Case Title: Boone v. Vanliner Ins. Co.

Citation: 2001-Ohio-27

Docket Number: 

State: ohio

Court: Ohio Supreme Court

Date: 2001-04-04T00:00:00Z

Document:
[Cite as Boone v. Vanliner Ins. Co., 91 Ohio St.3d 209, 2001-Ohio-27.] 
 
 
BOONE, APPELLANT, v. VANLINER INSURANCE COMPANY, APPELLEE. 
[Cite as Boone v. Vanliner Ins. Co. (2001), 91 Ohio St.3d 209.] 
Insurance — Action alleging bad faith denial of insurance coverage — Insured 
entitled to discover claims file materials containing attorney-client 
communications related to the issue of coverage that were created prior 
to the denial of coverage. 
(No. 00-104 — Submitted October 18, 2000 — Decided April 4, 2001.) 
APPEAL from the Court of Appeals for Franklin County, No. 98AP-1535. 
__________________ 
SYLLABUS OF THE COURT 
In an action alleging bad faith denial of insurance coverage, the insured is entitled 
to 
discover 
claims 
file 
materials 
containing 
attorney-client 
communications related to the issue of coverage that were created prior to 
the denial of coverage. 
__________________ 
 
DOUGLAS, J.  Appellant, Richard Boone, is an over-the-road truck driver 
and a resident of Ohio.  Appellee, Vanliner Insurance Company (“Vanliner”), 
issued a commercial vehicle liability insurance policy to Boone, individually, and 
a separate policy to Boone’s employer.  Each policy of insurance provided 
$1,000,000 liability coverage.  Boone’s employer’s policy also provided 
$1,000,000 uninsured/underinsured motorist coverage and Boone’s policy listed 
uninsured/underinsured motorist coverage in the amount of $50,000. 
 
On June 12, 1995, Boone was in Tampa, Florida, transporting goods for 
his employer when he was involved in a three-vehicle accident.  Boone, driving a 
tractor-trailer, was travelling behind a dump truck driven by Robert Allison, when 
Brett Verona, the operator of the third vehicle, lost control while attempting to 
SUPREME COURT OF OHIO 
2 
change lanes.  Due to Verona’s negligence, Allison was unable to prevent his 
vehicle from colliding with Verona’s.  Boone’s attempt to avoid hitting Allison’s 
truck was also unsuccessful. 
 
As a result of the accident, Boone suffered serious injuries, including 
bilateral fractures of both knees.  Verona’s insurer paid $100,000, the limit of 
Verona’s liability coverage, toward Boone’s damages.  Boone, alleging that his 
damages exceeded $100,000, subsequently sought underinsured motorist benefits 
from Vanliner through his employer’s policy of insurance.  Vanliner denied 
Boone’s claim, asserting that an exclusion provision in the policy precluded 
underinsured motorist coverage with regard to Boone’s accident. 
 
On June 12, 1997, Boone brought a declaratory judgment action against 
Vanliner seeking a determination that his policy and his employer’s policy of 
insurance 
with 
Vanliner 
each 
provided 
him 
with 
$1,000,000 
in 
uninsured/underinsured motorist coverage.  With regard to his individual policy, 
Boone alleged that he was entitled to $1,000,000 uninsured/underinsured 
coverage by operation of law because Vanliner had failed to obtain a written 
waiver of uninsured/underinsured coverage in an amount equal to his liability 
insurance as required by Ohio law.  The complaint included a claim for bad faith,1 
alleging that Vanliner lacked reasonable justification for denying underinsured 
motorist coverage.  To support his bad faith claim, Boone sought access, through 
discovery, to Vanliner’s claims file. 
 
In its answer to Boone’s complaint, Vanliner denied that Boone was 
entitled to uninsured/underinsured motorist benefits under either policy.  
However, Vanliner subsequently changed its position and admitted that each 
policy of insurance provided Boone with $1,000,000 of uninsured/underinsured 
                                                          
 
1. 
An insurer’s lack of good faith in the processing of a claim is frequently referred to as 
“bad faith.”  Such conduct gives rise to a cause of action in tort against the insurer.  Hoskins v. 
Aetna Life Ins. Co. (1983), 6 Ohio St.3d 272, 6 OBR 337, 452 N.E.2d 1315, paragraph one of the 
syllabus. 
January Term, 2001 
3 
motorist coverage.  Vanliner subsequently moved the court for a protective order 
with regard to numerous documents in its claims file.  In its motion, Vanliner 
contended that several documents were protected from discovery by the attorney-
client privilege and/or work-product doctrine.2 
 
The trial court ordered Vanliner to submit its claims file to the court for an 
in camera inspection to determine which documents, if any, were protected from 
discovery.  The claims file consists of 1,741 documents numbered “0” through 
“1741.”3  The trial court found that one hundred seventy-five of the documents 
were protected from discovery and ordered Vanliner to release the unprotected 
documents to Boone.4  In determining which documents were protected, the trial 
court applied our ruling in Moskovitz v. Mt. Sinai Med. Ctr. (1994), 69 Ohio St.3d 
638, 635 N.E.2d 331, wherein we held that certain attorney-client 
communications and work-product materials in an insurer’s claims file were not 
                                                          
 
2. 
The attorney-client privilege exempts from the discovery process certain communications 
between attorneys and their clients.  The privilege has long been recognized by the courts, Upjohn 
Co. v. United States (1981), 449 U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed.2d 584, 591; 
Moskovitz, infra, 69 Ohio St.3d at 660, 635 N.E.2d at 349, and “[i]ts purpose is to encourage full 
and frank communication between attorneys and their clients and thereby promote broader public 
interests in the observance of law and administration of justice.”  Upjohn at 389, 101 S.Ct. at 682, 
66 L.Ed.2d at 591. 
 
Work product consists of “documents and tangible things prepared in anticipation of 
litigation or for trial by or for another party or by or for that other party’s representative” and may 
be discovered only upon a showing of good cause.  Civ.R. 26(B)(3).  This rule is often referred to 
as the “work-product doctrine.”  The purpose of the work-product doctrine is “to prevent an 
attorney from taking undue advantage of his adversary’s industry or efforts.”  Civ.R. 26(A)(2). 
 
Vanliner also argued that certain claims file documents were not discoverable because 
they were not relevant to the bad faith claim.  The trial court did not accept this argument and 
Vanliner did not appeal that aspect of the trial court’s ruling. 
3. 
The claims file documents are actually stamped “000000” through “001741.”  
Throughout this opinion reference to specific documents will be by number without the preceding 
zeros. 
 
We also note that there is no document numbered 929 in the claims file.  According to 
Vanliner, this is due to a numbering error. 
4. 
The trial court held that the following documents were protected from discovery: 883, 
884, 891, 893-895, 898, 910-928, 930, 932-984, 1015, 1033-1043, 1049, 1051-1077, 1085-1091, 
1094-1098, 1101-1102, 1109-1114, 1124-1150, 1251, 1256, 1257, and 1258, and portions of 
documents numbered 858, 859, 861, and 862. 
SUPREME COURT OF OHIO 
4 
protected from discovery by the attorney-client privilege or work-product 
doctrine. 
 
Upon appeal5 to the Tenth District Court of Appeals, Vanliner argued that 
the trial court erred in applying Moskovitz and that, as a result, the trial court 
incorrectly ordered Vanliner to disclose thirty documents that are protected by the 
attorney-client privilege and/or work-product doctrine.  The court of appeals 
agreed with Vanliner’s argument that Moskovitz was inapplicable.  Consequently, 
the court found that of the thirty claims file documents challenged on appeal, 
Vanliner was required to disclose only one in its entirety.  The court accepted 
Vanliner’s argument that the remaining twenty-nine were privileged either in 
whole or in part.  Accordingly, the court of appeals affirmed in part and reversed 
in part the order of the trial court and remanded the cause to the trial court.6 
 
This cause is now before this court pursuant to the allowance of a 
discretionary appeal. 
 
The issue before us is whether, in an action alleging bad faith denial of 
insurance coverage, the insured is entitled to obtain, through discovery, claims file 
documents containing attorney-client communications and work product that may 
cast light on whether the denial was made in bad faith. 
                                                          
 
5. 
While the issue was apparently not raised by appellant either in the court of appeals or in 
this court, we note in passing, and without deciding, that there could be a question of whether this 
case, involving solely a discovery issue, met the requirements for a final appealable order as set 
forth in R.C. 2505.02(B)(4) and, in particular, (B)(4)(b). 
6. 
Upon the court of appeals’ remand of this case to the trial court, the trial court issued a 
new order, which stated, “Pursuant to the Court of Appeals’ Decision rendered December 2, 1999, 
the Court’s November 10, 1998 Entry is hereby modified to indicate that [Vanliner] must produce 
only the following documents contained in the claims file: 597, 598, 600, and 601 with requested 
redactions, and 599.” 
 
This entry of the trial court is misleading because the order says that it modifies the trial 
court’s order of November 10, 1998, so that only five documents from the insurer’s claims file 
must be produced.  However, the trial court’s November 10, 1998 entry ordered Vanliner to 
produce over fifteen hundred claims file documents.  Vanliner appealed, and the court of appeals 
addressed, the trial court’s November 10, 1998 order only with respect to thirty documents.  Thus, 
the entry upon remand should have reflected that it modified the November 10, 1998 entry only as 
to those documents at issue in the appeal. 
January Term, 2001 
5 
 
As already indicated, the trial court relied on our decision in Moskovitz to 
determine which claims file documents were protected from discovery.  In 
Moskovitz, after receiving a substantial jury award for a medical malpractice 
claim, the plaintiffs sought prejudgment interest as authorized by R.C. 
1343.03(C).  Id., 69 Ohio St.3d at 647-648, 635 N.E.2d at 340-341.  To be 
successful in an R.C. 1343.03(C) proceeding, the prevailing party of the 
underlying case must prove, among other things, that the opposing party did not 
make a good faith effort to settle the case.  With regard to this prong of R.C. 
1343.03(C), Moskovitz sought to clarify the extent of a plaintiff’s right to 
discovery of the malpractice insurer’s claims file in light of the attorney-client 
privilege and the work-product doctrine.  We stated that “[d]ocuments and other 
things showing the lack of a good faith effort to settle by a party or the attorneys 
acting on his or her behalf are wholly unworthy of the protections afforded by any 
claimed privilege.”  Id. at 661, 635 N.E.2d at 349.  Thus, we held that “[i]n an 
R.C. 1343.03(C) proceeding for prejudgment interest, neither the attorney-client 
privilege nor the so-called work product exception precludes discovery of the 
contents of an insurer’s claims file.  The only privileged matters contained in the 
file are those that go directly to the theory of defense of the underlying case in 
which the decision or verdict has been rendered.”  Id. at paragraph three of the 
syllabus. 
 
Boone argues that claims file materials showing an insurer’s lack of good 
faith in determining coverage are equally unworthy of protection.  Thus, Boone 
argues that the trial court was correct in applying Moskovitz to the claims file 
documents in this case. 
 
Vanliner, on the other hand, asks us to affirm the court of appeals’ 
decision, which held that Moskovitz was not applicable in the present action.  The 
court of appeals found the distinguishing factor between this case and Moskovitz 
to be the status of the underlying claim.  Specifically, the court of appeals noted 
SUPREME COURT OF OHIO 
6 
that in the case at bar the underlying claim (underinsured motorist damages) is 
still pending, whereas in Moskovitz the underlying claim (medical malpractice) 
had already been decided. 
 
We find that the court of appeals, in this regard, misread our decision.  
Our ruling in Moskovitz did not turn on the status of the underlying claim, but 
rather upon our recognition that certain attorney-client communications and work-
product materials were undeserving of protection, i.e., materials “showing the 
lack of a good faith effort to settle.”  Moskovitz at 661, 635 N.E.2d at 349.  
Moreover, this “distinction” could easily be eliminated by staying the bad faith 
claim until the underlying claim has been determined. 
 
Vanliner argues that Moskovitz must be viewed in light of our subsequent 
holding in State v. McDermott (1995), 72 Ohio St.3d 570, 651 N.E.2d 985, so that 
even if our ruling in Moskovitz is applicable to attorney-client communications in 
the present case, McDermott requires that they be protected.  We disagree. 
 
In McDermott, we held that R.C. 2317.02(A) provides the exclusive 
means by which privileged attorney-client communications can be waived by the 
client.  Id. at syllabus.  The flaw in Vanliner’s argument is that McDermott 
addresses client waiver of the privilege, whereas Moskovitz sets forth an exception 
to the privilege and is therefore unaffected by our holding in McDermott. 
 
Vanliner further contends that if insureds alleging bad faith are able to 
access certain attorney-client communications within the claims file, then insurers 
will be discouraged from seeking legal advice as to whether a certain claim is 
covered under a policy of insurance.  This argument is not well taken because it 
assumes that insurers will violate their duty to conduct a thorough investigation 
by failing, when necessary, to seek legal counsel regarding whether an insured’s 
claim is covered under the policy of insurance, in order to avoid the insured later 
having access to such communications, through discovery. 
January Term, 2001 
7 
 
Vanliner further argues that the release of the documents at issue in this 
case will undermine its ability to defend on the underlying underinsured motorist 
claim that remains pending.  We find this argument unpersuasive.  If this were a 
legitimate concern, we believe that Vanliner would have moved the trial court to 
stay the bad faith claim, severing it from the underlying underinsured motorist 
claim.  Our review of the record in this case reveals that Vanliner took no such 
action. 
 
Like the trial court, we find that the rationale behind our holding in 
Moskovitz is applicable to actions alleging bad faith denial of coverage.  That is, 
claims file materials that show an insurer’s lack of good faith in denying coverage 
are unworthy of protection.  It appears, however, that in determining which 
documents were protected in this case, the trial court applied the specific holding 
in 
Moskovitz, 
i.e., 
only 
those 
documents 
containing 
attorney-client 
communications and work product that go directly to the theory of defense of the 
underlying claim are protected.  We find this holding inapplicable in the present 
case because, while the lack of a good faith effort to settle involves conduct that 
may continue throughout the entire claims process, a lack of good faith in 
determining coverage involves conduct that occurs when assessment of coverage 
is being considered.  Therefore, the only attorney-client and work-product 
documents that would contain information related to the bad faith claim, and, 
thus, be unworthy of protection, would have been created prior to the denial of 
coverage. 
 
For the foregoing reasons, we hold that in an action alleging bad faith 
denial of insurance coverage, the insured is entitled to discover claims file 
materials containing attorney-client communications related to the issue of 
coverage that were created prior to the denial of coverage.  At that stage of the 
claims handling, the claims file materials will not contain work product, i.e., 
things prepared in anticipation of litigation, because at that point it has not yet 
SUPREME COURT OF OHIO 
8 
been determined whether coverage exists.  Of course, if the trial court finds that 
the release of this information will inhibit the insurer’s ability to defend on the 
underlying claim, it may issue a stay of the bad faith claim and related production 
of discovery pending the outcome of the underlying claim. 
 
We now turn to the specific documents at issue herein.  Out of the 1,741 
documents contained in the claims file, the issue before us concerns only twenty-
nine documents, namely documents numbered 581, 582, 597, 598, 600, 601, 676, 
677, 885, 886, 887, 888, 889, 890, 892, 896, 899, 900, 902, 903, 904, 905, 906, 
907, 1106, 1107, 1151, 1152, and 1153.  Although the trial court ordered Vanliner 
to produce over fifteen hundred claims file documents, Vanliner’s appeal sought 
to protect only thirty of these documents and was successful as to twenty-nine. 
 
The court of appeals found, and we agree, that the trial court’s ruling was 
inconsistent with respect to eight claims file documents.  Specifically, the trial 
court ordered Vanliner to produce documents numbered 597, 598, 600, and 601 
without Vanliner’s requested redactions but ordered Vanliner to produce 
documents numbered 858, 859, 861, and 862 with the requested redactions.  This 
was inconsistent because the information ordered to be redacted from documents 
numbered 858, 859, 861, and 862 was identical to the information requested to be 
redacted from 597, 598, 600, and 601. 
 
We do not agree, however, with the court of appeals’ approach to 
resolving this inconsistency.  The court found that “[d]ocuments 597, 598, 600 
and 601 are simply duplicates of documents 858, 859, 861 and 862” and held that 
“[s]ince these documents are duplicates, the trial court erred in not ordering 
similar redactions of 597, 598, 600 and 601.”7  From this statement it would 
                                                          
 
7. 
The court of appeals’ statement that “[d]ocuments 597, 598, 600 and 601 are simply 
duplicates of documents 858, 859, 861 and 862” is not correct.  While the information contained 
in the portions Vanliner requested to be redacted is the same in document number 597 as in 862, 
598 as in 861, 600 as in 859, and 601 as in 858, the documents themselves are not duplicates of 
each other. 
January Term, 2001 
9 
appear that the content of these documents was not independently evaluated and 
that it was assumed that because the trial court ordered the information to be 
redacted in some documents its mistake was in not ordering the same information 
redacted in others.  We find this analysis flawed because it does not consider the 
possibility that the trial court’s mistake was actually in permitting the redaction of 
the information. 
 
Upon review of these documents in light of our foregoing holding, we find 
that two of them, namely, documents numbered 600 and 601, should be released 
without redactions to Boone.  These documents were created prior to the denial of 
coverage and the information that Vanliner requested be redacted in these two 
documents, some of which reflects attorney-client communication, relates to the 
issue of insurance coverage.  Therefore, documents numbered 600 and 601 should 
be produced without redactions (which makes the redactions ordered in 
documents numbered 858 and 859 moot). 
 
Documents numbered 597 and 598 contain the name of an attorney with 
the language “We can explore with atty Maddox” and “Check with atty Maddox.”  
These documents were communications, it would appear, between two of 
Vanliner’s claims employees.  Vanliner’s attorney was, apparently, not involved 
in these communications on the issue in question.  Therefore, we find that 
documents numbered 597 and 598 do not contain attorney-client communications.  
Consequently, the information contained in these documents is not protected by 
the attorney-client privilege and should be disclosed without redactions (which 
makes the redactions ordered in documents numbered 861 and 862 moot). 
 
As to the remaining documents at issue in this appeal, those documents 
contain attorney-client communications and/or work product that were created 
after coverage was denied.  They are, therefore, protected from discovery. 
 
Accordingly, for the foregoing reasons, we affirm in part and reverse in 
part the judgment of the court of appeals, and remand this cause. 
SUPREME COURT OF OHIO 
10 
Judgment affirmed in part, 
reversed in part 
and cause remanded. 
 
RESNICK, F.E. SWEENEY and PFEIFER, JJ., concur. 
 
MOYER, C.J., COOK and LUNDBERG STRATTON, JJ., dissent. 
__________________ 
 
COOK, J., dissenting.  The majority today adopts a wholesale exception to 
the attorney-client privilege in actions alleging bad-faith denial of insurance 
coverage.  The majority concludes that “claims file materials that show an 
insurer’s lack of good faith in denying coverage are unworthy of protection.”  
Because the majority’s broad holding diminishes the attorney-client privilege 
without a reasoned basis for doing so, I dissent. 
 
The majority cites no authority for the proposition that attorney-client 
communications leading to a denial of insurance coverage are not protected from 
disclosure in a subsequent action alleging bad faith.  Instead, the majority relies 
on Moskovitz v. Mt. Sinai Med. Ctr. (1994), 69 Ohio St.3d 638, 635 N.E.2d 331, 
which allowed discovery of otherwise privileged materials in an R.C. 1343.03(C) 
proceeding seeking prejudgment interest.  The Moskovitz court supported its 
decision by declaring documents showing lack of good-faith effort to settle 
“wholly unworthy” of any privilege.  Id. at 661, 635 N.E.2d at 349. 
 
The majority extends the Moskovitz rationale to this case, deciding that 
claims file materials showing an insurer’s lack of good faith in denying coverage 
are similarly unworthy of protection by the attorney-client privilege. But the 
“unworthy of protection” rationale espoused by the majority was unsupported in 
Moskovitz and is unsupported now. 
 
The attorney-client privilege “is intended to encourage ‘full and frank 
communication between attorneys and their clients and thereby promote broader 
public interests in the observance of law and the administration of justice.’ ”  
January Term, 2001 
11 
Swidler & Berlin v. United States (1998), 524 U.S. 399, 403, 118 S.Ct. 2081, 
2084, 141 L.Ed.2d 379, 384, quoting Upjohn Co. v. United States (1981), 449 
U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed.2d 584, 591; see, also, In re Klemann 
(1936), 132 Ohio St. 187, 190-191, 7 O.O. 273, 275, 5 N.E.2d 492, 493-494.  
Although the privilege may suppress relevant evidence, its existence is justified 
by the perceived long-term social benefits of open communication between 
lawyer and client.  See 1 Rice, Attorney-Client Privilege in the United States (2 
Ed.1999) 18, Section 2:3.  The law will not allow the privilege, however, when 
the attorney-client relationship is abused.  Id. at 22-24, Section 8:2; see, also, 
Clark v. United States (1933), 289 U.S. 1, 15, 53 S.Ct. 465, 469, 77 L.Ed. 993, 
1000.  Accordingly, there is a well-established “crime-fraud exception,” which 
denies the protection of the privilege when the client communicates with an 
attorney for the purpose of committing or continuing a crime or fraud.  State ex 
rel. Nix v. Cleveland (1998), 83 Ohio St.3d 379, 383, 700 N.E.2d 12, 16.  
Communications in furtherance of a crime or fraud do not further the goals of the 
attorney-client privilege and are therefore undeserving of protection.  See In re 
Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983 (C.A.2, 1984), 731 
F.2d 1032, 1038. 
 
With its “unworthy of protection” rationale, the majority effectively 
equates an insurer’s communications with its attorney prior to a denial of 
coverage, in any case alleging bad faith, with communications in furtherance of a 
civil fraud.  But bad faith by an insurer is conceptually different from fraud.  Bad-
faith denial of insurance coverage means merely that the insurer lacked a 
“reasonable justification” for denying a claim.  Zoppo v. Homestead Ins. Co. 
(1994), 71 Ohio St.3d 552, 644 N.E.2d 397, paragraph one of the syllabus.  In 
contrast, an actionable claim of fraud requires proof of a false statement made 
with intent to mislead.  See Burr v. Stark Cty. Bd. of Commrs. (1986), 23 Ohio 
St.3d 69, 23 OBR 200, 491 N.E.2d 1101, paragraph two of the syllabus.  Proof of 
SUPREME COURT OF OHIO 
12 
an insurer’s bad faith in denying coverage does not require proof of any false or 
misleading statements; an insurer could, for example, act in bad faith by denying 
coverage without explanation.  Freedom Trust v. Chubb Group of Ins. Cos. 
(C.D.Cal.1999), 38 F.Supp.2d 1170, 1173.  Because bad faith is not inherently 
similar to fraud, there is no reason why an allegation of bad faith should result in 
an exception to the attorney-client privilege akin to the crime-fraud exception.  Id. 
 
The majority’s holding is also startling for its practical effect.  After 
today’s decision, an insured need only allege the insurer’s bad faith in the 
complaint in order to discover communications between the insurer and the 
insurer’s attorney.  Not even an allegation of the crime-fraud exception’s 
applicability carries such an absolute entitlement to discovery of attorney-client 
communications.  In order to overcome the attorney-client privilege based on the 
crime-fraud exception, a party must demonstrate “a factual basis for a showing of 
probable cause to believe that a crime or fraud has been committed and that the 
communications were in furtherance of the crime or fraud.”  Nix, 83 Ohio St.3d at 
384, 700 N.E.2d at 16.  The rule created today requires no similar prima facie 
showing of bad faith before an insured is entitled to discover attorney-client 
communications of the insurer.  The result of the majority’s decision is a 
categorical exception to the attorney-client privilege applicable in any case 
alleging a bad-faith denial of insurance coverage.  This is a sweeping exception 
that a number of courts have refused to adopt.8  The majority has simply decided 
                                                          
 
8. 
See, e.g., Dion v. Nationwide Mut. Ins. Co. (D.Mont.1998), 185 F.R.D. 288, 294 
(applying Montana law); Ferrara & DiMercurio, Inc. v. St. Paul Mercury Ins. Co. (D.Mass.1997), 
173 F.R.D. 7, 11 (applying Massachusetts law); Dixie Mill Supply Co., Inc. v. Continental Cas. 
Co. (E.D.La.1996), 168 F.R.D. 554, 558 (applying Louisiana law); Tackett v. State Farm Fire & 
Cas. Ins. Co. (Del.1995), 653 A.2d 254, 259-260 (declining to create a “per se waiver” of 
privilege in bad-faith cases); Aetna Cas. & Sur. Co. v. San Francisco Superior Court (1984), 153 
Cal.App.3d 467, 476-477, 200 Cal.Rptr. 471, 477 (that insurer’s “state of mind” is at issue in bad-
faith action does not justify an exception to privilege); Hartford Fin. Serv. Group, infra, 717 
N.E.2d at 1235-1236 (relying on Aetna to reject exception to privilege in bad-faith cases). See, 
also, Maryland Am. Gen. Ins. Co. v. Blackmon (Tex.1982), 639 S.W.2d 455, 458 (“if a plaintiff 
attempting to prove the validity of a claim against an insurer could obtain the insurer’s 
January Term, 2001 
13 
that insurance-bad-faith cases should be treated differently as far as the attorney-
client privilege is concerned, ignoring that “[t]he nature of the relationship, not 
the nature of the cause of action, controls whether communications between 
attorney and client can be discovered.”  Palmer v. Farmers Ins. Exch. (1993), 261 
Mont. 91, 108, 861 P.2d 895, 906. 
 
Deeming the insurer’s communications unworthy of the attorney-client 
privilege is also inconsistent with the very purpose of the privilege.  As noted 
previously, the privilege is designed to encourage open discussion between 
attorney and client, so as to promote the observance of the law and allow an 
attorney to adequately advise the client.  With today’s decision, the majority 
declares that an insurer’s consultation with an attorney prior to a denial of 
coverage does not fall within this purpose.  The rule laid down today assumes that 
an insurer will always have some sinister intent to act in bad faith when it 
discusses a coverage decision with its attorney.  But the majority overlooks the 
fact that an insurance company may consult with legal counsel to obtain legal 
advice about a coverage decision.  “[A]n insurance company’s retention of legal 
counsel to interpret the policy, investigate the details surrounding the damage, and 
to determine whether the insurance company is bound for all or some of the 
damage, is a ‘classic example of a client seeking legal advice from an attorney.’ ”  
Hartford Fin. Serv. Group, Inc. v. Lake Cty. Park & Recreation Bd.  
(Ind.App.1999), 717 N.E.2d 1232, 1236, quoting Aetna Cas. & Sur. Co. v. San 
Francisco Superior Court (1984), 153 Cal.App.3d 467, 476, 200 Cal.Rptr. 471, 
476.  These types of communications further the purpose of the attorney-client 
privilege and should be protected in the same manner as a communication by any 
other client seeking legal advice from an attorney. 
                                                                                                                                                              
 
investigative files merely by alleging the insurer acted in bad faith, all insurance claims would 
contain such allegations”). 
SUPREME COURT OF OHIO 
14 
 
An insurance company that seeks legal advice from an attorney about a 
coverage issue will now have to consider the possibility that those 
communications will be subject to future disclosure in the event that coverage is 
denied and the insured commences a bad-faith lawsuit.  As one appellate court has 
observed, a rule such as the one announced today threatens the open and honest 
discourse between attorney and client that the privilege is supposed to protect: 
 
“[A]n insurance company should be free to seek legal advice in cases 
where coverage is unclear without fearing that the communications necessary to 
obtain that advice will later become available to an insured who is dissatisfied 
with a decision to deny coverage.  A contrary rule would have a chilling effect on 
an insurance company’s decision to seek legal advice regarding close coverage 
questions, and would disserve the primary purpose of the attorney-client 
privilege—to facilitate the uninhibited flow of information between lawyer and 
client so as to lead to an accurate ascertainment and enforcement of rights.”  
Aetna, 153 Cal.App.3d at 474, 200 Cal.Rptr. at 475; see, also, State ex rel. United 
States Fid. & Guar. Co. v. Montana Second Judicial Dist. Court (1989), 240 
Mont. 5, 13, 783 P.2d 911, 916.  The majority’s decision here discounts these 
concerns based on its unsupported “unworthy of protection” rationale. 
 
For these reasons, I cannot join the majority’s unsound decision to declare 
a whole species of communications undeserving of protection by the attorney-
client privilege.  I would treat bad-faith cases no differently from any other case 
and 
regard 
attorney-client 
communications 
as 
privileged 
when 
those 
communications satisfy all elements of the privilege.  This would not mean, of 
course, that an insurer would never have to disclose the substance of attorney-
client communications in bad-faith cases.  An exception to the attorney-client 
privilege already exists, for example, when an attorney jointly represents both the 
insured and the insurer.  When an attorney has represented the common interests 
of insurer and insured, one joint client (the insurer) cannot assert the privilege in 
January Term, 2001 
15 
litigation against another joint client (the insured).  Netzley v. Nationwide Mut. 
Ins. Co. (1971), 34 Ohio App.2d 65, 77-78, 63 O.O.2d 127, 134-135, 296 N.E.2d 
550, 561-562; Palmer, 261 Mont. at 108, 861 P.2d at 905.9  Moreover, if an 
insured asserting a bad-faith claim makes a prima facie showing of fraudulent 
conduct, the crime-fraud exception may allow piercing the attorney-client 
privilege as to certain claims file materials.  See Barry v. USAA (1999), 98 
Wash.App. 199, 205, 989 P.2d 1172, 1176.  Courts have also recognized that an 
insurer in a bad-faith case may impliedly waive the privilege altogether by raising 
an advice-of-counsel defense, thereby placing its attorney-client communications 
directly at issue.  Palmer, 261 Mont. at 110, 861 P.2d at 907; Transamerica Title 
Ins. Co. v. Santa Clara Cty. Superior Court (1987), 188 Cal.App.3d 1047, 1053, 
233 Cal.Rptr. 825, 829.  Unlike the majority’s rationale, these limitations on the 
attorney-client privilege are well supported and consistent with the policy behind 
the privilege. 
 
I would affirm the judgment of the court of appeals and accordingly 
dissent. 
                                                          
 
9. 
Bad-faith cases involving the joint-client exception often arise after an insured becomes 
liable for a judgment in excess of the insured’s liability policy limits and later sues the insurer for 
failure to settle within the policy limits.  See Palmer, 261 Mont. at 108, 861 P.2d at 905.  During 
the course of the underlying litigation between the insured and the third party, the insurer has 
typically engaged an attorney to defend the insured.  Thus, an attorney has represented two clients 
(insured and insurer) who theoretically shared a common interest, i.e., defending a claim against a 
third party.  This exception would not apply to a case alleging bad-faith denial of 
uninsured/underinsured motorist (“UM/UIM”) coverage.  In UM/UIM claims, the insured 
claimant and the insurer are in adversarial positions from the outset: while the insured’s interest is 
in obtaining UM/UIM coverage, the insurer’s interest is inevitably aligned with that of the alleged 
third-party tortfeasor.  Id. at 108, 861 P.2d at 905-906.  This adversarial relationship would render 
communications between the insurer and its attorney concerning a UM/UIM claim protected by 
the attorney-client privilege for purposes of the insured’s bad-faith suit.  Id., 261 Mont. at 108, 861 
P.2d at 906; Barry v. USAA (1999), 98 Wash.App. 199, 205, 989 P.2d 1172, 1176; see, also, 1 
Rice, Attorney-Client Privilege in the United States (2 Ed.1999) 148, Section 4:29 (“If the 
interests of the insured and insurer become adverse, their joint communicant status ceases”); 
Developments in the Law – Privileged Communications (1985), 98 Harv.L.Rev. 1450, 1527 
(noting that the attorney-client privilege “rests on assumptions of adverseness that underlie the 
American judicial system”). 
SUPREME COURT OF OHIO 
16 
 
MOYER, C.J., and LUNDBERG STRATTON, J., concur in the foregoing 
dissenting opinion. 
__________________ 
 
Blue, Wilson & Blue and Richard H.H. Troxell, for appellant. 
 
Frost & Maddox Co., L.P.A., and Mark S. Maddox, for appellee. 
 
Robert P. Rutter, urging reversal for amicus curiae, the Ohio Academy of 
Trial Lawyers. 
__________________