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Twin City Fire Insurance Company v. Burke2/18/2003
En Banc
0PINI0N
RELIEF GRANTED
This matter arises from a bad faith action brought by an excess liability insurer against the primary carrier for the latter's failure to settle a wrongful death case within the primary carrier's policy limit. Over objections as to the attorney-client privilege, the trial judge granted a motion to compel the excess insurer to produce certain documents and respond to interrogatories pertaining to monitoring and evaluation of the wrongful death claim by its lawyers. The court of appeals declined to accept jurisdiction of the excess carrier's petition for special action relief, and we granted its petition for review to clarify the application of the principles determining whether a party has impliedly waived the attorney-client privilege.
JURISDICTION
We have jurisdiction pursuant to article VI, § 5(3) of the Arizona Constitution and A.R.S. § 12-120.24. See also Rule 8(b), Ariz.R.P.Spec.Act., and Rule 23, Ariz.R.Civ.App.P.
Special action review of an order compelling discovery over the objection of a party asserting a privilege is appropriate because there is no equally plain, speedy, or adequate remedy by appeal. See, e.g., Arizona Dep't of Econ. Sec. v. 0 'Neil, 183 Ariz. 196, 901 P.2d 1226 (App. 1995); Blazek v. Superior Court, 177 Ariz. 535, 869 P.2d 509 (App. 1994); see also Rules I and 3, Ariz.R.P.Spec.Act. Further, this case presents a question of law with statewide significance, which further supports our acceptance of jurisdiction of this special action, See City of Tucson v. Superior Court, 167 Ariz. 513,513,809 P.2d 428,428(1991) (finding special action jurisdiction properly accepted when "issue presented is a pure issue of law that is of statewide significance").
FACTS AND PROCEDURAL BACKGROUND
The parents of an eleven-year-old boy filed a wrongful death action against the City of Scottsdale; Southwest Gasand its subcontractor, Arizona Pipeline; the intoxicated driver of a vehicle that struck and killed the child as he was walking with his father; and the establishment at which the driver had been drinking. The parents alleged that Arizona Pipeline negligently had barricaded a construction zone on a street improvement project, forcing pedestrians such as the decedent and. his father to walk in the roadway. General Star Management Co. was Arizona Pipeline's primary liability insurer and provided it with $1 million coverage. Twin City Fire provided Arizona Pipeline with excess liability coverage of $9 million. General Star's primary policy provided that it had the exclusive right and duty to defend, control, and settle all claims or lawsuits brought against Arizona Pipeline, and it assumed the defense of the wrongful death action.
Twin City hired its own counsel to monitor the defense and evaluate the case. At least twice during pretrial settlement negotiations, the parents offered to settle their claims against Arizona Pipeline for less than General Star's $1 million limit, but General Star refused. Twin City sent General Star two letters in this regard, acknowledging that it was aware the decedent's parents had been willing to settle for less than the limit of General Star's policy but that General Star had refused. Twin City demanded that General Star settle the claims.
After settling with the driver of the vehicle as well as other defendants, the parents proceeded to trial against Arizona Pipeline. The jury found the parents had sustained $8 million in damages and allocated twenty-five percent of the fault to the driver, who had been designated a non-party at fault, and the remaining seventy-five percent to Arizona Pipeline. T
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