State of mind of the insured is irrelevant in a bad faith case, thus the contents of the insured's attorney file is not subject to discovery.

Insurer sought to discover the entire contents of the insureds' attorney's file, excluding attorney-client privileged communications, in an underlying UIM claim to determine whether the insureds acted in good faith. The insurer argued that the contents were needed to determine whether the insureds' acted in good faith. The relevant inquiry in a bad faith case is whether the insurer had a reasonable basis for its conduct, and the state of mind of the insured is irrelevant – therefore, the contents of the insureds' attorney's files are not subject to discovery in a bad faith action.

Case Law Alert - 2nd Qtr 2011