Summary
finding that at date of reservation of rights letter, it was reasonable for the parties to anticipate that if the insured were forced to expend money to resolve litigation, it would subsequently become involved in a coverage dispute with its insurer
Summary of this case from Drennen v. Certain Underwriters at Lloyd's of London (In re Residential Capital, LLC)Opinion
Case No. 2:07-cv-0009.
January 25, 2008
ORDER
This insurance coverage case is currently before the Court to resolve a dispute between the parties concerning documents withheld on grounds of work product privilege. Each party has submitted a brief, and the communications in question have also been submitted to the Court for in camera inspection. For the following reasons, the Court agrees with plaintiff, St. Paul Fire and Marine Insurance Company, that these communications are protected by the work product privilege.
The privilege in question is typically referred to as the "work product" privilege based upon the Supreme Court's recognition of such a privilege in Hickman v. Taylor, 329 U.S. 495 (1947). However, the privilege has been incorporated into Fed.R.Civ.P. 26(b)(3), and is applicable when the prerequisites of that rule have been satisfied. The rule exempts from discovery information which is otherwise discoverable if it has been "prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). . . ." The privilege can be overcome, however, "upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of materials by other means." Finally, however, even if the court does direct that trial preparation materials be disclosed, the court is required to guard against "disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation."
Rule 26(b)(3), by its terms, applies only to "documents and tangible things" which are otherwise discoverable. There is some authority for the proposition that the Rule does not apply to information as opposed to the documents or other tangible things from which the information has been derived, so that a "work product" objection cannot be made to preclude a deponent from answering questions about matters within his or her knowledge. However, the better-reasoned view is that a party may not avoid the application or Rule 26(b)(3) simply by framing a discovery request in a manner that does not call directly for the production of a document or other tangible thing. For example, the Rule itself provides that, even if discovery of documents or other tangible things is permitted, such substantive matters as the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation in question may not be disclosed. See Laxalt v. McClatchey, 116 F.R.D. 438, 441 (D. Nev. 1987); see also 4 J. Moore, J. Lucas and G. Grotheer, Jr., Moore's Federal Practice, ¶ 26.64(1), at 26-349 — 26-350 (2d Ed. 1989) ("Subject matter that relates to the preparation, strategy, and appraisal of the strengths and weaknesses of an action, or to the activities of the attorneys involved, rather than to the underlying evidence, is protected regardless of the discovery method employed."). Additionally, inquiry at a deposition which seeks to learn, through testimony, the fact that a document otherwise protected by the privilege contains certain information may also be improper under Rule 26(b)(3).See, e.g. Gilhuly v. Johns-Manville Corp., 100 F.R.D. 752, 755 (D.Conn. 1983).
In determining whether the privilege is applicable either to documents or other protected information, the burden is placed initially upon the party seeking discovery to show that the information is "otherwise discoverable," which means simply that it is both relevant to the action and not subject to any other claim of privilege. Once that burden has been met, the party opposing discovery must then demonstrate that the document or information was "prepared in anticipation of litigation or for trial. . . ." Nothing else is necessary in order to support a claim that Rule 26(b)(3) is applicable. Once that showing has been made, the burden shifts again to the party seeking discovery to demonstrate both substantial need for the information and undue hardship in duplicating it elsewhere. Even if that showing has been made, the Court must take care to protect the mental impressions and thought processes of counsel. Toledo Edison Co. v. G. A. Technologies, Inc., 847 F.2d 335 (6th Cir. 1988).
Here, there is no dispute that the information requested is relevant to the coverage issue in this case. Further, ConAgra has argued only that the information is not privileged and has not asserted that, were the Court to conclude otherwise, the information is still discoverable because ConAgra has a substantial need for the information and it cannot be obtained through other means. Consequently, the only issue before the Court is whether the notes in question were prepared in anticipation of litigation.
Each party presents a relatively straightforward argument concerning this issue. According to ConAgra, the parties maintained a common interest in defeating the third party litigation which has led to this coverage dispute, namely an intentional tort case filed against ConAgra, until that case was settled. Because all of the notes in question were made prior to the settlement of that action, ConAgra asserts that they cannot have been prepared in anticipation of litigation between St. Paul and ConAgra. On the other hand, St. Paul asserts that as soon as it issued a reservation of rights letter in August of 2005, it was anticipating that some day it would be litigating the question of coverage with ConAgra. Because all of the notes in question were prepared after that date, St. Paul asserts that they are all covered by the work product privilege.
In a case which concededly has nothing to do with insurance litigation, the Court of Appeals made several statements which assist the Court in resolving this issue. First, it noted that "a document can be created for both use in the ordinary course of business and in anticipation of litigation without losing its work-product privilege." United States v. Roxworthy, 457 F.3d 590, 599 (6th Cir. 2006). The Roxworthy court also noted that a specific threat of litigation is not needed in order to make the anticipation of litigation reasonable. Rather, it suffices that the facts known to the party asserting the privilege made its expectation of litigation reasonable under all the circumstances.
In several insurance-related cases, courts have concluded that the issuance of a reservation of rights letter triggers a reasonable expectation of future litigation between the parties. Thus, in Royal Surplus Lines Ins. v. Sofamor Danek Group, 190 F.R.D. 463, 473 (W.D. Tenn. 1999), the court stated that "the point at which [the insurer] sent the formal reservation of rights letter most clearly indicates the strong possibility of future litigation. . . . Once the ROR letter was sent, . . . it became reasonable to anticipate litigation." That case, like this one, involved a dispute over coverage for litigation against the insured. In another similar case, the court in Mount Vernon Fire Ins. Co. v. Try 3 Building Services, 1998 WL 729735 (S.D.N.Y. Oct. 16, 1998), concluded that when the insurer issued a reservation of rights letter, thereby taking a position regarding coverage, it had reasonably resolved to litigate the issue with its insured. Therefore, that the work product privilege covered documents created after that date which related to the issue of coverage.
Here, the parties agree that the first reservation of rights letter was issued in August, 2005, prior to the creation of any of the notes in question. Given the fact that, by that time, a substantial claim had been made against ConAgra concerning the alleged intentional tort and that ConAgra was in the process of defending that claim, it was reasonable for the parties to anticipate that if ConAgra were forced to expend money, through settlement or otherwise, to resolve that litigation, it would subsequently, become involved in a coverage dispute with St. Paul. Further, the notes in question, while they may have served some business purpose based on the fact that St. Paul is in the business of providing insurance and determining where coverage lies, do not appear to the Court to have been made for purposes of investigating ConAgra's claim of coverage. Rather, they appear to relate to St. Paul's decision to deny coverage and the consequences of that decision. Thus, they are distinguishable from routine business documents prepared either primarily or exclusively for the purposes of claims investigation. Cf St. Paul Reinsurance Co. v. Commercial Financial Corp., 197 F.R.D. 620 (N.D. Iowa 2000). Consequently, because the notes in question were prepared both when it was reasonable for St. Paul to anticipate that it would be litigating the coverage issue with ConAgra and because the notes appear to have been prepared for that purpose, the Court concludes that they are protected by the work product doctrine. Thus, the Court upholds the claim of privilege and declines to direct the production of these documents as requested by ConAgra. The issue raised by the parties briefs on this issue (#s 22 and 24) is therefore resolved in favor of the plaintiff, St. Paul Fire and Marine Insurance Company.
Any party may, within ten (10) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. 28 U.S.C. § 636(b)(1)(A), Rule 72(a), Fed.R.Civ.P.; Eastern Division Order No. 91-3, pt. I., F., 5. The motion must specifically designate the order or part in question and the basis for any objection. Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law.
This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.4.