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[(court's)-355(discretion)-355(to)-355(permit)-355(any)-355(discovery)-355(of)-355(reinsurance)]TJ T* [(documents)-583(or)-583(communications)-583(without)-583(the)-583(court)-583(first)]TJ T* [(examining)-412(those)-412(documents)-412(and)-412(communications,)-412(by)-412(in)]TJ T* [(camera)-457(inspection,)-457(to)-457(determine)-457(if)-457(they)-457(have)-457(sufficient)]TJ T* [(relevance)-367(to)-367(the)-367(requesting)-367(party's)-367(case)-367(to)-367(overcome)-367(the)]TJ T* [(insurer's)-250(claim)-250(of)-250(qualified)-250(privilege.)]TJ /TT1 1 Tf 0 -2.25 TD [(\(8a\))-861(\(8b\))-861(Insurance)-861(Contracts)-861(and)-861(Coverage)-861(\247)]TJ 0 -1.25 TD [(127--Actions--Bad)-2351(Faith)-2351(Action)-2351(Against)]TJ T* [(Insurer--Evidence--Of)-2111(Loss)-2111(Reserves)-2111(and)]TJ T* [(Reinsurance--Subject)-1445(to)-1445(Privilege--In)-1445(Camera)]TJ T* (Review.)Tj /TT0 1 Tf 4.011 0 Td 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176.92 Tm [(6)-958(Records)-319(produced)-319(by)-319(Lipton)-319(during)-319(discovery)]TJ T* [(in)-274(this)-274(action)-274(reflect)-274(that)-274(Lipton,)-274(prior)-274(to)-274(the)-274(filing)]TJ T* [(of)-302(this)-302(action,)-302(had)-302(entered)-302(into)-302(an)-302(agreement)-302(with)]TJ T* [(the)-491(Pachecos)-491(and)-491(their)-491(counsel)-491(which)-491(provided)]TJ T* [(that)-286(the)-286(Pachecos)-286(would)-286(stay)-286(enforcement)-286(of)-286(their)]TJ T* [(judgment)-540(against)-540(Lipton)-540(in)-540(exchange)-540(for)-540(a)-540(40)]TJ T* [(percent)-299(share)-299(in)-299(the)-299(proceeds)-299(of)-299(any)-299(settlement)-299(or)]TJ T* [(judgment)-662(entered)-662(in)-662(this)-662(action.)-662(Under)-662(this)]TJ 17.526 66.975 Td [(Page)-250(5)]TJ -33.357 -1.1 Td [(48)-250(Cal.)-250(App.)-250(4th)-250(1599,)-250(*1606;)-250(56)-250(Cal.)-250(Rptr.)-250(2d)-250(341,)-250(**344;)]TJ -1.346 -1.1 Td 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[(.\))-662(Pursuant)-662(to)-662(this)-662(statutory)]TJ T* [(authority,)-369(the)-369(commissioner)-369(has)-369(promulgated)-369(a)-369(series)-369(of)]TJ T* [(regulations)-436(for)-436(liability)-436(insurers.)-436(\(See)]TJ /TT2 1 Tf 16.097 0 Td [(Cal.)-436(Code)-436(Regs.,)]TJ -16.097 -1.25 Td [(tit.)-753(10,)-753(\247)-753(2319)-753(et)-753(seq.)]TJ /TT1 1 Tf [(\))-753(Among)-753(other)-753(things,)-753(the)]TJ T* [(commissioner)-303(requires)-303(that)-303(reserves)-303("reflect)-303(inflation)-303(and)]TJ T* [(development")-410(projected)-410(to)-410(the)-410(date)-410(of)-410(possible)-410(ultimate)]TJ T* [(payment,)-484(incurred-but-not-reported)-484(losses)-484(and)-484(ratios)-484(of)]TJ T* [(paid)-303(expenses)-303(to)-303(paid)-303(losses.)-303(\()]TJ /TT2 1 Tf 12.621 0 Td [(Cal.)-303(Code)-303(Regs.,)-303(tit.)-303(10,)-303(\247)]TJ -12.621 -1.25 Td (2319.2)Tj /TT1 1 Tf (.\))Tj 3 -2.25 Td (14)Tj /TT2 1 Tf 2.427 0 Td [(Insurance)-476(Code)-476(section)-476(923.5)]TJ /TT1 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66.975 Td [(Page)-250(9)]TJ -33.357 -1.1 Td [(48)-250(Cal.)-250(App.)-250(4th)-250(1599,)-250(*1611;)-250(56)-250(Cal.)-250(Rptr.)-250(2d)-250(341,)-250(**347;)]TJ -1.596 -1.1 Td [(1996)-250(Cal.)-250(App.)-250(LEXIS)-250(821,)-250(***16;)-250(96)-250(Cal.)-250(Daily)-250(Op.)-250(Service)-250(6445)]TJ ET endstream endobj 17 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/Type/Page>> endobj 18 0 obj <>stream BT /CS0 cs 0 scn /GS0 gs /TT0 1 Tf 10 0 0 10 94.8 704.42 Tm [(consideration)-501(of)-501(the)-501(ascertained)-501(experience)-501(and)]TJ 0 -1.25 TD [(the)-486(character)-486(of)-486(such)-486(kinds)-486(of)-486(business)-486(for)-486(the)]TJ T* [(purpose)-371(of)-371(adequately)-371(protecting)-371(the)-371(insured)-371(and)]TJ T* [(securing)-250(the)-250(solvency)-250(of)-250(the)-250(insurer.)-250(.)-250(.)-250(.")]TJ /TT1 1 Tf -0.926 -2.25 Td [([***21])-774(\(2\))]TJ /TT0 1 Tf 5.38 0 Td [(Loss)-274(reserves,)-274(which)-274(are)-274(the)-274("reserves")]TJ -7.455 -1.25 Td [(to)-596(which)-596(Lipton)-596(refers,)-596(and)-596(to)-596(which)-596(he)-596(directs)-596(his)]TJ T* [(petition,)-321(represent)-321(the)-321(amount)]TJ /TT1 1 Tf 12.729 0 Td ([**349])Tj /TT0 1 Tf 3.737 0 Td [(anticipated)-321(to)-321(be)]TJ -16.466 -1.25 Td [(sufficient)-272(to)-272(pay)-272(all)-272(obligations)-272(for)-272(which)-272(the)-272(insurer)-272(may)]TJ T* [(be)-736(responsible)-736(under)-736(the)-736(policy)-736(with)-736(respect)-736(to)-736(a)]TJ T* [(particular)-861(claim.)-861(That)-861(amount)-861(necessarily)-861(includes)]TJ T* [(expenses)-290(that)-290(are)-290(likely)-290(to)-290(be)-290(incurred)-290(in)-290(connection)-290(with)]TJ T* [(the)-353(settlement)-353(or)-353(adjustment)-353(of)-353(the)-353(claim,)-353(as)-353(well)-353(as)-353(the)]TJ T* [(legal)-324(fees)-324(and)-324(other)-324(costs)-324(required)-324(to)-324(defend)-324(the)-324(insured.)]TJ T* 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[(Cal.)-475(Rptr.)-475(343,)-475(636)-475(P.2d)-475(32])]TJ /TT0 1 Tf (;)Tj /TT2 1 Tf 13.349 0 Td [(Miller)-475(v.)-475(Elite)-475(Ins.)-475(Co.)]TJ -13.349 -1.25 Td [(\(1980\))-316(100)-316(Cal.)-316(App.)-316(3d)-316(739,)-316(753)-316([161)-316(Cal.)-316(Rptr.)-316(322])]TJ /TT0 1 Tf (.\))Tj 8 0 0 8 64.8 174.42 Tm (15)Tj 10 0 0 10 79.968 174.42 Tm [(In)-717(addition,)-717(an)-717(argument)-717(can)-717(be)-717(made)-717(for)-717(the)]TJ -1.517 -1.25 Td [(proposition)-629(that)-629(loss)-629(reserve)-629(information)-629(might)-629(have)]TJ /TT2 1 Tf T* (some)Tj /TT0 1 Tf 2.451 0 Td [(relevance)-396(to)-396(the)-396(question)-396(of)-396(whether)-396(a)-396(reasonable)]TJ -2.451 -1.25 Td [(likelihood)-321(of)-321(an)-321(excess)-321(verdict)-321(existed)-321(or)-321(the)-321(insurer)-321(had)]TJ T* [(conducted)-593(a)-593(proper)-593(investigation)-593(or)-593(given)-593(reasonable)]TJ T* 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[(carrier)-352(in)-352(which)-352(it)-352(is)-352(claimed)-352(that)-352(the)-352(insurer)-352(has)]TJ T* [(failed)-285(to)-285(act)-285(reasonably)-285(or)-285(fairly)-285(in)-285(the)-285(adjustment)]TJ T* [(and)-560(settlement)-560(of)-560(employee)-560(claims.)-560(\(See,)-560(e.g.,)]TJ /TT2 1 Tf T* [(Security)-461(Officers)-461(Service)-461(v.)-461(State)-461(Compensation)]TJ T* [(Ins.)-389(Fund)-389(\(1993\))-389(17)-389(Cal.)-389(App.)-389(4th)-389(887,)-389(898)-389([21)]TJ T* [(Cal.)-451(Rptr.)-451(2d)-451(653])]TJ /TT0 1 Tf (;)Tj /TT2 1 Tf 8.694 0 Td [(Mission)-451(Ins.)-451(Group,)-451(Inc.)-451(v.)]TJ -8.694 -1.25 Td [(Merco)-478(Construction)-478(Engineers,)-478(Inc.)-478(\(1983\))-478(147)]TJ T* [(Cal.)-277(App.)-277(3d)-277(1059,)-277(1066)-277([195)-277(Cal.)-277(Rptr.)-277(781])]TJ /TT0 1 Tf [(.\))-277(In)]TJ T* [(such)-349(cases,)-349(the)-349(amount)-349(of)-349(the)-349(reserves)-349(set)-349(by)-349(the)]TJ T* [(insurer)-373(and)-373(its)-373(loss)-373(experience)-373(directly)-373(affect)-373(the)]TJ T* [(amount)-646(of)-646(the)-646(insured's)-646(premiums)-646(and/or)-646(the)]TJ T* [(dividends)-254(to)-254(which)-254(the)-254(insured)-254(might)-254(otherwise)-254(be)]TJ T* [(entitled.)-420(")-420('When)-420(an)-420(insurance)-420(policy)-420(contains)-420(a)]TJ T* [(retrospective)-304(premium)-304(feature,)-304(an)-304(insurer's)-304(failure)]TJ T* [(to)-1100(act)-1100(reasonably)-1100(when)-1100(adjusting)-1100(claims)]TJ T* [(automatically)-767(subjects)-767(the)-767(insured)-767(to)-767(greater)]TJ T* [(financial)-620(obligations)-620(in)-620(the)-620(form)-620(of)-620(increased)]TJ T* [(premium)-728(rates.')-728([Citation.]")-728(\()]TJ /TT2 1 Tf [(Security)-728(Officers)]TJ T* [(Service,)-469(supra,)-469(17)-469(Cal.)-469(App.)-469(4th)-469(at)-469(p.)-469(897)]TJ /TT0 1 Tf [(.\))-469(In)]TJ T* [(such)-287(a)-287(case,)-287(the)-287(setting)-287(of)-287(reserves)-287(can)-287(be)-287(directly)]TJ T* [(related)-250(to)-250(the)-250(insured)-250(employer's)-250(damages.)]TJ /TT1 1 Tf -0.935 -2.25 Td [([***24])-765(\(4\))]TJ /TT0 1 Tf 5.361 0 Td [(None)-265(of)-265(the)-265(authorities)-265(cited)-265(to)-265(us)-265(have)]TJ -7.426 -1.25 Td [(dealt)-688(with)-688(the)-688(issue)-688(of)]TJ /TT2 1 Tf 11.216 0 Td (discovery)Tj /TT0 1 Tf 4.52 0 Td [(relevance)-688(under)]TJ 4.29 66.225 Td [(Page)-250(10)]TJ -32.857 -1.1 Td [(48)-250(Cal.)-250(App.)-250(4th)-250(1599,)-250(*1613;)-250(56)-250(Cal.)-250(Rptr.)-250(2d)-250(341,)-250(**348;)]TJ -1.596 -1.1 Td [(1996)-250(Cal.)-250(App.)-250(LEXIS)-250(821,)-250(***20;)-250(96)-250(Cal.)-250(Daily)-250(Op.)-250(Service)-250(6445)]TJ ET endstream endobj 19 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/Type/Page>> endobj 20 0 obj <>stream BT /CS0 cs 0 scn /GS0 gs /TT0 1 Tf 10 0 0 10 64.8 704.42 Tm (California)Tj /TT1 1 Tf 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[(matter)-540(of)-540(law,)-540(conclude)-540(\(as)-540(to)-540(each)-540(separate)-540(item)-540(of)]TJ T* [(information\))-327(that)-327(it)-327(is)-327(not)-327(relevant)-327(to)-327(the)-327(subject)]TJ /TT2 1 Tf 20.054 0 Td ([***28])Tj /TT1 1 Tf -20.054 -1.25 Td [(matter)-467(or)-467(is)-467(not)-467(calculated)-467(to)-467(lead)-467(to)-467(the)-467(discovery)-467(of)]TJ T* [(admissible)-900(evidence)-900(in)-900(Lipton's)-900(bad)-900(faith)-900(action.)]TJ T* [(However,)-959(the)-959(record)-959(indicates)-959(that)-959(such)-959(reserve)]TJ T* [(information)-936(in)-936(some)-936(of)-936(the)-936(documents)-936(may)-936(be)]TJ T* [(commingled)-322(with)-322(reinsurance)-322(information)-322(and)-322(privileged)]TJ T* [(matter.)-250(We)-250(therefore)-250(now)-250(turn)-250(to)-250(that)-250(issue.)]TJ /TT2 1 Tf 2.05 -2.25 Td ([**351])Tj /TT1 1 Tf 3.666 0 Td (3.)Tj /TT0 1 Tf 1 0 Td [(Discovery)-250(of)-250(Reinsurance)-250(Documents)]TJ /TT2 1 Tf -4.543 -2.25 Td (\(5a\))Tj /TT1 1 Tf 2.039 0 Td [(The)-372(documents)-372(relating)-372(to)-372(reinsurance)-372(which)]TJ 15.815 66.725 Td [(Page)-250(11)]TJ -32.857 -1.1 Td [(48)-250(Cal.)-250(App.)-250(4th)-250(1599,)-250(*1614;)-250(56)-250(Cal.)-250(Rptr.)-250(2d)-250(341,)-250(**349;)]TJ -1.596 -1.1 Td [(1996)-250(Cal.)-250(App.)-250(LEXIS)-250(821,)-250(***24;)-250(96)-250(Cal.)-250(Daily)-250(Op.)-250(Service)-250(6445)]TJ ET endstream endobj 21 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/Type/Page>> endobj 22 0 obj <>stream BT /CS0 cs 0 scn /GS0 gs /TT0 1 Tf 10 0 0 10 64.8 704.42 Tm [(Lipton)-426(seeks)-426(involve)-426(reinsuring)-426(agreements)-426(LMIC)-426(may)]TJ 0 -1.25 TD [(have)-788(entered)-788(into)-788(plus)-788(any)-788(related)-788(correspondence)]TJ T* [(regarding)-261(the)-261(adjustment)-261(and)-261(defense)-261(of)-261(the)-261(Pacheco,)-261(Hill)]TJ T* [(and)-654(Dale)-654(cases)-654(which)-654(LMIC)-654(may)-654(have)-654(sent)-654(to)-654(its)]TJ T* [(reinsurers.)-265(In)-265(his)-265(petition,)-265(Lipton)-265(argues,)-265("It)-265(is)-265(undisputed)]TJ T* [(that)-371(the)-371(defendant)-371(did,)-371(in)-371(fact,)-371(enter)-371(into)-371(at)-371(least)-371(one,)-371(if)]TJ T* [(not)-607(more,)-607(reinsurance)-607(agreements)-607(with)-607(other)-607(carriers)]TJ T* [(pertaining)-426(to)-426(its)-426(defense)-426(of)-426(Mr.)-426(Lipton.)-426(These)-426(types)-426(of)]TJ T* [(communications)-287(with)-287(reinsurers)-287(would)-287(not)-287(have)-287(occurred)]TJ T* [(unless)-422(defendant)-422(Lawyer's)-422(Mutual)-422(knew)-422(or)-422(had)-422(a)-422(good)]TJ T* [(faith)-334(belief,)-334(that)-334(aggregate)-334(coverage)-334(benefits)-334(were)-334(owed,)]TJ T* [(or)-250(may)-250(be)-250(owed,)-250(to)-250(Mr.)-250(Lipton.")]TJ 1.8 -2.25 Td [(It)-479(appears)-479(that)-479(Lipton's)-479(argument)-479(for)-479(discovery)-479(of)]TJ -1.8 -1.25 Td 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