IN THE SUPREME COURT OF TEXAS
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NO . 15-0591
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IN RE NATIONAL LLOYDS INSURANCE COMPANY,
WARDLAW CLAIMS SERVICE, INC. AND IDEAL ADJUSTING, INC., RELATORS
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ON PETITION FOR WRIT OF MANDAMUS
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JUSTICE JOHNSON , joined by JUSTICE LEHRMANN and JUSTICE BOYD , dissenting.
Relators (collectively, National Lloyds or the company) designated Scot Doyen, an attorney
representing them in these lawsuits, to testify regarding attorney’s fees the homeowner–plaintiffs
seek to recover. The question posed by the parties and ruled on by the trial court is whether
information about his fees, expenses, and billing information, as well as that of other attorneys
representing National Lloyds in the suits is discoverable. National Lloyds maintained in the trial
court and now maintains in this Court that the information is both irrelevant and privileged, either
as attorney-client communications or attorney work product. It has done so despite not making a
record by producing any documents for examination. The trial court disagreed as to relevance, but
wisely authorized—and directed—National Lloyds to respond to the discovery requests after
redacting privileged information from any documents produced.
This Court, addressing an issue not raised by the parties, says the homeowners used improper
discovery methods by using interrogatories and requests for production of documents. It follows that
up by saying that the methods would not have mattered anyway because the information is not
relevant. The first reason the information is irrelevant, says the Court, is because National Lloyds
has disavowed any intent to use its attorney’s fees as a measure for challenging the plaintiffs’ claims.
The second reason is because whatever relevance the information might have is slight when
compared to competing concerns such as undue prejudice, confusion of the issues, and abusive
discovery practices. Thus, the Court agrees with National Lloyds and determines that the trial court
abused its discretion by directing even the limited discovery it ordered.
I disagree and would deny relief.
I. Standard of Review
Generally, parties may obtain discovery “regarding any matter that is not privileged and is
relevant to the subject matter of the pending action, whether it relates to the claim or defense of the
party seeking discovery or the claim or defense of any other party.” TEX . R. CIV . P. 192.3(a); Ford
Motor Co. v. Castillo, 279 S.W.3d 656, 664 (Tex. 2009). Trial courts are afforded broad discretion
in determining and controlling the scope of discovery. See In re Am. Optical Corp., 988 S.W.2d
711, 713 (Tex. 1998). Trial court rulings regarding discovery are reviewed for abuse of discretion.
In re Nat’l Lloyds Ins. Co., 449 S.W.3d 486, 488 (Tex. 2014). There is no presumption that
documents are privileged, and the party resisting the discovery bears the burden of pleading and
proving an applicable privilege. In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223, 225
(Tex. 2004). Denial of discovery is proper only if there is “no possible relevant, discoverable”
material to support, or lead to evidence that would support, claims or defenses of a party. Ford
Motor Co., 279 S.W.3d at 664.
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II. Discussion
A. Methods of Discovery
National Lloyds designated Doyen, whose firm is one of those representing it in the pending
cases, as an expert witness on attorney’s fees. After Doyen testified in a similar-type case and gave
opinion testimony as to the plaintiff’s attorney’s fee request, based in part on his personal knowledge
from representing a defendant in the case, the homeowners sought permission to serve interrogatories
and requests for production regarding, as to each case, the time Doyen and his firm spent on the case
and the firm’s fees and expenses billed to and paid by National Lloyds. They sought the same
information regarding all the lawyers representing National Lloyds in the cases. National Lloyds
objected that the requested discovery was “overly broad and seeks information that is both irrelevant
and protected by the attorney-client and work-product privileges.” Ante at ___. A special master
heard the dispute. National Lloyds neither offered testimony nor produced any documents for
examination by the special master or trial court. The special master recommended, and the trial court
ordered, that National Lloyds respond to the discovery requests as modified by the court, except it
specified in its order that “specific records may be redacted for content protected by an appropriate
privilege.”
National Lloyds did not assert in the trial court that the homeowners improperly requested
discovery by using interrogatories and requests for production. It did not assert in the court of
appeals that the trial court abused its discretion by authorizing discovery by means of interrogatories
and requests for production instead of requests for disclosure, depositions, and reports as permitted
by Rule 195. See TEX . R. CIV . P. 195 (entitled “Discovery Regarding Testifying Expert Witnesses”).
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Nor has it made that argument here. The issue of whether the homeowners used proper discovery
methods when National Lloyds did not make that challenge is not an issue the trial court had a duty
to raise and rule on sua sponte. Compare, e.g., Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex.
2012) (“Subject matter jurisdiction cannot be waived or conferred by agreement, can be raised at any
time, and must be considered by a court sua sponte.”). We do not have a duty to sua sponte raise the
issue, either. Id. To the contrary, under this record we should do as the trial court did and limit
ourselves to ruling on the issues presented by the parties.
In my view, the trial court did not abuse its discretion by addressing only the issues presented
by the parties and not granting relief on grounds National Lloyds did not urge. See McKinney v.
Nat’l Union Fire Ins. Co., 772 S.W.2d 72, 75 (Tex. 1989) (“[T]he objecting party must assume the
burden of establishing its privilege, immunity or other objection to the discovery request.” (emphasis
added)). Moreover, interrogatories and requests for production of documents are appropriate for
discovering information related to Doyen as a person with knowledge of relevant facts regarding
attorney’s fees in cases in which he has participated in trial preparation, as is discussed more fully
below. National Lloyds should not get to convert a witness from one with knowledge of relevant
facts into solely an expert witness simply by designating the witness as an expert. And the trial court
would not have abused its discretion by considering Doyen as a fact witness as well as an expert for
discovery purposes—even if National Lloyds had argued he was not a fact witness, which it has not.
In light of the foregoing, I disagree with the Court’s conclusion that “[b]ecause the
homeowners chose not to use Rule 195’s permissible discovery methods to request insurer’s expert
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information, the trial court erred insofar as it relied on Rule 192.3(e) in determining the scope of
discovery.” See ante at ___.
B. Relevance
Going beyond the issue of methods of discovery, the Court concludes that the trial court
abused its discretion by ordering National Lloyds to respond to the following discovery requests
because they did not seek relevant information:
Interrogatories:
(1) State the hourly rate of any and all attorneys who have provided legal
services to this Defendant in this case;
(2) State the total amount billed by each law firm providing legal services to
this Defendant in this case up to and including the time of trial; and
(3) State the total amount of reimbursable expenses incurred by any law firm
providing legal services to this Defendant in this case up to and including the
time of trial.
Requests for Production:
(1) Produce all billing invoices received by Defendant and/or any of the firms
the named attorneys are affiliated with or employed by, in connection with
this case;
(2) Produce all payment logs, ledgers, or payment summaries showing all
payments paid to Defendants’ attorneys and/or any of the firms that the
named attorneys are affiliated with or employed by, in connection with this
case;
...
(4) Please produce all documents that show the flat rate, if any, being paid to
Defense Counsel and/or any of the firms that the named attorneys are
affiliated with or employed by, in connection with their services on this case;
and
(5) Please produce all documents related to audits of the billing and/or
invoices of Defense Counsel and/or any of the firms that the named attorneys
are affiliated with or employed by, which were performed on behalf of
Defendant in regards to the attorney services received by Defendant.
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(emphasis added). The record clarifies that Request for Production number five is limited to
documents in the particular case in which discovery is sought.
The amount of reasonable and necessary attorneys’ fees to which the plaintiffs are entitled,
if any, will be answered by the factfinder—in these cases, presumably a jury, as jury demands have
been made. Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211, 230 (Tex. 2010) (“In general, the
reasonableness of statutory attorney’s fees is a jury question.” (quoting City of Garland v. Dall.
Morning News, 22 S.W.3d 351, 367 (Tex. 2000))). The discovery was sought only after Doyen had
both been designated to testify in these cases and had testified in another case in opposition to a
plaintiff’s attorney’s fee request. And there can be no doubt that if Doyen testifies, his testimony
will be in opposition to the fees requested by the homeowners: trial lawyers do not call witnesses to
testify in support of the opposing party’s position.
During the discovery hearing the homeowners’ attorneys explained that Doyen’s testimony
in the prior, similar-type case prompted the discovery requests here. In that case he gave opinion
testimony based in part on personal knowledge from his own participation in the case. The
homeowners’ desire for information is understandable, given that when Doyen was cross-examined
in the earlier case about the amount of time and fees he and his firm billed for handling the case, he
could not recall details of those matters. Given that previous experience, the homeowners’ lawyers
reacted rationally: they sought specific information and records with which to arm themselves to test
Doyen’s testimony and opinions should his recollection again falter, or his memory as to the firm
billings be incomplete. Moreover, just in case there were other firms involved in representing
National Lloyds in any of these matters, the plaintiffs’ discovery requests inquired about those firms,
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also. For if litigation tasks in a case are split among several firms, a true picture of the amount of
time spent and fees billed by attorneys representing National Lloyds can only be presented by
disclosure of the time and billings on the case from all the firms performing services.
When a witness testifies based on personal knowledge, even in part, matters within that
witness’s personal knowledge, subject to other exclusionary rules of evidence, become relevant and
fall within the scope of cross examination. TEX . R. EVID . 602, 611(b); see also Reid Rd. Mun. Util.
Dist. No. 2 v. Speedy Stop, 337 S.W.3d 846, 850–52 (Tex. 2011). There is no dispute Doyen has
personal knowledge of his own firm’s billing rates and at least part of the activities and time spent
in litigating the cases by both his firm and the plaintiffs’ lawyers. That surely includes personal
knowledge of, or familiarity with, the complexity of the issues and the time various activities took
or reasonably should have taken; the attorney experience level appropriate to litigate the case; the
amount of time necessary to prepare for the various activities such as hearings, discovery requests
and responses; and very likely other facts and factors affecting the reasonableness and necessity of
the attorney’s fees sought. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812,
818–19 (Tex. 1997) (setting out a non-exhaustive list of factors to be considered when determining
whether an attorney’s fees request is reasonable). His designation as an expert witness does not
preclude his also being a fact witness and being examined as such with respect to the attorney’s fees
question. See Reid Rd., 337 S.W.3d at 850–52. If a witness with knowledge of relevant facts about
a contested matter such as the attorney’s fee issue is called to testify, even as an expert, it is not
subject to debate that the witness is subject to cross examination, including cross examination to test
his credibility, biases (if any), and the bases for his testimony. See TEX . R. EVID . 611(b) (“A witness
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may be cross-examined on any relevant matter, including credibility.”); Davidson v. Great Nat’l Life
Ins. Co., 737 S.W.2d 312, 314 (Tex. 1987); Goldberg v. Kelly, 397 U.S. 254, 269 (1970). Those are
all matters the jury will be entitled to consider in weighing Doyen’s testimony if the cases are tried
and he testifies; certainly information reflecting on them is discoverable.
The Court says that
[U]nder [these] circumstances, (1) compelling en masse production of a party’s
billing records invades the attorney work-product privilege; (2) the privilege is not
waived merely because the party resisting discovery has challenged the opponent’s
attorney-fee request; and (3) such information is ordinarily not discoverable.
Ante at ___ (citing TEX . R. CIV . P. 192.5(b)). But the quoted language does not apply. Here, the trial
court did not order National Lloyds to produce its billing records en masse, nor does anyone assert
that a privilege has been waived by the company’s challenging the plaintiffs’ attorney’s fees request.
To the contrary, the special master recommended, and the trial court specifically ordered, that
privileged information did not have to be disclosed—National Lloyds was to redact such information
before producing its records. Further, no one claims the information is ordinarily discoverable. But
it is no ordinary situation for a party’s trial attorney to be designated as a testifying expert to dispute
the opposing party’s attorney’s fee request—at least, it has not been. Things may well change after
this case issues.
Following its determination that some of the requested information is protected by the
work-product privilege, a determination with which I do not disagree, the Court turns to whether the
requests for hourly rates, total amounts billed, and total reimbursable expenses seek discoverable
information. The Court notes that this question relates to the scope of discovery and that the proper
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scope “extends to any unprivileged information that is ‘relevant to the subject matter’ of the pending
action, even if inadmissible at trial, so long as the information sought ‘appears reasonably calculated
to lead to the discovery of admissible evidence.’” Ante at ___ (quoting TEX . R. CIV . P. 192.3(a)).
But the Court then says:
To the extent factual information about hourly rates and aggregate attorney fees is not
privileged, that information is generally irrelevant and nondiscoverable because it
does not establish or tend to establish the reasonableness or necessity of the attorney
fees an opposing party has incurred.
Ante at ___ (citing TEX . R. EVID . 401; TEX . R. CIV . P. 192.3). I disagree. First of all, the
information clearly tends to establish the reasonableness and necessity of attorney’s fees National
Lloyds has incurred in each case. And the information sought, at a minimum, might be relevant to
both the reasonableness and necessity of the plaintiffs’ attorney’s fees in each case to which the
defendant’s fees apply.
While there are certainly times when counsel’s experience, the roles undertaken by counsel,
and varying motivations make a direct comparison of time spent on a case and fees charged for it
inapt, there are just as certainly times when circumstances in particular cases might make a
comparison highly appropriate. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 766 (Tex. 2012)
(Hecht, J., concurring). When a party designates the attorney representing it in a case to testify and
dispute another party’s fee request, the designation implies that the attorney will rely on his own
experience in trying and billing cases comparable to the one in which he is designated to testify. If
the attorney testifies and mitigating factors make a fee comparison between the parties inapplicable,
then objections can be lodged based on the status of the evidence at the time the attorney testifies.
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See TEX . R. EVID . 611(b) (providing that “[a] witness may be cross-examined on any relevant matter,
including credibility.”); TEX . R. EVID . 401 (defining “relevant evidence” as evidence having any
tendency to make the existence of any fact that is of consequence to the determination of the action
more probable or less probable). In any event, the attorney will have an opportunity to address the
subject and make any necessary clarifications during re-direct examination. And what better
exemplar could there be of comparing apples to apples than comparing attorney activities in the very
case in which the fees are sought? See El Apple I, 370 S.W.3d at 766. The trial court apparently
decided that this might be such a case. In my view the trial court did not abuse its discretion by that
decision and by allowing the limited discovery it ordered.
Further, the trial court could have, in its discretion, considered the information sought as
being relevant for cross examination of lawyer Doyen regarding the credibility of his opinions and
testimony. Witness credibility is important regarding contested issues, and attorney’s fees are no
different. See Howsley & Jacobs v. Kendall, 376 S.W.2d 562, 565 (Tex. 1964). The Texas Rules
of Evidence expressly recognize that witnesses may be cross examined on their credibility. TEX . R.
EVID . 611(b). Thus, information used to impeach the credibility of a witness, even an attorney
testifying about another party’s fees, is relevant, as the plaintiffs argued to the special master:
We believe that we’re entitled to know how much the Defendants spend on attorneys’
fees and the number of hours that they billed for, in order to counter the arguments
and testimony that we heard [from Doyen in the previous trial].
The Court gives several reasons for concluding that the requested information is not relevant.
First, it says that an opposing party may freely choose to spend more or less than would be
“reasonable” in comparison to the requesting party. Ante at ___. But deciding what is a reasonable
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fee for a case is a jury question. Certainly, a party has the right to spend whatever it chooses on a
case. But attorneys for both sides are professionally obligated to charge reasonable fees. TEX .
DISCIPLINARY RULES PROF’L CONDUCT 1.04(a). Beyond that, that party’s billing choices should not
preclude the party whose attorney’s fees it is contesting from discovering information about the time
spent and fees charged on a case by a testifying witness who has been part-and-parcel of representing
the contesting party in the suit. This holds especially true when, as happened with Doyen, the
designated witness has already demonstrated in previous trial testimony in a similar case that he
could not recall specifics regarding his firm’s time, activities, and billings for the case.
Second, the Court says that comparisons between attorney’s fees of plaintiffs and defendants
are inapt because differing motivations of the parties impact the time spent, rate charged, and skill
required. Ante at ___. That may be true to some extent, but the fact remains that all the lawyers are
representing clients in the same lawsuit and doing much of the same work, such as filing pleadings,
attending the same depositions and hearings, doing pretrial orders and briefing, preparing to examine
and cross examine the same pool of witnesses, working on the same jury charge, and preparing to
argue the same case to the same jury. There is necessarily symmetry in a great deal of the activity
undertaken by attorneys representing clients in the same lawsuit, even though they represent
opposing parties. That symmetry is relevant for cross-examination purposes if Doyen testifies
regarding such activities and is critical of the homeowners’ attorney’s fees request as to those
activities.
Third, the Court says that the tasks and roles of counsel on opposite sides of a case vary
fundamentally, so even in the same case, the legal services rendered to opposing parties are not
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“fairly characterized” as similar. Ante at ___. I disagree. There are some differences in the typical
activities undertaken by counsel for opposing parties in a lawsuit, but most of the activities are of
the same general nature. And if they are not, the testifying witness will have an opportunity to
explain the differences. In any particular case the issues generally become apparent early on. From
that point, preparation for the parties generally entails similar types of activities—even though likely
not exactly the same activities—as set out above, and others such as researching points of law that
might arise, conferring with and corresponding with the client regularly, interviewing witnesses,
attending mediation, and preparing witnesses for trial. Any differences go to the weight of the
evidence, not to whether there is some relevancy between the level and types of activities and time
spent by the attorneys for each side. At the least, there is enough similarity and relevance for the trial
court to have determined that the limited discovery it ordered was warranted.
Finally, the Court says that a single law firm’s fees and rates do not determine the
“customary” range of fees in a general locality for similar services. See Arthur Andersen & Co., 945
S.W.2d at 818 (noting that the fee customarily charged in the locality is a factor to be considered in
determining the reasonableness and necessity of attorney’s fees). True. But saying that a single
firm’s fees and rates do not determine a customary or reasonable fee is not the same as saying that
firm’s fees and rates are not relevant to the question. To the extent that “customary” fees are in
issue, an opposing party’s fees and rates are certainly some evidence of the customary fees and rates
in that locality. As such, they are at least relevant to what a customary or reasonable fee would be.
In sum, it is one thing to say that evidence of National Lloyds’ attorneys’ time and fees in a
particular case is inadmissible in that case when an opposing party is seeking attorney’s fees in the
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case. Admissibility will depend on the evidence and what has transpired at trial before such
evidence is offered, and the purpose for which it is offered. Cf. In re E.N.C., 384 S.W.3d 796, 805
(Tex. 2012); see also TEX . R. EVID . 401 (requiring that the evidence be of a “fact . . . of consequence
in determining the action”). But it is quite another thing to say that the trial court abused its
discretion by determining evidence of the time and fees of National Lloyds’ attorneys is discoverable
to the limited extent it ordered here.
C. And Further . . .
The Court asserts that production of any part of an attorney’s file, even redacted billing
information, would conflict with our holding in National Union Fire Insurance Co. v. Valdez, in
which we decided that requests for en masse production of an attorney’s entire litigation file was
improper because it called for disclosure of privileged, work-product materials. Ante at ___ (citing
Nat’l Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 460 (Tex. 1993)). Not so. The requests for
discovery in this case are not even close to the requests we considered in Valdez. An attorney’s
entire file includes notes about attorney-client conferences, reports to clients, trial strategies and
preparation, and case evaluation; just to mention a few areas and matters that are undisputedly
privileged. No one doubts that those materials “necessarily [reveal] the attorney’s thought processes
concerning the prosecution or defense of the case.” See Valdez, 863 S.W.2d at 460.
The requested billing information in this case is a narrow sliver of the entire file, and in
Valdez we were careful to note that the decision “does not prevent a party from requesting specific
documents . . . relevant to issues in a pending case, even though some or all of the documents may
be contained in an attorney’s file.” Id. The information and documents sought here are limited,
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specific, and unquestionably relevant to an issue in this case. The trial court’s authorizing National
Lloyds—by a very general and nonspecific order—to redact privileged information before producing
documents, was fully adequate to protect privileged information absent National Lloyds
demonstrating otherwise.
To the extent the Court implies that the homeowners seek to use the requested discovery to
independently support their claim for attorney’s fees, National Lloyds does not claim that they do.
As the homeowners argued to the special master, the discovery was sought only after Doyen’s
designation as a witness regarding the homeowners’ attorney’s fees claim, and after he testified in
opposition to the fee request of a homeowner in a different trial. As discussed, the homeowners say
they only seek the information to prepare for cross examining Doyen. So, any discussion about using
the fees National Lloyds’ lawyers charged as proof of the homeowners’ attorney’s fees is misplaced.
Moreover, the discovery requests can hardly be excessively burdensome or a great expansion
of the trial that will take place. First, National Lloyds did not claim that they are. Second, it is
common knowledge among civil trial lawyers that insurance companies require regular, detailed
billing invoices from their attorneys. Invoices generally set out, at the very least, the date, amount
of time taken, and description of activity for which the company is being billed. That information
is most likely either computer generated or transmitted to the company via paperless billing methods.
Either way, or even in the event that the billing invoices are paper instead of electronic, the invoices
and payments made in response will be readily and efficiently available on demand. It is also
common knowledge in the industry that insurance companies may have the fee invoices of their
attorneys audited, frequently by independent companies whose business it is to review attorney’s fee
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bills and report unusual or out-of-line time or activities to the auditing company’s clients—indeed,
the phrase “customary fee” comes to mind regarding such audits. See Arthur Andersen & Co., 945
S.W.2d at 818. Assuming National Lloyds follows industry norms, the responses to discovery
ordered by the trial court should take a nominal amount of time and effort, even including the time
to redact privileged information as authorized by the trial court. And if National Lloyds does not
follow industry norms, it did not mention it in the trial court, nor did it assert or offer evidence that
producing the requested information and redacted documents would take an unusual or excessive
amount of time, effort, or expense. In any event, if any such problems arise, they can be presented
to the trial court for resolution.
As the Court explains, this situation has been brought about by National Lloyds’own
litigation choice to designate its trial attorney to testify as an expert. Ante at ___ n.54 (noting that
parties concerned about disclosing fees and expenses paid to trial counsel can designate another
expert witness or withdraw the designation of trial counsel as a witness). What National Lloyds
should not be able to do is have it both ways by using one of its trial attorneys to critique the time,
fees, and other details of the homeowners’ attorney’s fees request, while screening from view its own
attorneys’ time and fees in the same case for the same or similar activities. The materials the trial
court ordered discovered, at the very least, may lead to admissible evidence that many, if not most,
jurors would consider relevant in weighing the testimony of a witness such as Doyen—how much
time did the insurance company’s lawyers spend on the case in regard to the items those lawyers
criticize as to the homeowners’ attorneys, and what did they and their insurance clients consider a
reasonable fee for those efforts?
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III. Conclusion
The trial court’s reasonably cautious approach as to what interrogatories must be answered
and what discovery must be produced does not demonstrate an abuse of discretion. There is, at a
minimum, possible relevance of the discovery sought to an element of the pending case. See Ford
Motor Co., 279 S.W.3d at 664. There simply has been no showing that National Lloyds’ complying
with the trial court’s discovery order would result in undue prejudice or abusive discovery practices.
It most certainly would not result in confusion of the issues—it is a discovery order, not a ruling on
the admissibility of the information or documents sought.
I would deny mandamus relief. Because the Court does otherwise, I respectfully dissent.
________________________________________
Phil Johnson
Justice
OPINION DELIVERED: June 9, 2017
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in Re National Lloyds Insurance Company, Wardlaw Claims Service, Inc. and Ideal Adjusting, Inc.
Combined Opinion