Linthicum et al v. Mendakota Insurance Company

Filing 28

ORDER granting 27 Motion for Leave to File Supplemental Brief; granting in part and denying in part 18 Motion to Compel Production of Documents; denying 19 Motion to Compel Interrogatory Response and Response to Mandatory Disclosures. Signed by Magistrate Judge G. R. Smith on 7/28/2015. (loh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
CYNTHIA DYCHES
)
LINTHICUM and
CHRISTOPHER MARTIN
)
LINTHICUM,
Natural Parents of TRISTAN A. )
LINTHICUM,
Deceased, as Assignees of
)
BOBBY JAMES HOPKINS, II, )
)

Case No. CV415-023

Plaintiffs,
)

V.

)
)

MENDAKOTA INSURANCE )
COMPANY,
)
)

Defendant.

ORDER
Before the Court are the plaintiffs' motions to compel
defendant's discovery responses. Does. 18 & 19. Defendant
opposes. Does. 20 & 27.
I. BACKGROUND
While insured by defendant Mendakota Insurance Company
("Mendakota"), Bobby Hopkins struck and killed Tristan
Linthicum with his car on June 3, 2008. Mendakota was obligated

to cover Hopkins' undisputed liability but, Tristan's parents now
claim, it in bad faith refused to settle with them for Hopkins'
$25,000 policy limits. Doc. 18 at 1-4. They later obtained -- with
Mendakota's cooperation -- a $1.2 million "settlement judgment"
against Hopkins. Id. at 4; doc. 20 at 6 (Mendakota "agreed to a
stipulated judgment so that its insured (and Plaintiffs) could avoid
a trial [in the underlying case] and the case could proceed to the
real issue: whether Mendakota acted in 'bad faith. . . .").
The legal mechanics of a "bad faith" claim inform the
background facts here, and thus the relevancy considerations
needed to resolve the discovery motions:
Under Georgia law, "[a]n insurance company may be liable
for the excess judgment entered against its insured based on
the insurer's bad faith or negligent refusal to settle a personal
claim within the policy limits." Cotton States Mut. Inc. Co. v.
Brightman, 580 S.E.2d 519, 521 (Ga. 2003). An insured may
establish a claim against its insurance company for bad faith
failure-to-settle where "the insurer acted unreasonably in
declining to accept a time-limited settlement offer." South.
Gen. Ins. Co. v. Holt, 416 S.E.2d 274, 276 (Ga. 1992).

Owners Ins. Co. v. Parsons, 2015 WL 2388393 at * 2 (11th Cir.
May 20, 2015). However,
an insurer will be exposed to a judgment in excess of its
policy limits only where there is some certainty regarding
2

the settlement posture of the parties in the underlying
lawsuit -- i.e., where the insured's liability is clear, the
damages are great and the insurer is on notice that it has
an opportunity to settle the case, usually because a
settlement demand in the amount of the policy limits or
greater is received from the plaintiff. There must be a
triggering event -- something that puts the insurer on
notice that it must respond or risk liability for an excess
judgment. Put another way, to find liability for tortious
refusal to settle there must be something the insurer was
required to "refuse."

Kingsley v. State Farm Mut. Auto. Ins. Co., 353 F. Supp. 2d 1242,
1252-53 (N.D. Ga. 2005); see also id. (the plaintiffs "secret"
deadline deprived insurer of notice of an opportunity to settle
within the policy limits required under Georgia law as a predicate
to liability), affd, 153 F. App'x 555 (11th Cir. 2005); see also

Delancy v. St. Paul Fire & Marine Ins. Co., 947 F.2d 1536, 1550
(11th Cir. 1991) ("At a minimum . . . Georgia law mandates that
the insured show that settlement was possible -- the case could
have been settled within the policy limits -- and that the insurer
knew, or reasonably should have known, of this fact.").
Hopkins assigned his "Holt" claim to the Linthicums, who
sue Mendakota here and move to compel it to produce its entire
claims file on the underlying lawsuit, plus answer interrogatories.

3

Doe. 18 at 5; doc. 19. Specifically, they want a "cover-to-cover"
copy of Mendakota's "entire claims file," doc. 18 at 5, "from the
inception of the claim to January 23, 2013, the date of the [$1.2
million] judgment," id., and "the claims file post-dating June 16[,
20101."

Id. at 8. Their interrogatories seek the identity of all

involved in the claims-adjustment process who likely have
discoverable information. Doe. 19 at 5-9. Mendakota objects to
some of that discovery on relevancy, work-product, and attorneyclient privilege grounds.' Doe. 20.
There is no dispute that the accident occurred on June 3,
2008 and that Mendakota's policy covered Hopkins. Doc. 20 at 1.
And Mendakota concedes that it failed to respond to plaintiffs' May
12 1 2010 "policy limits" demand letter by the May 24, 2010 deadline
that their counsel set. Doe. 19 at 3-4; doe. 20 at 1-2; see also id. at 2
n. 1. But Mendakota also says that it had repeatedly offered to

Plaintiffs clarify that they seek no "communications between Mendakota
and its attorneys in this bad faith action." Doe. 18 at 19 (emphasis added).
But "to the extent Mendakota has statements, reports and evaluations
prepared by anyone other than counsel of record in this case, Mendakota has
failed to fulfill its burden of showing that any privilege applies to such
documents and they must be produced." Id. at 19-20.

EI

settle for the $25,000 policy limits before that date, yet plaintiffs
refused. Doc. 20 at 2. It shows (and plaintiffs do not dispute) that,
on July 15, 2008, their attorney, Tom Bordeaux, sent a letter
to Mendakota's adjuster, Kate Moulton, advising Mendakota
that he represented Plaintiffs in their claim for wrongful
death against Hopkins. But [in their motion to compel filing]
Plaintiffs omit that just ten days later, on July 25, 2008,
Moulton and Bordeaux had a telephone conversation in which
Moulton told Bordeaux that Mendakota was tendering its full
policy limits to resolve Plaintiffs' claim. Plaintiffs also fail to
mention that, in response to Moulton's phone call, Bordeaux
said that he had "other avenues to pursue," and that he was
not yet ready to accept Mendakota's policy limits. Nor do
Plaintiffs mention that, on October 8, 2008, in another call
between Bordeaux and Moulton, Bordeaux said that Plaintiffs
would sign a limited release. Importantly, Bordeaux also
asked Moulton to send him a release "for his review/update."
The next day, Moulton sent a letter to Bordeaux, which again
stated that Mendakota was tendering its policy limits "to
settle the case of Cynthia and Christopher Linthicum, natural
parents of Tristan A. Linthicum, a minor, deceased." As
requested by Bordeaux, Moulton forwarded a proposed
release for his review. In the letter, Moulton mistakenly
suggested that Mendakota would have to issue payment to
the Estate of Tristan A. Linthicum. Moulton also requested a
copy of Tristan Linthicum's death certificate. According to
Plaintiffs, "[t]he Linthicums did not accept Mendakota's
offer."
Doc. 20 at 4 (record cites omitted; emphasis added).
Mendakota's unrebutted factual showing directly affects the
strength of plaintiffs' Holt (bad faith) claim against it. That, in

5

turn, informs the relevancy determination' required to resolve this
discovery dispute. Hence, closer scrutiny of Mendakota's claimshandling is warranted. Its recitation about what happened next
also is unrebutted:
Plaintiffs' Statement of Facts then skips ahead to May 12,
2010 -- as if Moulton and Mendakota simply ignored the claim
for 18 months. That is simply not true. Bordeaux responded
to Moulton's letter tendering policy limits on October 15,
2008. Bordeaux provided a certified copy of Tristan's death
certificate, which Moulton had requested, and stated: "I hope
to be able to proceed with these files in the near future."
Notably, Bordeaux did not object to the proposed release,
reject Mendakota's] tender of policy limits, or object to
Moulton's statement that the settlement check would have to
be issued to the estate. Moulton then did not hear from
Bordeaux for several months. On January 21, 2009, Moulton
contacted Bordeaux regarding the status of settlement.
Bordeaux told her that the case was "on hold" pending the
criminal prosecution of Bobby Hopkins.
Plaintiffs [in their moving brief] also omit that Moulton left
at least four telephone messages for Bordeaux between
January and August 2009, but none of them were returned.
2

See Fed. R. Civ, P. 26(b)(1) ("Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party's claim or defense.
Relevant information need not be admissible at the trial if the discovery
appears reasonably calculated to lead to the discovery of admissible
evidence."). And relevance is a broad concept, encompassing "any matter that
bears on, or that reasonably could lead to other matters that could bear on,
any issue that is or may be in the case." Healthcare Sen's. Grp., Inc. v. Lower
Oconee Cmty. Hosp., 2014 WL 4385714 at * 1 (S.D. Ga. Sept. 3, 2014) (quoting
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)); Robbins v.
Owners Ins. Co., 2015 WL 3910920 at * 1 n. 3 (S.D. Ga. June 24, 2015).

on

Finally, on August 27, 2009, Moulton spoke with Bordeaux's
assistant, who advised that Bordeaux would not conclude the
settlement until after the criminal case was completed.
Moulton again followed up on December 4, 2009, and
Bordeaux's assistant advised her that the criminal trial had
been "pushed out further."
Doe. 20 at 5 (record cites omitted; emphasis added).
It is telling that, in moving for discovery of Mendakota's
claims file and insisting that it is "highly relevant" to their bad
faith claim -- hence, plaintiffs pursue evidence to show just how
blasé Mendakota behaved -- plaintiffs would omit such critical
material facts from their factual presentation to this Court. Alas,
there's more (again, this goes unrebutted):
On May 12, 2010, Bordeaux sent a letter to Moulton
demanding Mendakota policy limits of $25,000 (which
Mendakota had already tendered numerous times), stating
that the offer would expire at 5 pm on May 24, 2010 -- just
eight business days later. On June 2, 2010, Plaintiffs filed the
underlying suit against Hopkins. On June 15, 2010, Moulton
spoke to Bordeaux's assistant and reminded her that
Mendakota had previously offered its policy limits to resolve
the case. Moulton also sent a letter to Bordeaux that same
day, reminding him of the October 9, 2008, tender of policy
limits, and asking Bordeaux to contact her to discuss.
Bordeaux did not contact Moulton to discuss. Instead, he
wrote back the next day, claiming tI iat Plaintiffs never
accepted Mendakota's offer of October 8, 2008, and that
Mendakota never accepted Bordeaux's demand of May 12,

7

2010. Bordeaux also made clear that his May 12 demand had
now expired.
Doe. 20 at 5-6 (record cites and footnote omitted).
Given the parties' failure to settle -- which Mendakota
ascribes to Bordeaux's stall tactics -- Mendakota reasons that
"anything that may have subsequently taken place in the
underlying lawsuit filed against Mr. Hopkins is neither relevant
here nor reasonably calculated to lead to the discovery of
admissible evidence." Doe. 20 at 2. It represents that the
"statements, reports, and evaluations," as well as "claim committee
documents" that plaintiffs seek "do not exist outside of the claim
file. Thus, any such documents generated prior to June 16, 2010,
have been produced." Id. at 9 n. 4 (emphasis added).'

Elsewhere, it represents that it
has produced its complete claims file from the date the file was opened
on June 10, 2008, through the date that Plaintiffs' counsel advised
Mendakota that the settlement offer was withdrawn, and even included
some claim entries after Mendakota proceeded to defend the underlying
lawsuits. While Mendakota did withhold communications with defense
counsel based on the attorney-client privilege and irrelevant
communications concerning the claim asserted by Dylan Linthicum, no
other documents were withheld.
Doc. 20 at 10.
ri

But the briefs get a tad confusing about negotiation cut-off
dates. Obviously people sometimes talk after the date of a letter,
and Mendakota's "date-variability" in the briefs reflects this.
Mendakota initially insisted that the "there were no negotiations

(i.e., no demands, and thus no refusals to settle) after June 16,
2010." Doc. 20 at 9. Since no relevant conduct occurred after that
date, it concluded, nothing in its claim file is now discoverable from
that point onward. Id. It thus asked the Court to deny plaintiffs'
motion to compel. Id. at 10; see also id. at 16 ("However, even if
Mendakota had somehow acted in bad faith, the bad faith could not
have occurred after negotiations ceased on June 16, 2010.")
(emphasis added).
To that end, Mendakota (in a later brief s) highlights
plaintiffs' admission, made in their interrogatory responses, that

Mendakota moves for leave to file it, doc. 27, evidently unaware of this
Court's unlimited reply brief policy. See Waddy v. Globus Medical, Inc., 2008
WL 3861994 (S.D.Ga. Aug 18, 2008) (the "parties may file as many reply briefs
as they like under Local Rule 7.5.") (citing Podger v. Gulfstream Aerospace
Corp., 212 F.R.D. 609, 609 (S.D. Ga. 2003)); see also S.D.GA.L.R. 7.6
(authorizing reply briefs but imposing notice requirements and time limits);
Brown v. Chertoff, 2008 WL 5190638 at *1 (S.D. Ga. Dec. 10, 2008) (reminding
that "[o]nce the initial round of briefs have been filed, subsequent replies run
the risk of 'sudden death.' That is, the Court is free to issue its decision at any
time."). Doe. 27. Given that policy, the motion is GRANTED, and

they made no settlement offer after May 24, 2010. Doc. 27 at 2; see

also doe. 27-1 at 4-5 ("After 5:00 p.m. on May 24, 2010, Plaintiffs
made no settlement demands to settle their claims against Hopkins
for amounts within policy limits"); doe. 27-2 (deposition of
Bordeaux, wherein he agrees that his clients "never offered to
settle for policy limits after May 24, 2010"). But Mendakota then
extends the "relevancy timeline" until the end of July 2010:
Because there was some interaction between Mr. Bordeaux
and [now former Mendokota claims adjuster] Ms. [Kate]
Moulton in June, 2010, regarding the settlement demand
and Mendakota's continued efforts to settle the claim,
Mendakota agrees that it is appropriate to conduct limited
discovery regarding the interactions between Mr.
Bordeaux and Ms. Moulton in June and July of 2010.
However, anything that may have transpired after July,
2010, has no relevance whatsoever to Plaintiffs' claim that
Mendakota somehow acted in bad faith by allegedly
"refusing to settle" with them.
Doe. 27-3 at 5 (emphasis added).
II. ANALYSIS
An insurer has no affirmative duty to engage in negotiations
concerning a settlement demand that is in excess of the insurance
policy's limits.

Baker v. Huff, 323 Ga. App. 357, 364 (2013).

Mendakota's new brief (doe. 27-3), along with its attachments (docs. 27-1 &
27-2), is deemed filed on the same day as Mendakota's motion.
10

Conversely, insurers do have a Holt duty to settle in the face of a
bona fide, policy-limits settlement offer where it would be
unreasonable not to do so.

See supra, Part I. And from the

reasoning contained in cases like Abueg v. State Farm Mut. Auto.

Ins. Co., 2014 WL 5503114 at * 3 (D. Nev. Oct. 30, 2014) and
Camacho v. Nationawide Mut. Ins. Co., 287 F.R.D. 688, 698 (N.D.
Ga. 2012), the dividing line emerges: When settlement negotiations
end, so should the temporal scope of the claims file discovery. It is,
after all, the very negotiation process itself (hence the negotiations

period) on which a bad-faith settlement claim focuses, and not what
the insurer does once the underlying litigation commences.
Still -- and as the time-frame-creep within Mendakota's own
briefing shows -- the actual date of the last settlement missive is
not dispositive. The more realistic discovery cut-off is when the
relevant parties have, for all intents and purposes, stopped
negotiating. Here, Mendakota ultimately says "anything that may
have transpired after July, 2010, has no relevance," doc. 27-3 at 6,
and this is not disputed. Hence, if it has not produced any non-

11

privileged, claims-file data generated before July 31, 2010, it must
do so now.
Plaintiffs want more, however. They also want all attorneyclient and work-product privileged materials. Doe. 18 at 10 (all
"communications between defense counsel and Mendakota's
adjusters regarding Hopkins' defense in the wrongful death
action"); see also id. at 11 (arguing that, since Hopkins assigned all
of his rights to the plaintiffs, they are entitled to his attorney's
communications); id. at 16-17 (plaintiffs want Mendakota's "claims
diary," an adjuster's "final report," and entries regarding Tristan's
brother, Dylan); id. at 21-23 (they want Mendakota's "Claim
Committee Documents").
Mendakota has been shifting its response here. In its initial
brief it said that "[n]o documents were withheld from the claim file
prior to June 16, 2010, based on the attorney-client privilege or
work-product doctrine."' Doc. 20 at 12. It otherwise insists that

Some courts frown on the invocation of these privileges in this context.
Lender v. GEICO Gen. Ins. Co., 2010 WL 3743812 at * 2 (S.D. Fla. Sept. 22,
2010) (discussing Florida law in explaining judicial abolition of the attorneyclient privilege as well as work product immunity from discovery in the
insurance bad faith context) (citing Nowak v. Lexington Ins. Co., 464
F.Supp.2d 1241 (S.D. Fla. 2006).

12

A more nuanced approach arises in Georgia law. Where counsel advises
both the insurer and the insured jointly, the privilege is waived when the
insured (as Hopkins did here) brings a bad-faith claim (directly or, as occurred
here, when it is assigned to another). That contrasts with the non-jointrepresentation context, covering attorney work product and communications
to the insurer over its coverage duties to its insured. Compare Camacho v.
Nationwide Mut. Ins. Co, 287 F.R.D. 688, 692 (N.D. Ga. 2012) ("Nationwide
cannot claim the protection of the attorney-client privilege over its
communications with [defense counsel] regarding the defense of its insured in
the underlying action unrelated to the issue of coverage. Such
communications are therefore discoverable in this third-party bad faith action,
and Nationwide's objection to the production of documents are being protected
by the attorney-client privilege is overruled."), quoted in Woodruff v. Am.
Family Mut. Ins. Co., 291 F.R.D. 239, 245 (S.D. Ind. 2013); see also id. ("This
Court finds the Camacho analysis persuasive. Even assuming [the insurer] was
represented by [counsel], it cannot claim the protection of the attorney-client
privilege over its communications with [counsel] regarding the defense of [its
insured] in the [underlying action]"), with Camacho, 287 F.R.D. at 693
(insurer's communications with its in-house claims counsel involving rendering
of legal services in defense of its insured in underlying action were protected
by attorney-client privilege, and thus were not discoverable in third-party bad
faith action, even though insured had waived attorney-client privilege).
Hence, Mendakota must produce all "joint-representation" information, but
not any documents or information arising from legal advice solely to
Mendakota regarding its coverage responsibility to Hopkins.
The "work product" privilege presents its own complexities. Unless
documents in question are shown to be have been produced "in anticipation of
litigation," Mendakota cannot even invoke the work-product objection. See
Smith v. Scottsdale Ins. Co., 40 F. Supp. 3d 704, 722 (N.D. Va. May 16, 2014)
(collecting cases). Often the "front end" of a claims file, typically generated
only by adjusters and not lawyers, is not work product and thus no privilege
applies. It is only when the adjuster, while investigating (adjusting) the claim,
suspects the case will be litigated (e.g., he discovers that the insured burned
his own home down and now seeks to fraudulently collect on his fire
insurance) -- and thus, lawyers will probably get involved -- that the privilege
comes into play. At that point, after all, the insurer is anticipating litigation,
and the law aims to protect the legal analysis of its adjusters and lawyers.
That's why the fact and opinion impressions and observation of both attorneys
and non-attorney personnel can be work product. Rule 26(b)(3). Otherwise, a
routine claims file will be discoverable. Atlanta Coca-Cola Bottling Co. v.
Transamerica Ins. Co., 61 F.R.D. 115, 116-17 (N.D. Ga. 1972) (claims files
13

these privileges apply. Id. But again, its later brief pushes the cutoff date (hence, it will hand over its entire file) to July 31, 2010.
Doc. 27-3 at 5 (conceding that "it is appropriate to limit discovery
regarding the interactions of Mr. Bordeaux and Ms. Moulton in
June and July, 2010."). There it says nothing further about any
privileges, so the Court will assume that it is handing over all file
contents. If not, then the parties are directed to confer,' in light of
the legal guidance set forth in note 5 supra, before returning to this
Court for judicial compulsion.
Plaintiffs also claim that, by asking Bordeaux at his
deposition about a February 11, 2014 letter written to Hopkins,
doe. 27-2 at 8-9, Mendakota "opened the door" to more discovery,
and thus pushed back the claims-file, discovery cut-off deadline to
were discoverable). Here, all "front end" claims file materials must be
disclosed, but only up to July 31, 2010. If Mendakota seeks documents and
information within that time frame based on a privilege, it must submit same
to this Court for in camera review - after the parties have conferred on same.
See infra n.6&8.
6

Local Rule 26.5(c) reminds attorneys "that Fed.R.Civ.P. 26(c) and 37(a)(2)
require a party seeking a protective order or moving to compel discovery to
certify that a good faith effort has been made to resolve the dispute before
coming to court." "That rule is enforced." Hernandez v. Hendrix Produce, Inc.,
2014 WL 953503 at * 1 (S.D.Ga. Mar. 10, 2014). And the conference must be
meaningful, consistent with the context and complexity level of each case.
Hernandez v. Hendrix Produce, Inc., 297 F.R.D. 538, 540 (S.D. Ga. 2014); State
Farm Mut. Auto. Ins. Co. u. Howard, 296 F.R.D. 692, 697 (S.D. Ga. 2013).

14

at least that date. Doc. 25 at 2. Mendakota correctly notes that
this argument is baseless, and in any event any "work product"
that it may have generated in response to that revelation would be
irrelevant to the bad faith claim here (there is no dispute that
underlying-lawsuit settlement efforts failed long before that date;
again, the "bad faith" element of the instant lawsuit goes to those
efforts, not post-settlement efforts).
There remains a loose end in this matter. Mendakota never
comes out and squarely says by what precise date that it has turned
over underlying-claim, settlement-phase documents and
information to the plaintiffs -- as noted earlier, its briefs keep
shifting on the precise "settlement time frame." Doe. 27-3 at 5.
Although Mendakota suggests that it has turned over all requested
information through July 31, 2010, there remains some uncertainty
about this. Hence, the Court GRANTS plaintiffs' motion to
compel documents (doe. 18) to the extent that Mendakota must
produce all non-privileged documents 7 up to July 31, 2010, and

' If Mendakota is withholding any "work product" or other privileged
documents or information by this point, it must, within 14 days of the date
this Order is served, submit them to this Court for an in camera determination
15

DENIES the remainder. Because Mendakota represents that it
has fully complied with plaintiffs' interrogatories, doc. 20 at 12-14,
the Court DENIES their motion to compel (doc. 19). Given this
result, no Fed. R. Civ. P. 37 sanctions are warranted here
(Mendakota seeks them, doc. 20 at 15, and so do plaintiffs, doc. 18
at 24). Finally, and as noted above at n. 4, the Court GRANTS
Mendakota's wholly unnecessary motion for leave to file its reply
brief. Doc. 27.
SO ORDERED this

day of July, 2015.

SGISTRATE JUDGE
UNiTED
SOUTHERN DISTRICT OF GEORGIA

and a brief showing why, in light of the legal parameters set forth in note 5
supra, that information (created up to July 31, 2010), should not be disclosed
to the plaintiffs.

16