Olga Despotis Trust v. The Cincinnati Insurance Company
MEMORANDUM AND ORDER... IT IS HEREBY ORDERED that Plaintiff's Second Motion to Compel is GRANTED. (Doc. No. 33 ). Signed by District Judge Audrey G. Fleissig on 7/15/2014. (NEB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
OLGA DESPOTIS TRUST,
THE CINCINNATI INSURANCE
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 claim under a property insurance policy issued by Defendant The
Cincinnati Insurance Company. Pursuant to the Plaintiff’s request, the Court ordered
Defendant to produce un-redacted versions of certain documents for the Court’s review in
conjunction with Plaintiff’s Second Motion to Compel.1 Upon review of the documents
and for the reasons set forth below, Plaintiff’s Second Motion to Compel will be granted.
In response to Plaintiff’s request for production, Defendant produced redacted
versions of documents bearing Bates Nos. CIC 541, 542, 545, and 546 and a Privilege
Log justifying the redactions.2 See Doc. Nos. 34-1 & 34-2. Some months later on March
The parties have briefed the motion and the record reflects their compliance with the
“meet and confer” requirement of Local Rule 37-3.04.
The Court assumes that Bates Nos. CIC 545 and 546, as submitted for review, are
complete versions of the disputed documents and not simply a partial portion of a longer
entry that exists in electronic form. If the documents do not reflect the entire entry in
14, 2014, without first consulting Defendant’s counsel, Plaintiff filed this motion
asserting among other things that the Privilege Log was inadequate. On March 16, 2014,
Defendant’s counsel, in an effort to resolve the parties’ ongoing dispute, e-mailed
Plaintiff’s counsel a more detailed explanation for each of the redactions. Defendant
asserted that the redactions applied to communications protected by the attorney-client
privilege, namely, discussions between Defendant’s employees around the time that
Plaintiff first indicated its intention to litigate the claim, regarding Defendant’s decision
to refer the claim to its counsel. 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. After consultation with
Defendant, Plaintiff 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. Defendant
asserts the attorney-client privilege with respect to all of the disputed documents and also
claims the protection of the work-product doctrine with respect to Bates No. CIC 541.
The Court thereafter granted the portion of Plaintiff’s motion requesting in camera
review of the un-redacted documents, withholding its ruling on the substance of the
motion pending that review.
those fields, and other information that may be privileged is reflected in the full field,
Defendant must so notify the Court and Plaintiff immediately.
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
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, noting that Defendant also has asserted that the work
product doctrine applies to Bates No. CIC 541, Plaintiff contends that the Court
nonetheless should compel full disclosure of that document 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 with respect to Bates No. CIC 541, the work product
doctrine because they reflect internal discussions regarding its decision to retain or
consult counsel after Plaintiff indicated its intention to litigate the unpaid claim. In
addition, Defendant asserts that when coupled with the information found in the unredacted portions of the notes and the additional information it provided to Plaintiff in the
March 16, 2014 e-mail, the Privilege Log is sufficient to justify the redactions and that no
further disclosure should be required. See Doc. No. 34-3.
In the alternative, Defendant asserts that even if the Privilege Log were deemed
deficient, such deficiency would not amount to a waiver of its claim of attorney-client
privilege. Defendant finally contends that Plaintiff is unable to establish substantial need
for the document covered under the work product doctrine, Bates No. CIC 541.
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. P. 26(b)(1). Missouri law governs the existence and scope of the attorneyclient 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),3 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
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).
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, 546 (Mo. Ct. App. 2008) (quoting State ex rel.
Terminal R.R. Ass’n of St. Louis v. Flynn, 363 Mo. 1065, 1072 (Mo. banc 1953)
Nonetheless, as Plaintiff correctly notes, merely including counsel among the
recipients of a document does not bring the document within the ambit of the attorneyclient 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 business 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. The Work Product Doctrine and 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 *6 (citing Logan v. Commercial Union Ins. Co., 96 F.3d 971, 977 (7th
Cir. 1996)). However, where, as here, an insured raises a claim of bad faith against an
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
Upon review of the parties’ briefs and exhibits, the Court concludes that the
redacted portions of the documents bearing Bates Nos. CIC 541, 542, 545, and 546 are
not covered by the attorney-client privilege. 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. Here, the redacted portions of the documents represent
communications about, and a decision by, Defendant’s employees to refer this dispute to
outside counsel for review and direction. No attorney or his agent was copied on, much
less participated in, these communications. In addition, although the communication
represents a decision to seek legal advice it is not a request directed to counsel for the
purpose of obtaining legal advice. At most it indicates an intention to seek such advice.
For these reasons, the Court cannot conclude that the redactions in the documents
submitted are subject to protection under the attorney-client privilege.
As noted above, Defendant claims the protection of the work product doctrine
with respect to the redacted material in Bates No. CIC 541. Upon review of that
document, the Court finds that the redacted material in Bates No. CIC 541 was prepared
in anticipation of litigation and with the intention that it be provided to outside counsel.
Therefore, the Court concludes that this redaction is protected by the work product
doctrine. See Fed. R. Civ. P. 26(b)(3).
Documents subject to protection under the work product doctrine are discoverable
upon a showing of substantial need. See id.; see also Baker, 209 F.3d at 1054 (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).
Where, as here, an insured alleges a claim of bad faith refusal to pay, the
allegations alone are not sufficient to invoke the protection of the work-product doctrine.
Lloyd’s Acceptance Corp., 2012 WL 1389708, at *6 (explaining that “[p]leading a
vexatious refusal to pay claim does not, ipso facto, create a substantial need for an
insurer’s internal documents”) (citing Logan, 96 F.3d at 977). Rather, “[t]he plaintiff
must demonstrate some likelihood or probability that the documents sought may contain
evidence of bad faith.” Id. at *6 (internal quotation omitted); see also Henderlong, 2009
WL 82493, at *2. The required showing is not, however, ‘“a high hurdle’” and “there
need be only ‘the possibility, not the certainty’ that the documents contain evidence of
bad faith in order for an insured to have a substantial need for them in establishing a
vexatious refusal to pay claim.” Id. (quoting Logan, 96 F.3d at 977).
Having conducted its in camera review, the Court concludes that the relatively
low hurdle presented by the “substantial need” requirement in cases of vexatious refusal
to pay has been met here. The Court cannot say that there is no “likelihood” or
“possibility” that the material sought contains or is “reasonably calculated to lead to the
discovery of” evidence of bad faith. Id. at *6; see also Fed. R. Civ. P. 26(b)(1). In
addition, as other courts have noted in similar cases, e-mail communications among an
insurer’s decision makers may provide valuable information for ‘“noticing, preparing for,
and guiding”’ the depositions of such persons and may be the “best evidence of the
claims adjusters’ mental impressions and opinions from the time surrounding the denial
of the claim.” Id. (quoting Schwarz & Schwarz v. Certain Underwriters at Lloyd’s, No.
6:07CV00042, 2009 WL 1043929, at *3 n. 10 (W.D. Va. Apr. 17, 2009); see also Busch
Properties, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA., No. 4:12CV2318 SNLJ,
2014 WL 2815655, at *5 (E.D. Mo June 23, 2014) (noting that “in a vexatious refusal to
pay claim, the strategy, mental impressions, and opinion of the insurer’s agents
concerning the handling of the claim are directly at issue”) (internal quotation omitted);
St. Paul Reinsurance Co., Ltd. v. Commercial Fin. Corp., 197 F.R.D. 620, 639 (N.D.
Iowa 2000) (ordering disclosure of materials in an insurer’s claims file despite assertion
of the work product doctrine because “the timing of, and the determination of a basis for,
the denial of coverage are essential facts” in a vexatious refusal to pay case). For these
reasons, the Court will order the disclosure of the redacted portions of Bates No. CIC 541
despite Defendant’s assertion of the work product doctrine. See Lloyd’s Acceptance
Corp., 2012 WL 1389708, at *6-7.
IT IS HEREBY ORDERED that Plaintiff’s Second Motion to Compel is
GRANTED. (Doc. No. 33)
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 15th day of July, 2014.
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