Procedural Posture

Petitioner insurance company sought a writ of mandate staying an order issued by respondent trial court in the Superior Court of Los Angeles County (California). Real parties in interest insured filed suit against petitioner for damages based on breach of contract, negligence and bad faith. Respondent’s order granted disclosure of information, which, according to petitioner, fell within the attorney-client privilege.

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Overview

Real parties in interest insured brought suit against petitioner insurance company after petitioner denied coverage when their property was damaged by an earthquake. The real parties alleged that petitioner fraudulently misrepresented the policy they had purchased. During pretrial proceedings, real parties presented declarations of an ex-employee of the insurance company. The ex-employee was an attorney who had worked on the insureds’ case during her employment. She described the insurance company’s litigation strategy and reiterated conversations with other employees. Respondent trial court allowed disclosure of the declarations and the insurance company filed the petition for a writ of mandate to prevent disclosure. The court reviewed the declarations and determined that some material would ordinarily be protected by the attorney-client privilege. In affirming the trial court’s order of disclosure, however, the court concluded that there was substantial evidence to support the application of the crime/fraud exception to the privileged materials contained in the declarations.

Outcome

The court denied petitioner insurance company’s application for writ of mandate to respondent trial court. The court concluded that in the suit brought by real parties in interest insured against petitioner, substantial evidence existed to support the application of the crime/fraud exception to the attorney-client privilege and that precluding disclosure of the information would work a fraud or injustice.