The background of this case is as follows. In 2014, ContraVest Inc., ContraVest Construction Co., and Plantation Point Horizontal Property Regime Owners Association Inc. (collectively, “Plaintiffs”) brought suit in South Carolina state court against Mt. Hawley Insurance Company (“Mt. Hawley”) for declaratory judgment, bad faith, breach of contract and unjust enrichment based on the insurer’s refusal to provide benefits allegedly owed under excess commercial liability insurance policies with respect to an allegedly defective construction project. The case was removed to South Carolina federal court. In March 2017, the South Carolina district court granted a motion to compel filed by Plaintiffs. In April 2018, Mt. Hawley moved to stay the case pending resolution of a mandamus petition to the Fourth Circuit and a motion to certify a question of attorney-client privilege waiver in bad faith insurance claims to the South Carolina Supreme Court. It also submitted to the court a privilege log and various documents for in camera review. The privilege log had four main categories of documents at issue: attorney-client privilege documents, work-product documents, reinsurance documents and reserves documents.
The South Carolina district court denied Mt. Hawley’s motion without prejudice and ordered that it produce all documents except those claiming attorney-client privilege in light of the mandamus petition. It declined to conduct an in camera review of the work-product documents and ordered production of those documents. The court also held that it would not consider whether an in camera review is necessary to determine if the reinsurance and reserves documents are relevant or privileged, and also ordered production of those documents. Mt. Hawley also took the position that it had not waived its objection regarding documents referencing mediation. However, the court noted that Mt. Hawley cited no South Carolina case law discussing a mediation privilege and the court noted that its own research did not reveal any such case law. It also noted that if Mt. Hawley meant to reference attorney-client privilege, “it does not appear that Mt. Hawley believes these documents to be attorney-client privileged as the privilege log does not identify them as such.” Thus, the court found that “[i]f Mt. Hawley means to reference general confidentiality rules about mediation, those rules are not applicable to the current issue” because “producing a document during discovery is not the same as introducing a document in a proceeding.” Thus, the court ordered that Mt. Hawley produce the mediation documents.
As for Mt. Hawley’s request to stay the case pending resolution of its petition for mandamus in the Fourth Circuit, the South Carolina district court noted that Mt. Hawley’s petition relates only to the attorney-client privilege issue, and that the Fourth Circuit already “stay[ed] any district court discovery that implicates the attorney-client issue pending further order of [the Fourth Circuit].” Thus, the court declined to stay the entire case “due to this discrete issue when there are other pending discovery issues unrelated to the attorney-client privilege issue,” and denied Mt. Hawley’s motion without prejudice.
ContraVest Inc., et al. v. Mt. Hawley Insurance Co., No.15-00304 (USDC D.S.C., Oct. 24, 2018).
This post written by Jeanne Kohler.
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