A trial court has used its own reasoning on severance and stay to deny bad faith discovery in an underlying contract dispute. On Sept. 9, in Wutz v. State Farm Insurance Co., Judge R. Stanton Wettick denied a plaintiff discovery in a bad faith case relating to State Farm’s evaluation of the claim. All parties agree that information sought was relevant only to the bad faith case. State Farm, for its part, further argued that to allow discovery relating to State Farm’s evaluation of the underlying UM/UIM claim, State Farm would be as unfairly prejudiced as would “the defense in a football game [being required] to furnish its defensive formation for the upcoming play to the Plaintiff before the Plaintiff selected the play that it would call.” Wettick agreed with State Farm, and ruled pursuant to his earlier ruling in Gunn v. The Hartford Insurance Co., and disallowed the discovery.
Wettick recalled that a court will not necessarily permit discovery of information in the files of the insurance company relevant to the bad faith claim, and that the insurance company should have an opportunity to show that the discovery of certain information relevant to the bad faith claim will unfairly prejudice the insurance company. Thus, Wettick in the case before him refused to allow discovery of State Farm’s evaluation ranges relating to the underlying claim, as well as the factors what were considered in evaluating the claim.
In terms of the mechanics of his ruling, the judge denied the plaintiff’s motion for in camera review of the documents, and ruled that at the beginning of trial State Farm’s counsel should have ready an unredacted copy of the claims activity log and should furnish the documents to plaintiffs immediately after the beginning of jury deliberations in the UIM claim. The order also noted that State Farm, inasmuch as it was not asserting advice of counsel in the bad faith claim, retained the right to assert attorney-client privilege and protect documents accordingly.
The ruling by Wettick in the Wutz case was an early one in the wake of his ruling in Gunn, and one in which insurers may be able to protect from discovery in a UIM case, claims evaluation and mental impression which is relevant to a bad faith claim are certainly not relevant to the underlying UIM claim. From this writer’s experience, rarely is a bad faith complaint limited to solely a claim of undervaluation. Therefore, Wettick’s ruling in Wutz could have considerable impact in bad faith discovery going forward.