State Farm Fire & Casualty Co. v. Superior Court

Opinion

WALLIN, J.

The trial court ordered petitioner State Farm Fire and Casualty Company, a defendant in the underlying insurance bad faith action brought by real parties in interest Melvin and Darlene Black, to produce four letters it had exchanged with its retained counsel in connection with the Blacks’ claim. State Farm contends the letters are protected from discovery by the attorney-client privilege. We agree and grant peremptory relief.

State Farm issued a standard homeowners’ insurance policy to the Blacks. The Blacks filed a claim for policy benefits, contending their residence had sustained physical damage. Although State Farm initially rejected the claim, it later compromised its position and agreed to pay some money if the Blacks would execute an agreement releasing State Farm from all liability.

The Blacks then filed the underlying action for damages for breach of the implied covenant of good faith and fair dealing and breach of the statutory duties prescribed by Insurance Code section 790.03, subdivision (h). They also served State Farm with a request for identification and production of documents. State Farm produced its claims file in response to the request, but withheld documents it claimed were protected by the attorney-client

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and work product privileges. It identified four of those documents as letters it had exchanged with attorneys it had employed “to assess legal issues and render legal opinions and advice with respect to [State Farm’s] offer to pay [the Blacks’] claim for insurance benefits.”

The Blacks moved to compel production of the letters, arguing the attorney-client privilege did not apply because the letters “all followed [State Farm’s] acceptance of liability [under the policy].”

1

The trial court accepted this argument and granted the motion. We stayed enforcement of that order pending resolution of this petition, and now grant relief on the merits.

2

State Farm maintains the letters contain substantive communications between attorney and client and that they were written and sent in confidence. The record supports this claim; absent more, the communications would be privileged and protected from disclosure. (Evid. Code, §§ 952, 954. See also