ALERT GLOBAL INSURANCE
News Concerning
Bad Faith and Extracontractual Issues
Third-Party Bad Faith Litigation –
Insurers’ Attorney-Client Privilege and Work Product Doctrine Protections
Limited by Tripartite Relationship in Underlying Liability Action
Stacey S. Farrell • 404.572.2027 • ssfarrell@cozen.com
Alicia G. Curran • 214.462.3021 • acurran@cozen.com
In what may be the continuation of a trend toward the erosion
of the attorney-client privilege and work product doctrine in
bad faith litigation, another court has held that an insurer’s
communications with defense counsel retained for the
insured in an underlying liability suit are discoverable and
not subject to the attorney-client privilege or work product
doctrine in a subsequent third-party bad faith lawsuit, this
time under Georgia law. Camacho v. Nationwide Mut. Ins.
Co., No. 1:11-CV-03111-AT., 2012 WL 6062029 (N.D. Ga.,
Dec. 3, 2012); see also In re XL Specialty, et al., 373 S.W.3d
46 (Tex. 2012) (communications between counsel for insurer
and employer in workers’ compensation administrative case
not privileged in subsequent bad faith lawsuit). In Camacho,
the U.S. District Court for the Northern District of Georgia (the
District Court) rejected the insurer’s attorney-client privilege
and work product doctrine arguments, (1) holding that the
joint defense/common interest exception to the attorney-client
privilege applies except for communications solely between
the insurer and the insurer’s in-house claims counsel, (2)
ordering the production of the insurer’s entire claims le
despite the work product doctrine, subject to the redaction
of only the mental impressions, conclusions, opinions or
legal theories of the insurer’s in-house counsel and insurer’s
claims representatives handling the le regarding the
litigation, and (3) ordering the depositions of the insurer’s
personnel to proceed.
UNDERLYING FACTS
Jesus Camacho, the surviving spouse of Stacey Camacho,
and Lajean Nichols, as administratrix of the estate (plaintiffs),
led a state court wrongful death suit against Seung C.
Park (Mr. Park), insured by Nationwide Mutual Insurance
Company (the insurer), that ultimately resulted in a verdict in
excess of policy limits against Mr. Park. Mr. Park assigned to
plaintiffs his claims against the insurer for negligent and bad
faith failure to settle the claim within policy limits. Plaintiffs,
standing in the shoes of Mr. Park, led a third-party bad faith
suit against the insurer in the Northern District of Georgia,
based on diversity jurisdiction.
Mr. Park’s settlement with plaintiffs, which included the
assignment, also stated he agreed to waive any attorney-
client privilege he had with defense counsel and any work
product doctrine he had with respect to the records, thoughts,
activities and communications in the possession of the insurer
or the law rms hired by the insurer. He also gave his full
authority to plaintiffs and their attorneys to interview all the
insurer’s claims professionals and the law rms the insurer
hired to represent him.
INSURER ORDERED TO PRODUCE
COMMUNICATIONS WITH COUNSEL
The District Court applied the joint-defense exception to the
attorney-client privilege and concluded that the insurer and/or
its in-house counsel’s communications with outside counsel
hired to defend Mr. Park in the underlying wrongful death
action were not protected by the attorney-client privilege.
Despite the District Court’s recognition that no Georgia
court has expressly held the joint defense exception to the
attorney-client privilege applies where the same attorney
represents both the insurer and the insured in the underlying
liability action, the District Court primarily based its decision
on the following:
ALERT
JANUARY 14, 2013
