Sloan v. Country Preferred Insurance Company

Filing 33

ORDER Granting in Part and Denying in Part 21 Plaintiff's MOTION to Compel. Signed by Magistrate Judge Peggy A. Leen on 4/17/2013. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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LUCIA SLOAN,

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Plaintiff,
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vs.
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COUNTRY PREFERRED INSURANCE
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COMPANY,
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Defendant.
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__________________________________________)

Case No. 2:12-cv-01085-APG-PAL
ORDER
(Motion to Compel - Dkt. #21)

The court held a hearing on Plaintiff’s Motion to Compel (Dkt. #21) on April 16, 2013. David

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Churchill and Jolene Manke appeared on behalf of the Plaintiff. Steve Rogers and Tracy Heinhold

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appeared on behalf of the Defendants.

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The complaint in this case arises out of an automobile accident that occurred on April 5, 2011.

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The Plaintiff settled with the adverse driver’s insurance carrier for $15,000 limits, and made a demand

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on her own carrier for Undersinsured (“UIM”) benefits. This action was filed when the Defendant did

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not tender its $250,000 policy limits. Plaintiff has asserted claims for Unfair Claims Act violations and

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bad faith.

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In the current motion Plaintiff seeks to compel supplemental responses to Request for

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Production Nos. 1, 9, 10, 11, and 16. Request for Production No. 1 seeks claim file materials.

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Defendant has produced some of the claims file, but has withheld certain documents identified in its

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privileged document log involving Mr. Bangay. Mr. Bangay is in-house counsel and a claims adjuster

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responsible for handling claims in litigation. The motion argues that because Mr. Bangay is in-house

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counsel for the Defendant, a more stringent analysis of the attorney-client privilege should be applied.

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Plaintiff cites a federal decision in the Southern Division of New York holding that when in-house

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counsel is acting as a negotiator, his/her functions fall outside the traditional function of a lawyer and

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are not privileged. In this case, the motion maintains that Mr. Bangay testified at his deposition that he

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functioned as a bodily injury adjuster once a claim goes to litigation. He also testified that he works

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with outside counsel on claims and is responsible for handling claims files once in litigation.

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Additionally, Mr. Bangay testified that he remains involved in evaluating this claim, and that the

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company evaluation of the Plaintiff’s claim is ongoing.

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During oral argument, counsel for Plaintiff clarified that he was not seeking all communications

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authored or received by Mr. Bangay pertaining to this case. He conceded that communications with

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outside counsel may still be privileged. Plaintiff’s supplemental motion to compel indicates that

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Plaintiff recently obtained the file from Dr. Duke, an independent medical examiner retained by

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Defendant in this case. Dr. Duke’s file contained an email from Mr. Bangay to claims adjuster Rosanne

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Foy. Plaintiff’s supplemental papers argue that Defendant waived the attorney-client privilege by

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disclosing Mr. Bangay’s communication with Ms Foy to Dr. Duke.

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Plaintiff also seeks an order compelling the Defendants to provide supplemental responses to

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Request for Production Nos. 9, 10 and 11. These requests seek Defendant’s written practice guides,

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training materials, and claims handling policies. Defendant objected to each of these requests on

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various ground that the requests were vague, ambiguous, overly broad in scope and time, as well as

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irrelevant to the subject matter of the case and not reasonably calculated to lead to the discovery of

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admissible evidence. The Defendant also objected that the requested materials are confidential and

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contain trade secret and proprietary information. Plaintiff offered to enter into a stipulated protective

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order to address the proprietary and confidential concerns. However, Defendant refused to produce any

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materials. During the deposition of Terry Sullivan, Defendant’s claims supervisor, Sullivan testified

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that Country Preferred maintains training materials for best practices in claims handling, estimate

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guidelines and check lists on a Passport website. Plaintiff therefore requests an order compelling

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supplemental responses to produce these materials relevant to handling Plaintiff’s claim.

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Finally, Plaintiff seeks an order compelling a supplemental response to Request for Production

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No. 16 which asks for financial records and profit-and-loss statements for the past three years.

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Defendant objected that the request was overly broad in scope and time, irrelevant and not reasonably

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calculated to the discovery of admissible evidence.
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Defendant opposes the motion arguing its discovery responses were appropriate, and that

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counsel for Plaintiff failed to engage in a good-faith effort to meet and confer before filing the motion.

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On the merits, Defendant argues it should not be compelled to produce claims file material regarding

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communications with its in house counsel, Mr. Bangay, because they are privileged. Fed. R. Evid. 501

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requires the court to apply Nevada law. NRS 49.095 sets forth the elements of the attorney-client

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privilege. The communications in dispute in this case which have been withheld are between in-house

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counsel and employees and/or outside counsel, and are therefore privileged. Nevada law has not

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recognized an exception to the attorney-client privilege in the context of an in-house lawyer.

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With respect to the practice guides, Defendant argues that Plaintiff has not cited any relevant

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authority supporting the request to compel and her motion should be denied on this ground. Finally,

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with respect to the financial records, Defendant argues that Plaintiff cites no authority supporting her

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request for these materials and that the motion should be denied on the grounds of relevance. Financial

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information regarding an insurance carrier is only relevant if there is a finding that punitive damages are

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appropriate at trial. Defendant asks that if the court grants Plaintiff’s motion to compel the production

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of certain financial records, that it follow the approach taken in a recent decision by Judge Ferenbach in

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Renfro v. Redwood Fire and Cas. Insurance Co., ___ FRD ___ 2013 WL 438810 (D. Nev. 2013).

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There, the Defendant was compelled to produce financial records under seal at the time the joint pretrial

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order was filed.

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During oral argument, counsel for both sides modified their positions in several respects. Oral

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argument was made by different lawyers than the lawyers who drafted the moving and responsive

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papers. Counsel for Plaintiff conceded that Mr. Bangay’s confidential communications without outside

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counsel for the purpose of rendering legal services were privileged, unless waived by disclosure to third

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parties. He clarified that he was only seeking Mr. Bangay’s communications with claims personnel

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involved in handling Plaintiff’s claim. Counsel for Plaintiff did not identify any specific documents in

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Defendant’s privileged document log he claimed was improperly withheld. Counsel for Defendant

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conceded that if Mr. Bangay’s communications had been disclosed to Dr. Duke, the privilege was

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waived. Counsel for Defendant also conceded that the training materials and best practices in claims

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handling materials described by Mr. Sullivan during his deposition were relevant to Plaintiff’s unfair
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claims practices and bad faith claims. However, he argued that Request for Production Nos. 9, 10 and

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11, were overbroad and that it was initially unclear what Plaintiff was seeking. He agreed to produce

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the claims handling materials described by Mr. Sullivan pertaining to UIM claims that were in effect at

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the time this claim was submitted through the present, subject to an appropriate protective order

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governing confidentiality of these materials.

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Finally, counsel for Defendant conceded that if Plaintiff is able to state a punitive damages

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claim, that the financial documents requested are relevant and discoverable. The court discussed the

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practical implications of the timing of these financial disclosures. Counsel for both sides agreed that

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the financial records requested should be produced only if Plaintiff’s punitive damage claim survives

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dispositive motions. The court indicated it would therefore direct that the Defendant serve the Plaintiff

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with documents responsive to Request for Production No. 16 for the years 2009, 2010, and 2011, within

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fourteen days of decision of dispositive motion in the event Plaintiff’s punitive damage claim survives.

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IT IS ORDERED that:

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Plaintiff’s Motion to Compel is GRANTED in part and DENIED in part.

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2.

The motion is GRANTED to the extent that:

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a.

Defendant shall serve Plaintiff with any claims file materials withheld on the

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privileged document log involving Mr. Bangay that had been disclosed to Dr.

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Duke or any other third party.

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b.

Defendant shall supplement it responses to Request for Production of Documents

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to produce the training materials for best practices in claims handling, estimate

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guidelines, and check lists on Defendant’s online website passport that were in

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effect at the time the Plaintiff made this claim, through the present.

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c.

In the event Plaintiff’s punitive damage claims survives a motion for summary

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judgment, Defendant shall have fourteen days from decision of the motion for

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summary judgment in which to serve financial statements and profit-and-loss

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statements described in Request for Production No. 16 for fiscal years 2009,

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2010, and 2011.

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A protective order is entered precluding the Plaintiff from using the claims handling

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practices guides and materials, compelled by this order to be produced for any purpose

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unrelated to this litigation.

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Any request for relief not specifically addressed in this order is DENIED.
Dated this 17th day of April, 2013.
______________________________________
Peggy A. Leen
United States Magistrate Judge

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