Massachusetts Appeals Court holds that insured waived attorney-client privilege when it brought suit against insurer

In Global Investors Agent Corp. v. Nat'l Fire Ins. Co. of Hartford, 76 Mass. App. Ct. 812 (2010), the Massachusetts Appeals Court held that an insurer who is a defendant in an an action alleging that it breached its duty to defend may depose the attorney who represented the insured in the underlying action.

The insureds notified the insurer of the claims against them on May 2, 2002. On July 30, 2002, before the insurer had made a determination about whether it had a duty to defend, the insureds settled the underlying claims. The insureds then sued the insurer alleging breach of the duty to defend. The insureds sought legal fees and costs and consequential damages on the grounds that they were forced to settle the underlying suit on unfavorable grounds and that they lost claims and rights in the underlying suit.

A Superior Court judge granted summary judgment to the insureds on the issue of the duty to defend, and the parties proceeded to trial on the issue of damages. The insureds, dissatisfied with the damages awarded, appealed after trial. They argued in part that the judge impermissibly allowed evidence protected by the attorney-client privilege.

The Superior Court had allowed the insurer to depose the insureds' attorney in the underlying claim concerning his perceptions, recollections, and analysis of the insureds' defenses and strategies before during and after the underlying mediation.

The Massachusetts Appeals Court agreed that the insureds had waived the attorney-client privilege. It held that their claim for consequential damages relied on the relative merits and value of the underlying case, and the only source of that information was their attorney.