Maryland American General Ins. Co. v. Blackmon
| Decision Date | 21 July 1982 |
| Docket Number | No. C-1104,C-1104 |
| Citation | 639 S.W.2d 455 |
| Parties | MARYLAND AMERICAN GENERAL INSURANCE COMPANY, Relator, v. Hon. Jack R. BLACKMON, Judge, Respondent. |
| Court | Texas Supreme Court |
Fulbright & Jaworski, Tom Connally and Janice P. Kemp, Houston, Gary, Thomasson, Hall & Marks, Richard A. Hall, Corpus Christi, for relator.
William F. Wallace, Jr., Corpus Christi, Hooper & Chappell, David F. Chappell, Fort Worth, for respondent.
This is an original mandamus proceeding concerning pretrial discovery in a suit brought by First State Bank of Bishop (Bank) against Relator, Maryland American General Insurance Company (Maryland American). The Bank is the real party in interest. Maryland American seeks an order from this Court compelling the Honorable Jack R. Blackmon, Judge of the 117th Judicial District Court in Nueces County, to vacate his orders requiring Maryland American to produce materials concerning the filing, investigation and evaluation of an insurance claim and requiring its attorney to appear for a deposition and produce his files.
This suit arose from losses sustained by the Bank resulting from its honoring of checks drawn on insufficient funds in certain customers' accounts and from loan transactions with these customers. The Bank determined these losses were caused by the dishonesty of its president, now deceased, and sought to collect on its bankers blanket bond (a fidelity insurance agreement) issued by Maryland American. After notifying Maryland American of its claim, the Bank in late 1970 initiated two lawsuits against the customers, the estate of its deceased president, and others, alleging inter alia losses caused by the dishonesty of its president. These lawsuits were eventually consolidated and Maryland American, who had previously intervened, was joined as a defendant with liability alleged under the terms of the bond. Maryland American denied liability but alternatively cross-claimed against the individual defendants for indemnity and subrogation should its liability be established.
Beginning in 1972, the Bank filed a series of amended petitions in which it alleged Maryland American was liable for compensatory and punitive damages in addition to the bond claim as a result of the insurance company's "bad faith" failure to properly investigate and make payment under the bond. The pleadings allege Maryland American "consciously, willfully and fraudulently" refused to fulfill its obligations under the bond, asserting a cause of action in tort, and pleading statutory liability under the Texas Insurance Code and the Texas Deceptive Trade Practices Act. These will be referred to as the bad faith claims.
In connection with the Bank's bad faith claims, the Bank in September 1981 served Maryland American with a Request for Production of the following materials pursuant to Rule 167: 1
1. All documents, tape recordings, video tape recordings, photographs, or other recorded or reproduced documents and items related to or in any way pertaining to the filing of the insurance claim which is the basis of this litigation, the investigation by your company, its agents, servants, employees, or others of said claim, and all other such material related to or in any way connected with the filing and investigation of said claim.
2. All documents, memoranda, letters, notes, or otherwise written or recorded materials pertaining to or in any way related to the decision by your company to either pay or not pay the insurance claim which is the basis of this litigation.
3. All documents, memoranda, letters, notes, or otherwise written or recorded materials which in any way relate to or involves your company's policies with regard to payment of insurance claims of the type or similar to the type of insurance claim which is the basis of the above styled litigation, for the calendar year 1970 through the present.
4. All records of membership of all claim committees related to this claim, the minutes of all meetings of such committee or committees, and all memoranda or other records of communication to or from any member of these committees related to the subject claims of this Plaintiff, commencing December 1, 1970. (If there were or are more than one committee with jurisdiction of the subject claim, all minutes, memoranda, or communications of each such committee should be produced.)
The Bank also requested an agreement from Maryland American's attorney that he would appear for a deposition to testify about subjects relating to the Bank's claims. In response, Maryland American filed a "Motion with Respect to Proposed Deposition of Counsel and Request for Production" in which it requested a protective order under Rule 186b on the basis that the documents and testimony sought by the Bank were privileged from discovery under the proviso in Rule 186a and the attorney-client privilege.
After two hearings on these and other related matters, the trial court rendered an order on March 4, 1982, compelling Maryland American to produce all documents requested by the Bank. The court further stated in the order that "no 'in-camera' inspection of the materials ordered to be produced is appropriate...." The following day, the court rendered a second order extending the deadline for production and ordering Maryland American's attorney to appear for a deposition and to produce all files, correspondence, records, and intra-office memoranda related to the Bank's cause of action.
We granted Maryland American leave to file a petition for writ of mandamus and a temporary stay on discovery. We now grant the writ as set out below.
Maryland American contends that Judge Blackmon abused his discretion in ordering the production of the materials requested by the Bank and the deposition of its attorney. Rule 186a defines the scope of permissible discovery, and requires that the information sought to be discovered be both relevant to the subject matter involved in the lawsuit and reasonably calculated to lead to admissible evidence. However, the Rule prohibits the discovery of such information if it is privileged and specifically extends such privilege to matters described in the following proviso:
Provided, however, that subject to the provisions of the succeeding sentence, the rights...
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