Coverage Opinions Remain Privileged in Bad Faith Action Even Where Gist of Recommendation is Set Forth in Letter to Insured
As a matter of first impression, the Supreme Court of West Virginia recently held that coverage opinion letters were protected by the attorney-client privilege even though the insurer subsequently sent correspondence to its insured that included the recommendation of coverage counsel. State of West Virginia ex Rel Montpelier U.S. Ins. Co., No. 13-1172, 2014 WL 1408487 (W. Va. Apr. 10, 2014). The Court conducted an in camera examination of the documents the insurer claimed were privileged.
The insured argued that because the insurer disclosed the recommendation of the coverage opinion letters to the insureds, the attorney-client privileged was waived. The insureds relied on the third-party disclosure exception to the attorney-client privilege. The Court surveyed cases nationwide and found no authority finding a waiver of the privilege merely because the gist of the recommendation was contained in a letter to the insured.
Further, the Court also held that training materials prepared by the insurer’s national counsel addressing specific legal issues was privileged. The Court stated that the training materials “clearly demonstrate specific requests by [coverage counsel’s] clients for legal opinions on specific subjects.” Id.
However, the Court found the retention agreement between coverage counsel and the insurer and invoices were not privileged as they were general and did not include any mental impressions of counsel.
Although the Court found that the insured presented a novel waiver argument to obtain coverage counsel’s advice to the insurer, that argument was rejected. Let us know if you have made or faced similar arguments and your own results.
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