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04/14/95 EX PARTE PROACTIVE INSURANCE CORPORATION

April 14, 1995

EX PARTE PROACTIVE INSURANCE CORPORATION (IN RE: RENEE H. BRANTLEY AND ROBERT S. BRANTLEY, JR.
v.
PROACTIVE INSURANCE CORPORATION)



(Jefferson Circuit Court, CV-91-10182). Wayne Thorn, Jefferson Circuit Court, TRIAL JUDGE.

Released For Publication February 17, 1996.

Houston

The opinion of the court was delivered by: Houston

PETITION FOR WRIT OF MANDAMUS

HOUSTON, JUSTICE.

Proactive Insurance Corporation ("Proactive"), the defendant in an action pending in the Jefferson Circuit Court, petitions this Court for a writ of mandamus ordering the trial court to set aside its order compelling the production of documents contained in a file prepared by Proactive's former attorneys in connection with the pending lawsuit. Without now ruling on the petition, we direct the circuit court to reconsider that order.

This is the second time these parties have been before this Court. In Brantley v. Proactive Ins. Corp., 632 So. 2d 969 (Ala. 1994), we reversed a summary judgment for Proactive on the plaintiffs' bad faith claim and we remanded the case for a trial on that claim, as well as on the plaintiffs' claim alleging breach of contract. Our opinion stated, in pertinent part:

"Renee Brantley underwent surgery on June 11, 1991, for removal of an ovarian cyst; during this surgery, she also had a hysterectomy. The Brantleys submitted to Proactive claims for the expenses incurred in connection with the surgery, for payment under an insurance policy issued in August 1990 by Proactive to Robert Brantley, insuring him and his dependents. The policy contained an exclusion for preexisting conditions; the exclusion provided that 'for a period of one year from the effective date of coverage for each covered person, we will not pay any covered expense for such covered person which results from a preexisting condition.' A pre-existing condition is defined under the policy as 'any symptom or condition incurred or suffered by a covered person which existed within five years prior' to the effective date of coverage. On August 29, 1991, Proactive denied the claims on the ground that the surgery performed was for a preexisting condition.

"On December 20, 1991, the Brantleys sued Proactive, alleging breach of contract and bad faith failure to pay an insurance claim. On April 21, 1992, Proactive paid all the outstanding bills associated with the surgery; and made the payment directly to the health care providers, without notice to the Brantleys. On May 21, 1993, the trial court entered a partial summary judgment in favor of Proactive on the bad faith claim and made that judgment final pursuant to Rule 54(b), A.R.Civ.P. The Brantleys appealed, arguing that the summary judgment was improper because, they argue, Proactive did not have a lawful basis for refusing to pay their claim and did not properly investigate the claim. The Brantleys also contend that the unconditional payment by Proactive, made without [Proactive's] having received any new information after it had initially refused to pay, constituted an admission of liability from which a jury could infer that Proactive knew or should have known that it had no basis for refusing payment; because of our Disposition of this case, however, we pretermit Discussion of this contention."

632 So. 2d at 969-71.

After the case was remanded, Proactive filed a motion in limine, seeking to prevent the plaintiffs from presenting evidence at the trial that it had paid the outstanding medical bills associated with Ms. Brantley's surgery. While that motion was pending with the trial court, Proactive's attorneys, W. Michael Atchison and Allan R. Wheeler, of the law firm of Starnes & Atchison, withdrew from the case in anticipation that they might have to testify, on Proactive's behalf, that they had advised Proactive to pay the bills. Proactive took the position that it had paid the bills only upon the advice of its attorneys, not in recognition of any liability, and that the fact of its payment was not relevant as to whether it had had a lawful basis for earlier denying Ms. Brantley's claim.

The trial court never expressly denied Proactive's motion in limine; however, according to the plaintiffs, on the day the case was called for trial the trial court "allowed mention of the payment of [the claim] both in the voir dire examination of the prospective jurors and during [the] opening statements by counsel for both the plaintiffs and [the] defendant." (Emphasis in the plaintiffs' brief.) The plaintiffs concede, therefore, that the trial court at least "tacitly" denied Proactive's motion in limine. After a jury had been empaneled and opening statements had been made by both parties, one of the jurors indicated to the trial court that she could not render a fair and impartial verdict. The trial court excused that juror and declared a mistrial. Thereafter, the plaintiffs filed a motion to produce the contents of the Starnes & Atchison file, arguing that that file might contain information that would be helpful to them in crossexamining Atchison and Wheeler at the next trial. Proactive objected to the motion, arguing that the contents of the file were not only irrelevant to any issue in the case, but also were protected from disclosure under either the attorney/client privilege or the attorney's work product doctrine. The plaintiffs moved to compel production of the documents, and the trial court held a hearing on that motion. The day after the hearing, Proactive wrote a letter to the trial court, offering, apparently for the first time, to produce for an in camera examination certain documents contained in the Starnes & Atchison file relating to the advice Atchison and Wheeler had given Proactive. However, before it received this letter, the trial court ordered Proactive to produce the file. The trial court's order stated:

"The court has reviewed the [court] file and this motion. It appears from the motion for leave to withdraw filed on May 17, 1994, by counsel for the defendant that the defendant has indicated its counsel may have to testify as a defensive matter. Therefore, this motion is granted and said requested documents are to be produced within ten days."

Proactive filed a motion asking the trial court to reconsider this order, once again offering to produce what it says were the relevant documents from the Starnes & Atchison file relating to the advice Atchison and Wheeler ...


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