COURT FINDS PLAINTIFF IN BAD FAITH CASE MAY COMPEL DISCOVERY OF INSURANCE DEFENSE ATTORNEY'S FEE INFORMATION

Last Tuesday, the Corpus Christi Court of Appeals denied an insurer's petition for writ of mandamus after finding that the insurer's defense counsel attorney fee information was relevant and discoverable by plaintiffs in a bad faith lawsuit.  In In Re National Lloyds Insurance Company, 2015 WL 4380929 (Tex. App. - Corpus Christi July 15, 2015), the insured's attorneys’ fee expert in the multidistrict litigation (MDL) stemming from the March and April 2012 Hidalgo County hail storms, testified that "the fees [of] the opposing party to the plaintiff's are "a factor" and one of the "indicators of a reasonable fee."  The insured's attorneys then sent additional discovery regarding the defense fees and costs that accrued in the underlying cases.  The insurer's counsel objected on the grounds that the information sought was irrelevant and violated the attorney-client and work-product privileges.  The trial court overruled the objections and ordered that the information be produced with redactions to protect any privileged information.  The insurer then filed a petition for mandamus seeking to overturn the order.   

The Corpus Christi Court of Appeals reviewed the factors identified by the Texas Supreme Court relevant to attorney fee determination and observed that the other party's fees and arrangements were not included.  But the court also noted that those factors were not exclusive.  And while they agreed with the insurer that their fees may be irrelevant in a given cause of action the court stated: "However, based on the specific facts underlying this original proceeding, we conclude the trial court acted  within its discretion in concluding that the fees were relevant and discoverable."  And to address the insurer's attorney-client and work-product concerns, the court found that the records could be sufficiently redacted to protect the privileges.  Accordingly, they denied the insurer's petition for writ of mandamus and the left the trial court's order intact. 

Editor's Note:  We anticipate that this case will be appealed to the Texas Supreme Court and we will continue to monitor this case for further developments.  Insurers interested in filing an amicus brief should contact Christopher Martin of our firm at martin@mdjwlaw.com for additional information.