When an action for negligence is filed against an insured, and the insurer has control over the claim, a fiduciary duty to the insured is created. In this case, the possibility of a verdict in excess of the policy limits caused the insurer to suspect that the insured was guilty of a bad faith refusal to settle. The insurer then retained counsel to review the bad faith suspicion who also ended up participating in the insured’s defense in the negligence action and so became, at least in part, the insured’s negligence counsel. Therefore, matters which were outside of the retained counsel’s representation regarding the suspicion of bad faith may be subject to discovery by the insured, unless protected by immunities for confidential communications or work product. At issue were certain discovery orders concerning the insured’s requests for information and documents. Here, the Court of Appeals found that the trial court erred in quashing the discovery subpoena outright and remanded the case with direction to the trial court to review documents in camera which may be protected and which may not.
Recent Missouri Case: Scope of Attorney/Client Privilege Discussed