MS Supreme Court Holds Attorney Insurer Waived Attorney-Client Privilege for In-House Counsel Communications
Prepared by Shauncey H. Ridgeway
December 16, 2020
On October 27, 2020, the Mississippi Supreme Court affirmed a trial court decision that an insurance company waived its attorney-client privilege and required it to 1) produce written communications between its in-house counsel and its claims handler, and 2) produce its in-house counsel for a deposition, where the insurance company based its assertion of good-faith belief in the accuracy of its coverage position based on the legal advice of counsel. The Court’s decision, available , falls in line with the minority of courts addressing this issue.
Facts & Procedural History
100 Renaissance, LLC (“Renaissance”) filed a claim under its automobile liability-insurance policy with Travelers Property Casualty Company of America (“Travelers”) after an unidentified driver struck a flagpole on Renaissance’s property. Renaissance’s policy included uninsured motorist coverage. Travelers denied Renaissance’s claim because the flagpole was not a covered “auto” as defined under Renaissance’s policy. Renaissance’s attorney subsequently sent correspondence to Travers’ claims handler detailing why Renaissance should be afforded coverage. Travelers’ claims handler, a non-attorney, sought legal advice from Travelers’ in-house counsel before responding that the policy terms required damage to a covered auto based on Travelers’ understanding of Mississippi auto liability and uninsured motorist insurance statutes.
Renaissance’s attorney later deposed Travelers’ claims handler and followed suit by filing a complaint alleging, among other things, a bad-faith claim against Travelers. In response to Travelers’ motion for summary judgment on the bad faith claim, Renaissance moved for a continuance to conduct additional discovery to obtain emails between Travelers’ claims handler and Travelers’ in-house counsel. The trial court ordered Travelers to produce the emails between its claims handler and in-house counsel for in camera review and determined that Travelers had waived its attorney-client privilege. The trial court accordingly ordered Travelers to produce the emails and produce its in-house counsel for a deposition.
The Majority Opinion
Justice Griffis, writing for the majority, recognized Mississippi Rule of Evidence 502(b) as setting forth the general rule of attorney-client privilege. The Court observed that just as a client may invoke attorney-client privilege, a client may also waive the privilege under certain circumstances, including, among others, where the client specifically asserts reliance on an attorney’s advice as a defense or otherwise places the attorney-client relationship directly at issue in the case.1 Additionally, the Court acknowledged the requirement under Mississippi law for insurers to have an arguable or legitimate basis for denying an insured’s claim.2
In finding that Travelers waived its attorney-client privilege, the Court reasoned that the deposition testimony of Travelers’ claims handler clearly demonstrated that the claims handler lacked personal knowledge of either the applicable law or Travelers’ reasons for denying the claim. Specifically, the Court observed that while the claims handler’s denial letter to Renaissance discussed, among other things, Mississippi uninsured motorist law and its application to the policy, the claims handler not only repeatedly denied and expressly conceded that she did not have any knowledge of Mississippi’s auto liability law or uninsured motorist statutes during her deposition. This considered, the Court concluded that the attorney-client privilege did not protect the contested communications.
The Court here determined that although Travelers’ claims handler signed and sent a denial letter to Renaissance to explain Travelers’ arguable and legitimate basis for denying the claim, the claims handler’s testimony revealed that the letter was most likely prepared by Travelers’ in-house counsel. The Court determined that if it were the case that Travelers’ in-house counsel prepared the denial letter, then Travelers’ in-house counsel did not act as legal counsel and give advice to the claims handler. Further, if the denial letter contained Travelers’ in-house counsel’s reasons for denial (as opposed to the claims handler’s reasons) under the guise of the claims handler’s signature, then it was actually Traveler’s in-house counsel who had personal knowledge of Travelers’ reasons for denying the claim. Despite Travelers’ assertion that its denial was reasonable under Mississippi, the Court determined that the attorney-client privilege did not apply because Travelers put the information it obtained from its in-house counsel at issue by asserting that its actions were reasonable based on what it knew about the applicable law. Accordingly, the Court declined to allow Travelers to use attorney-client privilege as a sword to prevent the Renaissance from discovering the reasons why Travelers denied its claim from a person who had personal knowledge of those reasons.
The Court did not indicate whether it would evaluate similar insurance cases involving attorney-client privilege on a case-by-case basis.
Chief Justice Randolph, presiding Justices Kitchens and King, and Justices Maxwell, Beam, and Chamberlin concurred without opinion.
Justice Ishee dissented with a separate written opinion joined by Justice Coleman, which reflects the majority opinion of courts addressing similar attorney-client privilege issues in the insurance context.3 While Justice Ishee agreed with the majority that the attorney-client privilege applied to the contested communications, he did not agree that Travelers waived its privilege. Justice Ishee acknowledged the likelihood of the denial letter being the product of the claims handler’s conference with in-house counsel. However, he disagreed with the majority’s position that the claims handler lacked personal knowledge as to why the claim was denied simply because she could not answer questions concerning Mississippi statutory interpretation.
Justice Ishee noted that relevance and helpfulness do not factor into whether attorney-client communications should be protected as privileged. He also posited that the majority’s opinion imposed a requirement on claims handlers to be able to explain legal arguments, even where such arguments involve the same legal issues for which they sought counsel, to begin with, in order to preserve attorney-client privilege. Justice Ishee expressed concern that the majority’s opinion would have a “deleterious and chilling” effect on the furtherance of the attorney-client relationship because insurance companies would not feel free to seek legal advice without fear that such communications would later become available to the insured.
On November 12, 2020, Travelers filed a petition for re-hearing, available , advocating for the Court to adopt Justice Ishee’s dissenting opinion. Renaissance filed a response on November 19, 2020, available , opposing Travelers’ motion on grounds essentially arguing that the majority Court correctly decided the case. Travelers petition remains pending before the Court.
1 See Jackson Med. Clinic for Women, P.A. v. Moore, 836 So. 2d 767, 771-73 (Miss. 2003).
2 E.g., Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530, 533 (Miss. 2003) (citing State Farm Mut. Auto. Ins. Co. v. Grimes, 722 So. 2d 637, 641 (Miss. 1998)).
3 See Spiniello Cos. v. Hartford Fire Ins. Co., Civil Action No. 07-cv-2689 (DMC), 2008 U.S. Dist. LEXIS 53509, 19 (D.N.J. July 14, 2008) (collecting cases setting out the majority rule, and adopting a case-by-case approach).
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