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Twin City Fire Insurance Company v. Burke2/18/2003
he trial judge therefore entered a $6 million judgment against Arizona Pipeline.
Arizona Pipeline subsequently settled the parents' wrongful death claims for a total of $5.4 million. Twin City demanded that General Star pay the entire amount, but it refused, instead paying the policy limit of$1 million. Twin City paid the remaining $4.4 million and then filed this bad faith action against General Star based on its refusal to settle the parents' claims within policy limits.
General Star served Twin City with interrogatories and requests for production of documents seeking Twin City's files pertaining to the wrongful death action, including any communications between Twin City and counsel it had retained to evaluate the wrongful death action and monitor General Star's defense of the case. Twin City objected to General Star's discovery requests, claiming the information it had received from counsel was not discoverable because it was either irrelevant or protected by the attorney-client privilege. General Star filed a motion to compel Twin City to produce the requested information. The judge granted the motion, finding, inter alia, that the information sought "may be evidence that will establish or negate bad faith on the part of General Star." He concluded that the material was discoverable based on our decision in Clearwater v. State Farm Mutual Automobile Insurance Co., 164 Ariz. 256, 792 P.2d 719 (1990). Making no factual findings, the judge further stated he did "not believe that the attorney/client privilege applies to the motion to compel under" State Farm Mutual Automobile Insurance Co. v. Lee, 199 Ariz. 52, 13 P.3d 1169(2000) (hereinafter referred to as Lee).
Twin City contends Lee does not support the conclusion that an excess insurer waives its attorney-client privilege simply by bringing an action against a primary insurer for bad faith when that action is based solely on the primary carrier's conduct. We agree and conclude that, based on the nature of Twin City's action against General Star and the principles we set forth in Lee, Twin City has not waived the attorney-client privilege.
STANDARD OF REVIEW
Generally, a trial judge's ruling on a discovery-related issue will not be disturbed absent an abuse of discretion. Blazek, 177 Ariz. at 537,869 P.2d at 511. Similarly, in reviewing a trial judge's order within the context of a special action, ordinarily we must find the judge abused his discretion or exceeded his jurisdiction or legal authority before we may grant relief. Rule 3. Ariz.R.P.Spec.Act. We defer to the judge with respect to any factual findings explicitly or implicitly made. affirming them so long as they are supported by reasonable evidence. See Horton v. Mitchell. 200 Ariz. 523, 526 13. 29 P.3d 870, 873 13 (App. 2001). But when a judge commits an "error of law.. . in the process of reaching discretionary conclusion," he maybe regarded as having abused his discretion. Grant v. Arizona Pub. Servs. Co., 133 Ariz. 434,456, 652 P.2d 507, 529 (1982); see also State v. Chapple. 135 Ariz. 281, 297 n.18, 660 P.2d 1208, 1224 n.l8 (1983). Whether a privilege exists is largely a question of law, which we therefore review de novo. Blazek, 177 Ariz. at 537,869 P.2dat 511. Likewise. " hether a party has waived the attorney-client privilege is a mixed question of law and fact which we review de novo." Home Indem. Co. v. Lane Powell Moss &Miller; 43 F.3d 1322, 1326 (9th Cir. 1995). So, too, is the question whether the trial judge properly applied our decision in Lee and whether his implicit conclusion that Twin City waived its attorney-client privilege is correct. See BrinkElec. Constr. Co. v. Arizona Dep't of Revenue, 184 Ariz. 354,
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