Menapace v. Alaska National Insurance Company
Filing
108
ORDER RE: DOCUMENTS WITHHELD OR REDACTED BY DEFENDANT PURSUANT TO ATTORNEY-CLIENT PRIVILEGE AND/OR WORK PRODUCT by Magistrate Judge Scott T. Varholak on 15 October 2020. (Attachments: # 1 Appendix A) (cmadr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 20-cv-00053-REB-STV
DARIN MENAPACE,
Plaintiff,
v.
ALASKA NATIONAL INSURANCE COMPANY,
Defendant.
______________________________________________________________________
ORDER RE: DOCUMENTS WITHHELD OR REDACTED BY DEFENDANT
PURSUANT TO ATTORNEY-CLIENT PRIVILEGE AND/OR WORK PRODUCT
______________________________________________________________________
Magistrate Judge Scott T. Varholak
This matter is before the Court on the parties’ discovery dispute regarding
documents withheld or redacted by Defendant as attorney-client privileged and/or
protected by the work produce doctrine. The Court has carefully considered the Parties’
briefing, arguments made at the April 23, 2020 hearing, and the applicable law. For the
reasons discussed herein, the Court ORDERS Defendant to produce certain of the
documents previously withheld or redacted as protected by the attorney-client privilege
and/or work product doctrine as set forth in Appendix A to this Order.
I.
BACKGROUND 1
The instant lawsuit arises from a claim for underinsured motorist (“UIM”) benefits
made by Plaintiff Darin Manapace to his employer’s insurer, Defendant Alaska National
1
The Court draws factual allegations from the Complaint [#5] and the parties’ briefing and
exhibits to provide context for resolution of the instant dispute. When available, the Court
cites to the publicly available docket. For references to the claim file not included in the
Insurance Company. [#5] On July 16, 2016, Plaintiff was involved in a motor vehicle
collision in Wyoming when the driver of another vehicle, Sharon Johnson, crossed the
center line into the oncoming lane of travel and collided head-on with Plaintiff’s vehicle.
[Id. at ¶¶ 5, 6] At the time of the collision, Ms. Johnson was insured by USAA with policy
limits of $100,000. [Id. at ¶¶ 7, 8] At the time of the collision, Plaintiff was acting within
the scope of his employment with Alaskan Brewing, LLC, and thus was an insured under
Alaskan Brewing’s underinsured motorist insurance policy with Defendant in the amount
of $1,000,000 per accident for bodily injury coverage. [Id. at ¶¶ 11, 12, 13] Although the
collision occurred in Wyoming, Plaintiff resided and worked for Alaskan Brewing in
Colorado and drove an Alaskan Brewing vehicle insured by Defendant. [#51 at 11]
Because Plaintiff’s damages and losses from the collision exceeded $100,000, on
August 16, 2017, Plaintiff—through counsel, Alana Anzalone—made a claim for UIM
benefits to Defendant. 2 [#5, ¶¶ 9, 10; #51-1 at 2-3] Scott Millar, a Senior Claims Examiner
for Defendant, was assigned to adjust the claim. [#51 at 11; #51-1 at 5] At the time of
Plaintiff’s claim, Defendant, which primarily provides commercial insurance in Alaska and
the Pacific Northwest, had handled only four Colorado UIM claims and 11 total Colorado
auto claims. [#51 at 10-11] As a result, in July 2017, Defendant retained outside counsel
in Colorado—Keith Olivera with the law firm White & Steele, P.C.—to provide advice in
connection with the adjustment of the claim. [#51 at 11; #51-3, ¶¶ 3-4, 6]
public record [see #51-2 (“Due to Size Exhibit B Submitted Directly to Court via FTP
site”)], the Court cites to the Bates number of the document (e.g.,
AlaskaNational_000000).
2 Contemporaneously, Plaintiff was also pursuing a claim for workers compensation from
Defendant—who was also Alaskan Brewing’s workers compensation carrier. [See, e.g.,
#51-1 at 4; AlaskaNational_000214]
2
In October 2017, Ms. Anzalone notified Mr. Millar that USAA had offered policy
limits of $100,000 and requested consent to settle. [#51-1 at 4] On November 27, 2017,
Mr. Millar sent a letter to Ms. Anzalone on behalf of Defendant “consent[ing] to the
underlying settlement [with USAA] and the satisfactory triggering required to present a
UM/UIM claim for review under the . . . policy.” [#51-1 at 9]
On June 21, 2018, Ms. Anzalone sent Mr. Millar a nine-page letter making a
demand in the amount of $500,000 and explaining the basis for that demand. [#51-1 at
13-21] Mr. Millar responded on July 2, 2018, requesting an examination under oath
(“EUO”), potentially an independent medical examination (“IME”), and a mediation. [#511 at 41] Mr. Millar informed Ms. Anzalone that Defendant “retained Keith Olivera in
Denver to work with you to get the EUO and any IME promptly completed.” [Id.] From
that point forward, Mr. Olivera “replace[d] Mr. Millar as the primary point of contact for
Plaintiff’s counsel.” [#51 at 34] At Defendant’s request, Mr. Olivera “t[ook] the lead” and
“coordinate[d]” the EUO, IME, and mediation with Ms. Anzalone on behalf of Defendant.
[#53-7 at 2; see generally AlaskaNational_000227-39] On or about August 20, 2018, Mr.
Olivera conducted the EUO of Plaintiff on behalf of Defendant. [See #53-4 at 16-18;
AlaskaNational_000400] In September 2018, Plaintiff submitted to an IME requested by
Defendant through Mr. Olivera. [#53-4 at 13] On or about October 17, 2018, Plaintiff and
Defendant participated in a mediation of the claim but were unsuccessful in reaching a
mutually agreeable settlement. [#51-1 at 28] Following the mediation, on October 25,
2018, Defendant made a payment in the amount of $150,000 in UIM benefits to Plaintiff,
which Plaintiff contends is an amount less than the full value of his claim. [#5, ¶ 15; #511 at 28; AlaskaNational_000397]
3
Between January 2019 and August 2019, Mr. Olivera and Ms. Anzalone
exchanged numerous communications regarding additional medical records provided by
Plaintiff and Defendant’s desire to have those records reviewed by an orthopedic surgeon
in order to “complete its updated evaluation of [Plaintiff’s] claim.” [#53-4 at 6-7; see
generally id. at 2-11] On October 4, 2019, Mr. Millar sent a letter to Ms. Anzalone,
contending that Defendant “believe[s] that [Plaintiff] has received fair and reasonable
compensation for his liability and UIM claims arising from the accident with the payment
of $100,000 from [USAA] and $150,000 from [Defendant] for the UIM claim,” but noted
that Defendant “would like to continue to move this matter towards a compromise
resolution” and requested any updated medical information and invited Plaintiff to submit
a “reasonable settlement demand.” [#51-1 at 42]
On December 5, 2019, Plaintiff filed the instant lawsuit in the District Court for the
County of Denver, Colorado asserting claims against Defendant for breach of contract,
undue delay or denial pursuant to Colorado Revised Statutes §§ 10-3-1115 and 10-31116, and bad faith breach of contract. [#5] On January 7, 2020, Defendant removed
the lawsuit to this Court. [#1] Upon removal, Senior District Judge Robert E. Blackburn
referred the case to this Court to, among other responsibilities, “resolve discovery
matters.” [#9]
Pursuant to the discovery dispute procedure set forth in this Court’s Civil Practice
Standards, the Court conducted a discovery hearing on April 23, 2020 to address
discovery disputes raised by the parties. [#42, 50] In advance of the hearing, on April
15, 2020, the parties submitted brief statements setting forth the issues in dispute, which
included a dispute with regard to documents related to Mr. Olivera’s involvement with the
4
claim that Defendant withheld or redacted pursuant to the work product and/or attorneyclient privilege protections. In connection with that dispute, Defendant also submitted a
privilege log and provided the documents for in camera review by the Court. At the
conclusion of the hearing, the Court ordered the parties to file supplemental briefing with
regard to the documents withheld or redacted by Defendant. 3 [#42, 50]
On May 21, 2020, Defendant filed its Brief in support of Attorney-Client Privilege
and Work-Product Protection (Defendant’s “Brief”). [#51] On that same date, Defendant
submitted to the Court via email a revised privilege log and revised set of redacted and
withheld documents for in camera review. On June 4, 2020, Plaintiff filed his Response
to Defendant’s Brief (Plaintiff’s “Response”) [#53], and, on June 11, 2020, Defendant filed
its Reply in Support of Attorney-Client Privilege and Work-Product Protection
(Defendant’s “Reply”) [#57]. On September 11, 2020, the Court granted Plaintiff’s request
to submit additional evidence in support of Plaintiff’s Response. [#82, 83, 84] On
September 18, 2020, Defendant filed a response to the supplemental evidence submitted
3
At the hearing, the Court ruled that Defendant would not be permitted to take the
deposition of Ms. Anzalone. [#42] Defendant inquired whether the Court would also
entertain supplemental briefing on that issue, and the Court responded that the issue was
“decided” and instructed the parties to “focus on” only the issues surrounding Defendant’s
assertion of attorney-client privilege and work product. [#50 at 22:15-22] Despite that
instruction, Defendant’s supplemental brief renews Defendant’s argument that Ms.
Anzalone’s communications and actions during the adjustment of the claim may not be
subject to the attorney-client privilege or work product protection. [#51 at 35-37] The
Court’s ruling at the April 23, 2020 Hearing with regard to the deposition of Ms. Anzalone
stands, and the Court declines Defendant’s invitation to revisit that issue. To the extent
Defendant requests that the Court “require disclosure of Ms. Anzalone’s documents and
files” [#57 at 18], the issue of the production of Ms. Anzalone’s documents is not properly
before the Court and the Court does not have the information (e.g., privilege log, in
camera review of documents) necessary to rule on that issue.
5
by Plaintiff [#87] and a Notice of Supplemental Authority in support of Defendant’s Brief
[#91].
II.
ANALYSIS
The parties dispute the applicability and scope of the attorney-client privilege and
work product doctrine with regard to documents redacted and/or withheld by Defendant
based upon Mr. Olivera’s involvement in Plaintiff’s claim for UIM benefits. The Court
addresses the application of each doctrine below.
A.
Attorney-Client Privilege
1.
Legal Standard
Because subject matter jurisdiction in this matter is based upon the Court’s
diversity jurisdiction [#1, ¶¶ 11-14], state law controls issues of privilege, including
application of the attorney-client privilege, Fed. R. Evid. 501. 4 Pursuant to Colo. Rev.
Stat. § 13-90-107(1)(b), “[a]n attorney shall not be examined without the consent of his
client as to any communication made by the client to him or his advice given thereon in
the course of professional employment.” Although now codified, “the privilege originated
in the common law, and much of the common law jurisprudence pertaining to the privilege
is retained.” People v. Tucker, 232 P.3d 194, 198 (Colo. App. 2009). “The purpose of
the attorney-client privilege is to secure the orderly administration of justice by insuring
candid and open discussion by the client to the attorney without fear of disclosure.”
Losavio v. Dist. Court In & For Tenth Judicial Dist., 533 P.2d 32, 34 (Colo. 1975).
4
The Court notes that much of Defendant’s discussion of the application of the attorneyclient privilege relies on court decisions applying federal law or the laws of other states
and thus is of limited value given that Defendant makes no attempt to compare the law
being applied in those cases to the law of privilege in Colorado. [See, e.g., #51 at 13-16,
21-23; #57 at 1-3]
6
“The attorney-client privilege applies to confidential matters communicated by or
to the client in the course of obtaining counsel, advice, or direction with respect to the
client's rights or obligations.” People v. Trujillo, 144 P.3d 539, 542 (Colo. 2006) (quotation
omitted).
“[T]he attorney-client privilege protects not only information and advice
communicated from the attorney to the client, but also information given to the attorney
to enable him to give sound and informed legal advice.” Gordon v. Boyles, 9 P.3d 1106,
1123 (Colo. 2000). The privilege, however, “protects only the communications to the
attorney; it does not protect any underlying and otherwise unprivileged facts that are
incorporated into a client's communication to his attorney.” Id.
The attorney-client privilege “is established by the act of a client seeking
professional advice from a lawyer and extends only to confidential matters communicated
by or to the client in the course of gaining counsel, advice, or direction with respect to the
client's rights or obligations.” Tucker, 232 P.3d at 198. Moreover, “the privilege ‘applies
only to statements made in circumstances giving rise to a reasonable expectation that the
statements will be treated as confidential.’” Id. (quoting Wesp v. Everson, 33 P.3d 191,
197 (Colo. 2001)). Thus, in order for the privilege to apply, the communication must both
relate to the provision of legal advice and be made confidentially.
“No blanket privilege for all attorney-client communications exists” but instead “the
privilege must be claimed with respect to each specific communication and, in deciding
whether the privilege attaches, a trial court must examine each communication
independently.” Wesp, 33 P.3d at 197. “The burden of establishing that a particular
communication is privileged rests on the party asserting the privilege.” Id. at 198.
7
Even where the attorney-client privilege does apply, however, its protections are
not absolute. “The client may impliedly or expressly waive the privilege that attaches to
a protected communication.” Id. “To prove an implied waiver, there must be evidence
showing that the privilege holder, by words or conduct, has impliedly forsaken his claim
of confidentiality with respect to the communication in question.” Id. (quotation omitted).
“[A] client impliedly waives the privilege when he or she (1) discloses privileged
communications to a third party or (2) asserts a claim or defense focusing on advice given
by the attorney, thereby placing the allegedly privileged communications at issue.” State
Farm Fire & Cas. Co. v. Griggs, 419 P.3d 572, 575 (Colo. 2018). “[T]he fact that privileged
information might become relevant in a given lawsuit could not alone be enough to
establish an implied waiver,” but, instead, it must be shown “that the client asserted a
claim or defense that depends on privileged information.” Id. (emphasis in original). “The
burden of establishing such a waiver rests with the party seeking to overcome the
privilege.” Wesp, 33 P.3d at 197.
2.
Application
In their briefing, the parties both argue for the application of bright line rules that
they contend would apply to all of the documents Defendant withheld or redacted based
upon attorney-client privilege as a result of Mr. Olivera’s involvement with Plaintiff’s
insurance claim. The Court acknowledges that there is some appeal to the application of
a bright line rule. As courts have recognized, “[a]n uncertain privilege, or one which
purports to be certain but results in widely varying applications by the courts, is little better
than no privilege at all.” Wesp, 33 P.3d at 201 (quoting Upjohn Co. v. United States, 449
U.S. 383, 393 (1981)). As the United States Supreme Court acknowledged in Upjohn,
8
however, “no abstractly formulated and unvarying ‘test’ will necessarily enable courts to
decide [privilege] questions . . . with mathematical precision.” 449 U.S. at 393. The
Colorado Supreme Court “ha[s] consistently stressed that no blanket privilege for all
attorney-client communications exists.” DCP Midstream, LP v. Anadarko Petroleum
Corp., 303 P.3d 1187, 1199 (Colo. 2013). With these principles in mind, the Court
considers the parties’ arguments for the application of a bright line rule to the facts of this
case.
a.
Defendant’s Arguments for a Bright Line Rule
Defendant contends that “each of the redacted communications helped ensure that
its adjustment and investigation of [Plaintiff’s] claim complied with Colorado law—a
quintessential legal purpose.” [#51 at 23] According to Defendant, “the fact that some of
Mr. Olivera’s actions and communications also helped [Defendant] adjust the claim does
not change the result,” and “[t]o hold that such communications lose their privileged
nature merely because they also relate to the ordinary course of [Defendant’s] business
(claims handling and investigation) would create an attorney-client privilege rule unique
to the insurance industry that discourages insurance companies from utilizing resources
for law compliance.” [Id. at 22-23 (emphasis in original)] Instead, Defendant argues that
“[w]hen communications contain both a legal and business purpose, courts ‘should
determine whether obtaining or providing legal advice was one of the significant purposes
of the attorney-client communication.’” [Id. at 22-23 (quoting Fed. Trade Comm'n v.
Boehringer Ingelheim Pharm., Inc., 892 F.3d 1264, 1267 (D.C. Cir. 2018)).
Notably, however, none of the authority Defendant cites for the application of this
“significant purpose” test applies Colorado law or arises in the insurance context. Outside
9
of the insurance context, other courts in this District considering communications that
have both a legal and business purpose have looked to see whether the legal purpose
was the “dominate purpose” or “predominate[d]” over the business purpose or instead
whether the legal purpose was “merely incidental” to the business purpose. See, e.g.,
RCHFU, LLC v. Marriott Vacations Worldwide Corp., No. 16-CV-1301-PAB-GPG, 2018
WL 3055774, at *3 (D. Colo. May 23, 2018) (holding that “[w]here business and legal
advice are intertwined, the legal advice must predominate for the communication to be
protected” and “[w]hen the legal advice is merely incidental to business advice, the
privilege does not apply” (quotations omitted)); Bonanno v. The Quizno's Franchise Co.,
LLC, No. 06-CV-02358-WYD-KLM, 2008 WL 1801173, at *3 (D. Colo. Apr. 18, 2008)
(finding that “the ‘dominant purpose’ of many of the communications appears to have
been to provide legal advice and strategy to the corporation, although business advice
and strategy [we]re also incorporated”).
Most relevant to the instant dispute, however, are the numerous decisions applying
Colorado law that have considered whether communications are subject to the attorneyclient privilege where, as here, the insurer retained an attorney to assist in adjusting an
insurance claim. As Defendant itself acknowledges these decisions uniformly have held
“that insurance companies cannot claim privilege when an attorney is acting as a claim
adjuster, rather than counsel.”
[#51 at 23-25 (citing cases); see also #57 at 4
(acknowledging that the Colorado Supreme Court has “recognized the unremarkable
principle that communications are not privileged when a lawyer is acting as a claim
investigator, rather than legal counsel”)] A review of these decisions is instructive.
10
In National Farmers Union Property & Casualty Co. v. District Court for the City
and County of Denver (“National Farmers”), the Colorado Supreme Court considered the
propriety of an insurer’s assertion of attorney-client privilege and work product protection
for a memorandum “prepared by outside counsel to inform [the insurer’s] general counsel
of the results of an investigation as to the facts regarding issuance of the policy and
conclusions regarding whether a claim under the policy should be paid.” 718 P.2d 1044,
1045-46 (Colo. 1986). The court found that the attorneys who prepared the memorandum
“were performing the same function a claims adjuster would perform, and the resulting
report [thus was] an ordinary business record of the insurance company.” Id. at 1048;
see also id. at 1049 (finding that, in conducting interviews to determine “the factual
circumstances underlying the issuance of the policy . . . the attorneys were acting more
in the role of claims investigator than legal counsel”). The court concluded that “the
attorney-client privilege [did] not protect [the portion of the memorandum ordered to be
produced] because the information contained therein was not legal advice but the results
of a factual investigation relating to the issuance of a policy.” Id. at 1049. The court
further indicated that the trial court had “correctly determined” that “[t]he portion of the
memorandum which contain[ed] legal conclusions and a subsequent memorandum of a
legal nature” were properly withheld. Id.
In Munoz v. State Farm Mutual Automobile Insurance Company, an insurer argued
that the trial court erred by allowing the plaintiff to discover “documents containing
information that was privileged, either because it reflected communications between [the
insurer] and its attorney or because it was a part of its ‘work product.’” 968 P.2d 126, 130
(Colo. App. 1998). The Colorado Court of Appeals observed, however, that “if a lawyer
11
is acting in an investigative capacity, and not as a legal counselor, with reference to
whether an insurance claim should be paid, then neither the [attorney-client] privilege . . .
nor the work product privilege protects communications from a lawyer to an insurance
carrier.” Id. The court further noted that the insurer “presented no evidence as to the role
that the lawyer was playing at the time the recommendation to pay was made nor as to
the circumstances surrounding that recommendation.” Id. Ultimately, the court refrained
from deciding whether the documents at issue should have been protected from
discovery, because the court found that there was no showing of prejudice resulting from
their production. Id.
In Fiechtner v. American Family Mutual Insurance Company, an insurer sought to
exclude evidence related to its in-house counsel’s involvement in the evaluation and
adjustment of the plaintiff’s insurance claim after the plaintiff initiated the litigation. No.
09-CV-02681-WJM-MEH, 2011 WL 4087296, at *1 (D. Colo. Sept. 13, 2011). The court
found that, although the in-house counsel “was acting as an attorney with respect to some
of his duties, and that some of his resulting actions or communications would therefore
be privileged, at least to some extent, [the attorney] was acting as a claims adjuster rather
than an attorney” and that the attorney’s “actions in [that] capacity [we]re not protected
by any attorney privilege or work-product doctrine.” Id. at *2. The court thus permitted
the plaintiff “to introduce evidence related to [the attorney’s] post-litigation conduct to the
extent it involve[d] [the attorney’s] activities as a claims adjuster rather than an attorney.”
Id.
In Colorado Mills, LLC v. Philadelphia Indemnity Insurance Company, an insurer
asserted attorney-client privilege over “certain documents contained in the insurance
12
claim file, claim notes, and correspondence that reveal[ed] communications” between the
insurer and counsel it retained “to investigate whether [a] claim was covered under the
policy.” No. 12-CV-01830-CMA-MEH, 2013 WL 1340649, at *1, *4 (D. Colo. Apr. 2,
2013). Without citation to any legal authority, the insurer argued that “‘coverage analysis’
. . .
is different than claim investigation and, thus, any communication concerning
coverage analysis [wa]s privileged and properly withheld.” Id. at *4. Upon reviewing the
withheld documents, the court concluded that the insurer “was not solely seeking legal
advice from [the attorneys] as counsel but, rather, [the insurer] largely sought factual
information and an evaluation concerning whether [the plaintiff’s] claims were covered,”
which the Court observed was “the same type of investigation and evaluation” that
insurance claims adjustors typically undertake. Id. The court further found that although
the insurer’s claim representative “testified that she sought ‘advice’ from [counsel] on
certain occasions, a review of the documents reveal[ed] that any such advice with respect
to coverage actually consist[ed] of [counsel’s] evaluation of its investigation.” Id. at *5.
In Plaza Insurance Company v. Lester (“Plaza”), the court found that “most, but
not all of the documents submitted for [the court’s] in camera review f[e]ll within the
attorney-client privilege,” because the attorneys retained by the insurer “provided legal
advice and opinion as to the UIM claim made in conjunction with [the policy beneficiary’s]
death and concerning [the insurer’s] exposure and legal obligations pursuant to Colorado
law regarding the Policy.” No. 14-CV-01162-LTB-CBS, 2015 WL 3528336, at *5 (D. Colo.
June 4, 2015). Despite that finding, however, the court conducted a document-bydocument review of the documents submitted for in camera review. Id. at *5-6. Based
upon that review, the court concluded that the retained counsel’s “initial efforts were often
13
investigative and non-legal in nature,” including communications that “simply direct[ed]
the [attorneys] to collect police files or court records,” and that communications related to
those non-legal, investigative activities were not entitled to the protections of the attorneyclient privilege. Id. at *5.
In Ivan v. AIG Property Casualty Company, the plaintiff sought to compel “claim
notes and correspondence” between an insurer and its outside counsel regarding the
insured’s claim. No. 17-CV-01906-PAB-MEH, 2018 WL 11182728, at *1 (D. Colo. Feb.
13, 2018). The court rejected the insurer’s contention that its attorney had solely acted
as counsel to the insurer and had not been involved in adjusting the plaintiff’s claim. Id.
at *2. More specifically, the court found “that some of [the insurer’s] redactions and
withheld documents relate[d] to communications [its outside counsel] made while acting
as a claims adjuster or investigator,” including communications related to the outside
counsel’s requests for the claimant’s medical records and communications from the
outside counsel to the insurer providing a detailed factual summary of those medical
records. Id. The court concluded that even if “[the outside counsel] gathered factual
information to analyze [the insurer’s] legal exposure, compiling basic factual information
from [the claimant’s] disclosed medical providers and presenting significant detail
regarding those findings to [the insurer] are not protected by the attorney-client privilege,”
because “the attorneys were acting in their role as claims investigators when they
gathered the factual information.” Id. at *3. The court further found, however, that some
of the withheld documents “discuss[ed] tasks [the outside counsel] performed in its role
as counsel”—including the outside counsel’s “use of the factual information to provide
14
legal advice”—and thus those documents were entitled to protection under the attorneyclient privilege. Id.
In Olsen v. Owners Insurance Company, an insurer asserted attorney-client
privilege and work product protection over claim notes reflecting communications
between a claims adjuster and an in-house counsel related to the plaintiff’s insurance
claim. No. 18-CV-1665-RM-NYW, 2019 WL 2502201, at *1, *4 (D. Colo. June 17, 2019).
The insurer argued that, even to the extent the communications related to the claims
handling process, “the communications concerned limiting [the insurer’s] liability in any
subsequent litigation” and were “shrouded by th[e] ever-present threat of liability for bad
faith claims handling.” Id. at *4. The court observed that the insurer essentially sought
the imposition of a “categorical rule that the attorney-client privilege protects all
communications between an attorney and claims adjuster because they ‘are actually
shrouded by this ever-present threat of liability for bad faith claims handling.’” Id. at 4 n.2.
The court rejected the invitation to adopt such a categorical rule, noting that the insurer
failed to cite any authority for it and the case law did not support it. Id. Instead, the court
focused its inquiry “on the substance of [each] communication” between the claims
adjuster and the attorney to determine whether “legal advice [wa]s sought and
exchanged” in which case the privilege applied or whether the “attorney [wa]s acting in a
different capacity, i.e., . . . as a claims handler” in which case the privilege would not
apply. 5 Id. at *5.
5
The Court is aware that there is a pending objection to the court’s order in Olsen. [See
#51 at 24 n.6] Nonetheless, the Court finds Olsen instructive to the extent it follows the
consistent approach taken by courts applying Colorado law to reject categorical rules
where an attorney participated in the claims handling process and instead evaluate each
specific withheld document to determine whether the communication involved relates to
15
These decisions thus stand for the proposition that, where an insurer utilizes an
attorney to both handle claims adjusting activities and also to provide legal advice, the
communications related to the claims handling functions (such as investigation, gathering
and summarizing information, and valuation of the claim) are ordinary business activities
of the insurance company typically handled by an adjuster or investigator and thus are
not entitled to attorney client privilege. However, communications related to the actual
provision of legal advice are still protected by the attorney-client privilege. These cases
further make clear that, even where an attorney participates in claims adjusting activities
to further their ability to offer legal advice (e.g., by investigating the factual basis for the
claim), communications related to those claims adjusting activities still are not entitled to
the protections of the attorney-client privilege. See, e.g., Ivan, 2018 WL 11182728, at *3
(finding that even if “[the outside counsel] gathered factual information to analyze [the
insurer’s] legal exposure,” the compilation and summary of that information was not
protected by the attorney-client privilege, because “the attorneys were acting in their role
as claims investigators when they gathered the factual information”); Colorado Mills, 2013
WL 1340649, at *4-5 (rejecting privilege assertion with regard to communications
involving type of “factual information and . . . evaluation concerning whether [the
claimant’s] claims were covered” that is typically performed by claims adjusters, but
allowing insurer to withhold communications related to specific legal advice); Nat'l
Farmers, 718 P.2d at 1049 (concluding that the attorney-client privilege did not protect
the attorney’s provision of legal advice or instead relates to the adjustment of the claim.
The Court has not reviewed the specific documents at issue in Olsen and thus does not
rely on Olsen’s more specific holdings as to whether particular documents or types of
documents qualify for protection under the attorney-client privilege.
16
the portion of a legal memorandum addressing the investigation into the claim, but that
“[t]he portion of the memorandum which contain[ed] legal conclusions” was properly
withheld).
Defendant seeks to distinguish these cases by arguing that “none of these cases
involved uncontroverted evidence establishing that a primary purpose of the
communications was to provide legal advice,” whereas “Mr. Olivera’s under-oath
declaration . . . proves that all of the communications either directly provided legal advice
or furthered Mr. Olivera’s ability to render legal advice.” [#51 at 24 (emphasis in original)]
The Court disagrees both (1) that Mr. Olivera’s declaration is sufficient to prove that “the
primary purpose” of all of the communications related to Mr. Olivera’s provision of legal
advice and (2) that his declaration is uncontroverted. Much of Mr. Olivera’s declaration
consists of self-serving overbroad and conclusory statements that provide little assistance
to the Court. 6 For example, Mr. Olivera declares that “[t]he tasks that [he] performed for
[Defendant] all served the purpose of providing legal advice to [Defendant] as to how the
requirements of Colorado law apply to the facts of the case and how to act consistent with
Colorado law.” [#51-3, ¶ 7] Upon review of the claim file, although it is clear that Mr.
Olivera did perform certain tasks that served the purpose of providing legal advice, it is
6
The Court considers Mr. Olivera’s testimony with regard to specific conversations that
purportedly relate to the documents Defendant has withheld or redacted in the Court’s
individualized review of those documents. [See Appendix A; but see infra note 23] The
Court notes, however, that much of that testimony also relies upon conclusory
statements. [See, e.g., #51-3, ¶ 11(ff) (“Between October 4, 2019 and December 10,
2019, I had numerous conversations with [sic] exchanged emails with [Defendant] that all
related to proceeding with the claim in a manner consistent with the requirements of
Colorado law or the status of anticipated litigation.”); Appendix A, notes 3, 9, 11, 13]
17
also clear that not all of the tasks performed by Mr. Olivera served that purpose. 7 As
noted above, Defendant tasked Mr. Olivera with “tak[ing] the lead” and “coordinat[ing]”
the EUO, IME, and mediation with Ms. Anzalone. [#53-7 at 2] Defendant also “had [Mr.
Olivera] replace Mr. Millar as the primary point of contact” for requesting information from
and providing information to Plaintiff.
[#51 at 34; see AlaskaNational_000227-39]
Obviously, these tasks related to coordinating and communicating with Ms. Anzalone are
the types of tasks typically performed by a claims adjuster and were not all undertaken
for “the purpose of providing legal advice to [Defendant].” Similarly, Mr. Olivera states in
his Declaration that “[a]ll of my emails to and phone calls with the representatives of
[Defendant] are communications that are protected by the attorney-client privilege.” [#513, ¶ 9] Contrary to this representation, however, Defendant has not claimed a privilege
with regard to all of Mr. Olivera’s communications with Defendant.
[See, e.g.,
AlaskaNational_000215 (9/4/2019 claim note summarizing call with Mr. Olivera regarding
7
The supplemental authority submitted by Defendant, Frias v. Auto-Owners Insurance
Company, No. 19-cv-00903-WJM-SKC (D. Colo. Sept. 1, 2020), thus is distinguishable.
[#91-1] In Frias, an insurer retained an attorney “to help during the time Defendant
investigated and adjusted Plaintiffs’ insurance claims” and that attorney prepared a 35page letter for the insurer “replete with legal analyses and legal advice.” [Id. at 3, 8]
Based upon the facts in that case, as informed by the letter prepared by counsel, the court
concluded that the attorney was retained “as a lawyer” and that the lawyer “did not
function as a claims handler.” [Id. at 8-9] The court thus found that proposed Rule
30(b)(6) deposition topics regarding communications between the attorney and the
insurer “either infringe[d] upon the attorney-client privilege or encompass[ed] matters not
relevant to any claims or defenses.” [Id. at 9] Here, although Mr. Olivera prepared a
memorandum for Defendant that—similar to the letter in Frias—was “replete with legal
analyses and legal advice,” that memorandum was not prepared until January 2020—two
and a half years after Mr. Olivera was initially retained to assist Defendant with Plaintiff’s
insurance claim. Moreover, there is no indication in the Frias decision that the attorney
retained in that case took an active role in the adjustment of the insured’s claim as Mr.
Olivera did here by becoming the primary point of contact between the insurer and the
claimant and taking sole responsibility for the EUO and coordinating the IME.
18
results of IME); AlaskaNational_000215-16 (8/16/2019 email from Mr. Olivera to Mr. Millar
attaching IME reports); AlaskaNational_000312 (6/03/2019 claim note summarizing call
with Mr. Olivera that is only partially redacted); AlaskaNational_000396 (11/28/2018 claim
note summarizing call with Mr. Olivera regarding status of UIM claim and communications
with Ms. Anzalone)] In addition to highlighting the inadequacy of Mr. Olivera’s overbroad
and conclusory testimony, these documents from the claim file (and others discussed in
more detail in Appendix A) controvert certain of the statements made by Mr. Olivera in
his declaration. The Court thus finds that Mr. Olivera’s Declaration is insufficient to
establish that all of the tasks he performed and communications he had with Defendant
were undertaken for the “primary purpose” of providing legal advice. See Colorado Mills,
2013 WL 1340649, at *5 (finding that although the insurer’s claim representative “testified
that she sought ‘advice’ from [counsel] on certain occasions, a review of the documents
reveal[ed] that any such advice with respect to coverage actually consist[ed] of [counsel’s]
evaluation of its investigation”).
Defendant also argues that “it is immaterial that [Mr. Olivera’s communications
related to the IME and EUO] may have also served an ordinary business purpose,”
because the evidence allegedly “is undisputed that Mr. Olvera’s role in the IME and EUO
process was primarily to assist him in providing legal advice regarding [Defendant’s]
duties under Colorado law.” [#51 at 21 n.5] Defendant contends that Mr. Olivera’s
involvement in the IME and EUO “furthered Mr. Olivera’s ability to obtain information
necessary for him to provide legal advice regarding proceeding with and valuing the claim
19
consistent with Colorado law.”8 [#51 at 20-21] The Court disagrees with this self-serving
characterization. Based upon the contemporaneous documentation, the primary purpose
of the IME and EUO was to obtain the information necessary for Defendant to validate
and adjust Plaintiff’s claim. [#51-1 at 41 (email from Mr. Millar to Ms. Anzalone requesting
IME and EUO as part of the “additional investigation” and “more information” Defendant
needed to evaluate Plaintiff’s demand)] Moreover, Defendant did not merely seek specific
legal advice from Mr. Olivera with regard to the requirements under Colorado law for the
conduct of an IME and EUO but rather delegated the entire IME and EUO process (and
other claims handling tasks) to Mr. Olivera. [Id.; #53-7 at 2] As such, Mr. Olivera clearly
was performing functions typically handled by a claims adjustor and not merely providing
legal advice.
The exception proposed by Defendant, which would protect all
communications related to “obtain[ing] information necessary for [the attorney] to provide
legal advice regarding proceeding with and valuing [a] claim” would seemingly provide
attorney-client privilege protection to every communication between an attorney to whom
8
Defendant’s reliance on U.S. Specialty Ins. Co. v. Capitol Films U.S., LLC (“US
Specialty”) is misplaced. [See #51 at 21 (quoting No. CV 07 7206-AHM (AGRX), 2008
WL 11340369, at *2-3 (C.D. Cal. Oct. 7, 2008))] As an initial matter, US Specialty involved
an application of California, not Colorado, law. 2008 WL 11340369, at *2. Regardless,
US Specialty held only that “[w]ithout more, the mere fact that [the attorney] conducted
EUOs does not create an inference that [the attorney] is a claims adjuster.” Id. In
rejecting the argument that the attorney had acted as a claims adjustor in conducting the
EUOs, the US Specialty court expressly noted that the claims adjusters had also
appeared at the EUOs. Id. Here, by contrast, Mr. Olivera’s role in adjusting Plaintiff’s
claim extended far beyond just taking the EUO and it appears that neither Mr. Millar nor
any other Defendant employee even attended the EUO. [See #53-4 at 16-18;
AlaskaNational_000399-400] Similarly, Defendant relies upon Hartford Fin. Servs. Grp.,
Inc. v. Lake Cty. Park & Recreation Bd., but that case involved the application of Indiana
law and the court expressly found that the attorney was not “retained to act in the capacity
of an agent other than an attorney such as a type of ‘outside claims adjuster’ or to give
simple business advice.” 717 N.E.2d 1232, 1236 (Ind. Ct. App. 1999).
20
an insurer has delegated claims adjustment responsibilities and the insurer. Defendant
provides no authority for such a sweeping exception, and—as established by the cases
discussed above—such is clearly not the law in Colorado. Thus, “regardless of whether
[Mr. Olivera] gathered factual information [from the EUO and IME] to analyze
[Defendant’s] legal exposure,” Mr. Olivera’s communications with Defendant relaying the
information obtained through the EUO and IME are not privileged, because Mr. Olivera
“w[as] acting in [his] role as claims investigator[ ] when [he] gathered th[at] factual
information.” Ivan, 2018 WL 11182728, at *3. To the extent Defendant requested—
and/or Mr. Olivera provided—legal advice based upon that information, the Court agrees
that those communications seeking or providing the legal advice would be entitled to
attorney-client privilege protection. The Court disagrees, however, that Defendant may
shroud all of Mr. Olivera’s communications related to the EUO and IME process with the
protections of the attorney-client privilege merely because his involvement was, in part,
for the purpose of obtaining legal advice.
See Id.
(finding that “documents or
communications detailing [counsel’s] efforts to obtain [the claimant’s] medical records and
[counsel’s] discussion of the relevant factual findings of such efforts” were not entitled to
the attorney-client privilege, but “communications [the insurer] made for the purpose of
obtaining legal advice or discussions detailing [counsel’s] legal analysis of the case” were
entitled to attorney-client privilege protection).
Defendant next seeks to distinguish this line of cases holding that no privilege
attaches where an attorney is acting as a claims adjuster based upon Defendant allegedly
being a “small insurance compan[y] with virtually no Colorado claims.” [#51 at 24]
Defendant contends that it was necessary for it to engage counsel to assist in adjusting
21
Plaintiff’s claim, because Defendant had very limited experience adjusting claims in
Colorado and thus it would be “difficult” for Defendant to provide its adjusters “anticipatory
guidance on each and every intricacy of Colorado law based on the remote possibility
that one claim adjuster might have to handle a Colorado insurance claim at some point
during his tenure with the company.“ [Id. at 19] Defendant thus requests that the Court
adopt a special rule for “smaller insurance companies who need to rely on the advice of
counsel to provide insurance services to their clients.” 9 [Id. at 19 n.4] None of the cases
discussed above have based their decision to deny an insurer the protections of the
attorney-client privilege where an attorney acted as an insurance adjuster on the size of
the insurer or the number of claims it has handled in Colorado. Nor does Defendant offer
any other authority for the distinction it asks this Court to draw.
The Court perceives no basis in law or as a matter of public policy to adopt a rule
that provides extra protections to an insurer who offers insurance in the state of Colorado
without the ability to adjust an insurance claim under that policy than it provides to an
insurer who devotes the resources necessary to employ or contract an adjuster capable
of adjusting the claim. Nor does Defendant offer any justification for why an insurer that
engages an attorney because its adjusters lack the requisite knowledge to adjust a claim
under Colorado law should be entitled to greater protections than an insurer that instead
9
As an initial matter, the Court rejects the premise of Defendant’s argument that, because
of its size, it “need[ed] to rely on the advice of counsel to provide insurance services” to
its clients. To the extent Defendant’s adjusters did not have adequate experience to
adjust claims in Colorado, rather than hire a Colorado attorney to assist in adjusting the
claim, Defendant could have either (1) chosen not to insure vehicles/policyholders located
in Colorado or (2) employed or contracted a claims adjuster with experience adjusting
claims in Colorado.
22
contracts to engage an adjuster with the requisite knowledge. 10 Such a rule would
encourage insurers to avail themselves of this newfound privilege by retaining attorneys
to conduct the tasks typically performed by claims adjusters and thus would be
inconsistent both with the case law discussed above and with the rule “that insurers
cannot escape their duty of good faith and fair dealing by delegating tasks to third parties.”
Cary v. United of Omaha Life Ins. Co., 68 P.3d 462, 466 (Colo. 2003).
b.
Plaintiff’s Arguments for a Bright Line Rule
For his part, Plaintiff argues that none of the documents withheld or redacted
based upon Mr. Olivera’s involvement are entitled to attorney-client privilege protection,
because an attorney’s “‘advice’ with respect to how to adjust a particular insurance claim
is neither ‘legal’ nor relates to ‘confidential matters,’ and so is not privileged in the first
instance.” [#53 at 2] More specifically, Plaintiff argues that, as a result of an insurer’s
affirmative investigation, documentation, and disclosure obligations, “there can be no
expectation of confidentiality as to what the insurer did to adjust the insured’s claim and
why, even if a lawyer was consulted.”
[Id. at 3]
10
Plaintiff contends that “advising
Defendant contends that it is not trying to use the privilege to improperly shield
communications related to its investigation and adjustment of Plaintiff’s claim, and, in
support, points out that it has not redacted or withheld communications between Mr. Millar
and Defendant’s in-house counsel regarding Plaintiff’s claim. [#51 at 25 n.7] Although
the Court appreciates that Defendant has not improperly attempted to assert privilege
over these communications, the fact that Defendant acknowledges that these
communications are not privileged lends support to a finding that Defendant’s
communications with Mr. Olivera discussing the same issues also are not privileged.
[Compare AlaskaNational_000367 (redacted claim note regarding communications
between Mr. Millar and Mr. Olivera) with AlaskaNational_000369 (unredacted claim note
regarding communications between Mr. Millar and in-house counsel)] Defendant offers
no basis for a finding that communications with outside counsel should receive greater
protection than communications with in-house counsel and the Court is aware of none.
23
[Defendant] as to whether to deny a particular claim, or the ‘value’ of that claim, or what
information is necessary to make such decisions, goes to the core business function of
[Defendant], and is not ‘legal advice.’” [Id. at 23] Plaintiff thus proposes that the Court
adopt the following bright-line rule: “[W]here an insurer seeks advice from a lawyer that
is not specific to the process of adjusting an insured’s insurance claim (such as advice
regarding how to create company-wide procedures to address a new development in the
law), the advice should be deemed privileged,” but “where an insurer voluntarily decides
to involve a lawyer in assisting the insurer to take actions or make decisions specific to
the insured’s claim, there can be no expectation of confidentiality, the advice is not ‘legal,’
and the communications should not be considered privilege[d].” [Id. at 5] In essence,
Plaintiff argues that where, as here, an attorney serves in a dual role—providing legal
advice with regard to the claim and also performing tasks associated with adjusting the
claim—none of the attorney’s communications related to the claim are privileged. 11
Plaintiff, however, provides no authority for such a sweeping, bright-line rule. To
the contrary, as discussed above, courts applying Colorado law have consistently found
that, even where an attorney’s involvement crosses the line into the role of claims
adjuster, communications between the attorney and the insurer involving legal advice
11
Plaintiff also argues that “to the extent the Court finds a waiver of privilege on the
subject matter of adjusting (investigating or evaluating) Plaintiff’s insurance claim, the
waiver would extend to all communications between [Defendant] and Mr. Olivera related
to adjusting Plaintiff’s insurance claim.” [#53 at 9]
The Court’s finding that
communications related to Mr. Olivera’s role in adjusting Plaintiff’s insurance claim are
not entitled to attorney-client privilege protection, however, is not premised upon waiver
but rather a finding that such communications are not covered by the attorney-client
privilege in the first instance. As Plaintiff himself explained, where an attorney is acting
as a claims adjuster, he is performing a business function rather than providing legal
advice and thus his communications related to those activities are not privileged. [#53 at
12-14, 22-24]
24
regarding the claim being adjusted are still protected by the attorney-client privilege. See,
e.g., Nat'l Farmers, 718 P.2d at 1049 (finding that trial court “reviewed the documents in
camera . . . and correctly determined which document or portions thereof needed to be
disclosed”); Plaza, 2015 WL 3528336, at *5-6 (conducting a document-by-document
privilege analysis for documents submitted for in camera review); Colorado Mills, 2013
WL 1340649, at *4-5 (rejecting privilege assertion with regard to communications
involving type of “factual information and . . . evaluation concerning whether [the
claimant’s] claims were covered” that is typically performed by claims adjusters, but
allowing insurer to withhold communications related to specific legal advice that arose
during adjustment of the claim).
The Court agrees with the approach taken in those cases. As an initial matter,
such an approach comports with the requirement that courts consider privilege issues on
a document-by-document basis. See, e.g., Wesp, 33 P.3d at 197 (“[I]n deciding whether
the privilege attaches, a trial court must examine each communication independently.”);
DCP Midstream, LP, 303 P.3d at 1199 (finding that Colorado legal precedent supports
“document-by-document approach” to determining privilege). Moreover, as a matter of
public policy, the Court finds that the bright line rule proposed by Plaintiff would
discourage insurers from seeking the advice of counsel with regard to specific legal issues
that may arise in the context of a specific claim and thereby may result in the
misapplication of the law or a delay in the correct application of the law. To the extent
Defendant requested that Mr. Olivera provide advice with regard to defining the applicable
Colorado law or how courts have applied that law to facts similar to that presented by
Plaintiff’s claim, the Court believes that such advice is legal in nature. Upon receiving
25
that advice, it is then Defendant’s business decision how to apply it to determine the value
of Plaintiff’s claim. Following Plaintiff’s logic, any time a client obtains and follows the
advice of counsel to make a business decision, the advice would “not [be] ‘legal,’ and the
communications [w]ould not be considered privilege[d].”
[#53 at 5]
Such a broad
interpretation of waiver is unsupported in the law and would render the attorney-client
privilege meaningless outside of the litigation context. See Wesp, 33 P.3d at 196 (“[T]he
right of parties . . . to consult professional legal experts is rendered meaningless unless
communications between attorney and client are ordinarily protected from later
disclosure.”); Shriver v. Baskin-Robbins Ice Cream Co., 145 F.R.D. 112, 114 (D. Colo.
1992) (finding that “communications between corporate counsel and company personnel
are privileged so long as they concern matters within the scope of the employees'
corporate duties”); All. Const. Sols., Inc. v. Dep't of Corr., 54 P.3d 861, 866 (Colo. 2002)
(same).
Plaintiff further argues that Defendant has waived any attorney-client privilege by
“assert[ing] it had a reasonable basis for its claim activities (predicated upon the attorney’s
actions), disclaims knowledge that it acted unreasonably (an element of a bad faith claim),
attempts to lend credibility to its conduct by referencing the fact that it hired counsel (a
“stealth” advice of counsel defense), or asserts that it was materially and substantially
prejudiced in its investigation of the claim by some failure to cooperate by Plaintiff.” 12 [#53
12
Plaintiff fails to provide any citation to the record to support his contentions that
Defendant has predicated the reasonableness of its claim activities upon Mr. Olivera’s
actions or that Defendant has attempted to lend credibility to its conduct by referencing
Mr. Olivera’s involvement. Although, in the context of the instant privilege dispute,
Defendant understandably has referenced its consultation with Mr. Olivera on certain
legal issues, Plaintiff has not pointed to any instances in which Defendant has referred to
Mr. Olivera’s legal advice to support its coverage decision either in Defendant’s pre26
at 14] Plaintiff contends that such waiver would “specifically include any communications
wherein Mr. Olivera was involved in the investigation or evaluation of Plaintiff’s insurance
claim, or where he instructed the adjuster as to what to do.” [Id. at 15] Although the Court
agrees that “any communications wherein Mr. Olivera was involved in the investigation or
evaluation of Plaintiff’s insurance claim, or where he instructed the adjuster as to what to
do” likely are not privileged, that is not because of the application of a waiver. Instead,
such communications would not be privileged in the first instance because in investigating
and evaluating Plaintiff’s claim (or “instructing” the adjuster what to do in that regard), Mr.
Olivera would be acting as a claims adjuster and not as an attorney.
To the extent Mr. Olivera provided legal advice on a specific issue of Colorado law
related to the adjustment of Plaintiff’s claim, however, such communication would be
privileged and that privilege is not necessarily waived as a result of Defendant denying
bad faith or asserting a failure to cooperate defense. The Court agrees with Defendant
that Plaintiff has “entirely fail[ed] to explain how [the failure to cooperate] defense
‘depends on privileged information.’” 13 [#57 at 12 (quotation omitted)] With regard to
Defendant’s denial of Plaintiff’s bad faith claim, “the mere denial of an allegation does not
litigation claim adjustment communications or in response to Plaintiff’s discovery
requests.
13 Plaintiff contends that, by asserting a failure to cooperate defense, Defendant “has
placed what it knew, what it needed, what it did to obtain information, what it did with the
information it had, and why it did not obtain additional information, directly at issue in the
litigation (to the extent it was not already).” [#53 at 15] Plaintiff, however, has not pointed
to any examples where Defendant has asserted that any such information is privileged.
Seemingly, the most important evidence with regard to Defendant’s failure to cooperate
defense are the pre-litigation communications between Defendant and Plaintiff—none of
which is claimed to be privileged. Moreover, as explained, to the extend Mr. Olivera was
performing tasks—such as requesting and obtaining information about Plaintiff’s claim—
associated with the adjustment of Plaintiff’s claim, the Court agrees that communications
related to those tasks are not privileged.
27
waive the attorney-client privilege” and Plaintiff has not demonstrated that his bad faith
claim (or Defendant’s denial of that claim) “depends on privileged information.” 14 Griggs,
419 P.3d at 575 (emphasis in original); see also Aull v. Cavalcade Pension Plan, 185
F.R.D. 618, 630 (D. Colo. 1998) (finding that defendants’ denial of the plaintiff’s bad faith
claim did not “amount to an affirmative act which supports an at issue waiver”).
c.
Denial of a Claim on a Purely Legal Basis
At the April 23, 2020 hearing, the Court asked the parties to address whether an
insurer waives the attorney-client privilege by denying a claim on a purely legal basis after
consulting with an attorney on the application of the law. 15 [#50 at 12-13] The Court
explained that—in such instances—there is a tension between the interest of the insurer
14
In Stillwell v. Exec. Fund Life Ins. Co., the court found that, in considering a bad faith
claim, “the fact-finder must consider how defendant handled plaintiff's claim” and thus
“communications between defendant and its attorneys [in the insurer’s claim file] may be
vital to plaintiff's case.” No. CIV. A. 89-A-245, 1989 WL 78159, at *5 (D. Colo. July 12,
1989). The court made clear, however, that it was not adopting a bright-line rule that the
privilege was waived as to all attorney-client communications where an insured has
asserted a claim for bad faith. Id. at *5 n.2. Instead, the court emphasized that “courts
are in a position to refuse discovery of materials which are not relevant if, as in this case,
an in camera inspection of the file is performed.” Id. Here, the Court has conducted such
a review and determined that Plaintiff’s bad faith claim does not “depend on” any of the
documents the court has permitted Defendant to withhold and/or redact as privileged.
15 At the hearing, the Court also asked the parties to address whether Defendant may
properly assert the attorney-client privilege if Mr. Olivera took the lead in adjusting
Plaintiff’s insurance claim such that the claims adjustor—Mr. Millar—served only as “a
mouthpiece for [the attorney] who is doing the adjusting.” [#50 at 10-11] Upon review of
the entire claim file, the Court finds it unnecessary to reach this issue in the context of this
case. Although Defendant made Mr. Olivera the “primary point of contact” for the claim
[#51 at 34], Mr. Olivera and Mr. Millar remained in regular contact and Mr. Olivera kept
Mr. Millar abreast of his communications with Ms. Anzalone.
[See, e.g.,
AlaskaNational_000397-AlaskaNational_000405 (claim notes reflecting that Mr. Olivera
promptly forwarded communications with Ms. Anzalone to Mr. Millar)] More importantly,
Mr. Millar maintained primary responsibility for adjusting the claim internally, including the
preparation of four major loss reports and discussing strategies for settlement of the
claim. [See, e.g., #51-1 at 22-37 (four major loss reports); AlaskaNational_000397
(9/18/2018 claim note mentioning discussion of “strategies for file resolution”)]
28
in obtaining the advice of counsel and the interest of the insured in obtaining the reasoning
behind the insurer’s claim decision. [Id.] In response, Defendant argues that “[i]t would
be improper and unnecessary to waive an insurance company’s attorney-client privilege
(and frustrate law compliance as a result)” in such circumstances. [#51 at 26-27] As
Defendant points out, under Colorado law, the insurer is required “to promptly provide a
reasonable explanation of the basis in the insurance policy in relation to the facts or
applicable law for denial of a claim or for the offer of a compromise settlement.” Colo.
Rev. Stat. § 10-3-1104(1)(h)(XIV). As a result, Defendant argues that, “to the extent a
legal issue significantly affects the value of an insured’s claim, the insurance company
must explain that issue and the effect it has on the insured’s claim.” [#51 at 26] Defendant
argues that an insurer may provide such an explanation “in its own voice” without waiving
the attorney-client privilege. [Id. at 26-27] The Court agrees that—to the extent an insurer
is able to articulate a sufficient explanation for its application of the law without expressly
relying upon the advice of counsel or otherwise waiving the privilege attached to its
communications with counsel on that subject—an insurer may be able to provide its
insured a reasonable explanation of the legal basis for its decision without waiving the
attorney-client privilege. Indeed, there may be instances where the insurer’s application
of the law differs from the advice the insurer received from counsel.
Plaintiff contends that Defendant has waived any privilege regarding the advice
provided by Mr. Olivera upon which Defendant based its coverage/reduction of benefits
decision by acknowledging that it relied upon that advice to make its coverage decision. 16
16
Plaintiff acknowledges that Defendant has not asserted an advice of counsel defense,
but contends that Defendant “has factually (and boldly) asserted that everything it did was
based on ‘advice of counsel’ in its decisions on this claim, which will likely serve to
29
[#53 at 14 n.6] The Court, however, does not believe that the current record supports
waiver on this basis. In refusing Plaintiff’s $500,000 demand, Defendant provided Plaintiff
an explanation that referenced Defendant’s application of Colorado law—including the
Colorado Court of Appeals’ decision in Scholle v. Delta Air Lines--to Plaintiff’s claim. [#511 at 42] Plaintiff contends that Defendant “[has] not explain[ed] how [its] decision to not
follow [Scholle] impacted the analysis or the final decision that Plaintiff was ‘amply
compensated’ already.” [#53 at 21 n.8] Even if true, 17 as Defendant points out, Plaintiff
“will have the opportunity to depose [Defendant] and its claims adjuster to fully understand
its investigation and evaluation.” [#51 at 35 n.14] If Defendant (and its adjuster) respond
to Plaintiff’s requests for information concerning the basis for Defendant’s evaluation of
Plaintiff’s claim by asserting that their evaluation was “based on the advice counsel gave
us” as Plaintiff anticipates [#53 at 4 n.1], Plaintiff may then renew his waiver argument.
Indeed, Plaintiff’s brief seems to acknowledge that his waiver argument is premature.
[#53 at 21 (arguing that “[e]ven if the insurer relied on counsel to decide whether to pay
the claim or deny it on legal grounds, and even if that communication could be privileged
in the first instance, it would likely create an at-issue waiver” (emphasis added))]
artificially bolster the credibility of those decisions in the eyes of the jury.” [#53 at 14 n.6]
As discussed above, however, Plaintiff provides no citation to the record to support a
finding that—outside the context of this discovery dispute—Defendant has referred to Mr.
Olvera’s legal advice in support of its coverage decision. See note 13.
17 The Court notes that the October 4, 2019 letter explains that, “[n]otwithstanding the
Scholle case, [Defendant] still believe[s] that the non-duplication of benefits language in
the Alaska National Colorado UIM endorsement [which was attached to the letter with
relevant language highlighted] may apply because [Defendant] is providing both UIM and
workers' compensation coverage to [Plaintiff] under policies purchased by [his] employer.”
[#51-1 at 42]
30
d.
Conclusion
The Court thus does not find persuasive any of the parties’ arguments for the
adoption of a bright-line rule universally applicable to all of the documents withheld or
redacted based upon Mr. Olivera’s involvement in Plaintiff’s insurance claim. Instead, the
Court finds that each document withheld or redacted must be individually evaluated to
determine whether the document relates to the provision of legal advice and thus is
privileged or whether the document relates to Mr. Olivera’s performance of tasks
associated with adjusting Plaintiff’s claim and thus are not privileged. In the attached
Appendix A, the Court—without repeating the findings set forth above and with attention
paid to avoiding the disclosure of any information that Defendant may consider
privileged—provides its ruling with regard to each entry on Defendant’s privilege log. 18
B.
Work Product
1. Legal Standard
“Unlike the attorney client privilege, the work product privilege is governed, even
in diversity cases, by a uniform federal standard embodied in Fed. R. Civ. P. 26(b)(3).”
Frontier Ref., Inc. v. Gorman-Rupp Co., 136 F.3d 695, 702 n.10 (10th Cir. 1998) (quoting
United Coal Cos. v. Powell Constr. Co., 839 F.2d 958, 966 (3d Cir.1988)). Pursuant to
Rule 26(b)(3)(A), “[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
18
Because, for the reasons stated above, the Court has concluded that, at this stage,
there has been an insufficient showing that Defendant is relying upon an advice of counsel
defense, is unreasonably relying upon the privilege to avoid explaining the basis for its
coverage decision, or has otherwise waived the privilege, the Court does not address
Plaintiff’s waiver arguments with regard to each specific document that the Court finds
was properly withheld or redacted on the basis of attorney-client privilege.
31
representative (including the other party's attorney, consultant, surety, indemnitor,
insurer, or agent),” unless “the party shows that it has substantial need for the materials
to prepare its case and cannot, without undue hardship, obtain their substantial equivalent
by other means.” Even where a court orders the production of work product protected
materials, however, the court “must protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of a party's attorney or other representative
concerning the litigation.” Fed. R. Civ. P. 26(b)(3)(B). Rule 26(b) thus “contemplates a
sequential step approach to resolving work product issues,” as follows:
First, the party seeking discovery must show that the subject documents or
tangible things are relevant to the subject matter involved in the pending
litigation and are not privileged. Once such a showing has been made, the
burden shifts to the party seeking protection to show that the requested
materials were prepared in anticipation of litigation or for trial by or for the
party or the party's attorney, consultant, surety, indemnitor, insurer or agent.
Such a showing may be made by affidavit, deposition testimony, answers
to interrogatories, and the like. If the Court concludes that the items were
prepared in anticipation of litigation, the burden shifts back to the requesting
party to show: (a) a substantial need for the materials in the preparation of
the party's case; and (b) the inability without undue hardship of obtaining
the substantial equivalent of the materials by other means. Finally, even if
substantial need and unavailability are demonstrated, the Court must
distinguish between factual work product, and mental impressions,
opinions, and conclusions, for the latter are rarely, if ever, subject to
discovery.
Martin v. Monfort, Inc., 150 F.R.D. 172, 172-73 (D. Colo. 1993) (citations omitted).
The work product doctrine does not protect documents from discovery unless they
were prepared in anticipation of litigation. See Colorado Mills, 2013 WL 1340649, at *2.
The doctrine, however, “is not confined to situations in which litigation is certain.”
Collardey v. All. for Sustainable Energy, LLC, 406 F. Supp. 3d 977, 982 (D. Colo. 2019).
Nor must litigation necessarily “be imminent,” instead “it must only be reasonably
32
foreseeable.” 19 Masters v. Gilmore, No. 08-CV-02278-LTB-KLM, 2009 WL 4016003, at
*3 (D. Colo. Nov. 17, 2009); see also Curtis Park Grp., LLC v. Allied World Specialty Ins.
Co., No. 1:20-CV-00552-CMA-NRN, 2020 WL 5406130, at *5 (D. Colo. Sept. 9, 2020)
(“Litigation need not necessarily be imminent as long as the primary motivating purpose
behind the creation of the document was to aid in possible future litigation.”).
To determine whether the “in anticipation of litigation” requirement has been met,
““[t]he test should be whether, in light of the nature of the document and the factual
situation in the particular case, the document can fairly be said to have been prepared or
obtained because of the prospect of litigation.” Martin, 150 F.R.D. at 173 (quoting 8
Wright & Miller, Federal Practice & Procedure § 2024, at p. 198) (emphasis omitted).
“Determining whether anticipated litigation is the driving force behind the preparation of
19
Although as a general principle under the federal work product doctrine, the anticipated
litigation need only be “reasonably foreseeable” rather than “imminent,” the Court notes
that the standard may be different where, as here, an insurer is asserting the work product
doctrine over documents related to the insurer’s pre-litigation adjustment of an insurance
claim. In Hawkins v. Dist. Court In & For Fourth Judicial District, the Colorado Supreme
Court held that “[b]ecause a substantial part of an insurance company's business is to
investigate claims made by an insured against the company . . ., it must be presumed
that such investigations are part of the normal business activity of the company” and thus
“the insurance company has the burden of demonstrating that . . . when the documents
were prepared or obtained, there was a substantial probability of imminent litigation over
the claim.” 638 P.2d 1372, 1378-79 (Colo. 1982) (emphasis added). Although Hawkins
was applying the Colorado—rather than the federal—work product doctrine, numerous
decisions in this District have applied the “imminent litigation” standard from Hawkins
without addressing the potential tension with the general rule that the anticipated litigation
need only be reasonably foreseeable rather than imminent. See, e.g., Martinez, 2015
WL 5915415, at *5; Plaza, 2015 WL 3528336, at *6; Colorado Mills, 2013 WL 1340649,
at *6; Markwest Hydrocarbon, Inc. v. Liberty Mut. Ins. Co., No. 05-CV-01948-RPM-KLM,
2008 WL 220726, at *1 (D. Colo. Jan. 25, 2008); Stillwell, 1989 WL 78159, at *3. The
Court finds it unnecessary to resolve that potential tension here, because the Court’s
conclusions would not differ regardless of whether the Court applied the “reasonably
foreseeable” or “imminent” standard. For purposes of the current dispute, the Court thus
applies the more lenient “reasonably foreseeable” standard.
33
each requested document is the central inquiry in resolving work product questions.”
Colorado Mills, 2013 WL 1340649, at *6 (quoting Smith v. Marten Transp., Ltd., No. 10–
cv–00293–WYD–KMT, 2010 WL 5313537, at *3 (D. Colo. Dec.17, 2010)).
2.
Application
Defendant contends that it “began anticipating litigation as soon as Plaintiff’s
counsel sent an unsubstantiated $500,000 demand in June 2018.”
[#51 at 34]
Defendant’s contention must be evaluated in the context of “the factual situation”
presented. Martin, 150 F.R.D. at 173. Plaintiff’s June 2018 demand was made in
response to repeated requests from Mr. Millar and Mr. Millar’s claim notes indicate that
he was waiting to receive the demand from Plaintiff prior to completing his evaluation of
Plaintiff’s claim. [See, e.g., AlaskaNational_000409 (11/27/2017 email from Mr. Millar to
Ms. Anzalone stating that the UIM benefit under the policy had been “successful[ly]
trigger[ed]” and stating that Defendant “look[ed] forward to receiving [Plaintiff’s] outlined
demand”); AlaskaNational_000408 (2/09/2018 claim note stating: “No demand as of
today . . . Plan of Action: f/u with plaintiff counsel on UIM demand”);
AlaskaNational_000407 (3/20/2018 claim note stating: “Plan of Action: Secure additional
medical records and demand”); AlaskaNational_000406 (5/30/2018 claim note stating
that Ms. Anzalone “has indicated [Plaintiff] has returned for treatment” and describing the
“Plan of Action” as “[m]onitoring file for updated response from plaintiff”)] Based upon the
nature of the documents in the claim file and the surrounding facts, it thus is clear that, at
the time Plaintiff submitted the June 2018 demand, Defendant was still in the process of
investigating and evaluating Plaintiff’s claim.
34
The invocation of the work product doctrine by an insurer to protect documents
created during the investigation and evaluation of an insurance claim presents unique
challenges. Particularly in the context of a UIM claim, there is almost always the potential
for litigation to follow from the insured’s claim. See Sunahara v. State Farm Mut. Auto.
Ins. Co., 280 P.3d 649, 657 (Colo. 2012) (finding that a UIM claim “places the insurance
company in the ‘unique role’ of becoming almost adversarial to its own insured”). Despite
this potential, courts consistently have rejected the argument that “any investigation
undertaken by the insurer and all associated documents are made in anticipation of
litigation,” because “there is always the possibility that [a] claim will end in litigation.” Hill
v. W. Door, No. 04-CV-00332-REB-CBS, 2005 WL 8171443, at *3 (D. Colo. Aug. 1, 2005)
(collecting cases). Accepting such an argument would improperly “allow an insurance
company to insulate all investigative materials generated in every case involving serious
injuries long before any coverage decisions are made or threats of litigation arise.”
Cornhusker Cas. Co. v. Skaj, No. 11-CV-110-S, 2012 WL 12541136, at *2 (D. Wyo. Apr.
5, 2012).
Courts thus have recognized that “[b]ecause a substantial part of an insurance
company's business is to investigate claims made by an insured against the company or
by some other party against an insured, it must be presumed that such investigations are
part of the normal business activity of the company and that reports and witness'
statements compiled by or on behalf of the insurer in the course of such investigations
are ordinary business records as distinguished from trial preparation materials.” Hawkins
v. Dist. Court In & For Fourth Judicial Dist., 638 P.2d 1372, 1378 (Colo. 1982). “This is
not to say, however, that under appropriate circumstances an insurance company's
35
investigation of a claim may not shift from an ordinary business activity to conduct ‘in
anticipation of litigation’” but “there is no bright line which will mark the division between
these two types of activities in all cases.” Id. With these considerations in mind, courts
have held that, to avail itself of work product protection for documents created during the
investigation and adjustment of the claim, “the insurance company has the burden of
demonstrating that the document was prepared or obtained in order to defend the specific
claim which already had arisen and, when the documents were prepared or obtained,
there was a substantial probability of . . . litigation over the claim.”20 Id. at 1379.
Here, Defendant argues that Mr. Olivera’s declaration provides “undisputed
evidence proving” that Defendant began anticipating litigation upon receipt of Plaintiff’s
demand in June 2018. [#51 at 34] The Court disagrees. All three of the cited paragraphs
of Mr. Olivera’s declaration include the same vague and conclusory statement: 21 “I also
conveyed my opinions on preparing for litigation, which I and [Defendant] anticipated.”22
[#51-3, ¶¶ 11(n), (o), (q)] Mr. Olivera’s conclusory statements are insufficient for the court
to conclude that Defendant actually anticipated reasonably foreseeable litigation upon
receipt of Plaintiff’s demand. Instead, based upon the factual situation and the nature of
20
Although Hawkins applied the Colorado work product doctrine, as observed above,
numerous courts in this District have relied upon these principles from Hawkins in cases
applying the federal work product doctrine. [See supra note 19]
21 Defendant’s Brief also cites Paragraph 11(f) of Mr. Olivera’s declaration, but that
Paragraph addresses communications on September 6, 2017 regarding “which
jurisdiction’s law will apply to [Plaintiff’s] UIM claim” and makes no mention of anticipated
litigation. [See also AlaskaNational_000412 (redacted claim note for 9/06/2017
communications)]
22 The Court further notes that the first of these conclusory statements is made in
reference to a conversation between Mr. Olivera, Mr. Millar, and another representative
of Defendant on August 24, 2018—over two months after the demand letter was received
by Defendant. [#51-3, ¶ 11(n)]
36
the documents surrounding the communications referenced by Mr. Olivera, 23 as the full
text of Mr. Olivera’s declaration itself indicates, these communications appear to have
focused primarily—if not exclusively—on how Defendant should “proceed[ ] with
[Plaintiff’s] claim.” [#51-3, ¶¶ 11(n), (o), (q); see also AlaskaNational_000399 (8/24/2018
claim note discussing the EUO and the need for additional information without any
reference to anticipated litigation)]
Defendant further contends that its actions upon receiving the demand support a
finding that it anticipated litigation. [#51 at 34-35] First, Defendant contends that, in
response to the demand letter, it had Mr. Olivera “replace Mr. Millar as the primary point
of contact for Plaintiff’s counsel.” [Id. at 34] There is no evidentiary support in the record,
however, to support a finding that Defendant made Mr. Olivera the primary contact
because it anticipated litigation. To the contrary, in the contemporaneous documents,
Mr. Millar represented that Defendant “retained [Mr.] Olivera . . . to work with [Ms.
Anzalone] to get the EUO and any IME promptly completed.” [#51-1 at 41] Mr. Olivera
then “t[ook] the lead” and “coordinate[d]” the EUO, IME, and mediation with Ms. Anzalone
23
Although Mr. Olivera’s declaration includes references to communications he
purportedly had with Defendant on specific dates to “identif[y], and provide[ ] context for,
certain specific documents that were generated in connection with [his] work,” Mr. Olivera
does not cross-reference (by Bates number or otherwise) the documents that purportedly
relate to those communications. [#51-3, ¶ 11] Paragraphs 11(o) and 11(q) of Mr.
Olivera’s Declaration describe communications that allegedly occurred on September 14,
2018 and January 4, 2019, respectively, but none of the documents included on
Defendant’s privilege log bears either of those dates. Nor do the claim notes appear to
document conversations between Mr. Olivera and Mr. Millar on those dates. [See
AlaskaNational_000398 (reflecting claim notes for 9/11/2018 and 9/17/2018 with no
entries between); AlaskaNational_000393 (reflecting claim notes for 12/28/2018 and
1/15/2019 with no entries between)] These discrepancies further highlight the
inadequacy of Mr. Olivera’s declaration, standing alone, to prove the contentions for
which it is cited.
37
on behalf of Defendant. [#53-7 at 2] Although the EUO, IME, and mediation are all
proceedings that the parties appear to agree regularly happen in the ordinary course of
adjusting a claim, Defendant now contends that they were all conducted for the dual
purpose of adjusting the claim and for purposes of the anticipated litigation. [#57 at 1415] Defendant further contends that the “primary purpose” of involving Mr. Olivera in
those proceedings was because it anticipated that litigation would result. [Id.] Defendant,
however, fails to cite any evidence to support a finding that the “primary purpose” of
involving Mr. Olivera was because it anticipated litigation (or even to support a finding
that it actually reasonably anticipated litigation at the time—i.e., before it had completed
its investigation and evaluation of the claim). 24 Moreover, elsewhere in Defendant’s
briefing, Defendant represents that it involved Mr. Olivera because it “needed counsel
who could advise it as to the unique requirements of handling a claim under Colorado
law, due to being an insurance company with no prior Colorado claims” and states that
“Mr. Olivera’s role in the IME and EUO process was primarily to assist him in providing
legal advice regarding [Defendant’s] duties under Colorado law.” [#51 at 12, 21 n.5]
Defendant thus did not obtain this advice from Mr. Olivera “because of the prospect of
litigation” but rather Defendant needed this advice to adjust Plaintiff’s claim regardless of
any anticipated litigation.
24
The only evidence Defendant cites to support a finding that Defendant involved Mr.
Olivera because it anticipated litigation at the time are the conclusory statements in Mr.
Olivera’s declaration addressed above. [See #57 at 15 (citing #51-3, ¶¶ 11(n), (o))] The
other evidence cited by Defendant makes no mention of any anticipated litigation and
instead indicates that Defendant involved Mr. Olivera to ensure that it adjusted Plaintiff’s
claim “in a manner consistent with Colorado law.” [#51-3, ¶ 11(j); see also id. at ¶ 11 (p)]
38
Second, Defendant argues that its anticipation of litigation is evidenced by the fact
that “it received advice from its counsel on numerous occasions regarding avoiding bad
faith liability in a lawsuit.” [#51 at 34 (emphasis in original)] That Defendant wanted to
avoid litigation in no way evidences that it reasonably anticipated the prospect of litigation
with regard to Plaintiff’s claim. Presumably, an insurer attempts to avoid exposing itself
to bad faith liability in adjusting a claim, regardless of whether or not there is “a substantial
probability of . . . litigation over the claim.” Hawkins, 638 P.2d at 1379. Indeed, at the
point that an insurer anticipates litigation, it often would be too late to avoid exposing itself
to such a claim. Defendant itself acknowledges that throughout the adjustment of a claim,
the adjuster “must understand what actions Colorado law deems ‘unreasonable’ to avoid
multiplied benefits and fees.” [#51 at 18] This acknowledgement and the record evidence
support a finding that Defendant obtained advice from Mr. Olivera regarding how to avoid
bad faith liability, not because it reasonably anticipated that Plaintiff intended to file a
lawsuit, but because Defendant had “virtually no history of claims in Colorado and no
Colorado offices or infrastructure” and thus was unfamiliar with the requirements for
adjusting a claim under Colorado law. 25 [Id. at 19; see also #51-3, ¶ 6 (testimony from
Mr. Olivera that he understood that Defendant “retained [him] because it ha[d] very few
claims in Colorado and, therefore, desired legal advice on Colorado law”)]
Third, Defendant contends that its anticipation of litigation is evidenced by the fact
that “it discussed with its counsel how Plaintiff would present as a witness in a lawsuit.”
25
Notably, none of the record evidence cited by Defendant to support its contention that
Mr. Olivera provided Defendant advice on how to avoid bad faith liability indicates that
Defendant actually anticipated that Plaintiff intended to file a lawsuit.
(See
AlaskaNational_000397 (10/22/2018 claim note); AlaskaNational_000406 (6/25/2018
claim note), AlaskaNational_002358 (3/18/2019 Serious Loss Report No. 1).
39
[#51 at 34]
Defendant, however,
provides no authority for the proposition that
Defendant’s own consideration of its risk if the matter were to go to trial is sufficient to
demonstrate that Defendant actually anticipated litigation. Nor is there any indication in
the cited claim note that Defendant actually anticipated that Plaintiff intended to file a
lawsuit in the foreseeable future. 26 [AlaskaNational_000399 (8/24/2018 claim note)]
Indeed, at the time of this discussion, Defendant had not yet obtained an IME or otherwise
completed its investigation and evaluation of the claim. [Id.] That Defendant—as part of
its evaluation of the value of Plaintiff’s claim—may have considered its potential litigation
exposure provides no evidence that Defendant was actually anticipating that Plaintiff
would file a lawsuit in the foreseeable future.
The Court having rejected these arguments, Defendant is left with its contention
that Plaintiff’s June 2018 demand alone “cause[d] [Defendant] to anticipate litigation.”
[#57 at 15] Specifically, Defendant argues that, upon receiving Plaintiff’s June 2018
demand, “it was objectively reasonable for [it] to believe that litigation was imminent,”
because the demand (1) was sent by an attorney, (2) requested a large amount of
benefits—$500,000—"without significant supporting documentation,” and (3) “specifically
mentioned proceeding to litigation if the parties did not resolve the claim.” [#57 at 16
(emphasis in original)] Based upon the nature of the documents and the factual situation
26
This discussion of how Plaintiff would present as a witness occurred during a
conversation in which Mr. Olivera conveyed to Mr. Millar and one of Defendant’s in-house
counsel what had occurred at the EUO Mr. Olivera conducted. [AlaskaNational_000399]
Because it appears that no representative of Defendant other than Mr. Olivera attended
the EUO, it is unsurprising that Mr. Olivera relayed his impressions of how Plaintiff would
present as a witness. Particularly in that context, the discussion of how Plaintiff would
present as a witness does not in any way imply that Defendant actually anticipated
litigation at that time.
40
in this case, the Court does not find any of these alleged facts—standing alone or taken
together—sufficient to establish that Defendant reasonably anticipated litigation in the
foreseeable future.
The court acknowledges that, in certain contexts, the retention of an attorney may
indicate that a party intends to pursue litigation. 27 Here, however, Plaintiff retained an
attorney to handle his insurance claims before he had even submitted a claim to
Defendant. [#51-1 at 2-3] It is neither unusual nor indicative of an intent to pursue
litigation that Plaintiff retained counsel to handle his insurance claims, particularly given
the substantial injuries Plaintiff sustained and the complexity of those claims, which, in
addition to the UIM claim, involved a claim for worker’s compensation benefits and a claim
against the other driver’s liability insurer. See Church Mut. Ins. Co. v. Coutu, No. 17-CV00209-RM-NYW, 2018 WL 2388555, at *5 (D. Colo. May 25, 2018) (finding that “[t]he
mere retention of counsel”—even one with a reputation for being litigious—“is . . .
insufficient to establish a reasonable anticipation of litigation”).
Although Defendant now contends that Plaintiff’s June 2018 demand was
“unsubstantiated” [#51 at 34], Defendant does not provide any contemporaneous
evidence indicating either that Defendant thought the amount of the demand was
unreasonable or that Defendant anticipated litigation as a result of the demand. 28 See
27
Defendant cites Wikel v. Wal-Mart Stores, Inc. for the proposition that “[t]he involvement
of an attorney makes it more likely than not that the focus has shifted toward litigation,
making materials more likely to have been prepared in anticipation of litigation.” 197
F.R.D. 493, 495 (N.D. Okla. 2000). Wikel recognized, however, that the “[i]nvolvement
of an attorney is not dispositive of the ‘in anticipation of litigation’ issue.” Id. Moreover,
here, Plaintiff’s retention of an attorney did not reflect a “shift[ ] toward litigation” as Plaintiff
retained counsel prior to even submitting a claim to Defendant.
28 Notably, Mr. Millar’s communications with Mr. Olivera immediately following receipt of
Plaintiff’s demand do not indicate that Mr. Millar found the demand unreasonable or
41
Coutu, 2018 WL 2388555, at *5 (finding that insurer failed to demonstrate anticipation of
litigation where there was “no contemporaneous retention letter” indicating that attorney
“was retained to provide specific advice because [the insurer] reasonably anticipated
litigation” and none of the “correspondence exchanged between [the insurer and the
attorney], as reviewed in camera, establish that [the insurer] reasonably anticipated
litigation”). Instead, Mr. Millar’s July 7, 2018 email response to Ms. Anzalone stated:
“Before responding to [the] demand, . . . [Defendant] need[s] to do some additional
investigation and collect more information.” [#51-1 at 41] Nor is it clear that Defendant
would even have had a good faith basis for believing that the demand was
unsubstantiated at the time the demand was made. See Nat’l Farmers, 718 P.2d at 1048
(finding that insurer failed to establish that it anticipated litigation based upon a demand
letter submitted before the insurer had concluded its evaluation of the claims, because
“until the investigation was completed and the reports submitted, [the insurer] was itself
uncertain whether or not it would deny the claim”). 29 Plaintiff included in the demand letter
additional medical records and other information related to the valuation of his claim.
[#51-1 at 20-21] Moreover, at the time the demand was made, Defendant had not yet
unsubstantiated or that he was anticipating litigation. [See AlaskaNational_000405AlaskaNational_000406]
29 In its Reply, Defendant notes that National Farmer was not applying the federal work
product doctrine, but Defendant fails to identify any difference between the Colorado work
product doctrine and the federal work product doctrine relevant to this portion of the
Colorado Supreme Court’s analysis in National Farmer. [#57 at 16] Defendant also seeks
to distinguish National Farmer by contending that “there was no indication [in National
Farmer] that an attorney drafted the demand letter, that it mentioned litigation, or that it
requested an unsubstantiated amount of insurance benefits.” [Id.] For the reasons
articulated herein, the Court does not find any of these alleged differences to merit a
different result.
42
obtained an EUO or IME and Mr. Millar had not yet prepared a serious loss report. [#511 at 22, 41]
Although Defendant contends that the demand letter “specifically mentioned
proceeding to litigation” if the parties were unable to resolve the claim [#57 at 16
(emphasis omitted)], the demand letter did not overtly threaten litigation [#51-1 at 13-21].
Rather, the letter thanked defendant for its “anticipated cooperation in evaluating [the]
claim” and stated only that Plaintiff “look[ed] forward to hearing from [Defendant] in hopes
to amicably resolve [the] claim short of litigation.” [Id. at 21] The Court does not find this
reference to the hope for avoiding litigation made at the commencement of the negotiation
process for the claim sufficient to demonstrate that there was “a substantial probability of
. . . litigation over the claim.” 30 Hawkins, 638 P.2d at 1379. Notably, neither the claim
notes nor Mr. Millar’s written communications with Mr. Olivera concerning the demand
mention a threat of litigation from Plaintiff or otherwise indicate that Defendant anticipated
that Plaintiff intended to file litigation. [See AlaskaNational_000406 (6/25/2018 claim
note)]
The Court thus concludes that Defendant has failed to establish that Plaintiff’s June
2018 demand letter caused it to anticipate reasonably foreseeable litigation. 31 Plaintiff
30
Because, as explained above, there is almost always the possibility that an insurance
claim—particularly a UIM claim—will result in litigation, accepting Defendant’s argument
that this passing reference to avoiding litigation is sufficient would improperly “allow an
insurance company to insulate all investigative materials generated in every case
involving serious injuries long before any coverage decisions are made or threats of
litigation arise.” Cornhusker Cas. Co., 2012 WL 12541136, at *2.
31 The Court notes that, even if Defendant had established that it reasonably anticipated
litigation upon receiving Plaintiff’s June 2018 demand, Defendant would still need to
establish that each of the documents it has withheld or redacted on the basis of the work
product doctrine “can fairly be said to have been prepared or obtained because of the
prospect of [that] litigation.” Martin, 150 F.R.D. at 173 (emphasis omitted); see also
43
argues that “there was virtually no chance of litigation . . . unless and until the insurer
responded and denied the claim” which Plaintiff contends “did not happen [here] until the
denial letter of October 4, 2019.”32 [#53 at 18] Based upon its review of the complete
claim file provided to the Court for in camera review, the Court agrees that Defendant’s
October 4, 2019 letter is the point at which Defendant appears to have completed its
investigation and evaluation of Plaintiff’s claim and thus the point at which it may have
shifted from a focus on its adjustment of the claim to an anticipation of litigation of the
claim. 33
A detailed analysis of the communications between Defendant and Plaintiff prior
to the October 4, 2019 letter supports this conclusion. In January 2019, Mr. Olivera asked
Ms. Anzalone whether Plaintiff “ha[d] any interest in further settlement discussions, or if
the case [would] move into litigation.” [#53-4 at 11] Ms. Anzalone responded within
minutes that Plaintiff had recently had an MRI and was consulting with a doctor about the
Kannaday v. Ball, 292 F.R.D. 640, 649 (D. Kan. 2013) (“The fact that a party anticipates
litigation does not make all documents thereafter generated by or for its attorney
automatically protected under the work-product doctrine”.).
32 Defendant objects to Plaintiff’s characterization of the October 4, 2019 letter as a
“denial letter.” [#51 at 25 (“[Defendant] did not deny Plaintiff’s claim. Rather, it
acknowledged coverage and paid Plaintiff $150,000 for his injuries.”) Instead, Defendant
contends that the October 4, 2019 letter “informed Plaintiff that its valuation of the claim
did not support more than $250,000 in damages” but “did not refuse Plaintiff’s request for
additional benefits.” [Id. at 25 n.8]
33 Although Defendant has not expressly proposed an alternative date for when it
anticipated foreseeable litigation, Defendant points out that in early November 2019, Mr.
Olivera “was monitoring the Colorado state court dockets to determine whether Plaintiff
had filed a lawsuit” and “[p]arties do not check to see if a lawsuit has been filed unless
they believe litigation is imminent.” [#51 at 35 (citing AlaskaNational_000196)] The Court
agrees that this is strong evidence that, at that time, Defendant was anticipating imminent
litigation. The absence of any indication in the record that Mr. Olivera was monitoring the
court filings prior to Defendant sending the October 4, 2019 letter, provides support for
the Court’s conclusion that Defendant did not anticipate reasonably foreseeable litigation
prior to sending the October 4, 2019 letter.
44
need for surgery and would have more information after that consultation. [Id.] On June
4, 2019, Ms. Anzalone provided additional medical records and information concerning
Plaintiff’s condition and requested “an updated evaluation within 30 days.” [Id. at 8] On
June 28, 2019, Mr. Olivera provided “an update on [Plaintiff’s] claim” and informed Ms.
Anzalone that Defendant needed to retain a different orthopedic surgeon to review
Plaintiff’s medical records and MRIs in order to complete its “updated evaluation of
[Plaintiff’s] claim.” [Id. at 6-7] On July 18, 2019, Mr. Olivera stated that, in meeting with
the orthopedic surgeon on July 17, 2019, they realized that they had not received a copy
of Plaintiff’s January 2019 MRI; Mr. Olivera thus requested a copy of that MRI, access to
Plaintiff’s worker’s compensation claims file, and any additional medical records. [Id. at
5-6] On July 23, 2019, Mr. Olivera confirmed that Defendant now had access to the
information it needed to re-evaluate the claim. [Id. at 4] On August 12 and August 15,
2019, Ms. Anzalone requested an update on the status of Defendant’s review of the new
medical information. [Id. at 3] On August 16, 2019, Mr. Olivera provided Ms. Anzalone
with two reports from the orthopedic surgeon Defendant engaged to review the MRIs and
medical records and stated that he would follow up next week “regarding [Plaintiff’s]
request that [Defendant] respond to the new information.” [Id. at 2] On August 28, 2019,
Ms. Anzalone requested that Mr. Olivera “advise whether [Defendant] will be offering
more payment to [Plaintiff] for his UIM claim” by August 30, 2019. [Id. at 2] On August
30, 2019, Mr. Olivera stated that he had “a call into [his] contact with [Defendant]” and
would “follow up with [Ms. Anzalone] next week.” [Id. at 1-2] On September 11, 2019,
Ms. Anzalone emailed Mr. Olivera and requested an update. [Id. at 1] That same day,
Mr. Olivera responded that Defendant “will have a decision on a possible new offer
45
shortly.” [Id. at 1] On October 4, 2019, Mr. Millar sent Ms. Anzalone the letter, describing
it as “a follow up to the numerous recent emails exchanged by [Ms. Anzalone] and Mr.
Olivera.” [#53-5] The letter referenced the orthopedic surgeon’s review of the additional
medical records and imaging studies provided by Plaintiff and concluded that Plaintiff
“ha[d] received fair and reasonable compensation for his liability and UIM claims arising
from the accident with the payment of $100,000 from the liability carrier and $150,000
from [Defendant] for the UIM claim.” [Id.] Notwithstanding that conclusion, Mr. Millar
stated that Defendant “would like to continue to move this matter towards a compromise
resolution” and invited Plaintiff “to submit a reasonable settlement demand.” [#53-5]
None of these communications (or any of the documents over which Defendant
asserts the work product doctrine) prior to the October 4, 2019 letter thus even hint at the
possibility of litigation. See Plaza, 2015 WL 3528336, at *6 (rejecting work product claim
with regard to communications “that d[id] not even hint at the possibility of future
litigation”). Instead, it was only after Defendant concluded its investigation and evaluation
of the claim and issued the October 4, 2019 letter that any litigation could reasonably
have been anticipated. See National Farmers, 718 P.2d at 1048 (finding that “[i]t was
only after [the insurer] denied the claim that litigation arose” (emphasis in original));
Century Sur. Co. v. Smith, No. 14-CV-00947-RM-MJW, 2014 WL 7666061, at *6 (D. Colo.
Jan. 21, 2014) (“Ordinarily, the date a claim is denied is the most obvious point at which
litigation becomes imminent.”). 34
34
In his briefing, Plaintiff argues that the Court should apply the crime-fraud exception to
Defendant’s assertion of both the attorney-client privilege and work product protection
based upon Defendant allegedly “act[ing] as though it [wa]s continuing to investigate the
insurance claim and . . . not advis[ing] the insured it [wa]s actually gathering information
to prepare a defense of anticipated litigated claims against it.” [#53 at 10] As explained
46
The Court thus concludes that none of the documents withheld or redacted by
Defendant that were created prior to October 4, 2019 are entitled to protection pursuant
to the work product doctrine. With regard to documents created after October 4, 2019
that Defendant has withheld or redacted on the basis of the work product doctrine, the
Court has conducted an individualized review to determine whether the document “can
fairly be said to have been prepared or obtained because of the prospect of [the
anticipated] litigation.” Martin, 150 F.R.D. at 173 (emphasis omitted); see also Colorado
Mills, 2013 WL 1340649, at *6 (“Determining whether anticipated litigation is the driving
force behind the preparation of each requested document is the central inquiry in
resolving work product questions.” (quotation omitted)); Hill, 2005 WL 8171443, at *2
(finding that work product analysis “depend[s] upon the particular circumstances of a
given case and may turn on a document-by-document review”). In the attached Appendix
above, however, upon review of the documents submitted for in camera review, the Court
does not find any evidence that Defendant was gathering information to prepare a
defense for anticipated litigation as distinguished from actually continuing to investigate
and evaluate Plaintiff’s claim as Plaintiff understood. To invoke the crime-fraud exception,
Plaintiff “must present evidence that the allegation of attorney participation in the
fraudulent conduct has some foundation in fact.” Plaza, 2015 WL 3528336, at *8. Here,
Plaintiff has not come forward with any evidence that Mr. Olivera engaged in fraudulent
conduct. Although, in the context of this dispute, Defendant contends that it reasonably
anticipated imminent litigation as of Plaintiff’s June 2018 demand, the Court has not found
sufficient evidence in the record to substantiate that contention. Regardless, even if
Defendant had anticipated imminent litigation, that is not necessarily inconsistent with
Defendant continuing to investigate and evaluate Plaintiff’s claim. Plaintiff’s reliance on
Plaza is misplaced. In Plaza, the court found evidence that the insurer and its counsel
“knowingly withheld information that was critical to the [claimants’] decision-making on
how best to preserve a future UIM claim that everyone agreed was meritorious” and that
the insurer and its counsel “made misleading representations in order to bolster [the
insurer’s] position in any future UIM case, to the detriment of whomever brought the UIM
claim.” 2015 WL 3528336, at *16. Here, Plaintiff has not come forward with any evidence
supporting a finding either (1) that Defendant and Mr. Olivera withheld material
information or made misleading representations with regard to Plaintiff’s claim or (2) that
any such misrepresentation or omission prejudiced Plaintiff’s claim.
47
A, the Court—without repeating the findings set forth above and with attention paid to
avoiding the disclosure of any information that Defendant may consider protected—
provides its ruling with regard to each of those documents. 35
III.
CONCLUSION
Accordingly, IT IS ORDERED that, as set forth in Appendix A, Defendant shall
produce certain of the documents previously withheld or redacted.
DATED: October 15, 2020
BY THE COURT:
s/Scott T. Varholak
United States Magistrate Judge
35
Because all of the documents that the Court found to properly be protected from
production pursuant to the work product doctrine also were protected from production
pursuant to the attorney-client privilege, the Court does not reach Plaintiff’s arguments
with regard to his “substantial need” for the withheld documents.
48
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