Court Opinion

ID: 8483345
Source: CourtListenerOpinion
Date Created: 2022-11-11 08:09:52.42051+00
Date Added: 2024-06-11T16:49:45.467911
License: Public Domain

In The

                               Court of Appeals

                    Ninth District of Texas at Beaumont

                              __________________

                              NO. 09-22-00207-CV
                              __________________

          IN RE MOUNTAIN VALLEY INDEMNITY COMPANY
                     AND SHANE WADDELL

__________________________________________________________________

                           Original Proceeding
             60th District Court of Jefferson County, Texas
                       Trial Cause No. B-204,896
__________________________________________________________________

                          MEMORANDUM OPINION

      In a first-party property damage suit, the insured (James Warren Stutts or Real

Party in Interest) alleged his homeowner’s insurance company (Mountain Valley

Indemnity Company or Relator) and the outside claims adjuster utilized by the

insurance company to adjust the claim (Shane Waddell) improperly handled his

claim for water damage caused by a malfunctioning plumbing line that was

connected to a second-floor water heater in the insured’s home. After invoking the

appraisal provision for the dwelling and contents loss part of the claim and after

receiving a partial summary judgment from the trial court, Stutts’ remaining causes

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of action include alleged improper claims handling and bad faith claims. Stutts

served Mountain Valley Indemnity Company with written discovery requesting

production of certain documents that it alleges are relevant to the alleged improper

claims handling. Mountain Valley objected to the production of twenty-six pages of

documents that include what Mountain Valley describes as claim notes and

communications between Mountain Valley’s in-house counsel and Waddell, and

Waddell’s supervisor. Mountain Valley alleged the documents are protected by the

attorney-client privilege and work-product doctrine and Stutts filed a Motion to

Compel. The trial court, after inspecting documents in camera, ordered Relators

Mountain Valley Indemnity Company and Shane Waddell to produce claim notes

and communications between Mountain Valley’s in-house counsel, Waddell, and

Waddell’s supervisor.

      In their mandamus petition, Relators contend they lack an adequate remedy

by appeal for the trial court’s clear abuse of discretion when it ordered Relators to

produce documents protected from discovery by the attorney-client privilege and the

work-product privilege. We temporarily stayed the trial court’s order compelling

discovery and requested a response from Real Party in Interest James Warren Stutts.

See Tex. R. App. P. 52.10(b). After considering the parties’ arguments and

authorities and after reviewing the record, including the in camera documents, we

conditionally grant mandamus relief.

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      To be entitled to mandamus relief, a relator must show that the trial court

clearly abused its discretion and the relator lacks an adequate remedy by appeal. In

re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig.

proceeding). A trial court abuses its discretion when it acts without regard to guiding

rules or principles or when it acts in an arbitrary or unreasonable manner. In re

Garza, 544 S.W.3d 836, 840 (Tex. 2018) (orig. proceeding). Mandamus relief is

available when the trial court erroneously orders the disclosure of privileged

information because appeal does not provide an adequate remedy. See In re Christus

Santa Rosa Health Sys., 492 S.W.3d 276, 279 (Tex. 2016); In re E.I. DuPont de

Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004); Walker v. Packer, 827 S.W.2d

833, 843 (Tex. 1992) (orig. proceeding).

1. Work-Product Privilege

      Work product comprises:

             (1) material prepared or mental impressions developed in
      anticipation of litigation or for trial by or for a party or a party’s
      representatives, including the party’s attorneys, consultants, sureties,
      indemnitors, insurers, employees, or agents; or

            (2) a communication made in anticipation of litigation or for trial
      between a party and the party’s representatives or among a party’s
      representatives, including the party’s attorneys, consultants, sureties,
      indemnitors, insurers, employees, or agents.

Tex. R. Civ. P. 192.5(a). Litigation is anticipated (1) whenever the circumstances

surrounding the investigation would indicate to a reasonable person that there is a

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substantial chance of litigation, and (2) the party resisting discovery had a good faith

belief that there was a substantial chance that litigation would ensue and conducted

the investigation for the purpose of preparing for such litigation. National Tank Co.

v. Brotherton, 851 S.W.2d 193, 204 (Tex. 1993) (orig. proceeding). Core work

product containing the “mental impressions, opinions, conclusions, or legal

theories” of an attorney or an attorney’s representative is not discoverable. Tex. R.

Civ. P. 192.5(b)(1); In re Nat’l Lloyds Ins. Co., 532 S.W.3d 794, 804 (Tex. 2017)

(orig. proceeding). A trial court may order disclosure of noncore work product only

if the requesting party shows substantial need and undue hardship. Tex. R. Civ. P.

192.5(b)(2); Nat’l Lloyds, 532 S.W.3d at 804.

      Relators argue they anticipated litigation on the date Mountain Valley issued

its May 31, 2018 coverage letter reserving rights under the policy and advising Stutts

that he was unjustifiably causing an increase in the Loss of Use expense of his claim.

They argue Stutts failed to produce any evidence establishing his substantial need

for the material to prepare his case and he failed to show that he is unable without

undue hardship to obtain the substantial equivalent of the material by other means.

They further argue that the in-house counsel’s emails include some core work

product.

      Stutts argues Relators failed to produce evidence that the communications at

issue were made in anticipation of litigation as opposed to normal claims-handling;

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therefore, he argues, the burden never shifted to him to produce evidence of a

substantial need.

      When the claim for protection is based on a specific privilege, such as

attorney-client or attorney work product, the documents themselves may constitute

the only evidence substantiating the claim of privilege. Weisel Enters, Inc. v. Curry,

718 S.W.2d 56, 58 (Tex. 1986) (orig. proceeding). We have reviewed the in camera

documents and find that Mountain Valley met its burden of making a prima facie

showing that the documents are protected from discovery as under the work-product

doctrine. To the extent some of the documents may only be non-core work product,

Stutts has not shown a substantial need for the documents. So, we conclude the trial

court abused its discretion by ordering production of documents protected as

attorney work-product.

2. Attorney-Client Privilege

      The attorney-client privilege protects communications between attorney and

client that are (1) not intended to be disclosed to third parties, and (2) made for the

purpose of facilitating the rendition of professional legal services. Nat’l Lloyds, 532

S.W.3d at 803. “The privilege promotes free discourse between attorney and client,

thereby advancing the effective administration of justice.” Id. A client has a privilege

to refuse to disclose and to prevent any other person from disclosing confidential

communications made to facilitate the rendition of professional legal services to the

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client. Tex. R. Evid. 503(b)(1). The attorney-client privilege protects confidential

communications between a client or the client’s representative and the lawyer or the

lawyer’s representative and between the client’s representatives who, to facilitate

the rendition of professional legal services to the client, make or receive a

confidential communication while acting in the scope of employment for the client.

Id; see also Tex. R. Evid. 503(a)(2)(B).

      Relators identify certain e-mail correspondence among Waddell, his

supervisor Mike Reyna, and Mountain Valley’s in-house counsel Ellen Greer. They

argue these e-mail communications clearly fall within the attorney-client privilege

because they “make clear that Ms. Greer’s involvement was for legal advice because

of significant concerns about Stutts’s claim and because Stutts had retained an

attorney to represent him in his claim.” Stutts contends Relators failed to

demonstrate that the trial court could have reached only one decision in making a

factual determination that none of the documents were made to facilitate the

rendition of legal services. Stutts argues the attorney-client privilege does not apply

to the extent any attorney’s communications related solely to the investigation and

evaluation of Stutts’s claim.

      We reviewed the documents that Relators identified as being subject to the

attorney-client privilege and that the trial court reviewed in camera. These

documents show by the discussion and content thereof that they concern Mountain

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Valley’s adjusters’ consultation with Mountain Valley’s staff attorney and pertain to

legal advice regarding Stutts’s claims. We conclude the trial court abused its

discretion by ordering production of the e-mail communication documents because

the documents are protected by the attorney-client privilege.

3. Appropriate Relief

      “Mandamus is proper when the trial court erroneously orders the disclosure

of privileged information because the trial court’s error cannot be corrected on

appeal.” DuPont, 136 S.W.3d at 223. We lift our stay order and conditionally grant

mandamus relief. We are confident that the trial court will vacate its order of June

23, 2022. A writ of mandamus will issue only in the event the trial court fails to

comply.

      PETITION CONDITIONALLY GRANTED.

                                                          PER CURIAM

Submitted on September 21, 2022
Opinion Delivered November 10, 2022

Before Golemon, C.J., Kreger and Johnson, JJ.

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