MAY 2011 BAD FAITH CASES COURT APPLIES THE “TWO-WAY STREET” RULE OF ATTORNEY-CLIENT PRIVILEGE TO DENY A MOTION FOR DISCLOSURE OF COMMUNICATIONS (Middle District)

In Verdetto v. State Farm Fire & Casualty Company, the insureds had filed an action against the insurer for breaching the terms of an insurance policy, and during the proceedings they filed a Motion for Disclosure of Communication between the insurer and its counsel.  In February 2011, the Pennsylvania Supreme Court in Gillard v. AIG Ins. Co. had determined that the privilege “operates in a two-way fashion to protect confidential client-to-attorney or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice.”  In light of Gillard, the court denied the insurer’s Motion for Disclosure of Communications, and the communications between the insurer and its counsel remained privileged.

Date of Decision:  April 19, 2011

Verdetto v. State Farm Fire & Cas. Co., Civil Action No. 3:10-cv-1917, United States District Court for the Middle District of Pennsylvania, 2011 U.S. Dist. LEXIS 42351, (Apr. 19, 2011) (Caputo, J.)