Olga Despotis Trust v. The Cincinnati Insurance Company

Filing 38

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that on or before Wednesday, June 18, 2014, Defendant shall provide the Court with unredacted versions of the documents bearing Bates Nos. 541, 542, 545 and 546. All documents submitted for in camera review s hall be submitted in hard copy directly to Chambers. The Court withholds its ruling on Plaintiffs Second Motion to Compel (Doc. No. 33) pending in camera review of the disputed documents. Response to Court due by 6/18/2014. Signed by District Judge Audrey G. Fleissig on 6/11/14. (JWJ)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
OLGA DESPOTIS TRUST,

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Plaintiff,
v.
THE CINCINNATI INSURANCE
COMPANY,
Defendant.

Case No. 4:12CV02369 AGF

MEMORANDUM AND ORDER
Plaintiff, the Olga Despotis Trust, brings this action for breach of contract and
vexatious refusal to pay a property insurance claim under a policy issued by Defendant
Cincinnati Insurance Company. Now before the Court is Plaintiff’s Second Motion to
Compel and request for in camera review. The parties have briefed the motion and the
record reflects their compliance with the “meet and confer” requirement of Local Rule
37-3.04. For the reasons set forth below, the Court grants Plaintiff’s request for in
camera review of the disputed documents and reserves its ruling on Plaintiff’s Second
Motion to Compel pending that review.
BACKGROUND

On April 5, 2011, Plaintiff first notified Defendant that it intended to pursue this
matter in litigation and sent Defendant a “Confidential Settlement Offer” demanding
payment in excess of the policy limits. See Doc. Nos. 35-2 & 35-3. Thereafter, on
December 21, 2012, Plaintiff filed suit. During the course of discovery and in response

to Plaintiff’s Request for Production of Documents, Defendant asserted the attorneyclient privilege with respect to documents bearing Bates Nos. 541, 542, 545, and 546.
Defendant then produced redacted versions of these documents and at Plaintiff’s request,
a Privilege Log justifying the redactions. See Doc. Nos. 34-1 & 34-2.
On March 14, 2014, without first consulting Defendant’s counsel, Plaintiff filed a
motion to compel asserting that the Privilege Log was inadequate. After receipt of that
motion, Defendant’s counsel contacted Plaintiff’s counsel to ask why there had been no
attempt to resolve the issue before the filing of the motion. See Doc. No. 35-1. As a
result of that conversation, on March 16, 2014, Defendant’s counsel e-mailed Plaintiff’s
counsel a more detailed explanation for each of the redactions. Defendant asserted that
the redactions referred to communications between Defendant’s employees regarding
referral of the claim to counsel around the time that Plaintiff first indicated its intention to
litigate. See Doc. No. 34-3.
The Court denied Plaintiff’s March 14, 2014 motion to compel for failure to
comply with Local Rule 37-3.04(A). See Doc. No. 32. Plaintiff then filed the present
motion again seeking to compel the disclosure of the redactions in the “log notes” entered
in Defendant’s claim file on or about April 6, 2011 and April 8, 2011 and bearing Bates
Nos. CIC 541, 542, 545, and 546.
I. Arguments of the Parties
In support of its motion, Plaintiff asserts that the Privilege Log fails to satisfy the
requirements of Fed. R. Civ. P. 26(b)(5)(A) and that, as a result, Defendant has waived its
claim of attorney-client privilege with respect to the documents. In the alternative, citing
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the importance of the documents to its claim of vexatious refusal to pay, Plaintiff asks the
Court to review the documents to assess the validity of Defendant’s assertion of the
attorney-client privilege. Finally, Plaintiff notes that Defendant has also asserted that the
work product doctrine applies with respect to Doc. No. 541. Plaintiff therefore argues
that the Court should compel full disclosure of Doc. No. 541 on the ground that Plaintiff
has a substantial need for it in light of Plaintiff’s claim of vexatious refusal to pay.
Defendant responds that the redacted portions of the notes are subject to the
attorney-client privilege and in some cases, the work product doctrine because they
reflect internal discussions regarding its decision to retain or consult counsel after
Plaintiff indicated their intention to litigate the unpaid claim. In addition, Defendant
asserts that when coupled with the information found in the un-redacted portions of the
notes, the Privilege Log is sufficient to justify the redactions and that no further
disclosure should be required. Defendant also points to the additional information it
provided to Plaintiff in its March 16, 2014 e-mail to bolster its assertion that it has fully
established the basis for the redactions. See Doc. No. 34-3. In the alternative, Defendant
asserts that even if the Privilege Log were deemed deficient, that deficiency would not
amount to a waiver of its claim of attorney-client privilege.
APPLICABLE LAW
I. The Attorney-Client Privilege
Under Federal Rule of Civil Procedure 26(b)(1) litigants may obtain “discovery
regarding any matter, not privileged, that is relevant to the claim or defense of any party.”
Fed. R. Civ. Pro. 26(b)(1). Missouri law governs the existence and scope of the attorney-3-

client privilege in this diversity action. Fed. R. Evid. 501; Baker v. Gen. Motors Corp.,
209 F.3d 1051, 1053 (8th Cir. 2000). In Missouri, the common law attorney-client
privilege has been statutorily codified, Mo. Rev. Stat. § 491.060(3),1 and the privilege
“protects ‘any professionally-oriented communication between attorney and client
regardless of whether it is made in anticipation of litigation or for preparation for trial.’”
Lloyd’s Acceptance Corp. v. Affiliated FM Ins. Co., No. 4:05 CV 1934 DDN, 2012 WL
1389708, at *7 (E.D. Mo. Apr. 23, 2012) (quoting State ex rel. Tillman v. Copeland, 271
S.W.3d 42, 45 (Mo. Ct. App. 2008)).
The privilege does not attach unless the communication involves the attorney and
the client and is made to obtain legal advice. Tillman, 271 S.W.3d at 45; see also United
States v. Spencer, 700 F.3d 317, 320 (8th Cir. 2012). “The attorney-client privilege
prohibits ‘the discovery of confidential communications, oral or written, between an
attorney and his client with reference to . . . litigation pending or contemplated.’” Ratcliff
v. Sprint Missouri, Inc., 261 S.W.3d 534, 547 (Mo. Ct. App. 2008) (quoting State ex rel.
Terminal R.R. Ass’n of St. Louis v. Flynn, 363 Mo. 1065, 257 S.W.2d 69, 73 (Mo. banc
1953)) (emphasis supplied). However, merely including counsel among the recipients of

1

The statute provides:
The following persons shall be incompetent to testify:
...
(3) An attorney, concerning any communication made to the attorney by
such attorney’s client in that relation, or such attorney's advice thereon,
without the consent of such client . . . .

Mo. Rev. Stat. § 491.060 (3).

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a document does not bring the document within the ambit of the attorney-client privilege;
the document must be shared in furtherance of the client’s solicitation of legal advice.
See Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir.1977) (explaining
that “the mere receipt of routine reports by the corporation’s counsel will not make the
communication privileged” and that such communications are “made for independent
reasons”); Monsanto Co. & Monsanto Tech. LLC v. E.I. Du Pont de Nemours & Co., No.
4:09 CV 686 ERW, 2011 WL 4408184, at *2 (E.D. Mo. Sept. 22, 2011) (noting that the
“attorney-client privilege does not cover client communications that relate only business
or technical data, where the client is not sharing that information in order to solicit legal
advice” (internal citation omitted)).
Absent voluntary waiver, materials subject to the attorney-client privilege are not
discoverable; even if the opposing party can show a substantial need for them and
establish that it would suffer undue hardship in acquiring their substantial equivalent.
Lloyd’s Acceptance Corp., 2012 WL 1389708, at *7 (citing May Dept. Stores Co. v.
Ryan, 699 S.W.2d 134, 136 (Mo. Ct. App.1985) (holding that “any professionally
oriented communication between attorney and client is absolutely privileged, in the
absence of waiver, regardless of the anticipation of litigation”)).
II. Discovery and Claims for Vexatious Refusal to Pay
Pleading vexatious refusal to pay may, but does not automatically create a
substantial need for an insurer’s internal documents. Lloyd’s Acceptance Corp., 2012
WL 1389708, at *7 (citing Logan v. Commercial Union Ins. Co., 96 F.3d 971, 977 (7th
Cir. 1996)). However, where, as here, an insured raises a bad faith claim against an
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insurer, and the insurer makes a claim of privilege, an in camera examination is
appropriate to verify the validity of the insured’s claim of attorney client privilege. Id.;
Henderlong v. Allstate Ins. Co., No. 08-CV-01377, 2009 WL 82493, at *2 (D. Colo. Jan.
13, 2009), Bishelli v. State Farm Mut. Auto. Ins. Co., No. 07-CV-00385, 2008 WL
280850, at *2 (D. Colo. Jan. 31, 2008). Because that privilege stands as a complete bar
to a plaintiff’s ability to obtain the document, the Court should satisfy itself that the claim
of attorney-client privilege is proper. Lloyd’s Acceptance Corp., 2012 WL 1389708, at
*7.
DISCUSSION
Upon review of the parties’ briefs and exhibits, the Court has determined to
withhold its ruling on the motion to compel pending in camera review of the disputed
documents. The record before the Court leaves some doubt as to the propriety of
Defendant’s claim of attorney-client privilege with respect to the redacted portions of the
documents. Communications among a client’s agents or employees about pending
litigation are not, without more, subject to the attorney client privilege. See Monsanto
Co. & Monsanto Tech. LLC, 2011 WL 4408184, at *2. The communication must involve
an attorney and its purpose must be to obtain legal advice. Tillman, 271 S.W.3d at 45.
As noted above, a conclusion that the redactions are subject to the attorney-client
privilege renders them non-discoverable even in an action for vexatious refusal to pay.
However, if the claim of privilege is improper, even if the documents are subject to
protection under the work product doctrine, they would be discoverable upon a showing
of substantial need. See Fed. R. Civ. P. 26(b)(3); see also Baker, 209 F.3d at 1054
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(stating that a party may not ordinarily discover documents prepared in anticipation of
litigation by an opposing party unless the party seeking discovery has a substantial need
for the materials and cannot, without undue hardship, obtain the substantial equivalent of
the materials by other means). For this reason, and because the redactions may indeed be
relevant to Plaintiff’s claims, the Court concludes that in camera review of the documents
is appropriate.
Accordingly,
IT IS HEREBY ORDERED that on or before Wednesday, June 18, 2014,
Defendant shall provide the Court with unredacted versions of the documents bearing
Bates Nos. 541, 542, 545 and 546. All documents submitted for in camera review shall
be submitted in hard copy directly to Chambers. The Court withholds its ruling on
Plaintiff’s Second Motion to Compel (Doc. No. 33) pending in camera review of the
disputed documents.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 11th day of June, 2014.

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