Gallegos et al v. Safeco Insurance Company of America

Filing 81

ORDER granting in part and denying in part 37 Motion to Compel and for Sanctions Regarding Selective Assertion of Attorney-Client Privileges; granting 38 Motion to Compel Documents From PT & C and Corey Schrauben, by Magistrate Judge Michael J. Watanabe on 3/04/2015.(slibi, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 14-cv-01114-WJM-MJW
EUGENE GALLEGOS and
DIANE GALLEGOS,
Plaintiffs,
v
SAFECO INSURANCE COMPANY OF AMERICA,
Defendant.

ORDER REGARDING
(1) PLAINTIFFS’ MOTION TO COMPEL AND FOR SANCTIONS REGARDING
SELECTIVE ASSERTION OF ATTORNEY-CLIENT PRIVILEGES
(DOCKET NO. 37)
AND
(2) PLAINTIFFS’ MOTION TO COMPEL DOCUMENTS FROM
PT & C AND COREY SCHRAUBEN
(DOCKET NO. 38)
Entered by U.S. Magistrate Judge Michael J. Watanabe
This matter is before the court on Plaintiff’s Motion to Compel and for Sanctions
Regarding Selective Assertion of Attorney-Client Privileges (docket no. 37) and
Plaintiffs’ Motion to Compel Documents from PT&C and Corey Schrauben (docket no.
38). The court has reviewed the subject motions (docket nos. 37 and 38), the
responses (docket nos. 52, 53, and 55), and the replies (docket nos. 57, 58, and 59). In
addition, the court has taken judicial notice of the court’s file and has considered
applicable Federal Rules of Civil Procedure and case law. The court now being fully
informed makes the following findings of fact, conclusions of law, and order.

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FINDINGS OF FACT AND CONCLUSIONS OF LAW
The court finds:
1.

That I have jurisdiction over the subject matter and over the parties
to this lawsuit;

2.

That venue is proper in the state and District of Colorado;

3.

That each party has been given a fair and adequate opportunity to
be heard;

4.

That in Plaintiffs’ Motion to Compel and for Sanctions Regarding
Selective Assertion of Attorney-Client Privileges (docket no. 37),
the Plaintiffs seek an Order from this court allowing them to re-open
the Rule 30(b)(6) deposition of representative Stephanie Weis. In
particular, Plaintiffs request that they be permitted to ask Ms. Weis
questions concerning the date of Defendant’s decision to pay; when
a decision was made to cut a check; who participated in the
decision; how Defendant determined the amount of the payment;
and why (timing wise) Defendant decided to make payment to Mr.
Gallegos at his deposition on October 9, 2014. Moreover, Plaintiffs
argue that since Defendant has stated in deposition that it made
payment to avoid litigation, then Plaintiff should be permitted to
inquire as to why payment was not made earlier and if payment
was made to avoid litigation, then why Defendant did not pay court
costs, interest, attorney fees, and other items of damages sought;

5.

Defendant argues that Plaintiffs’ Motion to Compel and for

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Sanctions Regarding Selective Assertion of Attorney-Client
Privileges (docket no. 37) should be denied for three principal
reasons: (a) inquiry into who made a litigation decision, when the
decision was made, and what a party reviewed in making a
litigation decision is protected by the attorney-client privilege and
work product doctrine; (2) the subject motion (docket no. 37) is
moot because the topic of Defendant’s decision to issue the
$9,782.00 payment to Plaintiffs was not listed in Plaintiffs’ Fed. R.
Civ. P. 30(b)(6) Notice - this was never an area of inquiry that
Plaintiffs requested of the 30(b)(6) witness; and (3) the cost to reopen the 30(b)(6) deposition outweighs any possible probative
value of such information requested and would cause an extension
to the discovery cut off date;
6.

That Rule 26(b) of the Federal Rules of Civil Procedure permits
discovery “regarding any nonprivileged matter that is relevant to
any party’s claim or defense” or discovery of any information that
“appears reasonably calculated to lead to the discovery of
admissible evidence.” Fed. R. Civ. P. 26(b)(1) (emphasis added).
The party resisting discovery on grounds of privilege or work
product doctrine bears the burden of coming forward with facts that
would sustain its claim. S.E.C. v. Nacchio, 2007 WL 219966, at *4
(D. Colo. Jan. 25, 2007). Under federal common law, the attorneyclient privilege arises (1) where legal advice of any kind is sought,

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(2) from a professional legal advisor in his capacity as such, (3) the
communications relating to that purpose, (4) made in confidence,
(5) by the client, (6) are at his instance permanently protected, (7)
from disclosure by himself or by the legal advisor, (8) unless the
protection is waived. See Williams v. Sprint United Management
Co., 2006 WL 266599, at *2 (D. Kan. Feb. 1, 2006). This privilege
protects from discovery communications made in confidence
between the client and attorney, but it does not protect the
underlying facts contained within those communications. Upjohn
Co. v. United States, 449 U.S. 383, 395-96 (1981). To be covered
by the attorney-client privilege, a communication between a lawyer
and client must relate to legal advice or strategy sought by the
client. See id.;
7.

That the work product doctrine is codified in Fed. R. Civ. P. 26(b)(3)
which provides that “[o]rdinarily, a party may not discover
documents and tangible things that are prepared in anticipation of
litigation or for trial by or for another party or its representative
(including the other party’s attorney, consultant, surety, indemnitor,
insurer, or agent.).” “Unlike the attorney-client privilege, which
protects all communication whether written or oral, work-product
immunity protects documents and tangible things, such as
memorandums, letters, and e-mails.” L-3 Communications Corp. v.
Jaxon Engineering & Maintenance, Inc., 2014 WL 3732943, at *5

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(D. Colo. July 29, 2014). “In contrast to the attorney-client privilege,
the work-product doctrine, or work-product immunity as it is also
called, can protect documents that are both non-privileged and
relevant. Fed. R. Civ. P. 26(b)(3). Documents prepared in the
ordinary course of business, however, are not protected as work
product unless the proponent of the protection demonstrates that
the documents would not have been created ‘but for’ the prospect
of litigation.” Id. “As with the attorney client privilege, the work
product doctrine is to be strictly construed, with the burden on the
proponent to establish its applicability and non-waiver.” Id.;
8.

That a judicial admission is a “formal admission[] . . . which has the
effect of withdrawing a fact from issue and dispensing wholly with
the need for proof of the fact.” Guidry v. Sheet Metal Workers Int’l
Ass’n, Local No. 9, 10 F.3d 700, 716 (10th Cir. 1993) (internal
quotation marks omitted), abrogated in part on other grounds on
reh’g, 39 F.3d 1078 (1994) (en banc). The doctrine does not apply
to “proposition[s] of law.” Id. “As a general rule, a stipulation is a
judicial admission binding on the parties who make it, absent
special considerations.” Vallejos v. C.E. Glass Co., 583 F.2d 507,
510 (10th Cir. 1978). “[A]dmissions in the pleadings . . . are in the
nature of judicial admissions binding upon the parties, unless
withdrawn or amended.” Missouri Housing Dev. Comm’n v. Brice,
919 F.2d 1306, 1314 (8th Cir. 1990) (internal quotation marks

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omitted). Earlier judicial admissions may be found to be binding,
even though the admitting party later submits an affidavit at
summary judgment contrary to those admissions. See id. at 131415; Davis v. A.G. Edwards & Sons, Inc., 823 F.2d 105, 107-08 (5th
Cir. 1987) (per curiam);
9.

That it is undisputed that Defendant tendered a check to Plaintiff
Mr. Gallegos during his deposition on October 9, 2014, in the
amount of $9,782.00. It is further undisputed that this payment was
not for claims relating to bad faith, unreasonable delay or denial,
interest, or court costs. See Ex. 1, 138:8-17 attached to docket no.
37. Plaintiffs’ only itemized damages was $10,000. See Exhibit A
attached to Response (docket no. 52-1). Plaintiffs provided
Defendant an estimate to repair their roof from Van Iwaarden
Builders in the amount of $9,782.00. See docket no. 52-1;

10.

That the notice for the Rule 30(b)(6) deposition in topic #1 states:
“1. All matters relating to the claim of Mr. and Mrs. Gallegos
including but not limited to all investigation, the reason for such
investigation, all decisions on the claim, the reason for such
decisions on the claims, the information used or made available to
you for use in connection with Plaintiffs’ claim.” It is clear that topic
#1 covers questions and areas of inquiry which go to the claim in
dispute in this case and the reason for such decisions as well as
the information used or made available in connection with Plaintiffs’

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claim;
11.

That Defendant has made the following judicial admissions:
A.

“The amount tendered by Safeco [Defendant] is equal to
Plaintiffs’ claimed monetary damage in this case. . . .” See
Response at page 1 (docket no. 52);

B.

“Rather, the payment was made in an effort to avoid
continued litigation over an apparently modest amount of
claimed damage, as well as to avoid any claim of continuing
or additional damages or losses by Plaintiffs.” See
Response at page 2 (docket no. 52);

C.

“The issuance of the modest payment was a litigation
decision - not a claims handling decision, as it was made
well after suit was filed and Safeco [Defendant] retained
counsel.” See Response at page 3 (docket no. 52.); and,

D.

“Because the cost to repair the roof was modest and greatly
exceeded the cost of continued litigation, Safeco [Defendant]
decided to pay the amount of $9,782.00 to Plaintiffs in an
effort to conclude this litigation and prevent any further
claims of continued or additional damages or losses on the
property. As was made clear at the time of payment, the
payment was not intended to constitute an admission of
liability or that coverage exists for Plaintiffs’ claim.” See
Response at pages 4 and 5 (docket no. 52); and

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E.

“The decision to pay $9,782.00 to Plaintiffs was made during
the course of this ongoing litigation - not in connection with
handling of Plaintiffs’ claim for damage to their property.”
See Response at page 9 (docket no. 52);

12.

That on October 30, 2014, during the Rule 30(b)(6) deposition,
representative Ms. Weis testified, in essence, consistent with
paragraph 11 above. See deposition transcript of Ms. Weis at
129:9-130: 6, 131:16-132:4 (Oct. 30, 2014) attached as Exhibit D to
Response (docket no. 52). However, Ms. Weiss did not answer the
following questions during her deposition:
A.

Who was involved in the decision to pay this claim?

B.

When did Safeco [Defendant] decide to issue the check?

C.

Who at Safeco [Defendant] reviewed the estimate, if you
know?

As to each of these three above questions, Defendant objected on
the basis of attorney-client privilege and work product;
13.

That as to the question - “Okay, And when did Safeco
[Defendant] decide to pay this claim? Ms. Weis answered: “I
don’t know the actual date.” See attached Exhibit D to Response
(docket no. 52) at 130:21-131:2);

14.

That as to questions in paragraph 12. A, B, and C listed above,
Safeco’s [Defendant’s] objections on the basis of the attorney-client

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privilege and work product are overruled. These questions are not
protected under either the attorney-client privilege or work product
doctrine. Safeco’s [Defendant’s] Rule 30(b)(6) representative Ms.
Weis shall be required to answer these questions. As to the
remainder of the questions as outlined in paragraph 4 above, this
court finds that Safeco [Defendant] has already responded to these
remaining questions through their judicial admissions in paragraph
11. A through E, inclusive, and by the answer by Ms. Weis in
paragraph 13 above. Therefore, no further inquiry will be permitted
as to these questions. Accordingly, Plaintiff may set a continued
deposition of Safeco’s [Defendant’s] Rule 30(b)(6) representative
Ms. Weis and inquire into those questions listed in paragraph 12 A,
B, and C. above only. This continued deposition of Ms. Weis shall
be limited to one-half hour, and the court reporter and/or video
conference costs shall be paid by Safeco [Defendant] as a
sanction, but the cost for any transcript shall be paid by each party;
15.

That in Plaintiffs’ Motion to Compel Documents from PT&C and
Corey Schrauben (docket no. 38), the Plaintiffs seek an Order from
this court for the last ten reports signed by Corey Schrauben, P.E.
Plaintiffs further seek the last ten reports to Safeco [Defendant]
from PT&C regarding residential claims in Colorado. In the
subpoena to Mr. Schrauben, Plaintiffs seek the last 15 reports
prepared by Mr. Schrauben with the names of the policyholders

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and the claim number redacted;
16.

That Mr. Schrabuen gave a report as to the subject roof claim in
this case to Safeco [Defendant] which report was used and relied
upon by Safeco [Defendant] to deny Plaintiffs’ claim. Plaintiffs
argue that they are entitled to previous reports from Mr. Schrauben
to demonstrate that his reports are unreliable and biased towards
Safeco [Defendant]. In addition, Plaintiffs argue that such reports
are relevant to impeachment and credibility should Mr. Schrauben
be called as a witness at trial. Since Safeco [Defendant] relied on
Mr. Schrauben’s report in denying Plaintiffs’ roof claim, it is highly
likely that Safeco [Defendant] will endorse Mr. Schrabuen as an
expert witness in the Final Pretrial Order or Plaintiffs may choose to
endorse Mr. Schrauben for trial in the Final Pretrial Order. It should
be noted that the Final Pretrial Conference is currently set on April
9, 2015, at 9:30 a.m., and the Final Pretrial Order must be filed with
the court on or before April 2, 2015. See docket no. 21. Further,
Plaintiffs argues that without such previous reports from Mr.
Schrauben, they cannot show that PT&C and Mr. Schrauben have
a financial interest in the outcome on this lawsuit based on a
continuing business relationship whereby expert opinions were
sold. In support of this argument, Plaintiffs rely on Hawkins v. S.
Plains Int’l Trucks, Inc., 139 F.R.D. 679, 681 (D. Colo. 1991), and
Smartt v. Lamar Oil Co., 623 P.2d 73, 76-77 (Colo. App. 1980);

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17.

That Safeco [Defendant] objects to Plaintiffs’ Motion to Compel
Documents from PT&C and Corey Schrauben (docket no. 38) on
the basis that such motion (docket no. 38) seeks confidential
personal and financial information regarding claims of other
insureds not at issue in this case. Also, that Safeco [Defendant]
does not have the authority to release this confidential and private
information to a third party [i.e. the Plaintiffs];

18.

That PT&C and Corey Schrauben, P.E., object to requested
information on the grounds that such request is unduly
burdensome, seeks irrelevant and immaterial information, and is
not reasonably calculated to lead to the discovery of admissible
evidence;

19.

That this court has previously entered a Protective Order in this
case on July 15, 2014. See docket no.26; and,

20.

That the objections by Safeco [Defendant] and Non-Parties PT&C
and Corey Schrauben are overruled. The reports requested from
PT&C and Schrauben are relevant as to impeachment and
credibility [bias] of Schrauben and are discoverable. The concerns
about confidential personal and financial information of other
insureds not at issue in this case can be addressed adequately by
this court through redaction of confidential personal and financial
information and through this court’s Protective Order (docket no.
26) entered on July 15, 2014.

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ORDER
WHEREFORE, based upon these findings of fact and conclusions of law this
court ORDERS:
1.

That Plaintiffs’ Motion to Compel and for Sanctions Regarding
Selective Assertion of Attorney-Client Privileges (docket no. 37)
is GRANTED IN PART AND DENIED IN PART. This motion
(docket no. 37) is GRANTED as follows. Plaintiff may set a
continued deposition of Safeco’s [Defendant’s] Rule 30(b)(6)
representative Ms. Weis and inquire into those questions listed in
paragraph 12. A, B, and C. above only. This continued deposition
of Ms. Weis shall be limited to one-half hour, and the court reporter
and/or video conference costs shall be paid by Safeco [Defendant]
as a sanction, but the cost for any transcript shall be paid by each
party. The parties shall meet forthwith and set this continued Rule
30(b)(6) deposition of Ms. Weis. The discovery cut-off date is
extended to March 31, 2015 to allow for the completion of Ms.
Weis’ deposition. This motion (docket no. 37) is DENIED as to the
remainder of the questions and other areas of inquiry as outlined in
paragraph 4 above;

2.

That Plaintiffs’ Motion to Compel Documents from PT&C and
Corey Schrauben (docket no. 38) is GRANTED. That PT&C and
Corey Schrauben shall provide the following reports to Plaintiffs on

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or before March 18, 2015: (a) the last ten reports signed by Corey
Schrauben, P.E.; (b) the last ten reports to Safeco [Defendant] from
PT&C regarding residential claims in Colorado; and (c) the last 15
reports by Mr. Schrauben prepared by Mr. Schrauben. PT&C and
Corey Schrauben shall redact the following from all of the reports
listed above: the names of the policyholders [i.e., other not-at-issue
insureds], confidential personal identifying information and
confidential financial information of the not-at-issue insureds, and
the claim numbers. The reports listed above are to be used for the
limited purpose of this case only and for no other purpose and are
subject to the protective order (docket no. 26) entered in this case
on July 15, 2014; and,
3.

That each party shall pay their own attorney fees and costs for both
of these motions (docket nos. 37 and 38), except as provided in
paragraph 14 above.

Done this 4th day of March 2015.
BY THE COURT
s/Michael J. Watanabe
MICHAEL J. WATANABE
U.S. MAGISTRATE JUDGE