Texas Judiciary Online - HTML Opinion

^{^[1]} Furthermore, both El Naggar and = Fred Bell=20 indicated that they thought the first assignment was sufficient to = transfer the right to waive the privileges in question. = Thus, the=20 second assignment is more in the way of a clarification than a = completely=20 new agreement.

^{^[2]} Arguably, if under different = circumstances=20 El Naggar was attempting to enforce rather than waive the = privileges it=20 received from Traxel, the analysis could be different. = However, El=20 Naggar is clearly asserting waiver, and Traxel has disassociated = itself=20 with any right to assert the privileges. Thus, as stated, = Gainsco is=20 left without any basis on which to assert privileges on = Traxel=3Ds behalf.

^{^[3]} Gainsco specifically represented=20 that:

Gainsco=3Ds actions in engaging defense counsel = and=20 monitoring the defense of the underlying suit were to facilitate=20 Traxel=3Ds defense in the suit and to further=20 Fahl=3Ds rendition of professional legal = services to=20 Traxel. . . . [T]he withheld documents themselves relating to the=20 underlying suit established the applicability of the work product=20 privilege because they revealed (a) material prepared or mental=20 impressions developed in anticipation and furtherance of=20 Traxel=3Ds defense at trial, by a party (Traxel) = or a=20 party=3Ds representatives (Traxel=3Ds attorney, Fahl, and Traxel=3Ds insurer, Gainsco); and (b) = communications made=20 in anticipation and furtherance of Traxel=3Ds defense at trial . . . . Again, = as to the=20 underlying suit, the attorney-client and work product privileges = belonged=20 to Traxel, not Gainsco. . . . As stated, as to the = underlying suit,=20 the >person upon whom these rules confer a = privilege=20 against disclosure=3D is Traxel.

^{^[4]} Although we will address=20 Gainsco=3Ds motion argument, it is important to = note that=20 this new argument is not simply an alternative to the previous = argument,=20 it is a completely contrary argument. The factual premise of = Gainsco=3Ds petition argumentCthat the underlying litigation documents = are=20 privileged solely based on Traxel=3Ds attorney-client and work product=20 privilegesChas not been disproved or refuted. = El=20 Naggar, in fact, basically agrees that the privileges attached to = these=20 documents are Traxel=3Ds. In its fallback argument, = Gainsco asserts=20 that it could protect the documents even from Traxel.

As will be discussed, many of the = designated=20 underlying case documents were drafted by, addressed to, or = pertaining to=20 communications with Fahl, the attorney representing Traxel in the=20 underlying litigation; thus, the attorney-client privilege = regarding these=20 documents could only belong to Traxel and not Gainsco. = See=20 Tex. R. Evid.=20 503(b)(1). Furthermore, in order for a person or = entity to=20 assert the work product privilege, the material in question must = have been=20 created in anticipation of litigation. See Tex. R. Civ. P. = 192.5. =20 Gainsco was not a party to the underlying litigation and does not = suggest=20 that it anticipated becoming a party. While Gainsco claims = that it=20 anticipated becoming a party to future coverage litigation, it has = made=20 this representation specifically only regarding documents related = to the=20 coverage suit.

^{^[5]} This database, part of a document = management system known as AImageRight,@ allowed Gainsco employees to input file = notes=20 automatically organized by date and time. A printout of the = notes=20 was included with the in camera documents, and the individual = notes were=20 listed on the privilege log. Gainsco employees apparently = did not=20 keep separate sets of notes for issues related to = Traxel=3Ds defense and issues related to=20 coverage.

^{^[6]} In support of its argument, = Gainsco relies=20 upon a case construing the federal counterpart to the Texas work = product=20 privilege. See In re Grand Jury Proceedings, 43 F.3d = 966, 972=20 (5th Cir. 1994).

^{^[7]} The core holding of = Blackmon is that=20 a plaintiff/insured cannot defeat the attorney-client and work = product=20 privileges of an insurer simply by alleging bad faith; however, = the=20 privileges may be defeated once liability is = established. 639=20 S.W.2d at 458.

^{^[8]} As discussed above, to the extent = Gainsco=20 is contending that documents in the claims file relate to its = decision to=20 not pay El Naggar=3Ds claim, it has identified these = documents as=20 pertaining to the coverage suit not the underlying = litigation. These=20 documents are discussed below.

^{^[9]} The trial court ordered Gainsco = to produce=20 documents created before February 5, 2005, which was the date on = which El=20 Naggar filed the current lawsuit.

^{^[10]} As claims adjuster for the El = Naggar=20 claims, Preen was clearly a representative of the client in = regards to=20 these documents under the meaning of Rule 503. Tex. R. Evid. 503(a)(2) = (AA representative of the client is one = having=20 authority to obtain professional legal services, or to act on = advice=20 rendered pursuant thereto, on behalf of the client.@).

^{^[11]} El Naggar also argues generally = that an=20 insurer=3Ds claims file in relation to a lawsuit = against an=20 insured is not protected from discovery in subsequent litigation = against=20 the insurer, citing Turbodyne Corp. v. Heard, 720 S.W.2d = 802, 803=20 (Tex. 1987); Allen v. Humphreys, 559 S.W.2d 798, 803 (Tex. = 1977);=20 Victoria Lloyds Insurance Co. v. Gayle, 717 S.W.2d 166, 168 = (Tex.=20 App.CHouston [1st Dist.] 1986, orig. = proceeding); and=20 Service Lloyds Insurance Co. v. Clark, 714 S.W.2d 437, 439 = (Tex.=20 App.CAustin 1986, orig. proceeding). = However,=20 each of these cited cases involved assertions of the party = communications=20 privilege contained in former Rule 166b(3)(d) of the Texas Rules = of Civil=20 Procedure. Tex. R. = Civ. P.=20 166b(3)(d) (repealed 1998) (see now Tex. R. Civ. P.=20 192.5(a)(2)). These cases have no impact on=20 Gainsco=3Ds assertion of attorney-client = privilege. =20 Unlike the old and the new rules governing party communications, = the=20 attorney-client privilege is not limited in its application to=20 communications made in anticipation of litigation. = Compare=20 Tex. R. Civ. P. = 192.5(a)(2)=20 and Turbodyne, 720 S.W.2d at 803-04 (discussing = former rule=20 166b(3)(d)), with Tex. R.=20 Evid. 503.

^{^[12]} In granting a partial summary = judgment=20 favoring El Naggar, the trial court has declared the = Gainsco-Traxel=20 buyback agreement to be void, apparently as against public = policy. =20 However, because (1) this order was not made an object of=20 Gainsco=3Ds petition for writ of mandamus and (2) = we need=20 not answer the question in order to decide the issues before us, = we take=20 no position on whether such an agreement violates public policy in = Texas.

^{^[13]} The Volcanic Gardens court = held that=20 the crime/fraud exception could apply to any false statement = regardless of=20 whether it constituted actionable fraud. 847 S.W.2d at = 348. =20 While we agree with the court=3Ds conclusion that there must be a=20 misrepresentation or concealment before the fraud portion of the=20 crime/fraud exception can apply, we need offer no opinion = regarding=20 whether the exception can apply absent a prima facie showing of an = actionable claim for fraud. Because we hold that El Naggar = has=20 failed to present a prima facie case that any misrepresentation or = concealment occurred, we do not reach the question of whether an=20 actionable fraud occurred.

Furthermore, we note that the = crime/fraud=20 exception would also not apply to the request for the coverage = opinion and=20 the coverage opinion itself because no relationship has been = established=20 between those documents and the alleged fraud. Granada = Corp.,=20 844 S.W.2d at 227. The request f