Fireman's Fund Insurance v. Superior Court

[632]

Opinion

WHITE, P. J.

An insurance company defendant in an action for bad faith failure to contribute to a settlement asks us to protect it from disclosing to its insured the defendant’s reinsurance agreements and related documents and communications. We conclude that the superior court abused its discretion in ordering disclosure.

We need not fully explain the underlying action. In brief, Fireman’s Fund Insurance Company (Fireman’s Fund hereafter) provided excess insurance coverage for PaineWebber Real Estate Securities, Inc., and related corporations (PaineWebber hereafter) but refused to contribute to a settlement between PaineWebber and Homestead Savings. Fireman’s Fund contends that PaineWebber did not convincingly show that the primary insurance coverage had been exhausted. PaineWebber has sued Fireman’s Fund for the full cost of settlement, alleging breach of contract and “bad faith” failure to contribute to settlement.

As part of an extensive document request, PaineWebber asked Fireman’s Fund to produce all documents related to any reinsurance agreement covering the PaineWebber policy and all documents related to reinsurance of the particular claim arising out of Homestead Savings’s action against PaineWebber. When Fireman’s Fund resisted, PaineWebber moved to compel production. Fireman’s Fund claimed that the documents were not relevant, and raised other objections.

The petition before us concerns an order that Fireman’s Fund furnish to PaineWebber: “Each document that describes, summarizes, reflects, refers to, or constitutes any insurance (or reinsurance) agreement” under which an insurance company might be liable to satisfy a judgment against Fireman’s Fund or reimburse Fireman’s Fund, and “[a]ll documents that relate to the subject of reinsurance in connection with any claim arising out of [Homestead Savings’ federal court actions against PaineWebber] that PaineWebber made against any policy of insurance issued by Fireman’s Fund.”

In proceedings below, PaineWebber justified its request by noting that Fireman’s Fund’s former director of reinsurance claims testified that on occasion reinsurers attempted to influence or pressure Fireman’s Fund either to settle or not to settle. Therefore, according to PaineWebber, “Communication between Fireman’s Fund and its reinsurer concerning PaineWebber’s claim is relevant with respect to Fireman’s Fund’s investigation and evaluation of the claim, and with respect to any pressure from the reinsurer and Fireman’s Fund’s response to such pressure.” In its opposition brief to this