State ex rel. Erie Ins. Co. v. Mazzone

Decision Date30 November 2005
Docket NumberNo. 32777.,32777.
Citation625 S.E.2d 355
CourtWest Virginia Supreme Court
PartiesSTATE 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, Respondents.
Concurring Opinion of Justice Davis December 6, 2005.
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. United States Fidelity and Guaranty 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. Medical Assurance of West Virginia v. Recht, 213 W.Va. 457, 583 S.E.2d 80 (2003).

3. "The question of the relevancy of the information sought through discovery essentially involves a determination of how substantively the information requested bears on the issues to be tried." Syl. Pt. 4, in part, State Farm Mut. Auto. Ins. Co. v. Stephens, 188 W.Va. 622, 425 S.E.2d 577 (1992).

4. When presented with a challenge to discovery of insurance reserves information, the trial court is required under the provisions of Rule 26(b)(1) of the West Virginia Rules of Civil Procedure to make a preliminary determination of whether the requested information is relevant in that it is admissible or is reasonably calculated to lead to the discovery of admissible evidence.

5. In making a determination in the context of discovery about the relevancy of insurance reserves information, the trial could should take into account the nature of the case, the methods used by the insurer to set the reserves and the purpose for which the information is sought, and only grant requests for disclosure when its findings of fact and conclusions of law support a determination that the specific facts of the claim in the case before it directly and primarily influenced the setting of the reserves in question.

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

James G. Bordas, III, James B. Stoneking, Bordas & Bordas, P.L.L.C., Wheeling, for the Respondent, Elizabeth Murfitt.

ALBRIGHT, Chief Justice:

As the defendant below, Erie Insurance Property & Casualty Company (hereinafter referred to as "Erie"), invokes the original jurisdiction of this Court in order to prohibit enforcement of the March 30, 2005, order of the Ohio County Circuit Court directing disclosure of claims file documents in an underlying third-party bad faith action brought by Elizabeth Murfitt, plaintiff below. The particular Erie documents at issue pertain to reserve information detailing amounts and dates on which those amounts were set. Erie claims that the reserve information represents opinion work product which warrants heightened protection from disclosure. In consideration of the argument of the parties and applicable legal authorities, we grant the requested writ of prohibition on a ground other than the reason asserted.

I. Factual and Procedural Background

Ms. Murfitt initiated the underlying third-party bad faith action against Erie based on Erie's handling of a claim arising out of a motor vehicle accident involving Ms. Murfitt and Erie's insured. Within the context of the third-party bad faith suit, Ms. Murfitt served a request for production of documents upon Erie, seeking a copy of the Erie claims file relative to the accident. Erie produced a redacted version of its entire claims file and provided a detailed privilege log which identified each document withheld or redacted as well as noting whether the attorney-client privilege and work product doctrine warranted the reservation or redaction. As to its reason for objecting to disclosing reserve information within the claims file, Erie maintained that such information was protected as opinion work product.

On February 24, 2004, Ms. Murfitt filed a motion to compel disclosure of the reserve information. In response, the lower court conducted an in camera review of the documents in question, examined Erie's privilege log and heard oral argument on the motion. The court below then issued an order on March 30, 2005, wherein the court detailed which documents were subject to disclosure in whole or in part. Additionally, with respect to those documents to be produced in their entirety or in redacted version, the order stated that any information contained in the discoverable documents bearing on reserves was subject to disclosure.

On June 24, 2005, Erie filed an original jurisdiction petition in this Court seeking to prohibit the circuit court from enforcing its order. By order dated July 5, 2005, this Court granted review.

II. Standard of Review

The original jurisdiction of this Court in matters of extraordinary writs derives from Article VIII, § 3 of the West Virginia Constitution and is codified in West Virginia Code § 51-1-3 (1923) (Repl. Vol. 2000). With specific regard to cases of prohibition, West Virginia Code § 53-1-1 (1923) (Repl. Vol. 2000) provides that "[t]he writ of prohibition shall lie as a matter of right in all cases of usurpation and abuse of power, when the inferior court has not jurisdiction of the subject matter in controversy, or, having such jurisdiction, exceeds its legitimate powers."

The order being challenged in this case involves a ruling granting discovery. While such orders are interlocutory in nature and generally only reviewable on appeal, "[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." Syl. Pt. 3, State ex rel. United States Fid. and Guar. Co. v. Canady, 194 W.Va. 431, 460 S.E.2d 677 (1995). This is so because the harm resulting from the disclosure of such information is often not correctable on appeal. State ex rel. Brison v. Kaufman, 213 W.Va. 624, 629, 584 S.E.2d 480, 485 (2003). Accordingly, the matter in the instant case is properly before us for review.

We will proceed in our examination of the issues raised by adhering to the standard of review put forth in syllabus point five of State ex rel. Medical Assurance of West Virginia v. Recht, 213 W.Va. 457, 583 S.E.2d 80 (2003):

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.

III. Discussion

Erie claims that the lower court exceeded its jurisdiction or legitimate powers by requiring that portions of the company's claims file pertaining to reserve information be disclosed in the underlying third-party bad faith action because reserve information constitutes non-discoverable opinion work product. We do not reach the matter of work product because our examination reveals a more fundamental weakness in the lower court's treatment of the discovery request.

The general test for determining whether information is discoverable is stated in Rule 26 of the West Virginia Rules of Civil Procedure (hereinafter referred to as "Rule 26"), which provides that:

[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

W.Va. R. Civ. P. 26(b)(1). It is clear from the face of Rule 26 that disclosure decisions involve relevancy and privilege determinations.

A threshold issue regarding all discovery requests is relevancy. This is so because "[t]he question of the relevancy of the information sought through discovery essentially involves a determination of how substantively the information requested bears on the issues to be tried." Syl. Pt. 4, in part, State Farm Mut. Auto. Ins. Co. v. Stephens, 188 W.Va. 622, 425 S.E.2d 577 (1992). It is only after information is determined to be relevant that consideration is given to whether the information is subject to exclusion based upon the absolute or conditional privilege of attorney-client communications or work-product information respectively.

In the case at hand, Erie objected to disclosing reserve information in response to Ms. Murfitt's request for production of documents. Ms. Murfitt's attorneys filed a motion to compel disclosure of a complete, unredacted copy of the claims file which included the reserve information. In considering Ms. Murfitt's motion to compel, the lower court conducted an in camera review of the documents, examined Erie's privilege log and heard oral argument before it issued its order on March 30, 2005. We have only the...

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