State ex rel. Erie Ins. v. Mazzone, 33209.

• Decision Date: 07 June 2007
• Docket Number: No. 33209.,33209.
• Citation: 648 S.E.2d 31
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia ex rel. ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Defendant Below, Petitioner, v. The Honorable James P. MAZZONE, Judge of the Circuit Court of Ohio County, and Elizabeth Murfitt, Plaintiff Below, Respondents.

648 S.E.2d 31

STATE of West Virginia ex rel. ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Defendant Below, Petitioner, v. The Honorable James P. MAZZONE, Judge of the Circuit Court of Ohio County, and Elizabeth Murfitt, Plaintiff Below, Respondents.

No. 33209.

Supreme Court of Appeals of West Virginia.

Submitted: January 23, 2007.

Decided: June 7, 2007.

Concurring Opinion of Justice Starcher June 29, 2007.

Concurring Opinion of Justice Benjamin July 25, 2007.

Syllabus by the Court

1. "When a discovery order involves the probable invasion of confidential materials that are exempted from discovery under Rule 26(b)(1) and (3) of the West Virginia Rules of Civil Procedure, the exercise of this Court's original jurisdiction is appropriate." Syl. Pt. 3, State ex rel. U.S. Fid. & Guar. Co. v. Canady, 194 W.Va. 431, 460 S.E.2d 677 (1995).

2. "A circuit court's ruling on discovery requests is reviewed for an abuse of discretion standard; but, where a circuit court's ruling turns on a misinterpretation of the West Virginia Rules of Civil Procedure, our review is plenary. The discretion that is normally given to a trial court's procedural decisions does not apply where the trial court makes no findings or applies the wrong legal standard." Syl. Pt. 5, State ex rel. Med. Assurance of West Virginia v. Recht, 213 W.Va. 457, 583 S.E.2d 80 (2003).

3. "To determine whether a document was prepared in anticipation of litigation and, is therefore, protected from disclosure under the work product doctrine, the primary motivating purpose behind the creation of the document must have been to assist in pending or probable future litigation." Syl. Pt. 7, State ex rel. United Hosp. Ctr., Inc. v. Bedell, 199 W.Va. 316, 484 S.E.2d 199 (1997).

4. When individual case reserves information is set by an attorney or by a non-lawyer representative with the primary intent of preparing for litigation, then the individual case reserves information is subject to protection from discovery as opinion work product pursuant to Rule 26(b)(3) of the West Virginia Rules of Civil Procedure.

5. For the purposes of Rule 26(b)(3) of the West Virginia Rules of Civil Procedure, aggregate reserves documents compiled for specific litigation either by a lawyer or by a non-lawyer representative are opinion work product and merit greater protection from discovery. However, aggregate reserves documents not developed primarily in anticipation of specific litigation but produced for general business purposes are not protected by the work product rule.

6. Reserves documents determined to be opinion work product are generally protected from disclosure under the provisions of Rule 26(b)(3) of the West Virginia Rules of Civil Procedure unless the party seeking discovery demonstrates compelling need for the materials, which shall include proof that the opinion materials qualify for a recognized exclusion from application of the work product doctrine.

7. "When a trial court presiding over a third-party bad faith action makes its determination of whether a document was prepared in anticipation of litigation, the trial court should consider the nature of the requested documents, the reason the documents were prepared, the relationship between the preparer of the document and the party seeking its protection form discovery, the relationship between the litigating parties, and any other facts relevant to the issue." Syl. Pt. 12, in part, State ex rel. Allstate Ins. v. Gaughan, 203 W.Va. 358, 508 S.E.2d 75 (1998).

Robert J. Behling, Robert E. Dapper, Jr., Christopher M. Jacobs, Dapper, Baldasare, Benson, Behling & Kane, Pittsburgh, PA, for the Petitioner.

Christopher J. Regan, James G. Bordas, III, Bordas & Bordas, PLLC, Wheeling, for the Respondent, Elizabeth Murfitt.

ALBRIGHT, Justice.

For a second time in the underlying third-party bad faith action, Erie Insurance Property & Casualty Company (hereinafter referred to as "Erie") invokes the original jurisdiction of this Court¹ in order to obtain a writ of prohibition to bar the enforcement of a discovery order of the Ohio County Circuit Court requiring disclosure of relevant reserves information to the plaintiff below, Elizabeth Murfitt. This Court had granted Erie's earlier request to prohibit the enforcement of a March 30, 2005, order regarding the reserves information. State ex rel. Erie Ins. Prop. & Cas. Co. v. Mazzone, 218 W.Va. 593, 625 S.E.2d 355 (2005) (hereinafter referred to as "Erie I"). While Erie had asserted in Erie I that the reserves information was protected from disclosure as opinion work product, we did not reach the work product argument and instead granted the writ based on the more fundamental problem that the threshold inquiry regarding relevancy had not been completed by the lower court. See id. at Syl. Pt. 4. Erie renews its opinion work product argument in the request now before this Court to prohibit the enforcement of the lower court's June 29, 2006, order, which again requires disclosure of the reserves information. For the reasons explained below, the relief in prohibition is denied.

I. Factual and Procedural Background

The original negligence claim in this case was brought by Ms. Murfitt against a driver whose automobile insurer was Erie. During the course of the jury trial on the negligence action, the parties settled the claim. Ms. Murfitt then filed an amended complaint alleging that the manner in which Erie had handled her claim evidenced bad faith.²

When Erie objected to discovery requests of Ms. Murfitt, including documents containing Erie's reserves information regarding the claim, Ms. Murfitt filed a motion to compel discovery. The ruling on the motion took the form of a lower court order dated March 30, 2005. In that order the court below directed that "any documents pertaining to `reserves' are to be disclosed to the extent of reserve amounts and dates on which any such amounts were placed." The March 30, 2005, order was the object of our attention in Erie I.

Following our decision in Erie I, the lower court held a hearing on May 12, 2006, to address Ms. Murfitt's Renewed Motion to Compel Production of Reserve Information. After hearing oral argument, the trial court, adhering to the direction provided in Erie I, determined that the reserves information is relevant to Ms. Murfitt's claim that Erie intentionally undervalued her claim in its settlement offers.³ Thereafter, the lower court reaffirmed its previous determination that the reserves information was not excluded from discovery under the principles of the work product doctrine. As indicated in the Memorandum Opinion and Order dated June 29, 2006, the lower court found the doctrine inapplicable because only the raw data regarding the reserves amounts and the dates those amounts were calculated were being ordered disclosed rather than the reasoning and thought process behind the reserves numbers. Additionally, the lower court in its June 29, 2006, order found that "anticipation of litigation is not the primary motivating purpose for establishing insurance reserves...." The court below alternatively found that disclosure was appropriate even if the reserves information was work product because Ms. Murfitt had established the requisite level of need.

On August 14, 2006, Erie petitioned this Court for a writ of prohibition to bar enforcement of the June 29, 2006, order. The petition asserts that by again issuing the discovery order the lower court exceeded its legitimate powers and abused its discretion because the material ordered to be produced is opinion work product, which Erie contends should be treated as privileged material that Erie maintains should rarely, if ever, be subject to disclosure. After finding a prima facie case had been established, on October 26, 2006, this Court issued a rule against the circuit judge and Ms. Murfitt as respondents to show cause why the writ prayed for should not be awarded. W.Va.Code § 53-1-5 (1933) (Repl.Vol.2000).

II. Standard of Review

The requested extraordinary relief is sought to stop the enforcement of an order directing release of information at the discovery phase of a civil proceeding. As we held in syllabus point three of State ex rel. United States Fidelity & Guaranty Co. v. Canady, 194 W.Va. 431, 460 S.E.2d 677 (1995), "[w]hen a discovery order involves the probable invasion of confidential materials that are exempted from discovery under Rule 26(b)(1) and (3) of the West Virginia Rules of Civil Procedure, the exercise of this Court's original jurisdiction is appropriate."

As a general rule,

[a] circuit court's ruling on discovery requests is reviewed for an abuse of discretion standard; but, where a circuit court's ruling turns on a misinterpretation of the West Virginia Rules of Civil Procedure, our review is plenary. The discretion that is normally given to a trial court's procedural decisions does not apply where the trial court makes no findings or applies the wrong legal standard.

Syl. Pt. 5, State ex rel. Medical Assurance of West Virginia v. Recht, 213 W.Va. 457, 583 S.E.2d 80 (2003). Furthermore, when presented with a challenge to the compelled disclosure of materials alleged to be privileged, we conduct "a hard and more stringent examination" of whether the circuit court abused its discretion. Syl. Pt. 5, Canady, 194 W.Va. at 433, 460 S.E.2d at 679..

III. Discussion

Erie urges us to find that the lower court erred as a matter of law when it ordered disclosure of the subject reserves information because it maintains that the information is protected from discovery pursuant to Rule 26(b)(3) of the West Virginia Rules of Civil Procedure as opinion work product that was prepared in the context of anticipated or existing litigation. With like force Ms. Murfitt urges us to uphold the ruling because it neither demonstrates improper application of the law nor an abuse of discretion by the court below. Ms. Murfitt specifically maintains that Erie failed...