Coronel v. GEICO Insurance Agency Incorporated
Filing
29
ORDER the Court will deny Plaintiffs' request to find a waiver of privileged communications re 26 and 27 (please see attached order for complete information). Signed by Judge David G Campbell on 11/8/12. (TLJ)
1
WO
2
3
4
5
6
IN THE UNITED STATES DISTRICT COURT
7
FOR THE DISTRICT OF ARIZONA
8
9
Katherine Coronel, et al.,
No. CV12-0795 PHX DGC
Plaintiffs,
10
ORDER
11
v.
12
GEICO Insurance Agency Incorporated,
13
Defendant.
14
15
The Court held a telephone conference with the parties on October 24, 2012, and
16
directed that they file memoranda addressing whether Defendant has waived the attorney-
17
client privilege by its position in this litigation. Doc. 23. The Court has reviewed the
18
parties’ memoranda. Docs. 26, 27.
19
This issue appears to be controlled by the Arizona Supreme Court’s decision in
20
State Farm Mutual Automobile Ins. Co. v. Lee, 13 P.3d 1169 (Ariz. 2000). Lee held that
21
State Farm waived the attorney-client privilege with respect to specific attorney-client
22
communications by asserting that, after conducting an investigation, its employees
23
possessed a subjective good-faith belief in the legal correctness of the position State Farm
24
was taking. It was the subjective belief of State Farm employees, asserted as a defense to
25
bad faith, that triggered the waiver: “in cases such as this in which the litigant claiming
26
the privilege relies on and advances as a claim or defense a subjective and allegedly
27
reasonable evaluation of the law – but an evaluation that necessarily incorporates what
28
the litigant learned from its lawyer – the communication is discoverable and admissible.”
1
Id. at 1175, ¶ 15 (emphasis omitted). The Supreme Court provided this explanation:
2
3
4
5
6
7
8
9
By asserting the subjective evaluation and understanding of its
personnel about the state of the law on stacking, State Farm has
affirmatively injected the legal knowledge of its claims managers into the
litigation and put the extent, and thus the sources, of this legal knowledge at
issue. State Farm’s claims managers cannot testify that they investigated
the state of the law and concluded and believed they were acting within the
law but deny Plaintiffs the ability to explore the basis for this belief and to
determine whether it might have known its actions did not conform to the
law.
Id. at 1182, ¶ 34.
10
Plaintiffs have not established that Defendant GEICO is taking a position in this
11
case that waives the privilege under Lee. Plaintiffs first state that “If GEICO is relying on
12
advice of counsel as a defense for its position that New York law applied, then any
13
advice that it received from its counsel is discoverable.” Doc. 27 at 3 (emphasis added).
14
Defendant GEICO responds that it will not rely on advice of counsel as a defense in this
15
case. Doc. 26 at 3. This statement by GEICO does not end the inquiry, however,
16
because State Farm likewise did not assert an advice-of-counsel defense in Lee, 13 P.3d
17
at 1172, ¶ 5 (“State Farm denied it intended to show good faith by advancing a defense of
18
reliance on advice of counsel”), and yet was deemed to have waived the privilege by
19
asserting that its employees acted with subjective good faith.
20
Plaintiffs also assert that “insofar as GEICO’s investigation of the UM claims in
21
this case incorporated advice of counsel, because GEICO contends that it acted in good
22
faith, that advice is discoverable in this case.” Id. (emphasis added). Plaintiffs do not
23
show, however, that GEICO actually asserts the subjective good faith of its employees.
24
Plaintiffs merely state that “insofar” as GEICO is taking that position, the privilege has
25
been waived. Firmer evidence is needed before the Court will conclude that the privilege
26
has been waived by GEICO’s taking the same position that State Farm took in Lee.
27
Nor can the Court conclude that GEICO has waived the privilege merely by
28
denying the allegation of bad faith. Lee makes clear that an insurer can avoid a waiver of
-2-
1
the privilege by asserting the objective (as opposed to subjective) reasonableness of its
2
conduct. See 13 P.3d at 1173, ¶ 8 (“If State Farm had merely denied bad faith and
3
defended on an objective basis, without advancing its agents’ subjective understanding of
4
the law, we would have a different case.”). Because Plaintiffs have not shown that
5
GEICO intends to assert the subjective good faith of its employees, formed after
6
investigating the legal issues in this case, the Court will deny Plaintiffs’ request to find a
7
waiver of privileged communications.
8
The Court makes two additional observations. First, although Plaintiffs have not
9
at this point shown that GEICO is asserting the subjective good-faith belief of its
10
employees concerning the application of New York law to Plaintiffs’ claims, if GEICO
11
does intend to argue that it did not act in bad faith because its employees genuinely
12
believed that the claim could not be made under New York law, any legal advice those
13
employees received concerning New York law or its application to this claim will be
14
discoverable for the reasons stated in Lee. Second, in such an event, Plaintiffs will not be
15
entitled to discover all privileged communications as they suggest. Doc. 27 at 3-4.
16
Plaintiffs will be entitled to discover only those attorney-client communications related to
17
the New-York-law position taken by GEICO in this case. See Lee, 13 P.3d at 1182 n.8.
18
Dated this 8th day of November, 2012.
19
20
21
22
23
24
25
26
27
28
-3-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?