State ex rel. Great American Ins. Co. v. Smith

• Decision Date: 18 December 1978
• Docket Number: No. 60812,60812
• Citation: 574 S.W.2d 379,340 Mo. 832
• Parties: STATE ex rel. GREAT AMERICAN INSURANCE CO. et al., Relators, v. The Honorable Laurence R. SMITH, Judge of the Circuit Court of Jackson County, Missouri, Sixteenth Judicial Circuit, Division 12, Respondent.
• Court: Missouri Supreme Court

Page 379

574 S.W.2d 379

STATE ex rel. GREAT AMERICAN INSURANCE CO. et al., Relators, v. The Honorable Laurence R. SMITH, Judge of the Circuit Court of Jackson County, Missouri, Sixteenth Judicial Circuit, Division 12, Respondent.

No. 60812.

Supreme Court of Missouri, En Banc.

Dec. 18, 1978.

John C. Risjord, Ronald K. Barker, Kansas City, for relators.

Gene A. DeLeve, Ronald S. Weiss, Kansas City, for respondent.

Ernest H. Fremont, Jr., Wm. Dirk Vandever, Russell W. Baker, Jr., Neil Gerstandt, Dennis D. Palmer, George Leonard, Kansas City, for amicus curiae.

FINCH, Judge.

This original action in prohibition is the second such proceeding in this court for the purpose of resolving the issue of whether three letters concerning fire loss claims, written by an attorney to insurance companies he represents (relators), are protected from discovery by the attorney-client privilege. We make permanent our previously issued provisional rule in prohibition.

On December 24, 1973, a restaurant and nightclub owned by Cannova Enterprises, Inc. (Cannova) was destroyed by fire. Cannova had in effect fire insurance policies written by relators which covered the contents, leasehold improvements and business interruption for Cannova's business premises. After the fire Cannova and Mid-Continent National Bank of Kansas City, Missouri (Mid-Continent), the loss payee in the described policies, notified relators of the fire loss and damage and furnished proof of loss to each relator.

Relators employed the General Adjustment Bureau (GAB) to investigate the loss. Attorney John C. Risjord of the law firm of Niewald, Risjord and Waldeck was then contacted and employed to assist in investigating the origin of the loss and to represent relators in connection with the claims being asserted against them by Cannova and Mid-Continent.

On May 31, 1974, relators rejected the proofs of loss by letter from Risjord to Gene DeLeve, attorney for Cannova and Mid-Continent. The claims were denied on the ground that the loss was of incendiary origin.

On August 9, 1974, Cannova and Mid-Continent filed suit against relators, alleging that their refusal to pay the amounts due under the fire insurance policies was vexatious and without reasonable cause. In Counts I and II they sought to recover the face amounts of the policies plus damages, attorney's fees and interest. ¹ Relators' answer, filed by attorney Risjord, raised the affirmative defenses of arson and false swearing.

In response to written interrogatories, submitted under Rule 56.01(b), ² each of the relators identified the person who made the decision on its behalf to deny the claims submitted by Cannova and Mid-Continent. Depositions of those individuals were scheduled and they were commanded by subpoenas duces tecum to produce all files, papers, documents, records and correspondence concerning the investigation of the fire and their action thereon. During the depositions, each witness was asked what he considered before denying the claim. Each testified that three letters written by attorney Risjord to relators were included in the material reviewed. These consisted of a letter dated February 12, 1974, an undated letter which Risjord testified was written during March or April, 1974, and a letter dated May 28, 1974. Production of all the material reviewed by the witnesses was then requested. All has since been furnished except the three letters from Risjord which, on advice of counsel, relators refused to furnish for the reason that they were communications protected by the attorney-client privilege.

Counsel for Cannova and Mid-Continent next moved for a court order directing the witnesses to produce the three letters from Risjord. A hearing was held, after which the court entered this order:

"Plaintiffs having made oral motion to require Raymond Schurkamp, George Freeseman and William L. Mathiesen and their respective insurance companies to produce certain described documents on the taking of their depositions, and the Court having given full consideration to same,

"IT IS HEREBY ORDERED that each of aforementioned witnesses produce at the taking of his deposition, subject to the condition hereinafter stated, all documents, described in his subpoenae, that are dated May 31, 1974 and earlier, but is not required to produce those documents bearing a date subsequent to May 31, 1974.

"IT IS FURTHER ORDERED that, at the option of defendants' counsel, any of aforementioned documents required to be produced, may first be presented to this Court for viewing by this Judge, who reserves the right to exclude from presentation at deposition any portions of said documents with respect to which interests of justice require exclusion.

"The Court believes that aforementioned documents, required to be produced, are reasonably calculated to lead to the discovery of admissible evidence as related to the issue of defendants' vexatious refusal to pay and that plaintiffs have shown they have a substantial need of the materials in the preparation of their case and that they are unable without undue hardship to obtain the substantial equivalent of the materials by other means. Interests of justice require the documents to be produced notwithstanding claim of lawyer-client privilege except for any portions the Court deems should be excluded following inspection of the documents."

Following this order relators sought prohibition. This court, in State ex rel. Great American Insurance Company v. Smith, 563 S.W.2d 62 (Mo. banc 1978), announced standards for determining whether communications are protected from discovery by the attorney-client privilege and held that the trial judge should examine the letters in camera to determine whether, under the standards announced, the letters should be produced for examination by Cannova and Mid-Continent. Those standards were based on 8 J. Wigmore, Evidence §§ 2320, 2322 (McNaughton rev. 1961) and § 491.060. ³

Following that decision, respondent directed relators to deliver the three letters to him for in camera inspection. Pursuant to that order, the letters were produced at a hearing before respondent on May 22, 1978. The transcript of that proceeding shows that Risjord stated that after the fire he was contacted by GAB and the relators and asked to represent relators; Risjord also said that the three letters in question were written in response to requests from relators "to advise them concerning my opinion as to the investigation, where they stood on the law, and to keep them periodically advised and give them my opinion and advice on the subject of a claim which was being made * * *." Risjord's explanation was not questioned at the hearing by counsel for respondent and nothing to the contrary was presented to the court.

On the day following that hearing, respondent made findings and conclusions with reference to the letters. These findings and conclusions were set out in a communication to counsel as follows:

"Gentlemen:

"On May 22, 1978, Mr. Risjord delivered to me (the Court) copies of the three letters in question (written by Mr. Risjord to the defendant insurance companies), pursuant to this Court's order of May 15, 1978, for In camera inspection by me.

"I have read these letters and find that they basically contain:

1. Results of investigation made on behalf of Mr. Risjord and his firm.

2. Conclusions, opinions and impressions of Mr. Risjord and his firm concerning the results of the investigation and the handling of the case.

3. Recommendations of Mr. Risjord and his firm concerning action to be taken with reference to the case.

"I do not find in any of the letters any reference to any information given to Mr. Risjord or his firm by their clients, the defendant insurance companies, or any reference to communication made to the firm by the insurance companies. Nor do I find any indication of any advice given to the companies concerning any communication made by the companies to their attorneys.

"Using the majority opinion of the Supreme Court of Missouri En banc as a guide, I do Not find in any of the three letters any matter to be protected by the attorney-client privilege, to-wit, nothing that '(1) "concerns any communication made to him by his client" in the attorney-client relation; or (2) contains "his advice thereon"; or (3) could lead to "the use of his statements as admissions of the client"; or (4) could lead "to inferences of the tenor of the client's communications." '

"Accordingly, I plan to deliver to Mr. Weiss, attorney for the plaintiff, copies of the three letters in their entirety. However, since Mr. Risjord has indicated he might seek some extraordinary relief in the matter, I will hold up delivering the copies until June 12, 1978.

Respectfully,

Laurence R. Smith,

Judge, Div. 12"

Thereafter, relators again sought prohibition in this court. We issued our provisional rule in prohibition to which a return was filed. We then invited counsel to make suggestions in their briefs as to (1) what changes, if any, should be made in the rule announced in our prior decision reported at 563 S.W.2d 62, and (2) what procedure should be utilized at the appellate level to review in camera decisions of a trial court as to whether particular attorney-client communications are privileged. The court also granted the Missouri Bar's request to file a brief amicus curiae in the case. After considering those briefs and the transcript in this case, as well as the briefs and transcript in the first prohibition proceeding, we have decided to overrule our prior decision, reported at 563 S.W.2d 62, and to hold that the three letters from Risjord to relators are privileged and not subject to discovery.

The attorney-client privilege dates from the reign of Elizabeth I of England. See 8 J. Wigmore, Supra, § 2290. In recognition of that common law privilege, the legislature has enacted a statute, § 491.060, which provides, in part:

"The following persons shall be...