Court Opinion

ID: 9779099
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:36:15.884428+00
Date Added: 2024-06-11T07:33:21.359967
License: Public Domain

SEILER, Chief Justice
(dissenting).
I respectfully dissent. As I understand the principal opinion, it finds it unnecessary to determine whether there was an attorney-client relationship between Cain and the Turner firm on November 18 and 20, 1974, the dates on which the insurance adjuster took Cain’s statement. The principal opinion says it is arguable that the relationship did exist, but it is not necessary to resolve this question inasmuch as it is clear in any event that an insurer-insured relationship existed between the insurance company and Cain at the time of the statements; therefore, the statements given by Cain to his insurer fall within the protection of the attorney-client privilege and privileged matters are not discoverable. Rule 56.01(b)(1).
The net effect of this, it seems to me, is to clothe with privilege whatever information is furnished the insurance adjuster by the insured, whether it is reduced to writing or is in the form of notes taken by the adjuster or dictated by him subsequently in a memorandum or simply carried in his head. There really is not and could never be any true attorney-client relationship existing between a lay adjuster and the insured, but nevertheless we are going to treat it as though the insured were in fact talking to his lawyer, because in the indefinite future there might be a damage suit filed and the lawyer selected by the insurer to defend the case would then have use for the insureds’ statement.
I have serious doubts about the advisability of making any statements taken by an insurance adjuster immune from discovery. Automobile liability insurance companies and insurance companies in general are in the business of insuring persons, firms, and corporations against loss and liability from a variety of sources. Investigation of claims of all sorts is a matter of routine by insurance companies.1 It is done when a claim is reported, regardless of whether there is a probability of litigation. Further, it is well known that only a small fraction of claims involve litigation. The vast majority are settled without litigation and without lawyers. When an insurance adjuster takes a statement from an insured for an insurance company, he is doing no more than performing the routine business of the insurance company. Instead of liberalizing discovery by the adoption of our new rule 56 in 1975 (which I believe is what the court intended to do) the rule announced by the principal opinion would shield from discovery the internal documents of insurance companies obtained in the normal routine of their business relating to the claims of their insureds.
In my opinion, we are not giving proper consideration to the changes made by the 1975 amendment to our rule 56, which was based on the 1970 amendments made to federal rule 26. Without exception, the cases relied upon by the majority opinion were decided or rely on cases decided prior to the 1970 amendments to the federal *59rules, and of course do not consider the situation in the light of those changes or the continued trend toward expanded discovery which frowns upon rewarding parties for hiding or obscuring potentially significant facts. The majority opinion creates a new privilege in Missouri law (insured-insurer) and thereby nullifies to that extent the provisions of our new rule 56.-01(b)(3).
If a statement obtained by an insurance adjuster from an insured is to be privileged and immune from discovery no matter what, why, in the changes which we made in our discovery rules in 1975, did we in rule 56.01(b)(3) provide that documents “prepared in anticipation of litigation or for trial by . [the] other party’s . insurer . . . ” (emphasis supplied) are discoverable upon a certain showing of need and hardship? We had nothing like that in our rules prior to 1975. In fact, former rule 57.01(b) provided that production should not be required of any writing obtained by the adverse party or his indemnitor or agent in anticipation of litigation or preparation for trial (with the sole exception of a statement given by the interrogating party). The Cain statement would not have been discoverable under the former rule, not because of the attorney-client privilege, but because the rule so provided. Now we are saying it still is not discoverable, even though we have dropped from the rules the provision which made it nondiscoverable. If a statement of an insured taken by an insurance adjuster was to be considered privileged, then there would be no need to make mention of the subject beyond rule 56.01(b)(1) which provides that “Parties may obtain discovery regarding any matter, not privileged . . . ”, and it would make no sense to make further reference to such material and provide for its discovery, which it seems to me is what the above quoted portion of our new rule 56.01(b)(3) does. But if it were meant that such a statement or document is subject to discovery under certain conditions, then the portion of our new rule 56.01(b)(3) above has a meaning and purpose and is not superfluous.
It is true that under the standard automobile liability insurance policy the insurer is obligated to defend the insured if and when he is sued and to provide counsel to handle the case. I doubt, however, if this justifies bringing an insurance company within the protection of the attorney-client privilege, even if we ignore the portion of rule 56.01(b)(3) referred to above.
Examination of the standard liability insurance policy will show that the insurer agrees “to defend, with attorneys selected by and compensated by the company” any suit seeking damages covered by the policy. For his part, the insured agrees to “cooperate with the company and, upon request, attend hearings and trials, assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of any legal proceedings in connection with the subject matter of this insurance.” The insured has no choice in the selection of the attorney; he has no right to change attorneys or fire the company attorney, and in case of any conflict of interest between the insured and the insurer, the attorney’s first loyalty is to the insurer who hired and pays him, not the insured. This is by no means the same as the traditional attorney-client relationship, which is what the courts had in mind when the privilege against disclosure of confidential communications was originally established. We should be most cautious in extending this high privilege, because every such extension removes from the arena of the courts evidence which is highly relevant and which would otherwise be used as a matter of course.
I think we also should remember that there is no requirement in Missouri that the operator of an automobile carry liability insurance and when an individual does elect to carry such insurance then the matter becomes one of contract between him and his insurer. One of the things the insured agrees to do in the contract is to cooperate with the insurer. He agrees to report the accident and to give information respecting the time, place and circumstances thereof. These contractual obligations, voluntarily *60assumed, require complete information from the insured, not partial or distorted information. As said in 7 Am.Jur.2d, Automobile Insurance, Sec. 178, p. 512: “Under the co-operation clause of an automobile liability insurance policy, it is the duty of the insured to give a full, frank, and complete statement of the cause, conditions, and circumstances of the accident and the conduct of the parties at the time, in order that the insurer may properly present its defense, or determine whether there is a genuine defense. . . [T]he intentional furnishing of false information of a material nature either before or at the trial is a breach of the co-operation clause.
Professor Wigmore points out there are four conditions which are recognized as basic to the establishment of a privilege against the disclosure of communications. He sets them forth as follows (Wigmore on Evidence, McNaughton Revision, Vol. VIII, Sec. 2285): “(1) The communications must originate in a confidence that they will not be disclosed. (2) The element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties. (3) The relation must be one which in the opinion of the community ought to be sedulously fostered. (4) The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.”
Tested by the foregoing, it does not seem to me that a justification has been established for extending privileged communication status to a statement obtained from the insured by an insurance adjuster as a part of the routine investigation of claims for the insurance company. Specifically, it does not seem to me that (1), (2), or (3) above are present and it is speculative as to (4). The communication between the insured and the insurance adjuster originates in the fact that the insured has elected to take out liability insurance and as a part of the contract has agreed to make a full and accurate disclosure to the insurance company of what happened. It is to obtain the liability protection that the insured agrees to make full disclosure. The disclosure made after an accident originates from that source, not because of a confidence that the communications to the adjuster will not be disclosed. If the element of confidentiality were essential to the maintenance of the relation, it would have been provided for in the standard policy, but it is not. Under the law, as earlier said, if the insured does not make a full disclosure he runs the risk of the insurance company being entitled to disclaim coverage. The insured is obligated to tell the insurer the full facts by the terms of the contract, regardless of whether it is kept confidential. Nor do I believe the insured-insurer relationship is one which fits the requirement that it ought to be sedulously fostered. I would think rather that the courts should be neutral in this area, neither encouraging nor discouraging the relation, instead of affirmatively aiding the insured and the insurer by extending the immunity of privilege to statements made to the adjuster by the insured, at the expense of all those who may have legitimate claims and a valid reason for ascertaining what the insured had to say about the accident while it was still fresh in his mind.
As the principal opinion states, many federal cases hold that a statement given by the insured to an insurance adjuster is not privileged. The reasoning of the federal courts is that statements of parties and witnesses taken immediately after the accident constitute “unique catalysts in the search for truth” and where the party seeking discovery is unable for whatever sufficient reason to obtain equivalent information (which plaintiff contends is her situation here but which the majority opinion says is not necessary to decide), then under the federal rule, which is the same as our rule 56.01(b)(3), the statements should be produced. McDougall v. Dunn, 468 F.2d 468 (4 Cir. 1972); further, that the nature of the business of an insurance company involves claims and to make its investigation and statements nondiscoverable would foreclose “almost all internal documents of insurance companies relating to the claims *61of insureds”. Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367 (D.C.Ill.1972). There is also respectable authority to the same effect in state courts. See 23 Am.Jur.2nd, Depositions and Discovery, Sec. 171. There are a good many automobile damage suits tried in federal court and defended by insurance companies under the federal rules of discovery, but this does not seem to have brought about any breakdown in the insurance industry or produced any hardship on any insured or reluctance to take out liability insurance. I believe this shows that the fear that making statements discoverable is somehow going to impair the operation of liability insurance companies or cause reluctance on the part of insureds to tell the true facts about their driving of motor vehicles is not justified. I would come down on the side of encouraging and enlarging discovery, not restricting it, and therefore respectfully dissent.
Additionally, this case is an illustration of the unfairness that may result if we adopt the rule that a statement given by an insured to an insurance adjuster is immune from discovery.
According to the brief of respondent (and as I understand it, there is no denial of this by relator), efforts were made by others to interview Cain and obtain his statement or version of the accident within a few days after the accident, but Cain refused to discuss the facts of the accident, saying he had already told his adjuster as much as he possibly could. Later plaintiff attempted to take Cain’s deposition, but Cain was unable to recall or could only approximate many of the important details concerning the accident. Specifically, as shown by the transcript of the deposition attached as an exhibit to the petition for writ of prohibition, Cain was unable to recall whether there were any traffic signs where the accident occurred, could not be positive whether there were any vehicles in the vicinity other than the three vehicles directly involved, could not recall how far the camper truck was from where the collision occurred when he first saw the Rambler, could not recall whether the headlights of the Rambler were on bright or dim, had no idea as to the speed of the camper truck, did not know whether or not he (Cain) had entered the curve when he first saw the approaching headlights of the camper, did not recall what gear he was in, could not recall how loud a sound the brakes made, could not recall how far he was from the rear of the Rambler when he first swerved to the left —“it would just be an uneducated guess”— could not recall what part of his vehicle came in contact with the Rambler, could not recall the position of his tractor-trailer unit with respect to the right or left hand lane at the time of collision, did not know how far he travelled from the time he collided with the Rambler until he collided with the camper, could not estimate whether it was more or less than 10 feet, did not know his speed at time of collision with the Rambler, or how much of his trailer was in the wrong lane, or what part of the camper was struck, or how far the Rambler was knocked.
Plaintiff’s husband might have known some of the facts of the accident, but he was killed in the collision. It does not appear whether plaintiff herself was a witness to the accident or not. In any event, Cain was the driver of one of the vehicles and no one else had his exact vantage point and personal knowledge of what he observed and did. The circumstances may well be that plaintiff “has substantial need” of Cain’s statements in the preparation of her case and is unable “to obtain the substantial equivalent of the materials by other means”, a possibility which rule 56.-01(b)(3) provides for. It is clear that had Cain been able to recall the details as to the facts of the accident, he would have been required to disclose the same in his deposition. He could not have refused to testify as to the facts merely because he had incorporated a statement of such facts in his statement to the adjuster. But this means of ascertaining the facts from Cain failed because he could not recall the details at the time of his deposition. In this situation I do not believe that a plaintiff who needs the information must be relegated to con*62tinued ignorance of what the defendant knows about the accident when there is in existence a statement or statements which were taken by an adjuster at a time when the matter should have been quite fresh and vivid in defendant’s recollection. I think this is taken care of by rule 56.-01(b)(3). I would hold that Cain’s statements should be produced and would discharge the provisional rule.

. Ordinarily, facts, information and records obtained or made in the ordinary and usual course of business are discoverable. State ex rel. Terminal R. Ass’n of St. Louis v. Flynn, 363 Mo. 1065, 257 S.W.2d 69 (banc 1953).