Key Decisions

February 2013 – Documents Were Privileged

(filed under: Key Decisions Archive | February 22, 2013)

Documents Were Privileged

Bank of America, N.A. v. Superior Court
(Cal. Ct. of App., 4th Dist.), filed January 15, 2013 

Bank of America and Pacific City Bank found themselves embroiled in a dispute over their respective interests in a piece of property on which they each held security interests.

Bank of America made a claim under a lender’s title policy issued by Fidelity National Title Insurance Company insuring a deed of trust in favor of Bank of America.  Fidelity retained the law firm of Gilbert, Kelly, Crowley & Jennett LLP (GKCJ) to prosecute, on B of A’s behalf, the underlying lawsuit for equitable subrogation, injunctive relief, declaratory relief, and fraud.

Pacific City Bank served subpoenas duces tecum on Fidelity’s parent company and Lawyers Title Insurance Company, requesting the production of documents, including communications between GKCJ and Fidelity, regarding the litigation between B of A and Pacific City Bank.  B of A moved to quash or modify the subpoenas on the ground that they sought confidential communications and documents protected by the attorney client privilege or attorney work product doctrine.

The trial court denied the motions to quash or modify, and B of A and Fidelity filed a petition for writ of mandate or prohibition to challenge the court’s order.

The Court of Appeal granted the petition and held that the trial court erred.

When an insurer retains counsel to defend its insured, a tripartite attorney client relationship arises among the insurer, insured, and counsel.  As a consequence, confidential communications between either the insurer or the insured and counsel are protected by the attorney client privilege, and both the insurer and insured are holders of the privilege.  In addition, counsel’s work product does not lose its protection when it is transmitted to the insurer.

The same tripartite attorney-client relationship arises when a title insurer retains counsel to prosecute an action on behalf of the insured pursuant to a title insurance policy.