Brent A. Kesner, Esq.
Donald M. Kresen, Esq.
Tanya M. Kesner, Esq. Gold, Khourey & Turak
Ellen R. Archibald, Esq. Moundsville, West Virginia
Kesner, Kesner & Bramble James W. Peters
Charleston, West Virginia Woodsfield, Ohio
Attorneys for Petitioner Attorneys for Respondent
Jeffrey A. Grove, Esq.
Paul T. Tucker, Esq.
Bachmann, Hess, Bachmann & Garden
Wheeling, West Virginia
Attorneys for Respondent Litman
JUSTICE DAVIS delivered the Opinion of the Court.
JUSTICE MCGRAW dissents and reserves the right to file a dissenting opinion.
CHIEF JUSTICE MAYNARD concurs and reserves the right to file a concurring opinion.
2. In an action for bad faith against an insurer, the general procedure involved with discovery of documents contained in an insurer's litigation or claim file is as follows: (1) The party seeking the documents must do so in accordance with the reasonable particularity requirement of Rule 34(b) of the West Virginia Rules of Civil Procedure; (2) If the responding party asserts a privilege to any of the specific documents requested, the responding party shall file a privilege log that identifies the document for which a privilege is claimed by name, date, custodian, source and the basis for the claim of privilege; (3) The privilege log should be provided to the requesting party and the trial court; and (4) If the party seeking documents for which a privilege is claimed files a motion to compel, or the responding party files a motion for a protective order, the trial court must hold an in camera proceeding and make an independent determination of the status of each communication the responding party seeks to shield from discovery.
This matter is here under the original jurisdiction of this Court. Westfield Insurance Company (hereinafter referred to as Westfield), petitioner/defendant below, seeks a writ of prohibition to prevent enforcement of an order from the Circuit Court of Marshall County. The circuit court's order required Westfield to produce allegedly privileged documents, as a discovery sanction, to Richard Hornbeck and Robert Litman, d/b/a Litman Excavating (hereinafter referred to as Litman), respondents/plaintiffs below. After a careful review of the briefs and listening to the oral arguments of the parties, the writ prayed for is hereby granted as moulded.
In pursuing their bad faith claims, Mr. Hornbeck and Litman filed discovery
requests on Westfield. The discovery sought information from the file Westfield generated
in the action against Litman (hereinafter referred to as the A tort file). The discovery also
sought information in a file Westfield generated in the declaratory judgment action
(hereinafter referred to as the B coverage file).
(See footnote 5)
Westfield responded to the requests by
asserting the attorney-client privilege, quasi attorney-client privilege, and work product
doctrine. Mr. Hornbeck and Litman each filed motions to compel discovery and for
sanctions. After a hearing on the motions, the circuit court entered an order on September
19, 2003, requiring Westfield to produce the A tort file and B coverage file as a sanction
for asserting the attorney-client privilege, quasi attorney-client privilege, and work product
doctrine in bad faith.
(See footnote 6)
Westfield thereafter filed the instant prohibition action with this Court.
Our cases have made clear that [a] writ of prohibition is available to correct
a clear legal error resulting from a trial court's substantial abuse of its discretion in regard
to discovery orders. Syl. pt. 1, State Farm v. Stephens, 188 W. Va. 622, 425 S.E.2d 577
(1992). Moreover, [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. U.S. Fid. & Guar. Co. v. Canady, 194 W. Va. 431, 460 S.E.2d 677
Based upon the foregoing principles, we now hold that in an action for bad
faith against an insurer, the general procedure involved with discovery of documents
contained in an insurer's litigation or claim file is as follows: (1) The party seeking the
documents must do so in accordance with the reasonable particularity requirement of Rule
34(b) of the West Virginia Rules of Civil Procedure; (2) If the responding party asserts a
privilege to any of the specific documents requested, the responding party shall file a
privilege log that identifies the document for which a privilege is claimed by name, date,
custodian, source and the basis for the claim of privilege; (3) The privilege log should be
provided to the requesting party and the trial court; and (4) If the party seeking documents
for which a privilege is claimed files a motion to compel, or the responding party files a
motion for a protective order, the trial court must hold an in camera proceeding and make an
independent determination of the status of each communication the responding party seeks
to shield from discovery.
In our review of the briefs and limited record submitted, we conclude that
critical points in the above general procedure were not followed. First, both Mr. Hornbeck
and Litman made broad general requests for all documents contained in the A tort file and
B coverage file. Westfield eventually responded by producing a privilege log that
identified a total of 450 documents. Mr. Hornbeck and Litman thereafter filed motions to
compel and to sanction Westfield. The position taken by Mr. Hornbeck and Litman was that
the privilege log was too vague and that Westfield was asserting a claim of privilege for
documents that were not privileged.
(See footnote 9)
A hearing was held on the motions on April 16, 2003. During the hearing, Litman produced a letter that he was privy to, which was also in the A tort file, and argued that the letter was not privileged. Therefore, Litman's counsel contended that Westfield acted in bad faith in asserting that it was privileged. In response to arguments that Westfield acted in bad faith in designating documents as privileged, when they were not, the circuit court made the following comments:
THE COURT: You know where I see Westfield right now? And the decision I'm going to make is whether to sustain Mr. Tucker's motion and, you know, strike your objections to turning over the material or whether I'm going to have to ask for it all to be looked at in-camera and then if I see that Mr. Tucker's suspicions are justified, if you have said that - a lot of things that the average lawyer would know aren't privileged are in there, then strike your answer. That's the quandary I see myself in right at this point.
Are you willing to take a chance on me going ahead and looking at the material and if I see that you said a lot of things were confidential and the average lawyer would know that there's no way they are, and I'd so find, that it might be proper for me to go ahead and strike your answer?
Counsel for Westfield did not expressly answer the trial court's question. Thereafter, the trial court entered two separate orders on May 27, 2003, and May 30, 2003, sanctioning Westfield for asserting privileges in bad faith. The orders clearly demonstrate that the circuit court made its decision based upon the representations of all counsel during the hearing. That is, the circuit court did not undertake an in camera review of the privilege log.
It is quite obvious that the circuit court acted under an erroneous presumption that, when a party claims a privilege and files a privilege log, every document listed in the log must in fact be privileged to avoid sanctions. This presumption is legally wrong. The reason for an in camera review is to determine which, if any, of the documents alleged to be privileged are, in fact, privileged. See Medical Assurance, 213 W. Va. at ___, 583 S.E.2d at 88 (Our review of the privilege log leads us to conclude that at least some of the documents sought by Respondent are probably protected by attorney-client privilege or the work product doctrine. Therefore, because of the probable invasion of confidential materials, this Court's original jurisdiction is appropriate.); Gaughan, 203 W. Va. at 364 n.8, 508 S.E.2d at 81 n.8 (Allstate retained 137 documents from Mr. Mirandy's claim file. After an in camera review of the privilege logs on each of the documents retained, the circuit court ordered Allstate to produce 66 of the documents.). This Court will not adopt or approve of a rule which would allow a party to be sanctioned, in the manner done in this case, merely because some documents listed in a privilege log turn out not to be privileged.
After reviewing the record in this case, this Court is very aware of the circuit court's frustration. In fact, it is obvious that the circuit court was trying to resolve discovery matters when all parties to the litigation were polarized. None of the parties complied with our prior case law regarding how discovery requests and discovery production are to be handled when privileged documents are involved.
Notwithstanding the circuit court's frustration, it was obligated to hold an in camera review of the privilege log and make an independent determination of the privilege status of each document. Alternatively, should the court deem it to be more expedient, the court may appoint a special master to review the withheld documents in camera and to determine whether they were exempt from disclosure[.] Daily Gazette Co., Inc. v. West Virginia Dev. Office, 198 W. Va. 563, 566, 482 S.E.2d 180, 183 (1996). Likewise, all fees and expenses relating to the special master may be assessed by the circuit court pursuant to Rule 37(a)(4). Here, the circuit court failed to make an independent determination or appoint a special master to review the documents. Instead, the circuit court ordered all the documents be produced because some of the documents may not have been privileged. As a result of the application of this incorrect legal standard, we have no choice but to grant the writ of prohibition prayed for by the relator. Medical Assurance, 213 W. Va. at ___, 583 S.E.2d at 88.
Writ granted as moulded.
(b) Procedure. The request [for production] may, without leave of court, be served upon the plaintiff after commencement of the action and upon any other party with or after service of the summons and complaint upon that party. The request shall set forth, either by individual item or by category, the items to be inspected, and describe each with reasonable particularity. (Emphasis added.)