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In re York Risk Services Group, Inc.

Court of Appeals of Texas, Twelfth District, Tyler

November 22, 2017

IN RE: YORK RISK SERVICES GROUP, INC., BRAD SELPH, AND SELPH ARMS, LLC, RELATOR

         ORIGINAL PROCEEDING

          Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

          MEMORANDUM OPINION

          Greg Neeley Justice

         York Risk Services Group, Inc. (York), Brad Selph (Selph), and Selph Arms, L.L.C. (Selph Arms) filed this original proceeding in which they challenge the trial court's order requiring the production of certain documents.[1] In two issues, Relators maintain that the trial court abused its discretion by ordering them to produce privileged documents and that they have no adequate remedy by appeal. We conditionally grant the writ.

         Background

         Corby Hall was employed by F&D Defense, L.L.C., a weapons manufacturer. According to Hall, he invented a device to reduce a problem with certain rifles. He shared this invention with Jesus Gomez from LWRC International, LLC (LWRC). In July 2013, Hall sued LWRC in Comal County for defamation based on forum posts disclaiming his involvement in the invention. In October 2013, Hall sued Selph and later added Selph Arms to the suit. Hall alleged that Selph made false and disparaging comments regarding Hall's involvement in the invention.

         Selph Arms had a general liability policy with Granite State Insurance Company (Granite), which contained a duty to defend provision. York was Granite's claims administrator. On October 25, Selph submitted a claim for a defense under the policy. James Beltrante, a York employee, was Selph's claims adjuster. On November 6, York informed Selph that it was investigating whether Selph's claim was covered.

         In February 2014, LWRC sued Hall and F&D in federal court asserting various causes of action. Hall also sued LWRC in federal court for correction of inventorship. That May, F&D settled LWRC's lawsuit against it. Like Selph Arms, F&D had a commercial general liability insurance policy with Granite. The policy contained a duty to defend provision. On August 11, Hall filed a claim for a defense on F&D's policy. Beltrante was assigned to Hall's claim. LWRC subsequently dismissed its case against F&D. Hall settled with LWRC in September 2014.

         On December 18, 2014, York informed Selph that Granite would "continue to furnish the defense with regard to the entire Corby Hall lawsuit; however you may wish to retain your own counsel, at your own expense, to participate with respect to any uncovered claims." In September 2015, Hall was denied coverage under F&D's policy because he did not qualify as an insured. The denial letter explained that (1) Hall's employment with F&D terminated on or about April 24, 2014 and at the time Hall provided notice of his claim, on or about August 13, he was no longer an employee with F&D; and (2) even if he qualified as an insured, he was not entitled to coverage for affirmative claims, i.e., those against LWRC.

         On October 27, 2015, Hall sued York, Granite, and AIG Claims, Inc. for various causes of action.[2] Specifically, Hall sued York for violations of the insurance code and the Texas Deceptive Trade Practices Act. He alleged a conflict of interest based on York's investigation of Selph's claim in Hall's lawsuit against Selph at the time that Hall filed his claim with York. In May 2017, Hall filed an emergency motion to compel discovery based on York's refusal to produce documents in response to the following requests:

Produce each Claim Management Review ("CMR") document which relates to Brad Selph's request for coverage regarding 0902B. This request does not pertain to privileged portions of the related documents, if any.
Produce each document containing coverage investigations, notes, memorandums, and conclusions which relate to Brad Selph's request for coverage regarding 0902B. This request does not pertain to privileged portions of the related documents, if any.
Produce each email communication between You and Brad Selph which relates to Brad Selph's request for coverage regarding 0902B.

"0902B" refers to Hall's lawsuit against Selph, trial court cause number 2013-0902B. York objected to these requests, in part, on grounds that the requests sought "confidential and/or proprietary documents pertaining to another insured concerning litigation in which [Hall] was the claimant." The trial court granted Hall partial relief and ordered that the following documents be produced:

Non-privileged portions of Claim Note entries from York's Claims Connect system with respect to York File No. LXFD - 1720A1 (Brad Selph's Request for a defense under Policy No. 02-LX-864785123);
AND
Non-privileged email communications between James Beltrante on the one hand, and Brad Selph and/or James Bettersworth on the other hand, from October 24, 2013 to May 21, 2015.

         The order allowed York to redact portions of the documents it claimed to be privileged, provide a privilege log on or before May 25, and submit documents for in camera review on or before May 25. On May 25, York provided a privilege log and tendered multiple documents for in camera review.

         On May 30, Hall's counsel provided a letter to the trial court, in which it alleged that York's redacted documents and privilege log reflected an attempt to "improperly shield communications behind baseless assertions of attorney-client privilege and/or work product." On June 30, the trial court issued a supplemental order determining that York "failed to make a prima facie case of privilege[, ]" and ordering York to provide Hall with unredacted versions of documents that were "created, sent, received, or maintained by York between October 25, 2013 and December 18, 2014[.]" This original proceeding followed.

         Prerequisites to Mandamus

         Mandamus is an extraordinary remedy. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623 (Tex. 2007) (orig. proceeding). A writ of mandamus will issue only when the relator has no adequate remedy by appeal and the trial court committed a clear abuse of discretion. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding). The relator has the burden of establishing both of these prerequisites. In re Fitzgerald, 429 S.W.3d 886, 891 (Tex. App.-Tyler 2014, orig. proceeding.). "[M]andamus will not issue when the law provides another plain, adequate, and complete remedy." In re Tex. Dep't of Family & Protective Servs., 210 S.W.3d 609, 613 (Tex. 2006) (orig. proceeding).

         Adequate Remedy

         In issue one, York maintains that mandamus review is appropriate in this case because there is no ...


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