Robert R. McCormick Foundation v. Arthur J. Gallagher Risk Management Services, Inc.

Summary

The Illinois Supreme Court held that the common-interest exception to the attorney-client privilege does not extend to a dispute between insured parties and an insurance broker accused of negligently procuring coverage, where no insured-insurer relationship or comparable cooperation obligation existed. The court distinguished its prior decision in Waste Management, Inc. v. International Surplus Lines Insurance Co., and held that the subpoenaed privileged communications were not discoverable under that exception. The appellate and circuit court judgments were affirmed in part and reversed in part, and the cause was remanded.

Holdings

1. The common-interest exception to the attorney-client privilege does not extend beyond the circumstances identified in Waste Management to a relationship between insureds and an insurance broker that lacks an insurer's duty to defend and indemnify the insureds for the insureds' own negligence.
2. The Foundations' attorney-client communications concerning the underlying LBO litigation remained protected from discovery because Gallagher did not establish a qualifying common interest that negated the privilege.

Questions Presented

1. Whether the common-interest exception to the attorney-client privilege recognized in Waste Management, Inc. v. International Surplus Lines Insurance Co. extends to a dispute between an insured and an insurance broker who allegedly negligently failed to procure appropriate insurance, where the broker had no duty to defend or indemnify the insured for the insured's own negligence.
2. Whether the appellate court's discovery order compelling production of the Foundations' attorney-client communications should be affirmed.
3. Whether the denial of a stay and the vacatur of the circuit court's contempt order should remain in effect.

Disposition

reversed_and_remanded