Exception to attorney-client privilege in bad faith litigation discovery could prove prejudicial to underlying claim, thus necessitating stay of discovery.

The homeowner alleged a breach of contract and bad faith when her insurance carrier denied coverage for rafter and roof damage. The Cuyahoga County Court denied the insurance carrier’s motion to stay the bad faith claim, which this court reversed, finding that the litigation of the contract claim could result in dismissal of the bad faith claim and that the discovery permitted in a bad faith claim (specifically, materials generally protected by privilege) could prejudice the insurer in the underlying matter.

Case Law Alerts, 4th Quarter 2013