Appellate Division all but states that judges are crazy to deny motion to sever and stay 93A claim against insurer

In my last post I discussed the decision of the Massachusetts Appellate Division in Rodriguez v. Alvelo, 2009 WL 2438328 (Mass. App. Div.) to uphold the trial judge's decision not to sever a 93A claim against an insurer from the underlying claim against the insured.

The court also addressed the insurer's request that discovery against it be stayed. The insurer argued that it was entitled to a stay until after the adjudication of the underlying action to protect it from the irreparably prejudicial disclosure of confidential, privileged information contained in its claims file.

The court stated that the insurer "has an undeniably legitimate, if not compelling, interest" in protecting its work product, privileged communications, and other information the disclosure of which would prevent or impair its full defense of the underlying claim.

The court noted that there are non-precedential decisions on both sides of the issue (which many plaintiffs' and insurance defense attorneys can easily recite, having copied the same briefs over and over).

The court held that trial judges have discretion to decide whether discovery against an insurer should be stayed until resolution of the underlying matter. It noted that discovery of privileged or otherwise protected material is not allowed. It held, however, that the insurer in this case made no showing that materials in its file were not discoverable. Rather, the insurer had filed a "general motion to sever and stay" simultaneously with its answer, at a point at which there had been no request for any discovery of any kind by the plaintiff. The trial court therefore did not abuse its discretion in denying the motion.

The court then all but begged the insurer to move the trial judge to reconsider the decision, and the trial judge to do so:

In so ruling, we caution that prejudicial error would almost certainly result from any order for complete or unbridled discovery in this case. Having rejected the simpler, arguably more expeditious alternative of immediately severing and staying Rodriguez's G.L. c. 93A case, the trial judge has shouldered the potentially more time-consuming, labor-intensive tasks of scrutinizing Rodriguez's anticipated discovery requests and Premier's expected motions for protective orders, of fairly balancing the parties' competing discovery rights and interests, and of ruling in careful compliance with governing discovery rules. Permissible, practical procedures, including in camera review . . . of specific documents under seal identified by Premier as qualifying for protection, are available and must be undertaken by the trial judge. Nor is the judge precluded from reconsidering the question of a severance and stay, at least early in the procedures.