Procedural Posture

Petitioner insurer requested a writ reversing the discovery order of the lower court (California), with respect to the contents of insured’s adjuster’s file pertaining to petitioner’s coverage suit against insured, arguing that such order violated petitioner’s attorney-client privilege.

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Overview

Petitioner insurer requested a writ reversing respondent lower court’s discovery order, pertaining to the full contents of insured’s adjuster’s file addressing petitioner’s suit against insured challenging coverage, with respect to insured’s bad faith suit against petitioner, contending that such order violated the attorney-client privilege. On appeal, the writ was granted and the discovery order was vacated. In support of its ruling, the court held that an insurance adjuster can under particular fact situations also become the agent of insured, usually when no issue as to coverage arises. The court further held, however, that where coverage was in issue, it was obvious that the adjuster’s loyalties were divided and the insured and his counsel could not reasonably expect that he represented only the interests of insured. Accordingly, the court found that the communications between petitioner’s coverage counsel were privileged under Cal. Evid. Code ยง 954, and were not discoverable.

Outcome

The discovery order was vacated as the court found that in an adversarial situation whereby petitioner insurer brought a coverage suit against insured, insured’s adjuster’s materials were covered under petitioner’s attorney-client privilege.