect action. The insured settled the construction defect action and brought a bad faith tort action. When the insurer asserted it acted in good faith in denying coverage, the insured sought to discover the reasons why the insurer denied coverage. According to the insurer, the discovery requests included communications protected by the attorney-client relationship. The federal district court reviewed the parties' respective positions, determined the insured had established a prima facie case of bad faith, and ordered the questioned documents to be submitted to the court for an in camera inspection. The insurer then sought a writ of mandamus from the Fourth Circuit to vacate the district court's order regarding the discovery dispute. In turn, the Fourth Circuit certified the following question to this Court:
Does South Carolina law support application of the "at issue" exception to attorney-client privilege such that a party may waive the privilege by denying liability in its answer?
The parties, especially the insured, assert the certified question does not accurately represent the correct posture of the case. In fact, the insured concedes the narrow question presented requires an answer in the negative. We agree, for we find little authority for the untenable proposition that the mere denial of liability in a pleading constitutes a waiver of the attorney-client privilege. For the reasons set forth below, we elect to analyze the issue narrowly in the limited context of a bad faith action against an insurer. We are constrained to answer the certified question as follows: "No, denying liability and/or asserting good faith in the answer does not, standing alone, place the privileged communications ‘at issue’ in the case."1
In its Certification Order, the Fourth Circuit summarized the relevant facts as follows:
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Reeves v. S.C. Mun. Ins. & Risk Fin. Fund
... ... SOUTH CAROLINA MUNICIPAL INSURANCE AND RISK FINANCING FUND, Respondent. Appellate Case No. 2019-001756 Opinion No. 28034 Supreme Court ... difference between Schneider and this case, however, is that in Schneider the insurance company did not satisfy the judgment, but left the insured exposed beyond the policy limits. Here, the Fund ... See In re Mt. Hawley Ins. Co. , 427 S.C. 159, 170, 829 S.E.2d 707, 714 (2019) ("Of course, ... [i]f there is a ... ...
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